Audit queries $25,000 Christmas gifts
A total of $25,000 Christmas gifts were given to a Minister and board members by the Samoa Housing Corporation.
This was revealed in the audit report for S.H.C.’s financial year ended 30 June 2014.
According to the audit report Christmas gifts valued at $5,000 and $4000 were given to the minister and each Board Member.
The auditors noted that the gifts were, “quite excessive and contrary to the good governance and accountability objectives of governing legislations, as well and the general duty of care of board directors.
“Such significant payments pertaining to the directors and the minister of the Corporation should first be approved from Cabinet.”
In response to the auditor’s concerns, the S.H.C. stated that these Christmas gifts have been an ongoing tradition during the festive season with amounts increasing over the years.
Other issues pointed out by the Auditors Report were that some loans issued exceeded the approved amounts.
“Loan fees were not included in the approval given but were paid out. It is recommended that borrower either pay the fees upfront or have these deducted from the loan amount approved.
“The S.H.C. explained that fees were previously deducted from the loan amount up until Cyclone Evan Recovery Program when all new approvals were debited with fees to allow clients to utilise the full loan for the recovery effort which in most cases is over, and above, the limits authorised.
“Since September 2014, the S.H.C. has reverted to the fees being deducted from the loan amount. There was no proper filing room used for files storage due to the lack of building space.
There were still a number of loan files left on workstations and almost all the filing cabinets were unlocked after working hours,” the auditors report stated.
There was also no proper control record to monitor all land loans that required the payment of 30 per cent of the deposit of land cost.
“There was no record or file kept for all the board of directors’ decisions on written-off debts. This can mean that debts that have not been approved by board to be written off will also be included.
“Journal entries for write-off should include narration of Board meeting resolution.
“The Rental Units Properties operation had no existing policies and procedures manual to guide and control its activities and processes at present,” stated the Audit report.
In response to the concerns, the S.H.C said the policy formed a major part of the Corporate Plan for 2015-2017.
“The carrying values of some rental buildings appeared to be overstated, compared to their current and existing conditions which can result in overstatement of assets in the Balance Sheet.
“It was very difficult to understand the reasons for many journal entries. Having no proper journal entries narrations will lead to lack of accountability and transparency, and may even allow fraud and error to occur, that may not be easily detected. Journal vouchers are recommended to authorize, endorse and monitor every journal entry.
“Each entry must also have a correct and clear narration and to have the Chief Financial Officer sign off these entries as approved and properly prepared.
Other anomalies highlighted in the report included bank reconciliations not been done properly and on time, which made the S.H.C. vulnerable to fraud.
“Incorrect bank reconciliations directly lead to misstatements of cash and bank and related accounts in the financial statements, and may allow fraud and error to go undetected.
“In addition proper bank reconciliations should be prepared by the Finance Division who should not rely solely on reconciliations from M.Y.O.B. system. Double postings into accounts were also noted. Each payment voucher should be posted and then marked ‘posted’ to avoid such errors. Bank reconciliations should also be properly prepared to ensure these errors are picked up promptly and corrected,” says the Audit Report.