BY BEN BILUA
Gizo
THE 2021/2022 Audit Report of the Isabel Provincial Government (IPG) has revealed serious concerns over financial mismanagement and weak administrative practices, raising risks of fraud and misuse of public funds.
The report outlines multiple irregularities across key areas, including revenue collection, payments, and financial controls.
Among the major findings were unreconciled business registers, incomplete documentation, and failure to verify key sources of provincial income such as logging royalties and timber rights grants.
Auditors noted discrepancies between recorded cash receipts and uncollected business license revenues.
The financial statements appear to have understated cash receipts by $450 and receivable balances by $163,560, highlighting weaknesses in financial reporting and reconciliation processes.
The report also raised concerns over the province’s handling of logging revenues.
Despite being entitled to 17 percent of total earnings from logging exports under contractual agreements, IPG lacks a verification mechanism to confirm the accuracy of payments received from contractors.
Similarly, timber rights grants were not supported by sufficient documentation, making it difficult to determine whether payments were correctly calculated.
“These gaps create a significant risk of underreporting revenue and potential fraud,” the report stated.
Further issues were identified in the management of licensing records, with auditors unable to sight duplicate copies of license certificates during the audit process.
This raise concerns over the completeness and traceability of revenue collection.
On the expenditure side, the audit found that payments related to timber rights hearings did not comply with rates set by the Parliamentary Entitlements Commission (PEC).
Instead, allowances were paid based on rates approved by the Provincial Executive, which falls outside its legal authority.
This constitutes non-compliance with established regulations governing provincial finances.
The report also highlighted breaches of the Provincial Financial Management Ordinance (FMO).
In two out of seven sampled capital payments valued at $14,800 and $138,000, auditors did not find evidence of contract agreements or proper tender processes.
This violates procurement rules requiring competitive bidding and oversight by the provincial tender board.
Additionally, supporting documents for imprest retirements totalling $88,000 were not provided, further undermining accountability in public spending.
The audit noted the absence of an internal audit function and a fraud policy within the provincial administration, further compounding risks of financial mismanagement.
Overall, the findings point to systemic weaknesses in governance, record-keeping, and compliance with financial regulations within the Isabel Provincial Government.
The report warns that unless these issues are addressed, the province remains vulnerable to fraud, revenue leakages, and misuse of public funds.
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