Trust Fund in Papua New Guinea Not Complying with Finance Management Act, Says Deloitte

Lucas Gilmore, “Big 4″ observer
February 08, 2011 /

PAPUA NEW GUINEA – The latest in the audit reports of business consultancy and accounting firm Deloitte on the Department of Environment and Conservation (DEC) disclosed several lapses in how it has managed the coffers of its Biodiversity Trust Fund and poor compliance with the rules.

The audit report, which is the second in a series of four reports, revealed that 73 percent of the amount spent from the trust fund in 2008 has gone to unofficial transactions.

Biodiversity Trust Fund draws its resources from the United Nations and private sector contributors to World Environment Day.

The first audit of Deloitte conducted in 2008 has shown that the financial management procedures of the DEC did not comply with the requirements of the Public Finance Management Act or the Financial Management Manual.

Deloitte added that its procedures within the trust fund failed to provide useful information to the expenditure management as cross-checked with the total budget and layout of the projects.

Specifically, the second audit report shows that almost $87,000, which included approximately $3,000 for travel expenses abroad, from Biodiversity Trust Fund that DEC staff acquired as cash advances in 2007 to 2008 was not properly accounted for.

According to Deloitte, the trust fund did not show any bank reconciliations for the past seven months, and if there were some, the figures used in opening balances were inaccurate.

Deloitte said the DEC failed to furnish the Department of Finance with monthly reports covering the trust fund, which is a statutory requirement.

Furthermore, assets purchased using amounts from the trust fund totaling almost $60,000 have not been registered.

Of the ten transactions audited, none showed the necessary signatories who would prove the amount incurred in the expenses while four have not been documented at all, Deloitte added.

Early this month, Deloitte has also exposed another shortcomings by one state-owned entity in South Africa in complying with its internal control processes of procurement and contract management.

Deloitte’s audit report revealed failures on the part of Broadband Infraco to produce accurate reports of its contract management.

The report cited invalid registration information involving contract terminations that have not been detached from the register, inadequate maintenance of contracts and loose access to documentations.

 

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