The Auditor General’s named the following government ministries as receiving Qualified Audit Reports:

Cabinet Office; Judicial Administration; Ministry of Community Affairs, Gender and Housing; Ministry of Education, Training and Unemployment; Public Finance; Financial Services, Ministry of Health, Environment, Youth, Sports and Culture; Office of the Complaints Commissioner; Portfolio of the Civil Service and the Portfolio of Legal Affairs.

Some of his comments are:

Cabinet Office

For both the years ended 30 June 2011and 30 June 2012, the financial statements of the Cabinet Office received a qualified opinion in respect of property, plant and equipment. I was unable to confirm satisfactorily the completeness, existence and valuation of property, plant and equipment amounting to $2.3m for the year ended 30 June 2012 (30 June 2011: $5m) on the statement of financial position as the Cabinet Office did not maintain proper records.

For the year ended 30 June 2011, I qualified my opinion on four other issues in addition to the qualification on property, plant and equipment. I was unable to:

satisfactorily confirm the validity, accuracy and existence of accounts receivable amounting to $10.7m due to the lack of a reasonable provision for doubtful accounts and confirmation that the amounts were recorded on the books of the debtors;

carry out satisfactory audit procedures to obtain reasonable assurance for the accuracy of the inventory and related expense accounts due to inadequate supporting documents;

confirm satisfactorily that the amount of $8.3m reported as net worth on the statement of financial position was fairly stated because of the lack of adequate records on the beginning balance amounting to $2.6m relating to the 2005-06 opening balance; and

obtain reasonable assurance on the completeness of sale of goods and services due to an accounting system limitation. The magnitude of this observation to the statement of financial performance could not be determined due to the limitation in generating the required information from the system.

Judicial Administration

While I did not qualify the opinion on the financial statements for the year ended 30 June 2012, I included one matter of emphasis in my audit report. The entity billed Cabinet for outputs greater than authorized in the Appropriation law by $117k and thus undertook irregular transactions. These additional billings were included in a Supplementary Appropriation Bill. However as at 30 June 2012 the Bill had not been presented to the legislative Assembly and passed into law as required by the PMFL. A Supplementary Appropriation Bill was presented to the legislative Assembly and passed into law in September 2013.However as this was subsequent to the year end and the certification of the financial statements in our opinion the billings to Cabinet for outputs above the original appropriations were incurred without the requisite legislative authority.

For the year ended 30 June 2011,the financial statements also received a qualified opinion in respect of accounts receivable in the amount of $187,674,as documentation that clearly supported the existence of this amount could not be provided.

The entity’s management and accounting for property, plant and equipment was weak as it did not maintain proper asset registers. Whilst the issue was not significant enough during 2010-11 and 2011-12 to lead to a qualified opinion on the financial statements, it is a matter that requires attention to ensure that assets are managed effectively (not lost, stolen, improperly maintained, etc.).

Ministry of Community Affairs, Gender and Housing

For the years ended 30 June 2011and 30 June 2012, the Ministry’ s financial statements received qualified opinions. The opinion was qualified for the concerns I had about the valuation of property, plant and equipment. The Ministry had not valued its buildings in the last five years in accordance with the Financial Regulations and International Public Sector Accounting Standards. Therefore, I

was unable to satisfactorily confirm that the amount recorded for property, plant and equipment was fairly stated in the financial statements.

A number of matters were brought to the Ministry’s attention. Three significant issues we identified which have not been already highlighted are:

• Control of system generated transactions: We noted that there were various “system generated accounts” in the accounting records with material transactions. Our audit tests found that management did not have proper control and oversight over these accounts as there were automatic postings done without involving the Ministry and no review done by senior management. The risks associated with transactions being posted outside the Ministry’s internal accounting system are significant. As management does not have full control over these accounts, the opportunity for fraud and abuse is significant and it is impossible to ensure the financial statements represent a fair representation of the transactions carried out in the Ministry.
• Funds being spent on abandoned building: We noted during the audit for the year ending 30 June 2011that the Ministry paid utilities and security expenses of approximately $7k for the Joyce Hylton building. Further enquiry indicated that the building had been unoccupied for several years and had in fact been condemned by the Public Works Department and written off the books of the Ministry. During the year ending 30 June 2012 the Ministry resolved this matter and stopped making these payments.
• Utilities expenses: We found that there was no metering capacity for the utilities costs incurred by at the Flagship Building in 2010-11 and the Ministry was being invoiced on a formula which management could not understand or explain. The Ministry subsequently negotiated a new lease and will cease to occupy the Flagship Building starting in 2013-14.

END

I will leave it there today and continue this discourse later. When you consider that the government department’s accounts now I am highlighting are the better ones it should make you, as it does me, feel very uncomfortable.