Report of the Auditor-General Part IV 2019 on the Accounts of Public Authorities and Statutory Bodies

Mentions of people and company names in this document

The information these results are derived from was last updated in June 2022

Name References in this document Mentions in other documents

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

  • About

    Auditor-General's annual report for 2019 on the Accounts of Public Authorities and Statutory Bodies established under the Act of Parliament and Government Owned Companies established under the Companies Act.

Document content

  • Part IV Report of the
    Auditor General

    This Report contains:
    – Public Bodies and their Subsidiaries
    – National Government Owned Companies
    – National Government Shareholdings in Other Companies

    Part IV

    Report of the Auditor-General


    on the Accounts of Public Authorities and Statutory Bodies
    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

    Phone: (+675) 3012200 Fax: (+675) 325 2872 Email:


    10 September 2020

  • Page 2 of 475

  • Honourable Job Pomat, MP
    Speaker of the National Parliament
    Parliament House
    National Capital District

    Dear Mr Speaker,

    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 10th September 2020
    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 Report contains
    information on the status of certain
    entities whose audits have been in arrears.

    Yours sincerely,

    Acting Auditor-General

    Level 6 PO Box 423
    TISA Investment Haus WAIGANI, NCD

  • Page 3 of 475

  • Kumul Avenue, NCD Papua New Guinea



    NO. NO.

    General v
    A. Foreword v
    B. Authority to Audit
    C. Audit of Public Bodies
    D. Appointment and use of Authorised Auditors
    E. Executive Summary
    Attachments A – F xviii-

    NO. NO.
    1. Foreword 1
    2. APEC Papua New Guinea 2018 Co-ordination Authority 3
    3. Bank of Papua New Guinea 5
    4. Border Development Authority and its Subsidiary 8
    4A. Papua New Guinea Maritime Transport Limited 10
    5. Civil Aviation Safety Authority of Papua New Guinea 11
    6. Climate Change and Development Authority … 14
    7. Cocoa Board of Papua New Guinea and its Subsidiaries 18
    7A. Cocoa Pod Borer Project Fund 19
    7B. Cocoa Stabilisation Fund 20
    8. Cocoa Coconut Institute Limited of Papua New Guinea 21
    9. Coffee Industry Corporation Limited and its Subsidiaries 22
    9A. Coffee Industry Fund 28
    9B. Patana No. 61 Limited 31
    10. Conservation and Environment Protection Authority 33
    11. Government Printing Office 38
    12. Independence Fellowship Trust 39
    13. Independent Consumer and Competition Commission 40
    14. Industrial Centres Development Corporation 42
    15. Internal Revenue Commission. 48
    16. Investment Promotion Authority 50
    17. Kokonas Indastri Koporesen and its Subsidiaries 53
    17A. Papua New Guinea Coconut Extension Fund 55
    17B. Papua New Guinea Coconut Research Fund 56
    18. Kumul Consolidated Holdings and its Subsidiaries 57
    18A. General Business Trust 60
    18B. Kumul Technology Development Corporation Limited 64
    18C. PNG Dams Limited 67

  • Page 4 of 475

  • 19. Legal Training Institute 68
    20. Mineral Resources Authority 71
    21. National Agriculture Quarantine and Inspection Authority 73
    22. National Agricultural Research Institute 77
    23. National AIDS Council Secretariat 80
    24. National Broadcasting Corporation 85


    25. National Capital District Commission and its Subsidiaries
    25A. National Capital District Botanical Enterprises Limited
    25B. Port Moresby Nature Park Limited
    26. National Cultural Commission
    27. National Economic and Fiscal Commission
    28. National Fisheries Authority
    29. National Gaming Control Board and its Subsidiary
    29A. National Gaming Control Board Community Benefit Fund
    Trust. 114
    30. National Housing Corporation and its Subsidiary
    30A National Housing Estate Limited.
    31. National Information and Communications Technology Authority
    (NICTA) 118
    32. National Maritime Safety Authority
    33. National Museum and Art Gallery
    34. National Research Institute
    35. National Roads Authority
    36. National Training Council
    37. National Volunteer Service
    38. National Youth Development Authority
    39. Office of the Insurance Commissioner

  • Page 5 of 475

  • 40. Oil Palm Industry Corporation
    41. Ombudsman Commission of Papua New Guinea
    42. Papua New Guinea Accident Investigation Commission
    43. Papua New Guinea Customs Service
    44. Papua New Guinea Forest Authority
    45. Papua New Guinea Immigration and Citizenship Service Authority
    46. Papua New Guinea Institute of Medical Research
    47. Pacific Institute of Leadership and Governance
    48. Papua New Guinea Maritime College
    49. Papua New Guinea National Institute of Standards and
    Industrial Technology 177
    50. Papua New Guinea Sports Foundation
    51. Papua New Guinea University of Technology and its Subsidiaries
    51A. National Analytical and Testing Services Limited.
    51B. Unitech Development and Consultancy Company Limited
    52. Parliamentary Members’ Retirement Benefits Fund .
    53. Public Curator of Papua New Guinea
    54. Road Traffic Authority
    55. Security Industries Authority
    56. Small and Medium Enterprises Corporation
    57. Tourism Promotion Authority
    58. University of Goroka and its Subsidiary
    58A. Unigor Consultancy Limited
    58B. Unigor Humi Catering Limited
    59. University of Natural Resources and Environment (UNRE)
    60. University of Papua New Guinea and its Subsidiaries
    60A. Unisave Limited
    60B. Univentures Limited

  • Page 6 of 475

  • -II-


    NO. NO.

    61. Foreword 225
    62. Air Niugini Limited and its Subsidiary 227
    62A. Air Niugini Cargo Limited 229
    62B. Air Niugini Properties Limited 230
    62C. Business Travel Centre Limited 231
    62D. Link-PNG Limited 232
    63 Bemobile Limited and Subsidiary 233
    63A. Bemobile (Solomon Islands) Limited 234
    64. Kumul Agriculture Limited 235
    65. Kumul Petroleum Holdings Limited and its Subsidiaries 243
    65A. Eda Oil Limited. 244
    65B. Kumul Exploration (Asia) Limited. 245
    65C. Kumul Gas Foreland 239 B.V. 246
    65D. Kumul Gas Foreland 261 B.V . 247
    65E. Kumul Gas Foreland 268 B.V . 248
    65F. Kumul Gas Foreland 269 B.V . 249
    65G. Kumul Gas Niugini B.V. 250
    65H. Kumul Lending Co Pte Limited . 251
    65I. Kumul LNG Limited. 252
    65J. Kumul Petroleum (Development) Limited. 253
    65K. Kumul Petroleum (Investments) Limited 254
    65L. Kumul Petroleum (Kroton) Limited. 255
    65M. Kumul Petroleum (Pipeline) Limited 256
    65N. Kumul Petroleum (Tech & Advisory) Limited. 257
    65O. Kumul Petroleum Marketing Pte Limited… 259
    65P. Kumul Security Agent Limited . 260
    65Q. NPCP Oil Company Pty Limited . 261
    66. Livestock Development Corporation Limited 262
    67. Mineral Resources Development Company Limited 263
    68. Motor Vehicles Insurance Limited 267
    69. National Airports Corporation Limited and its Subsidiaries 271
    69A. Airport City Development Limited 272
    69B. Airports Investments Limited 273
    70. NCD Water and Sewerage Limited (Eda Ranu) 274
    71. Papua New Guinea Ports Corporation Limited 280
    72. PNG Air Services Limited 284

  • Page 7 of 475

  • 73. PNG DataCo Limited 285
    74. PNG Power Limited 288
    75. Post (PNG) Limited 290
    76. Telikom (PNG) Limited and its Subsidiaries 293
    76A. DATEC (PNG) Limited 295
    76B. Kalang Advertising Limited 298
    76C. Media Niugini Limited (EMTV) 300
    76D. PNG Directories Limited 302
    77. Water PNG Limited 303


    NO. NO.

    78. Foreword 311
    79. Bougainville Copper Limited 313
    80. Gogol Reforestation Company Limited 315


    81. Foreword
    82. Audits in Arrears
    82.1 General
    82.2 Responsibility for preparation of Financial
    Statements 321
    82.3 Legislative Requirements
    82.4 Current Year Audits (2019 Audits)
    82.5 Status of Current Year Audits
    82.6 Audits in Arrears (2018 and prior years)
    82.7 Long Outstanding Financial Statements
    82.8 Status of Audits as at 30 June 2020
    Schedule A – Current Year Audits
    Schedule B – Status of Audits in Arrears
    Schedule C – Long Outstanding Financial Statements

  • Page 8 of 475

  • 345
    Schedule D – Government Shareholding in Companies
    Schedule E – Audit in Arrears (2018 and Prior years)
    completed during 2019/2020 349




    My Annual Report to the National Parliament for the 2019
    financial year is presented
    in four Parts. Part I deals with the Public Accounts of Papua
    New Guinea (PNG), Part

  • Page 9 of 475

  • 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

    Part IV (this Part) of my Report deals with Public Bodies and
    their Subsidiaries,
    Government Owned Companies and National Government’s
    shareholdings in Other

    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
    minority shareholdings; and
    • Section D is an additional section which provides details of
    entities that have
    audits which have been in arrears due to non-submission of
    financial statements.

    The audit findings contained in Sections A and B of this Report
    have been reported to
    management of the respective entities and to the responsible

    A.1 Audit and Delivery of Government Program

    I have carried out audits of Statutory Bodies and their
    Subsidiaries and other audits as
    mandated. These Statutory Bodies entities are tasked to deliver
    government services to
    the people of Papua New Guinea.

    Although my report provides opinions on the financial affairs of
    these entities, other
    audit procedures performed by my Office give a picture of
    effective delivery of
    government policies and programs particularly by the public
    sector and their
    contribution to the Medium Term Plan III 2018-2022 by attaining
    an inclusive
    sustainable economic growth through the following key result

    • Increase Revenue and Wealth Creation;
    • Quality Infrastructure;
    • Sustainable Social Development;
    • Improved Law, Justice and National Security;
    • Improved Service Delivery;
    • Improved Governance;

  • Page 10 of 475

  • -v-


    • Responsible Sustainable Development; and
    • Sustainable Population.

    In addition, my audit findings that have been repeatedly
    highlighted show slow progress
    in making improvements to governance structures and public
    mechanisms in relation to expending public finances. Without
    strong governance
    support, service delivery as envisaged by the National
    Government risks falling short
    of its objectives.

    Besides the audit of Financial Statements, I have extended my
    audit programs into the
    audit of service delivery, performance audit and major public
    work projects to enhance
    my Office’s ability to deliver reports to Parliament on how well
    and effective the
    government programs are being delivered.


    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,
    in so far 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

  • Page 11 of 475

  • 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.

    B.2.1 Auditing and Reporting Requirements

    In Section 8, Sub-sections 2 and 4 of the Audit 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.2.2 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.2.3 Audit Opinion on Financial Statements

    Section 8(4) of the Audit Act requires me to audit the
    financial statements of the public
    bodies and to report an opinion to the aforementioned Ministers
    • Whether the financial statements are based on proper accounts
    and records;
    • Whether the financial statements are in agreement with those
    accounts and
    records; and
    • 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.3 Public Finances (Management) (Amendment) Act 2018 (PFMA)

    The submission of the financial statements of statutory bodies

  • Page 12 of 475

  • for audit is required
    under Section 63(1) and (3) of the Public Finances (Management)
    (Amendment) Act
    2018. The Section requires each statutory body to prepare and
    furnish to its Minister
    before end of fourth calendar month from close of a fiscal
    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.

    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.4 Companies Act 1997

    I am required to audit National Government owned Companies and
    their Subsidiaries
    under the provisions of the Companies Act 1997. Though these
    companies are
    registered under the Companies Act 1997, my responsibility to
    audit them is by virtue
    of Section 63 of the PFMA and Section 3 of the Audit Act.




    C.1 Scope of Audit

    Presently, the limited resources available to my Office are
    directed primarily towards
    financial attestation and compliance or regularity audit of
    Public Bodies. Due to
    resource constraints, I have not been able to venture into the
    audits of information

    The full scope of my audit responsibility in respect of Public
    Bodies covers the
    Statutory Bodies and their subsidiaries, National Government

  • Page 13 of 475

  • owned companies and
    their subsidiaries, and the companies in which the government
    holds 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 me to report the
    instances of non-compliance with these requirements. More
    details on the audit
    responsibilities under the Companies Act are provided in Section
    B of this Report
    which covers the National Government owned companies.

    C.3 Reporting Framework

    My audits are conducted in accordance with the International
    Standards on Auditing
    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
    the International
    Financial Reporting Standards (IFRS) and statutory requirements.


    Section 8(5) of the Audit Act 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.


  • Page 14 of 475


    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, and National
    shareholdings in Other Companies during the period July 2019 to
    June 2020 (2019/2020
    Audit Cycle). The Report covers the audits of these entities’
    financial statements for a
    number of years, not just 2019.

    In 2019 there were 123 public entities subject to audit by my
    Office, consisting of 79 Public
    Bodies and their Subsidiaries and 44 National Government Owned

    I am also responsible for reporting on the audits of 2
    Companies, in which the National
    Government has minority shareholding. These entities are audited
    by private company
    auditors and are reported under Section C of this Report.

    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 overall poor state of the
    financial management structure in most
    public entities whose statements are subject to my audit and

    The overall purpose of financial statements is to provide
    information about the financial
    position and performance of an organisation. The information is
    useful to a wide range of
    stakeholders and the statements constitute a formal record of
    the financial and business
    activities of an organisation. As such, the statements are a
    core component of an
    organisation’s governance and accountability. Non-submission of
    the financial statements
    for audits in a timely manner greatly limits the ability of
    stakeholders to monitor performance
    and make informed decisions regarding the organisation.

    Financial management in the public sector is the establishment
    and maintenance of policies,
    processes and procedures to achieve effective and efficient

  • Page 15 of 475

  • management of public funds in
    such a manner as to achieve the objectives of the organisation.
    It consists of planning,
    organising, directing, monitoring and controlling the monetary
    resources of an organisation.
    Unfortunately, many organisations continue to indicate they are
    incapable of managing their
    financial affairs.

    Weaknesses with financial management are contributing to
    significant wastage of financial
    resources and indicate a serious lack of transparency and
    accountability. Ultimately these
    weaknesses adversely impact upon the delivery of services to the
    citizens of PNG.


    Executive Summary

    E.3 Submission of current year Financial Statements

    Section 63(1) and (3)(a) of the PFMA requires Wa statutory
    body to prepare and furnish to

    the Finance Departmental Head before end of fourth calendar
    month from close of a fiscal

    year, a performance and management report of its operations
    for the year ended 31

    December preceding, together with financial statements to
    enable the Finance Minister to

    present such report and statements to the Parliament

    Before submitting the financial statements to the Minister,
    Section 63(3)(c) requires a

    statutory body to submit the financial statements to the

  • Page 16 of 475

  • Auditor-General and for the Auditor-

    General to report to the Minister in accordance with Part II
    of the Audit Act.

    Despite these legislative requirements, 78 entities had not
    submitted their 2019 financial

    statements to be audited and overall some 101 financial
    statements for 2018 and prior

    years had not been submitted for audit (Refer Table A).
    Moreover, the situation has

    deteriorated during this cycle.

    Due to Covid-19 pandemic outbreak, Government response has
    resulted in virus lock-downs

    and reduced economic activities which has resulted in
    reduction of current year audits to 3

    during 2019/2020 cycle. Further, 42 audits were either
    substantially completed, in progress

    or to commence shortly and 78 audits were unable to commence
    due to the non-submission

    of the financial statements during the cycle.

    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

    Table A

    STATUS OF AUDITS AS AT 30 JUNE 2020 (END OF 2019/2020 CYCLE)

  • Page 17 of 475

  • Audits Audits to Financial
    Audits Audits in
    Total Total
    Year Substantially Commence Statements
    Completed Progress
    Completed Shortly not Submitted

    2019 3 1 32 9 78
    123 –

    2018 31 11 27 6 42
    117 123

    2017 22 13 17 6 25
    83 119

    2016 14 8 8 5 13
    48 81

    2015 5 6 5 4 8
    28 55

    2014 5 4 1 2 6
    18 33

    2013 1 1 1 2 5
    10 14

    2012 0 3 0 2 2
    7 8

    2011 0 1 0 2 0
    3 2

    2010 0 1 0 1 0
    2 2

    Total 81 49 91 39 179
    439 437

  • Page 18 of 475

  • -x-


    Table A above shows that 221 audits were either completed,
    substantially completed or still
    in progress as at 30 June 2020. The details are graphically
    depicted in Attachment ‘C’, which
    also included the arrears of prior years.

    Table A also shows that of the 123 current year audits (2019),
    only 3 were completed, with
    33 audits either substantially completed or in progress. A
    further 9 audits were to commence
    shortly. Graphical description of the status of current year
    2019 audits (excluding arrears) is
    given in Attachment ‘A’. The list of entities is at Schedule
    ‘A’ (i), (ii), (iii), (iv) & (v).

    E.4 Type of Audit Opinions Issued1

    In the period covered (July 2019 to June 2020) by the audit, 81
    audit reports were issued. Of
    the 81 audit reports issued, 39 were unqualified, 26 were
    qualified, 15 were Disclaimer of
    Opinions and 1 Adverse Opinion. The details are captured in
    Attachment ‘D’.

    Types of Audit Opinions issued for each entity over the period
    of seven years from 2013 to
    2019 are detailed in Attachment ‘E’.

    E.5 Key Findings

    The key findings from the audits centered primarily 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, lack of staff
    capacity and competence and ineffective internal control
    systems. Other issues noted are also
    highlighted in paragraph E.9.

  • Page 19 of 475

  • • Bank reconciliations not being prepared in a timely manner or
    not at all;
    • Transactions not having the required supporting documents;
    • Fixed asset registers not being properly kept or maintained
    and improper and
    inconsistent valuation of assets;
    • Physical count of assets/stock-take not being carried out
    properly and property acquired
    or disposed off without proper procedures being followed;
    • Failure to comply with IFRS/IAS in the preparation of
    financial statements and breach of
    public finances management and other statutory provisions;
    • Travel and other allowances not being fully acquitted;
    • Non payments of taxes to IRC (Group Tax & GST)