Auditor General raises questions on "Polynesian" accounts

The Controller and Chief Auditor, Fuimaono Camillo Afele, has exposed issues of non disclosure in his audit of Polynesian Airlines (investment) Ltd and Polynesian Limited's accounts. 

The issues are revealed in Fuimaono's recently released 2015-2016 audit of the government owned entity.

Polynesian Airlines (Investments) is a company which shares the name of Samoa's first national carrier, established in 1959. 

Today, that entity, which was formed in 1989 and is entirely owned by the Government of Samoa, is the sole shareholder of Samoa Airways which was established in 2017. 

Two significant pieces of board-approved expenditure were missing from the capital commitments section of the airline investor's financial statements: a $1.65 million "jet operations" task force and "jet implementation costs" totalling just over $25.5 million, the audit report found.

The audit reports say each were approved by a Board meeting of Polynesian Airlines (Investments) Ltd., at a special meeting convened on March 2016. 

However, the information was neither disclosed in the "Notes to Financial Statements" section of the airlines accounting disclosures.

“This information should be disclosed in the Notes to Financial Statements under Capital Commitments,” said the Auditor in his report.

“Budgets have not been approved by Cabinet"

The Samoa Observer has since Tuesday last week been seeking comment via e-mail and telephone calls from Samoa Airways Chief Executive Officer, Seiuli Alvin Tuala, and the responsible Minister, Lautafi Selafi Purcell

Messages left with the Chairman of the Board, Muagututia Lafaele Ngau Chun, were not returned as well. 

The airline resumed international flights in 2017 under the name Samoa Airways.

Since then Minister Lautafi Selafi Purcell has expressed positive sentiments about the future of the airline. He recently told the Samoa Observer that despite the “tough” financial situation facing the airline, Samoa Airways has a bright future. 

Last month the Minister for Finance, Sili Epa Tuioti, said the Government was prepared to ensure the airline's operations continued on.

“Obviously there is a need to inject additional capital just to ensure the continuity of operation," Sili said in an interview with the Samoa Observer. 

"They haven’t asked for another loan but we have to plan in the event that they do ask and we are in a position to provide the financial assistance.

The entire global airline industry has also taken a financial hit with the grounding of Boeing 737-MAX planes following crashes in Africa and Southeast Asia. Samoa Airways had leased a Boeing model shortly before the ban took force resulting in the airline having to "wet lease" an aircraft from Malaysian headquartered Malindo Air. 

The relevant section of the auditor's reports are included below. 

3.12 Polynesian Airlines (Investments) Ltd and Polynesian Limited for the year ended 30 June 2016

1. Dividends to Shareholders with regards to their obligation and methodology of calculation. Board and management are aware of the ongoing issue as raised prior year. The Board of Directors is well within its rights under the Companies Act 2001 (as amended by the Companies Act 2006) to make distribution to its shareholders. The Board should appraise the solvency situation for the two companies when considering the declaration of a dividend. The Board and management should seek an agreement with Ministry of Finance (MOF) with a methodology of calculating the dividend.

2. A budget for Jet Operations Taskforce to the tune of $1,657,373.83 and Jet Implementation Costs totalling $25,630,542.90 was approved in a special board meeting on 25 March 2016. This information should be disclosed in the Notes to Financial Statements under Capital Commitments. Budgets have not been approved by Cabinet.

3. There were a few instances where employee’s entire statutory Samoa National Provident Fund (S.N.P.F.) deductions being borne fully by the Company.

3.13 Polynesian Airlines Ltd – American Samoa Interim Audit for the period 26-27 July 2016

1. There were instances of delayed banking. The banking was delayed due to one of the holders of the locks to the deposit box being absent from work. Recommendation is noted.

2. Fixed assets accommodated by the Pago Pago office were not labelled. Fixed assets acquired and used by the Company must be labelled to ensure assets are properly safeguarded and accounted for. Recommendation is noted and a Finance Senior Staff will attend to the labelling. All labelling for the Pago office was completed and done to ensure the safeguarding of company assets.



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