BY GEORGINA KEKEA
IN the Provincial Government’s and Honiara City Council Report to Parliament 2018, OAG reported that HCC did not comply with legislative, HCC Act 1999.
The HCC Act 1999 required that audited financial statements were to be submitted to the Auditor-General no later than three months after the end of the financial year. OAG however received the signed statements for the years 2011 to 2014 on 6th February 2017.
When received, the Auditor-General was also unable to confirm or verify by alternative means the balances and disclosures with respect to the financial statements submitted by HCC.
OAG says the disclaimer audit opinion made in the report is attributed to the continued failure in the system of recording and controlling accounting transactions and insufficient audit evidence to support transactions and accounts by HCC.
OAG says the system failures are most likely that most HCC officers had not had formal training in using the MYOB accounting system. This includes officers who used the MYOB system routinely and were responsible for entering data into the system.
The OAG also sighted significant errors in the 2011/2013 actual revenue figures reflected in the 2013/2014 Approved Budget Estimates.
OAG says HCC lacks the knowledge to produce financial statements thus why they fail to produce financial statements for 2011 – 2014. The financial statements must comply with international accounting standards.
“HCC has produced its previous financial statements in accordance with cash basis IPSAS, rather than preparing financial statements that include a Balance Sheet (accrual) as per HCC Act (1999)”, the report from OAG says.
Also other setbacks for HCC was the restrictions on access to MYOB system. This has limited the ability of HCC officers to obtain or provide financial information in the absence of the Deputy Treasurer.
“The IT function (IT officer) was outsourced by HCC. The IT officer has overall control of domain and application passwords, and there was little or no input from Senior HCC Officers reducing their ability to manage the HCC IT environment. HCC has no logbook or register to record IT issues, despite the regular difficulties in using the system and down time resulting from power and server problems noted by several members of HCC”, OAG report says.
The report says in order to correct MYOB errors, instead of posting journal adjustments or reversing accounting entries the Deputy Treasurer deleted the original posting and inputted a replacement entry.
“Basic Rates and Business License Officers are required to reconcile their data with the main system to ensure its accuracy. However this was not completed for 2013 until June 2014, and no reconciliations have been carried out for 2014 at the time of audit. There was no external backup of HCC accounting data offsite, such as hard copies of the general ledger or on external hard drives”.
Among other issues raised by the OAG was the lack of segregations of duties over the review of data entry in the main MYOB system.
“Also the same officer was responsible for checking reconciliations on the MYOB system, journal entry, system access, and report production. The main HCC bank account was not reconciled on a timely basis, with delays of over eight months from the date of the bank statement to the date on which reconciliation was performed. Bank reconciliations of the HCC main bank account were not signed and dated as prepared”.
In addition, the report stated that reconciliations were not signed off as reviewed by a second officer.
OAG says HCC failed to investigate a large number of significant reconciling items on the bank reconciliation, including some entries that appeared to have been miss-posted to the reconciliation.
With the disclaimer audit opinion, OAG called on the HCC management take proactive actions in the management of finances and resources of the Council so that citizens of HCC are provided with quality, efficient and equitable services.