$640,217 ticketing machine queried

By Joyetter Feagaimaali’i-Luamanu ,

1473 Hits

CONTROLLER AND CHIEF AUDITOR: Fuimaono Camillo Afele.

CONTROLLER AND CHIEF AUDITOR: Fuimaono Camillo Afele.

The Samoa Airport Authority (S.A.A.) spent more than half a million tala on a parking ticketing machine.

This was revealed by the Controller and Chief Auditor, Fuimaono Camillo Afele, in his report to Parliament for the financial year ending 30 June 2013. 

The report says that the auditors found upon their review of fixed assets that an amount totaling $529,398.77 was paid for the new ticketing machine project in 2013.

The report does not name the company, which installed the machine.

But it revealed that it was awarded to a locally owned overseas company. The Sunday Samoan understands that the company was also involved with previous cases highlighted by the Controller and Chief Auditor in relation to the Samoa Land Corporation.

It was not possible to get a comment from the company in question.

But the Auditor’s report raises eyebrows.

“The total amount approved for the project was for $642,348 and so the amount paid by the end of the current audited financial period ended 30th June 2013 was 82 per cent of the total project,” the report reads. 

“Further investigation revealed a final payment made in October 2013 of $110,818.53 totaling $640,217.30. 

“Investigation of work done on the ticketing machine revealed work has not been completed up until the date of the completion of this audit in December 2013. No contract was sighted at the time of the audit but was made available later. 

“At the end of the audit, the authority has yet to settle the 40 per cent of the first variation but 100 per cent of the initial contract was already paid,” stated the report.

Responding to the findings of the audit report, the S.A.A. said the ticket machine had already been installed, tested and commissioned in 2014.

“We found from our review of payments that there was a lack of supporting documents for a payment made to the company.

“The supplier invoiced S.A.A. in absence of the required documentations which they promised to provide later on. The S.A.A. noted the recommendation for future improvement.” 

But the auditors noted in their review of payments that quotes for purchases were either not sought or not filed for some of the payments. 

The report also stated that the S.A.A. is committed to obtaining three quotes from its suppliers.

See below the full findings of the audit into the Samoa Airport Authority.

 

4.23 Samoa Airport Authority for the financial year ended 30

June 2013

1. A review of fixed assets noted that SAA did not comply with FK(12)29 which required the

approval by the Tenders Board of all procurements over $200,000. The initial VIP upgrade

was stated by the Authority, as per Board paper dated the 9th August 2013, as being approved

by the tenders board in October 2012 at a cost of $442,000 to a local supplier/contractor. SAA

could not locate or provide the Tenders Board approval.

2. The plan in issue 1 for the VIP upgrade was changed, nullifying the initial VIP upgrade

contract, to include a new VIP building and an upgrade of the existing VIP building. This was

not re-advertised by the Authority nor was it taken to the Tenders Board for approval but was

awarded to the existing contractor through the utilization of the former approval issued by the

Tender's Board in October 2012 (not sighted) for the initial VIP upgrade contract. The new cost

of the VIP upgrade was then increased to $1,024,175 and the Board endorsed this increase yet

there was still no Tenders Board approval located or provided to the audit team. SAA argued

that these arrangements became necessary because of the urgency required to be ready to

receive the SIDS guests.

3. We found from our review of fixed assets that the cost of the terminal upgrade, which started

in 2012, reached $415,557 at 30 June 2013 and continued increasing to a total of $663,661.41

at the end of November 2013. This procurement was again in contravention of FK(12)29.

According to SAA the upgrades to the Terminal Buildings were not undertaken as a single

project as implied by the audit observation, but rather were implemented in different stages in

response to urgent deterioration or negative impacts to airport facilities or services or due to

outstanding requests from airport tenants who had been subjected to deteriorating airport

assets that they were using.

4. We found from our review of fixed assets that there was no tenders board approval available

for the upgrade of the coastal fence project which was awarded to a local supplier for

$279,629.50 in 2013. This procurement failed again FK(12)29 but then SAA argued that the

procurement for the new coastal fence was made in 2012 before the new procurement

guidelines came into force.

5. We found from our review of fixed assets that an amount totalling $529,398.77 was paid for

the new Ticketing Machine project in 2013, which was awarded to a locally owned overseas

company, as approved by the Tenders Board. The total amount approved for the project was

for $642,348 and so the amount paid by the end of the current audited financial period ended

30th June 2013 was 82% of the total project. Further investigation revealed a final payment

made in October 2013 of $110,818.53 totalling $640,217.30. Investigation of work done on the

Ticketing Machine revealed work has not been completed up until the date of the completion

of this audit in December 2013. No contract was sighted at the time of the audit but was made

available later. At the end of the audit, the Authority has yet to settle the 40% of the first

variation but 100% of the initial contract was already paid. SAA responded that this machine

had already been installed, tested and commissioned in 2014.

6. We found from our review of payments that there was a lack of supporting documents for a

payment made to the company in issue 5 The supplier invoiced SAA in absence of the

required documentations which they promised to provide later on. SAA noted the

recommendation for future improvement.

7. We noted in our review of payments that quotes for purchases were either not sought or not

filed for some payments. SAA is committed to obtaining three quotes from its suppliers.

8. An amount of $743,235 has been sitting in the current liability account as payable to the

Ministry for Finance (MOF) of which, according to MOF, they have no record of (awaiting

confirmation from MOF). It would be good to have a final determination on this unsupported

liability.

The audit discovered that the Ministry for Revenue has been receiving from the Ministry of

Finance cheques to offset GST liability of SAA determined in an MFR audit for the period

ended April 2009. The audit recommended that SAA takes note and investigate as it appeared

the payments have exceeded the GST liability and SAA agreed to investigate further and

action the recommendation.

9. We found from our review of Board Minutes that a number of Board Minutes were missing.

None of the board minutes available were signed by the Chairman of the Board. SAA later

advised that the minutes were available for sighting but the audit was not sure whether they

were in fact correct. SAA stated that a new staff member had been recruited to assist with

the Board with minutes and other Board tasks.

10. We noted that the airspace income was not paid by the MOF as per usual of $20,656 per

month totalling $248,348 for the year but was paid in lump sum at$241,391.34 for the year.

The payments were made as a portion of airspace usage paid by various airlines and the

agreement was made about 10 years ago. MOF made these payments toward the Authority's

loan with NPF where it was then identified via the NPF loan statement and posted into the

Authority's system as airspace income. There was no record of an agreement with MOF on

what constitutes this payment and what the reason for the decrease in payment was for

this year. The recommendation was noted and SAA had advised that MOF had been updating

its loan repayment for the past 2 years.

11. The audit raised again the issue of a withholding tax credit of $81,800 carried in the

Authority's books for over five years and has not been claimed from the Ministry for Revenue.

This was raised in the previous year's internal control memorandum but the issue has not yet

been addressed. The recommendation was noted and the Authority already wrote to the

Ministry regarding this amount.

12. Interest earned during the financial year on term deposits held with one of the Banks had

withholding taxes deducted. The Authority already discussed this with the Bank and noted the

matter for future reference and rectification.

13. We noted from our testing of long service leave cards that that long service payments were

not recorded (ie. removal of the long service leave entitlement) in the long service leave card

as was usual practice: The human resources overlooked the updating of leave cards even

though the copy of the payment voucher was filed in the personal files. Recommendation was

noted and the Authority has assured that the leave cards would be updated once payment

was made.

14. The audit noted the confusion by SAA over the Labour and Employment Act and its own

policies. The confusion arose on the policy to forfeit untaken annual leave where SAA argued

the use of the Act as overriding the policy. The Labour and Employment Act is for all

Employers not operating under its own Act or under the Public Service Act.

15. A lot of errors were noted in the calculation of provision for leave and even leave entitlements.

SAA has committed to rectifying the problem and so it should because of its financial impact

on its finances.

16. We noted that the fixed asset register has not yet been completed. As set out in the

accounting policies s2.10, all fixed assets should be recorded in the fixed asset register and the

details should include name, model, model number, classification, supplier etc. At present, the

fixed asset schedule is updated on a monthly basis and reconciles to the MYOB General

Ledger accounts. The recommendation on the Fixed Asset Register is noted and the Authority

will ensure regular update of the Fixed Asset Register.

17. We noted that the White Toyota Hiace 15 seater van has not replaced its private license plate

number "16061" with the Authority's license number as registered with the Land Transport

Authority of "AA13". This van was purchased on the 29th June 2012 and has been used by the

Authority since then. The reason why the private plates were used was due to the LTA running

out of AA license plates. The Authority had just disposed an old van and its plate is now used

to replace the private plate .

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4.24 Samoa Airport Authority for the financial year ended 30

June 2014

1. Payments were processed without the required three quotes to support, and without

the General Manager’s signature of approval. Audit recommended that procedures

must be complied with, or else review policies to relieve the General Manager from

approving certain amounts, or an authority schedule with delegated authority to

other members of the management to ensure compliance and proper maintenance of

policies. SAA responded that, at the time, it was under immense pressure to complete its

preparations for the SIDS conference in time. These included major refurbishment, building

new structures and painting of the terminal and office buildings. Some of these works

involved direct quotations from suppliers that had the necessary materials when needed,

with some being the only suppliers with available materials at the time of acquisition. Some

payments relating to runway lights and rescue fire vehicles could only be procured from

usual overseas suppliers. Some were preferred for their specialist nature. SAA also explained

that some were regular suppliers that were difficult to obtain quotes for especially since

they supply regularly using their price lists. The quality of products and services are also

used to determine the suppliers. SAA has noted the recommendations and the procedures

in the manual will be amended accordingly to build in flexibility especially when various

scenarios are encountered.

2. Payments were made to contractors without any signed contracts. None were available

during the interim audit. Audit recommended that contractors must have signed contract

agreements, and to have these filed securely. Contractors for SAA should also be registered

with the Ministry for Revenue to enable SAA to claim VAGST, and for transparency purposes.

SAA understands that the recommendations are very valid, and again cited SIDS conference

preparations and, under time constraints, it was forced to adopt the methodologies of single

source selection and cost, quality based selection with suppliers, with terms and conditions

discussed and agreed to prior to start of their work. Costs were also assessed as significantly

lower compared to market rates and the high quality of work produced. Nonetheless,

contracts for works or services for SAA have been re-enforced.

3. Issues with payment vouchers:

Receipts from suppliers were not attached to payment vouchers. All payment

vouchers must have receipts to confirm payments being made, or other source of

confirmation. SAA replied that there were situations where suppliers did not have

their receipt books on hand when uplifting their cheques. Given the distance of

the airport from Apia, cheques were released to supplier who signed on payment

voucher to acknowledge receipt of payment.

Payment vouchers were without proper signed approval. We recommend

that all payment vouchers must followed appropriate procedures to prevent risk

of making phantom payments to phantom suppliers. All payment vouchers are

checked, certified and approved by authorized personnel before the cheques are

uplifted by suppliers. In terms of general supplies, the initiatives to process

payment are with the Finance Unit. The Finance Unit will process payment once

the goods are supplied and all the documentation is done. For contractual

payments, they will only process payment upon receipt of instructions to pay.

Payment vouchers were not properly filed. It costs both us and the Authority time

in trying to locate files requested for Audit We recommend that all payment

vouchers must be filed in a chronological order on a timely basis to avoid delayed

matters or issues when requested by auditors or authorised personnel.

Management Responses: Most of the files were properly filed. however, at times,

some files are pulled out for review purposes and got misplaced in the process.

Recommendation is noted and our filing staffs have been reminded of their

responsibility of ensuring the safe keeping of payment vouchers.

4. There was a variance between the Master receipts book against departure tax reconciliation.

A fraud case Maota Airport Savaii, involving senior security where total collection recorded

was $6,610 against the receipt book of $2,060. Audit findings verified the occurrence of

fraud on departure taxes. SAA explained that this matter was reported by the cashier when

he went to Savaii to collect the cash from Maota Airport. An internal investigation was

carried out to confirm the people involved. The report identified the Supervisor as the sole

culprit in this activity and was instructed to repay the full amount which he did within the

same week. His services were also terminated at that time. Remedial action has been taken

whereby all cash collected at Maota will now be banked directly from Savaii on a daily basis

to eliminate cash being held in the office overnight.

5. Issues relating to the car park ticketing system:

There was no summary of receipts attached to the master receipt book. SAA replied

that this was a one-off occurrence, and that receipts were now attached to Cash

Summaries.

Cash count for the financial year ended 30 June 2014 noted a variation between the

actual cash count and receipt summary printed out from the electronic ticketing

system. All three machines’ cash boxes actual cash count noted a shortage. SAA

replied that the new car park ticketing system was operational in May 2014. There

were some problems when the system first operated. Some of the problems included

incorrect change to customers, incorrect reports generated by the system due to the

system been cleared every time the door of the vault is opened to clear jammed

notes, and problems related to the poor quality of our notes.

Weaknesses identified in the internal control and for management to raise red flag on

these issues:

- No daily collection of cash from the new ticketing system.

- Jammed notes can only be receipted once they are replaced from CBS, two to three

days after the collection date.

SAA explained that management made a decision when the equipment was first installed that

it will be emptied on a weekly basis, not daily. The capacity of the equipment to hold cash can

be up to 3 weeks. The keys to remove and open the cash vaults are with the AGM - Finance.

The technicians only had the keys which open the door of the equipment. The technicians are

responsible for the maintenance of the machine. They do not have access to the cash box but

they do have access to the jammed notes. SAA said it could not receipt any money which they

did not have on hand, otherwise the receipts would be more than the banking. They had to

wait until the torn paper money was replaced. There was also no guarantee that all the torn

money would be replaced by the Central Bank.

6. Cash receipts were not being deposited on a timely basis. The cashier accumulates cash

receipts in a ticketing System and makes weekly deposits. SAA said that all their daily

receipts were banked on a daily basis. The cash in the ticketing System was only receipted

and banked when the vaults were opened once a week. No one has access to vaults without

the keys held by AGM-Finance. AGM-Finance alone cannot access the vaults as keys to open

the equipment doors are with the technicians.

7. Receipt summaries were not properly signed by appropriate personnel. SAA replied that

officers may have missed signing the summary but that they had already checked and

signed off on the Lodgement and Receipt books.

8. Although audit was advised that all bank reconciliations were approved by a responsible

employee, no indication of such review was evident on the reconciliations selected for

review. SAA replied that reconciliations were done quarterly, monthly and bi-annually. A

review of reconciliations, as recommended, has been noted by SAA.

9. At present, the details of the bank reconciling items are preserved for three months and

then are destroyed. Some are misplaced. SAA stated that bank reconciliations for the full 12

months of the financial year were filed in one file. Separate files contain bank reconciliations

from past years, and that it kept its records for 10 years. SAA agreed that some are

misplaced at times, but they do not any of their records.

10. Some cheques drawn on one account had been outstanding for long period of time; some

for a year or more (stale cheques). Several of the long outstanding cheques require special

attention. SAA has noted the recommendation.

11. Account Receivables Ageing did not match the General Ledger. Itemized statements for

customers were requested, but these accounts could not be reconciled. This indicated no

reconciliation on a timely basis of the General Ledger. Management should determine the

underlying reason for the $15,652.85 difference and should take steps to correct current

procedures. In addition, management should develop procedures to ensure that differences

are identified, researched, and resolved on a timely manner. SAA responded that all

subsidiaries including staff debtors are linked to the main General Ledger but because it has

a separate General Ledger for Staff Debtors.

12. Audit discovered negative balances in the trade receivables ageing summary. This also

shows no evidence of General Ledger being reconciled on a monthly basis. SAA said that

these credit balances did not mean that accounts were not reconciled. The credit balances

represent overpayment by customers usually those who paid their accounts through the

banks. The variance was a result of the changes in the exchange rate. These credits can be

used later to offset some of their outstanding invoices if required.

13. One accounts payable’s records did not agree with confirmation from SAA. Audit sent out a

request to the creditor to confirm the amount owed by SAA, and they disputed the amount

on SAA records. This again indicated lack of monitoring and reconciliation on a timely basis.

SAA stated that its payments were based on purchase orders issued plus the invoices on

hand. SAA is aware of the variance but maintains their records are correct as the creditor

could not provide the relevant purchase orders to justify their outstanding balance.

14. There were number of long outstanding accounts receivable balances. Management should

continue to monitor accounts receivables on a timely basis. SAA clarified that its Debtors

Balances and Debtors Report are provided to the Board of Directors’ monthly meetings and

also to its Audit Committee meetings. Audit recommendation has been noted and SAA will

continue to monitor debtors’ accounts as suggested.

15. Accrued interest on term deposit was overstated.

16. Discrepancies were found between the recorded balances of fixed assets and the recorded

gains and losses on disposals and the amounts per the detail schedules maintained. SAA has

noted the recommendations and that adjusting journal entries and fixed assets

reconciliations have been sent to the auditors.

17. There were variances between the fixed assets register and the General Ledger. This

indicated that there was no reconciliation done on a timely basis. SAA replied that the

reconciliations of individual Fixed Asset Ledgers were done on a monthly basis. However,

given that expenses were tidied up during monthly financial reports, the Fixed Asset Ledgers

were also updated. The Fixed Asset Schedule was updated to match the reconciled Fixed

Asset Ledgers before it was submitted to the auditors. The audit recommendation is noted.

18. Recruitment of staff was done without following proper procedures. SAA explained that

most of the employees noted by audit had been employed for more than 10 years and had

come through the process of application, interview and approval. Since then, some had

been transferred to other departments. Only one of those identified by audit was directly

appointed on a request by the Board due the need for a person to translate, collate and

write-up minutes, submissions and resolutions. This person had specific skills as a journalist

and was seen as the ideal candidate for this position. There was only one Executive Assistant

to the GM, one for Board communications and one for contingency needs of the GM’s

office.

19. Staff members previously terminated were reinstated by SAA. SAA replied that it had a

robust recruitment process in place and that it’s General Manager, as approved in the

Administration Manual, had the final discretion in a lot of the recruitment and any lay-offs.

One employee re-hired at SAA could not prove beyond reasonable doubt accusations

against her and felt that she was unfairly treated given the circumstances of the case. The

other employee was never terminated.

20. There were numerous adjusting entries in the accounting system at the time of the audit.

These entries impacted on net income and retained earnings and resulted in changing

drafts of accounts many times. These entries should have been done during month end

procedures to save time. A review and evaluation of transactions and proper monthly

closing procedures would expedite the year-end closing and reduce audit time and fees.

SAA clarified that end-of- month adjusting entries were based on estimates, like

depreciation and accrued interest. Correcting adjustments are made at year end to correct

any over- or under- provision.

21. Many journal entries lacked proper approval by responsible employees. Explanations

accompanying the entries were inadequate in many instances. SAA said that journal entries

were only processed on the instruction of the Finance General Manager, and the

recommendation is noted for clearer narrations.

22. While SAA prepared quarterly financial statements, all required adjustments were not always

made in the quarterly statements on the same basis as in the audited year-end financial

statements. SAA said that its quarterly reports were prepared based on the information in

the system which they believe to be accurate at the time the report is prepared. It

incorporates all the adjustments which are done on the monthly basis. Provisions and

accruals are based on estimates for the purpose of monthly reports but adjusted again at

the end of the financial year to reflect the actual amount for the year.

23. Close personal relationships exist within SAA. Management must take this issue into

consideration and determine the risks associated. SAA clarified that it was an SOE and that it

was not required to apply PSC requirements. SAA operates under the Labour and

Employment Act. In the cases highlighted by audit, the SAA Administration Manual

approved in 2012 specifically prohibits couples, father, mother and direct off-springs to

work together at the SAA. It must also be highlighted that the couples mentioned were

originally recruited as individuals but married before the policy in the Admin Manual was

put in place. It is management’s view that as long as there were no adverse impacts to the

performances of their duties, then they would continue to be employed together but

monitored strictly for any unwanted work complications. SAA said it was proactive in other

ways to prevent future cases from occurring.

24. Departure taxes collected by banks were to be credited into SAA bank account after they

were checked and reconciled by the banks at the end of each day. The majority of unbanked

receipts had no records of correspondence exist between the client and one of the banks.

SAA said it was working with said bank to clear these outstanding deposits as soon as

possible.

25. VAGST returns for the year 2014 were not filed until January 2015. SAA explained that VA

GST Returns were file on time but since SAA had a VAGST credit, it notified MOR and made

arrangements for the supporting documentation to be supplied at a later date.

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