Section 48 Ministry of Civil Aviation

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					REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001




Section 48                                 Ministry of Civil Aviation

                                           The Ministry is responsible for the regulation and control of Civil Aviation in Fiji
                                           and matters incidental thereto.

                                           Its functions include the economic regulation, control and planning of
                                           Commercial air transport to, from and within Fiji, investigation of aircraft
                                           accidents in Fiji, indirect provision of domestic airport services through
                                           Government grants to CAAF, the charter of aircraft for search and rescue
                                           within Fiji’s Flight Information Region, representation on Civil Aviation
                                           Statutory Boards and Committees and meeting obligations under the
                                           International Civil Aviation Convention 1944.




                                                           Table of Contents

48.1 HANDING - OVER PROCEDURE .......................................................................................... 1

48.2 GRANT ACQUITTAL REPORTS NOT SUBMITTED .............................................................. 2

48.3 MINISTRY EXPENDITURE AND REVENUE DETAILS.......................................................... 3

          48.3.1 Expenditures for 2000 and three- year Analysis .......................................................... 3
          48.3.2 Budget allocations for 2000 ......................................................................................... 4
          48.3.3 Over-Expenditure ........................................................................................................ 4
          48.3.4 Budget Savings ........................................................................................................... 6
          48.3.5 Underline Accounts ..................................................................................................... 7
                 48.3.5.1 Preparing of Reconciliations ...................................................................................... 7
          48.3.6 Arrears of Revenue ..................................................................................................... 7
          48.3.7 Trend Analysis............................................................................................................. 8
                 48.3.7.1 Trust Fund ................................................................................................................... 8




48.1            HANDING - OVER PROCEDURE

A Handing-over Statement in the prescribed form should be prepared on each occasion on which
cash, stamps, safes, unused receipt books and cheque forms are handed over from one officer to
another. Handing over statements should be rendered to the Chief Accounting Officer of the
department1. The cash book, stamp register, receipt book register, expenditure ledger and all other
required documents should be balanced and the relevant officers should sign the book for the
amount handed over2.

It was noted that there was no proper handing-over when the outgoing Accountant left in April
2001.
    1
        Finance Instructions 164
    2
        Finance Instructions 168
Ministry of Civil Aviation                                                                                                     Section 48: Page 1
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001



The relieving Accountant joined the Ministry in mid-May 2001 and during this period, until the
date of audit the Clerical Officer handled the accounts. The Expenditure Ledgers were left
incomplete and since the handing over statement was not given, the new Accountant was left to
cope with an immense backlog of work, such as posting to the expenditure ledger and
reconciliation of accounts, most of which she was not familiar with.

Standing Government Instructions were not followed and an experience officer was not appointed
to assume the duties of the Accountant. This resulted in the Ministry’s accounting records being
incomplete and not written up as at the date of the audit on 3 August 2001.

Recommendation

The Ministry should ensure strict compliance with the requirements of the Finance
Instructions.



48.2          GRANT ACQUITTAL REPORTS NOT SUBMITTED

Accounting officers and all other officers responsible for expenditure shall at all times exercise
proper economy in the expenditure of public funds and thereby ensure that proper value is obtained
for all sums spent.3

The Ministry released grants to the following:

Table 48.1: Grant Recipients

Payee                            Particulars                                           Amount
                                                                                           $
Airport Fiji Ltd.                Operating grant for the year 2000                     1,500,000
Airport Fiji Ltd.                Capital grant for capital projects                      800,000
Post Fiji                        Grant for postal projects                               259,000
Telecommunication Fiji           Grant for village telecommunications                    296,150

It was noted that Airport Fiji Ltd. and Post Fiji did not submit acquittal reports for the grants
released to them in 2000. The Ministry therefore is not in a position to establish how economically
the funds have been utilised.

Recommendation

The Ministry should ensure that all funds released are fully accounted for and acquittal
reports are submitted and reviewed before grants for the next period are released.




   3
       Finance Instructions 18
Ministry of Civil Aviation                                                       Section 48: Page 2
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001


48.3         MINISTRY EXPENDITURE AND REVENUE DETAILS

48.3.1 Expenditures for 2000 and three- year Analysis

The Ministry incurred a total expenditure of $4.777 million as at 31 December 2000 against a
revised budget of $5.157 million resulting in savings of $379,967. The original budget of the
Ministry in 2000 was $6.051 million but was reduced following the Mini - Budget.

The Ministry’s financial details for the past three years have been as follows:

Table 48.2: Analysis of Expenditure vs Budget

SEG Description             Revised Total Variance Revised    Total    Variance Revised Total Variance Variance
                            Estimate Expend.  %     Estimate Expend.      %     Estimate Expend.           %
                              1998    1998            1999    1999                2000    2000
                             $’000    $’000          $’000    $’000              $’000    $’000   $’000
1    Established Staff           95.3    96.2   (1)     131.6    129.2        2     459.4 1,028.6  (569.2) (124)
2    Unestablished Staff        29.5        29.8       (1)         31.2     31.3     0      41.7     16.1    25.6      61
3    Travel &                   47.0        33.5        29         17.2     17.3    (1)     38.6     46.1    (7.5)    (19)
     Communications
4    Maintenance &               2.7         2.2        19          4.7       4.0   15       4.2      2.3     1.9      45
     Operations
5    Purchase of Goods &         9.7         9.3         4         13.6     12.9     5      14.8     20.9    (6.1)    (41)
     Services
6    Operating Grants &      2,541.7       869.7        66         49.0     49.0     0    2,167.1 1,702.0   465.1      21
     Transfers
7    Special Expenditures       10.0       (0.1)       101           0         0     0     142.6    104.4    38.2      27
10   Capital Grants &          953.5       520.0        45        800.0    800.0     0    2,207.1 1,813.2   393.9      18
     Transfers
13   Value Added Tax            31.4         2.9        91         34.8       3.4   90      81.3     43.3    38.0      47
     Total                   3,720.8 1,563.5            58    1,082.1     1,047.1    3    5,156.8 4,776.9   379.9          7


Analysis of the details shown in Table 48.2 above show the following.

•    Government has increased total funding for the Ministry in the year 2000 by 377% compared to
     1999 to accommodate the setting up of the Telecommunication Regulatory Unit.

•    The Department recorded savings of $379,967 in 2000.

•    Over expenditure in 2000 were found in SEG 1, SEG 3 and SEG 5.

Table 48.3: Staff Establishment

Staff                          1998         1999       2000

Established Staff                      4           5         15
Unestablished Staff                    4           4          6
Total                                  8           9         21




Ministry of Civil Aviation                                                                            Section 48: Page 3
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001

Table 48.4: Cost per Staff

Staff                            1998     1999     2000
                                   $        $       $
Established Staff                24,056   25,835
Unestablished Staff               7,446    7,818
Total                            31,502   33,653

Cost per staff based on the actual expenditure increased could only be calculated for 1998 and
1999. The 1998 and 1999 budget and actual expenditures in respect of staff relate to the Ministry
of Civil Aviation only.

48.3.2 Budget allocations for 2000

The Department’s budget has one major programme comprising of two activities namely Civil
Aviation and Telecommunication Regulatory Unit.

The manner in which funds were allocated in the programme in the year 2000 is shown in Diagram
48.1 below.


                   DIAGRAM 48.1: BUDGET ALLOCATION BY PROGRAMMES

  Telecom Regulatory Unit
           36%




                                                                                   Civil Aviation General
                                                                                           Admin.
                                                                                            64%




Diagram 48.1 shows that the General Administration received 64% of the total funding to the
Ministry while the Telecommunication Regulatory Unit received the remaining 36%.

48.3.3 Over-Expenditure

Any excess expenditure incurred has to be applied for an additional provision to the Minister for
Finance. Unauthorised excess expenditure may be surcharged against the Accounting Officer
responsible.4

As shown in Table 48.5, the highest over expenditure was recorded in allocation 40-3-1-1, Salaries
for the Telecommunication Regulatory Unit, which had exceeded the revised budget by 391%. The
Ministry continued to pay its staff despite funds not being provided for in the budget.
Consequently, an over expenditure of 36% was recorded in VAT.


   4
       Finance Instructions 17
Ministry of Civil Aviation                                                      Section 48: Page 4
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001

Table 48.5: Over-Expenditure by Allocation

Allocation      Revised   Actual      Over        %
                Budget Expenditure Expenditure Over-
                 $’000    $’000       $’000      spent
40-1-1-3             30.4       31.8         1.4    4.6
40-1-1-5              8.8       11.1         2.3   26.1
40-1-1-10           800.0    1,258.0       458.0   57.3
40-1-3-1            190.8      936.0       745.2  390.5
40-1-3-3              8.2       14.4         6.2   75.6
40-1-3-5              6.0        9.7         3.7   61.7
40-1-3-6            120.1      136.1        16.0   13.3
40-1-3-13            21.3       28.9         7.6   35.7
Total             1,185.6    2,426.0     1,240.4  104.6


The Comparison of the budgeted and actual expenditure is shown graphically in Diagram 48.2
below:


                          DIAGRAM 48.2: OVER EXPENDITURE BY ALLOCATION

            1,400,000

            1,200,000

            1,000,000

             800,000
                                                                                                                       Revised
             600,000                                                                                                   Budget
             400,000
                                                                                                                       Actual
             200,000                                                                                                   Expenditure
                   0
                        40-1-1-3   40-1-1-5   40-1-1-10   40-1-3-1   40-1-3-3   40-1-3-5   40-1-3-6   40-1-3-13

                                                          ALLOCATION




Over expenditure was noted in 8 allocations totalling $1.240 million as at 31 December 2000.
Details of over expenditure are shown in Table 48.6.

Satisfactory explanations have not been provided for the over-expenditure. The amounts over-
spent lack approval of the Cabinet and reflect that proper controls were not exercised in the
department’s spending.




Ministry of Civil Aviation                                                                                        Section 48: Page 5
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001

Table 48.6: Details of Over-Expenditure

 SEG       Description                   Original    Revised    Revised      Actual     Over         %
           -    Programme                Estimate     (Mini     Estimate    Expend.    Expend       Over-
           -    Activity                             Budget)                                        spent
           -    SEG                        $’000      $’000      $’000       $’000      $’000
40-1-1     Policy & Administration
           Civil Aviation
      -3   Travel & Communications            36.0      30.4        30.4        31.8        1.4         4.6
      -5   Purchase of Goods & Services       10.7       8.8         8.8        11.1        2.3        26.1
     -10   Capital Grants & Transfers        800.0     800.0       800.0     1,258.0      458.0        57.3
40-1-3     Policy & Administration
           Telecommunication Regulatory Unit
      -1   Established Staff                 227.2     190.8       190.8       936.0      745.1       390.5
      -3   Travel & Communications            10.0       8.2         8.2        14.4        6.2        75.6
      -5   Purchase of Goods & Services        7.5       6.0         6.0         9.8        3.8        63.3
      -6   Operating Grants & Transfers       95.0      95.0       120.1       136.1       16.0        13.3
     -13   Value Added Tax                       0      21.3        21.3        28.9        7.6        35.7

Recommendation

The Ministry should exercise proper controls so that expenditure incurred is within the
budget.



48.3.4 Budget Savings

As shown in Table 48.7, a number of allocations had unspent balances of funds as at 31 December
2000. According to details recorded in the table, there were savings amounting to $1,606,033 for
those unspent balances of funds greater than 20%. The highest unspent balance is SEG 7 Special
Expenditures but on average the unspent variance is 60%.

Table 48.7: Budget Savings - 20 % and more

 SEG       Description                   Original    Revised    Revised      Actual    Variance     %
           -    Programme                Estimate     (Mini     Estimate    Expend.    (Actual/   Unspent
           -    Activity                             Budget)                           Revised)
           -    SEG                        $’000      $’000      $’000       $’000      $’000
40-1-1     Policy & Administration
           Civil Aviation
      -1   Established Staff                 319.8      268.7       268.6       92.7      175.9        65.5
      -2   Unestablished Staff                43.1       36.2        36.2       14.0       22.2        61.3
      -4   Maintenance & Operations            2.7        2.2         2.2        1.4        0.8        36.3
      -6   Operating Grants & Transfers    2,567.0    2,067.0     2,047.0    1,566.0      481.0        23.5
      -7   Special Expenditures                5.0        4.0        24.0          0       24.0       100.0
     -13   Value Added Tax                    66.7       60.0        60.0       14.4       45.6        76.0
40-1-3     Policy & Administration
           Telecommunication Regulatory Unit
      -2   Unestablished Staff                 6.7        5.5         5.5        2.1        3.4        61.8
      -4   Maintenance & Operations            2.5        2.0         2.0        1.0        1.0        50.0
     -10   Capital Grants & Transfers      1,750.0    1,550.0     1,407.1      555.2      851.9        60.5




Ministry of Civil Aviation                                                               Section 48: Page 6
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001

48.3.5 Underline Accounts

48.3.5.1 Preparing of Reconciliations

Every Chief Accounting Officer is responsible for the monthly reconciliation of his/her
Commitment Ledger, Expenditure Ledgers and Underline Ledger with the Treasury Accounts in
respect of all votes under his/her control5. This would enable Ministries and Departments to
determine the correctness of the accounts maintained by Treasury.

The audit revealed that Underline Ledgers were not maintained by the Ministry during 2000 and
reconciliations of Underline Accounts were prepared from the reports provided by Treasury.

As a result the correctness of the amounts shown in the Treasury Reports for the various Underline
Accounts could not be determined.

The table below provides details of the accounts kept by the Department and the corresponding
balances in the Ministry of Finance records.

Table 48.8: Ministry’s Reconciliations against Ministry of Finance Figures

Account             Month of        Most recent     Months     Ministry’s   M.O.F            Comments
Name               most recent        Recon.          not       Figure      Figure
                     Recon.         received by    submitted       $           $
                                      M.O.F       in between
Trust Fund               -               -            -          Not         1,014.65   No reconciliations
                                                               Available                were prepared in 2000.
Imprest                  -               -            -         1,000.00       17.71
RFA                      -               -            -          Not             Nil    No reconciliations
                                                               Available                were prepared in 2000.

The Revolving Fund Account in the above Table shows a nil balance as at 31 December 2000.

The reconciliation as at 31 December 2000 was prepared by the Ministry from the reports
submitted by Treasury.

Hence the correctness of the amounts reflected in the reports prepared by Treasury could not be
determined.

Recommendation

The Chief Accounting Officer should ensure that Underline Accounts ledgers are maintained
and that reconciliations with Treasury reports are prepared from these ledgers.



48.3.6 Arrears of Revenue

No arrears of revenue return was prepared by the Ministry or submitted for audit purposes.

It was noted that arrears of revenue as at 31/12/00 were $20,991. The arrears of revenue for the
past four years from 1996 to 1999 could not be established as records pertaining to the arrears of
revenue for these years were not made available for audit purposes.
   5
       Finance Instructions 29(2)
Ministry of Civil Aviation                                                               Section 48: Page 7
REPORT OF THE AUDITOR GENERAL OF THE REPUBLIC OF THE FIJI ISLANDS – SEPTEMBER 2001



It was indicated that the outstanding revenue was revenue that was to be collected from remote
stations with estimated license fees of $550 per annum. Additionally, some of these users do not
bother to pay despite numerous reminders because users in the coastal region operate their own
repeaters and most ship stations operate their own private coast stations.

The Ministry’s officers’ were not able to inspect the stations because of transport problems.

The recovery process for arrears of revenue at the Telecom Regulatory unit needs improvement.

Recommendation

Effort must be made towards the recovery of the arrears of revenue. Legal actions should be
instituted against offenders after they fail to respond to the second and third reminders for
payment.

48.3.7 Trend Analysis

48.3.7.1 Trust Fund



 Year       Balance
               $                                         TRUST FUND ACCOUNT
 1998            1,147
                                      1,200
 1999            1,061                1,150
                             Amount




 2000            1,015                1,100
                                      1,050
                                      1,000
                                       950
                                       900
                                              1998                1999               2000

                                                                Year




The declining trend in Trust Fund Account is the result of timely payments of FNPF contributions
and other employee deductions to the relevant authorities.




Ministry of Civil Aviation                                                         Section 48: Page 8

				
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