Cutting the “excesses” and Samoa Airways' shoddy accounting

Samoa has over the last eight months begun counting the cost of the COVID-19 global pandemic, despite recording zero cases to date of the dreaded virus.

Thousands of people have lost their jobs, a large number of them released by operators in the tourism industry which now lies in tatters, and more local companies are either on the edge of bankruptcy or have shut their doors permanently.

It is tragic but it is the new norm. No one saw the pandemic coming, and we don’t know where it will take us, with global health authorities unable to put a finger on when exactly a vaccine will become available.

But one thing we do have control over, for now, is how we manage our finances in these unpredictable and challenging times. Fiscal discipline is paramount to ensuring excesses in the Government’s expenditure are avoided so public funds are only channelled to essential services such as health and education.

In fact doing a review of all forms of Government expenditure – with a view to trimming the “excesses” in order to generate savings in public funds – would go a long way to ensure that we continue to have savings as revenue continues to decline.

Even benefits earmarked for staff of public organisations, which would have a long-term bearing on the operational cost of State-owned entities such as Samoa Airways going forward, warrant a review. 

The Auditor-General and Controller, Fuimaono Afele Taimalelagi, raised his concerns about Samoa Airways’ 50 per cent discounted airfares for staff being extended to relatives according to a Samoa Observer article titled “Auditor queries Samoa Airways staff benefits”.

The Auditor noted in his 2018-2019 Financial Year Audit Report that the staff discounted travel benefit is part of the airline’s human resource manual and is approved by the Chief Executive Officer.

“However, it was also noted that this concession [for 50 per cent discounted travel] was extended to family members,” the report added.

The report also acknowledged that the airline’s  management is currently reviewing the policy’s validity.

In these hard times – as the airline awaits the reopening of international travel and the arrival of a leased Boeing 737-800 from the Netherlands – it would make sense for staff benefits such as discounted travel for extended family to be discontinued.

And the audit report’s uncovering of deficiencies in the airline’s systems and processes – relating to delegation authority; procurement guidelines; cash floats; petty cash; asset disposals; directors’ fees taxation; and debt accounts reconciliation – is also a cause for concern.

The Samoa Observer has in the last three years called for the financial report of the national airline to be made public, as its operations are kept afloat by public funding thus are accountable to the taxpayers.

Sadly, the findings of the 2018-2019 Financial Year Audit Report confirms our fears about the state of the airline’s books.

“There were missing or misplaced receipt books for the Apia main office for July, August, October, November and December 2017,” the airline said in its official response. 

“Management will work on improving their filing practices.” 

The Auditor also found the airline’s review of monthly bank reconciliations showed lapses in review procedures for the reconciliation of foreign bank accounts.

“Management has agreed to improve their processes as well as recruiting extra staff,” the Auditor wrote. 

Fuimaono said, according to the article published by the Samoa Observer, that during the Auditor’s review of year-end financial reconciliation that some accounting entries had not been properly reconciled to supporting documents. 

Some of the key findings from the audit by the Auditor-General and Controller were:

“Review of monthly bank reconciliations indicated that the preparation and checking of bank reconciliations for foreign bank accounts were not performed properly. Management has agreed to improve their processes as well as recruiting extra staff.”

“Shortage of staff has led to some routine reconciliation of Ledger balances not being carried out properly. Management has agreed to hire extra staff.”

It is absurd that a public company, which continues to be the recipient of multimillion tala funding from the Government, has problems with its accounting systems and has attributed its problems to the lack of staff. 

What guarantee is there for the airline management to account for every single tala if its book-keeping is in a sorry state? 

And this review of the airline’s financial framework should not only focus on Samoa Airways. 

Other Government Ministries including State-owned entities should be subject to similar scrutiny by the relevant authorities, especially with the 2021 General Election only seven months away.

We say this knowing that history has shown how successive Governments announce grand projects, in the lead-up to a general election, often to promote political expediency and overlooking broader cost implications.

The Government should aim to keep cost to a minimum and use savings to prop up and support essential services as the country strives to ride out the pandemic. 

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