Auditor General queries $100,000 Miami trip
An $100,000 research trip to Miami and a $35,000 cell phone bill are among the examples of overspending the Controller and Auditor General, Fuimaono Afele Taimalelagi, found in the finances of the Samoa Ports Authority (S.P.A.) between 1 July 2014 and 30 April 2015.
The issues are highlighted in the Report of the Controller and Auditor General to the Legislative Assembly, which has been tabled in Parliament. According to the report, four S.P.A. officials spent $100,000 on the Miami trip.
"The overspending was from official trips to Miami by the Chairman, General Manager, Manager Commercial & Marketing and the Principal Marketing Officer to promote Samoa as an attractive destination to the cruise liners conference held there," the report reads.
Contacted for a comment, the Minister for the S.P.A. Papali’i Niko Lee Hang, told the Samoa Observer the trip to Miami was necessary to attract cruise liners to Samoa, but four people need not have attended.
Papali'i was not the Minister of S.P.A. at the time.
“What a waste of public funds,” he said.
The Seatrade Cruise Global is the largest cruise industry gathering in the world and it is held in Miami Florida where 13,000 professionals come together to innovate, uncover new trends, and secure profitable partnerships.
The Minister noted it was an effective avenue for luring tourists from the increasingly lucrative cruising market.
“However there was no logical reason why S.P.A. at the time sent four people and $100,000 was too much money to spend on one trip,” he said.
The last time the S.P.A. filed a paper with Cabinet for S.P.A.’s General Manager to attend this conference, it was denied.
But the budget excesses did not stop there. S.P.A. had budgeted $38,000 for communications during the year concerned. They more than doubled this with a total of more than $91,000. Just over 40 per cent of the over spend came from excess mobile expenditure.
Two senior officials were singled out for incurring large roaming costs while on a trip to Niue. Other staff members kept using their company phones after plans were maxed out.
The company also stopped giving staff the ability to call mobile numbers from landlines and said rising internet costs had helped drive its communications excesses.
Another issue identified was contracts being issued prior to going through the tender board process.
“There were contracts which were authorised and works implemented prior to Tenders Board Approval which is a non-compliance with the Tenders Process.," the report said.
In response, the S.P.A. stated that contracts authorised by Authority and carried out prior to Tenders Board Approval.
“Contracts mentioned were urgently needed in preparation for [a United Nations] Meeting. Based on this understanding, they were subsequently approved by the Tenders Board," they said.
“Tenders for work were carried out by with bids received from all interested parties.
“These bids were opened with all bidders present in SPAs Conference Room with an evaluation report tabled.
Some contractors later requested for variation when the contract work was already in progress due to additional work identified that was not in the original contract.
“There were instances where terms of contracts had to be amended due to unforeseen circumstances yet lacked documentation (variation agreement) and proper approval from the Board of directors,” the report reads.
This is what the Audit Report says about S.P.A.
Samoa Ports Authority
Interim Audit for the period 1 July 2014 – 30 April 2015
1. The revised Accounting Manual was still a work in progress and all recommendations given will be incorporated into the Manual.
2. Although it had undergone a restructuring process, an organizational chart has not been fully updated to document changes and movement of personnel.
3. Several daily batches were not signed as evidence of function being carried out as per usual practice and procedure. SPA said all revenue collections were checked on daily basis by senior officers, and staff were reminded to ensure checking of revenue collections.
4. The daily collections of wharf-ages for the Lady Naomi collections were not banked intact. The delayed banking was due to these funds being used as float for the Lady Naomi operations on Friday and Saturdays. However, a recommendation from SPA Audit Division has led to this practice being stopped and all collections are now banked daily.
5. Reports that were forwarded to the Finance Division for processing were not signed or endorsed by the manager as evidence of checking being carried out. Shipping agents on numerous occasions have disputed these reports. Responsible employees for shipping agents are now required to countersign these reports before the issuing of invoices.
6. There were amendments to SPA dues and rates (tariff) approved by the General Manager in February 2015, replacing the one endorsed by the Ministry of Works, Transport and Infrastructure in October 2014. In this proposal was the recommendation for all invoices issued after the 27October 2014 for cruise vessels to be amended to reflect these changes. It was recommended that if amendments are to be made to Ports Dues and Rates, SPA should forward this to Board and Minister for endorsement.
7. The Finance Manager did not sign on the system-generated invoices as indication that checking and approval took place.
8. Storage of containers and break bulks on the wharf are being charged per day as per Ports Dues and Rates 2014 after the completion of the grace period of 3 working days to the date the vessel departs the wharf. However, several invoices had charges that were not consistent with charges notated on wharfage document or against dates that should have been charged. SPA has noted this in going forward.
9. There was slow movement in recovery of outstanding debts. SPA said that receivables never remain constant as new amounts are added from time to time based on the number and types of vessels that comes in, etc., despite payments being made for other arrears.
10. Bond storage charges have been miscalculated in several instances and not consistent with Ports Dues and Rates 2014.
11. SPA allows the extension of the grace period (of 3 days) to companies despite restrictions in Ports Dues and Rates 2014.
12. Bonds were waived by the Manager of the Commercial & Marketing Division without proper and documented approval and justification. This approval should be well documented to verify authorization. Approval for the waiving of bonds mentioned by the Commercial & Marketing Manager were authorised by the General Manager as he was not available at the time.
13. There was no proper reconciliation carried out for vessels (Cargo – Containers/ Break bulk) to facilitate with unpaid wharfages and amount of bonds to be collected. The recommendation is noted going forward.
14. Parties leasing space had no contracts to clarify arrangements. SPA responded that one now has a lease, and the other had been re-leased.
15. There were leases with expired contracts still operating on premises with the extensions given verbally while SPA was finalising renewal of arrangements. SPA explained that leases were being processed for renewal.
16. One lessee had been leasing SPA land for five years without a signed contract. SPA said there was a signed lease agreement in place.
17. Non-compliance with lease agreements was noted.
18. The leasing of warehouse and SPA premises to tenants were not awarded through proper procedures of tendering to the public. Some of the leases mentioned were not tendered as per instructions received directly from the PM's office.
19. There were several payments without or incomplete number of quotes as per SPA procedures. SPA said it complies with the requirement for 3 quotations. However, due to unavailability of needed items from other companies and/or the urgency of work needed, the purchases of these items/services were made.
20. There were several invoices paid late.
21. Cheques cashed by the Finance Team for convenient purposes still exist and are becoming a usual practice.
22. There was no reconciliation of cheques. SPA responded there was now one register where the cheques are registered and where claimants also sign when uplifting cheques.
23. There was an increase in electricity use. SPA said this fluctuates mainly due to the number of reefer plugging, etc.
24. The Authority had engaged in a cell phone plans for staff with Digicel Samoa Ltd. Audit recommends revising IT Usage Policy – less general and more specific. SPA responded that cell phones issued to staff is due to the nature of the Authority’s business and the need to contact these officers from time to time, as they are most likely to move from location to location, thus making it difficult to contact them via land lines. Bills that exceeded monthly plans for December 2014 - The chairman and General Manager’s large cell phone bills mentioned were due to roaming, when they were on official trip to Niue at the time. Other phone bills that exceeded the Plan are not paid for, as Digicel is supposed to cease the operation of these phones when the limits indicated in the Plan is reached. Lack of Cell Phone Policy - This will be closely looked at. All cell phone holders’ names appear in phone bills and those that loose or damage their phones pay for their replacement. Telephone etc. overspent by 96% or $44,863.00 for period ending 31st March 2015 (refer table below). Budget of $46,547 against actual expenditure of $91,411. Of this $91,411, $38,024 or 42% was spent on mobiles expenditure. This will be closely looked at, as only the General Manager’s excess phone bills are paid for and not others.
25. There were contracts which were authorized and works implemented prior to Tenders Board Approval which is a non-compliance with the Tenders Process. SPA responded as follows:
Contracts authorised by Authority and carried out prior to Tenders Board Approval. Contracts mentioned were urgently needed in preparation for the UNSIDS Meeting. Based on this understanding, they were subsequently approved by the Tenders Board.
Tenders for work were carried out by with bids received from all interested parties. These bids were opened with all bidders present in SPAs Conference Room with an evaluation report tabled. SPA, however, after realising that all contract works over $200,000 were supposed to through the Government Tenders Board, later submitted these to the Board for approval.
Some contractors later requested for variation when the contract work was already in progress due to additional work identified that was not in the original contract.
26. There were instances where terms of contracts had to be amended due to unforeseen circumstances yet lacked documentation (variation agreement) and proper approval from the Board of directors.
27. Lack of monitoring of traditional corridor contracts payments led to overpayment of $10,000.
28. Non-compliance with Schedule 6 of Public Bodies Act 2001 and Cabinet Directives FK(05)32 and FK(05)Faapitoa 8. The only remuneration approved for Board of Directors are sitting allowances for directors when attending board meetings, and Annual director’s fees. SPA responded as follows:
Apart from its monthly meetings, the Board hold additional meetings from time to time to deal with unfinished business and special meetings to discuss important matters that require immediate response.
A payment of a $50 meal allowance for Board members, since no meals are provided during meetings.
Cell phones issued to board members are paid by SPA
Membership fees paid out to the Samoa Institute of Directors for Board directors
The annual director’s fee of $8,500 paid out to the Chairman of the Board of Directors started in 2012 the late General Manager’s time. These payments, according to payment vouchers sighted, were based on the rate of $708.33 per month.
29. Withholding Tax for board allowances were incorrectly calculated at 13% rather than 15% in the previous year. SPA said this was now corrected.
30. Upon spot check/collection of attendance books from different division on Thursday 11th June 2015 to Friday 12th June 2015, we observed the following concerns:
Employees not signing in for work;
Employees who were late were not crossed/marked red;
Employees who were on leave were not crossed/marked red.
SPA has advised staff and has enforced the monitoring of attendance and leave records.
31. SPA’s salary scale and grading of the principal salary rate differs between divisions - ranges from $77, 424 to $41,200. The Officer Rate is higher than Principal Level. SPA has responded to the following:
Structure across division not aligned
i. The difference noted in salaries is due to some employees being employed by the Authority for a good number of years compared to others. As such, these long time employees were given a number of salary increments over the years by previous General Managers. This coupled with government general salary increases from time to time led to higher salaries for these employees. Other salary increases including the $77,424 pointed out for the Principal Accounts Receivable Officer was carried out during the late General Manager’s term.
ii. The different designations noted reflect staff either being transferred to fill the positions for those that have left or those that had been given more responsibilities that are not properly reflected on the organisational structure. The current management is now trying to rectify this problem.
Revised salary grading not properly implemented
i. The Officer whose salary is higher than the Principal Officer mentioned was used by the late General Manager. However, after being transferred from that post to her old position, there was hesitation to lower her salary due to legal concerns.
32. There were a few weaknesses noted in the recruitment of the Commercial and Marketing manager. The SPA responded as follows:
i. New established position was not approved by Board
- There was no prior approval by the Board for the Policy Analyst position at the time
ii. Position was not advertised
- The position of Policy Analyst was not publicly advertised as stated but the officer did apply and attach a CV that the General Manager submitted to Management for an interview. It was also felt at the time that there was a need for an officer to carry out this function and complete SPA’s Corporate Plan.
iii. Did not meet criteria
- Whereas the applicant did not possess the qualification mentioned,
Management took into account his previous working experience and reference from the current Airport Authority’s General Manager. Management had no knowledge at the time that the officer was terminated from his previous employer due to some disciplinary actions and mismanagement as mentioned in the Report.
33. Copies of Advisory Committee meetings minutes could not be obtained making it difficult to determine whether there was any documentation of the advisory committee giving advice to management regarding operations of Ports. There were paid sitting allowances for said meetings yet no minutes were made available to verify that such meetings took place.
34. Board authorized staff bonus that was paid out on 22 December 2014. Audit concern was the lack of performance appraisals carried out to determine bonus paid out as we were unable to attain whether divisional objectives/measure for that year were assessed by management and whether they were achieved to warrant the awarding of bonuses to all staff. SPA responded that the payment of bonus was approved by the Board based on the submission by management on the basis of those mentioned in the Report plus the fact that there were no overtime paid out to staff for preparations carried out for the UNSIDS Meeting. The salary increase for Principal Officers was also approved by the Board prior to the UNSIDS Meeting but not implemented up to date. The bonus is equivalent to the fortnightly salary of each officer. As in previous years, there was no performance appraisal carried out.
35. SPA currently has no Fixed Asset Management Policy. There was a lack of proper policies and procedures to guide managing and capitalization of assets.
36. There was no separation of fixed assets and consumables. SPA has responded that $1,000.00 will be the threshold for capitalisation purposes and will be incorporated in the Manual. Consumables below $1,000 will be treated as expenses. A separate register to monitor these items is already in place.
37. The fixed asset register was incomplete and not updated. SPA explained that the last fixed asset taking was conducted in late June and early July after the Spot Check. Those assets that had been disposed have been removed from the Register while those with no book values but still usable are maintained in the Register to reflect their existence. Labelling of all Assets has now been completed. The movement or transferring of assets labelled under one division to another without the knowledge of those responsible for the Asset Register has made updating of the Register difficult.
38. There were insufficient documentations presented to verify the procurement of a generator that was purchased at a value above SAT$250,000. Additionally, that generator was posted under code for Office Equipment. SPA said that this back-up generator was obtained just before the UNSIDS Meeting and was approved by the Board and retrospectively by the Tenders Board due to urgent need at the time. Correction has been made to the codes.
39. SPA did not have a proper and approved Vehicle Policy to guide, monitor and control use of Authority’s vehicles. SPA said it has adopted the Government Vehicle Regulation 2015 and this will be incorporated in the Accounting Manual.
40. SPA supplies a second vehicle for the Minister in addition to the one from his other portfolio he oversees. Fuel expense for both his vehicle and that of the Associate Minister are also paid by SPA.
41. Decorative accessories/additional parts on SPA01 vehicle. SPA said this vehicle was purchased in 2011 before the Cabinet directive (FK) was issued and during former General Manager’s tenure. SPA said that all accessories came with the vehicle when it was first obtained.
42. There was no approval on journal entries and no particular standard form used to prepare entries.
43. There was no signatory on bank reconciliations to indicate they were reviewed and checked by higher authority. SPA’s Finance Manager now checks the reconciliations and initials them.
44. For the period of 1 July 2014 to 31 March 2015, revenue collected was below budget. SPA responded as follows:
Bond Fees: These depend largely on how quickly is removed from the wharf by Consignees prior to being bonded.
Commission: This was due to the cessation of employees deductions to finance companies as per Ministry of Commerce, Industry and Labour recommendation.
Devanning: Less devanning work carried out on the wharf
Fishing vessels: Income from this source was budgeted based on the number of fishing vessels from the previous year. However, the number of these vessels has greatly reduced.
Lease/Rental: The budgeted amount included anticipated revenue from an operation that never eventuated. This, coupled with grace period given to some companies, resulted in lower revenue.
Stevedoring License: All license fees for the 3 stevedoring companies totalling $72,450 were paid in May, after the spot check took place. Weighbridge: This was hardly used and as such minimal income was derived from it
45. For the period of 1 July 2014 to 31 March 2015, expenditure had exceeded budgets. SPA responded as follows:
Overseas Travel: The overspending was from official trips to Miami by the Chairman, General Manager, Manager Commercial & Marketing and the Principal Marketing Officer to promote Samoa as an attractive destination to the cruise liners conference held there. Total cost of this trip amounted to almost $100,000.
Hirage: The hire of tents for cruise ships was under-budgeted as more cruise ships visited during the year.
Donations: These were approved by the Board.
Insurance: Insurance for wharves is paid in US dollars. The insurance of additional assets obtained for the UNSIDS Meeting resulted in the overspending.
Board Expenses: Increase in the purchase of tea supplies and other small items.
Ministerial Support: Fuel for both the Minister and Associate Minister’s vehicles and for services, repairs and maintenance.
Overtime: Overtime to cater for vessels that enter the wharf.
Audit Fees: These fees also included assistance with other accounting matters.
Subscriptions: Subscriptions paid for membership of the Cruise Liners International Association (CLIA)
Telephone, mobile, fax & Internet: Roaming fees during General Manager’s travels, as well as the increase in cost of internet plans.
Electricity: Much of it due to reefer plugging and shipping agents’ offices on the wharf.
Water: SPA is looking at shipping agents with offices on the wharf that have no water sub-meter, as this could be one of the reasons for higher water bills.
Loss on disposal of fixed assets: A direct result of the transfer of the two domestic wharves (Salelologa & Mulifanua) to Samoa Shipping Corporation, together with other related fixed assets. SPA has not received any compensation to date.
46. There was no IT Strategic Plan to complement the Ministry’s Corporate Plan and provide a blueprint for the ongoing implementation of IT infrastructure and systems.
47. Issues relating to back-up and recovery procedures:
No backup and recovery procedures.
Back up maintained is not periodically tested for readability and verified for accuracy
48. There was no documented IT Disaster Recovery Plan for data recovery in the event of a major disaster.
49. A review of the Authority’s security setting pertaining to accounts and audit policies found:
Weaknesses in password settings
No auditing enabled
No automatic account logout
Users were not forced to log off when log on hours expire 93
50. There were around 30-33 active users on SPA’s network with passwords set such that they do not expire, placing the network at risk.