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Is the Council of Rotuma financially compliant?

by Lilino Vaurasi

The Government website of the Republic of the Fiji Islands posted an article on 12 August 2008 titled “Cabinet endorses Audit Report on Provincial Councils”.

The article highlights the delays in auditing Provincial Council Annual Financial Reports. The non-compliance in record-keeping and the untimely production of requested information was reported as the major hindering factor to the timely completion of Audits. Further, appropriate disciplinary action is to be handed to office bearers found in breach of their duties.

Such a report raises concern whether the Council of Rotuma's annual financial reports are up-to-date, audited and certified with a clean bill of management by the Auditor General.

The Rotuma Act, Part IV, section 25 (e) Administration of Funds, clearly stipulates “that the Council shall not later than the 30th day of June in each year submit to the Minister a report on the operations of the fund during the year ending the 31st day of December immediately preceding.” Subsection (a) further stipulates that projected revenue and expenditure required for the following year needs to be submitted annually before 1 October in the preceding year to the Minister responsible for finance for approval.

Whether this mandatory financial reporting process is followed or changed for the better, one would hope that the Council of Rotuma and its management team is in compliance.

It is important that the Council of Rotuma's annual financial reports are up-to-date and audited each year. A certified clean bill of control by the Auditor would provide confidence to the people--that is, confidence that those given the responsibility to manage the Islands financial interests and well-being have integrity and the right calibre to continue.

More importantly, compliance with financial reporting requirements and audit certification are now prerequisites for the Central Government to provide further annual grants to Council.

It is therefore of great importance that financial issues pertaining to the management funds by the Council of Rotuma are handled with diligence, transparency and made available within the stipulated time to the Minister.

Having unquestionable integrity and leadership charisma are key factors in championing unity and patriotism amongst the Rotumans.

For the Council of Rotuma the first step to gaining confidence and achieving unity amongst its people is to demonstrate its ability to diligently manage its finances year in and year out in fulfilling its development plans.

Rotumans all over the world would contribute to a central fund if the Council of Rotuma has theintegrity and calibre to strategically plan, implement and manage investment or infrastructure projects. No one will donate a dollar until such confidence and integrity is demonstrated and proven.

An updated status report on the Council of Rotuma's investment company, Rotuma Investments Limited, would be a good start. There is an urgent need to summarise the said company's activities and to make available to the Rotuman community a report, including the company's annual financial reports since its inception on 20 July 2001.

The Rotuma Investments Limited Board of Directors needs to transparently report its activities, especially when the Council of Rotuma reportedly provided a grant of $100,000 to the company as working capital to facilitate its activities (company's response to question posted to the Rotuma website 24 October 2003).

The financial grant to the company is from taxpayers' money and from funds allocated for the development needs of the inhabitants of the Island of Rotuma. Therefore, if the Council of Rotuma has provided funds to the company for investment purposes, the Rotuman community has a right to question what has been the return on the investment since the funds were allocated.

The Rotuman Community needs to know;

  • Is company still operational?
  • Who are the current Managing Director and Board members?
  • What is the company's financial status since inception?
  • What investments or project developments has the company made since inception?
  • If the company has made substantial profits, what dividend payments has the Council of Rotuma received?

On the flip side, if the company is defunct or in the verge of being insolvent;

  • What financial losses has the company incurred?
  • What corrective actions has the company taken?
  • What lessons can be learnt from the management and development capabilities of those entrusted to manage the company?
  • Has the Council of Rotuma received its fair share of its initial investment or has all hope for a return to initial investment been lost?

The worst-case scenario is that all has been lost. If that is the case, then at least the company and the Council of Rotuma should be strong and honest enough to declare that their good intention has failed. If the company's financial losses are proven by auditors to have been legitimately incurred in the course of operations, then the Rotuman community should be satisfied, bring closure to the issue and move on. If there is an element of mismanagement of funds then the course of law should be instigated to prosecute those involved.

Failure of the company does not mean that the Council of Rotuma retreat to its original perception of mistrust about educated people. It must forge on and further engage educated Rotumans while implementing more stringent screening criteria in its selection of trustworthy advisors.

It is important that we do not judge harshly those involved with the company because many unforeseen business factors may have caused its demise or the reason for its decision to remain silent about its activities.

Book of Matthew 7:1 says “Do not judge, or you too will be judged. For the same way as you judge others, you will be judged, and with the measure you use, it will be measured to you.”
Those involved in the management of the company did so on a voluntary basis and that could have been the main downfall of the company.

Had the company been established to function competently in a business investment-oriented environment, offering market-rate salary packages for its management team, complemented with set bonuses if targets were achieved, the results might have been different and the Rotuman community would have heard more success stories and updates on its return to investments.

Let us all hope the Council of Rotuma, with the elusive stern leadership assistance of retired Major General Jioji Konrote, is managed well and is in compliance with financial regulations under the Rotuma Act. Further, that the Council of Rotuma, Major General Jioji Konrote or Rotuma Investments Limited Board Chairman respond with a transparent report enlightening the Rotuman community with the company's activities.

Let's be resilient about the outcome of the Rotuma Investments Limited report and adjust to correctly “make hay while the sun shines."

May good tidings and integrity within the Council of Rotuma be upheld at all times, bringing prosperity to the Rotuman community.

Article taken from the Government website of the Republic of the Fiji Islands, 12 August 2008

Cabinet endorses Audit Report on Provincial Councils

The Minister for Finance, National Planning, Sugar Industry and Public Utilities (Water and Energy) tabled in Cabinet the report of the Auditor General on the audits of the accounts of 10 of the 14 Provincial Councils.

The Minister explained that considerable delays were noted in the preparation and submission of financial statements to the Auditor General.

Two Provincial Councils had their financial statements audited up to the year 1999, five up to 2000, six up to the year 2001, and one up to 2002.ù

He said that the commitment by the Office of the Auditor General (OAG) to update the audits of the Provincial Councils resulted in the outsourcing of audits to chartered accounting firms in 2004.

However, this had not been successful as the chartered accounting firms faced similar difficulties that were encountered by the OAG in auditing the accounts of the Provincial Councils.

Generally, these included information requested for audit purposes were not produced in timely manner or not at all; and the underlying records from which the financial statements were prepared were not maintained satisfactorily.ù

The Minister explained that the audit opinions of all audits completed have been qualified mostly on the basis of non-availability of records and related documents to substantiate the balances in the financial statements and for non-compliance with FAS 103 “ Accounting of Value Added Tax (VAT).

The Minister said that the various Provincial Councils needed to comply with the required accounting standards.

Based on this, Cabinet has agreed that Annual Government Grants to Provincial Councils will be subject to their compliance with the statutory requirements for compilation and audit of their accounts.

Cabinet has also agreed that in view of their high cost implications, outstanding audits will be pursued in a consolidated form which should be audited and reported on by the Auditor General as soon as practically possible.

In the meantime, relevant resources will be allocated to updating the annual accounts to year 2007.

The current audit report will now be submitted for the Public Accounts Committee deliberation.

The Ministry of Indigenous Affairs will also investigate the serious breaches reported in the Auditor General Report and institute appropriate disciplinary action against the Roko Tui's and the Provincial Treasurers responsible for these serious breaches.

Submitted 14 August 2008


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