“There was uncertainty about the ability of the Corporation to continue as a going concern because there was no documentary evidence that the Government of Samoa will continue to support the Corporation after 30 June 2010.” – Fuimaono C.G. Afele.
The Samoa Trust Estate Corporation’s (S.T.E.C.) were “very unstable” with its accountants, Lesa ma Penn, delivering a qualified opinion, the Chief Auditor reports.
According to Investopedia, a qualified audit opinion suggests that the information provided was limited in scope, and/or the company has not maintained Generally Accepted Accounting Principals (G.A.A.P).
“Contrary to its connotation, a qualified opinion is not a good thing,” the site reports.
“Auditors that deem audits as qualified opinions are advising whomever is reading the document that the information within the audit is not complete or that the accounting methods used by the company do not follow G.A.A.P.”
Returning to the Controller and Chief Auditor’s 2011 report to the Legislative Assembly Fuimaono C G Afele reports this fiscal situation the Corporation found themselves in was due to an increase in the working capital deficit at the end of the 2010 financial year.
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“There was uncertainty about the ability of the Corporation to continue as a going concern,” the Auditor reports.
“Because there was no documentary evidence that the Government of Samoa will continue to support the Corporation after 30 June 2010.”
Despite this, the Corporation’s financial performance improved slightly, the Auditor says.
“With a three per cent reduction in net loss from $928,591 in the prior year to $899,650 in the current financial year,” according to the report.
S.T.E.C. responded to Fuimaono’s concerns saying that in the past, the Corporation faced cash flow problems due to the lack of funds to start new economic activities. “The Corporation was operating on bank overdraft towards the end of every financial year,” the Corporation responded.
“At present, the Corporation implements cash cropping and long term crops to improve its cash flow as well as collecting rents of land leases and seeking projects to finance agricultural and renewable projects to improve its cash flow positions.”
S.T.E.C. also said that there were documents including the Samoa Development Strategy (S.D.S.) plan, Agriculture Sector plans and other plans that Samoa committed to implement in order to improve the level of social economic development of the country.
“S.T.E.C., in its corporate planning and development strategy 2011 to 2016, highlights key priorities for S.T.E.C. to work and implement to improve its financial position and perform sustainably,” its response reads.
The report is published in full below:
Samoa Trust Estate Corporation
Financial year:
30 June 2010
Audit opinion:
Qualified
Auditor: Lesa ma Penn
Summary of audit findings:
1. The Corporation’s financial performance improved slightly with a 3% reduction in net loss from $928,591 in the prior year to $899,650 in the current financial year.
2. The Corporation’s financial position was very unstable with an increase in the working capital deficit.
3. There was uncertainty about the ability of the Corporation to continue as a going concern because there was no documentary evidence that the Government of Samoa will continue to support the Corporation after 30 June 2010.
4. There was no Human Resource manual and Financial and Accounting manual. These manuals would specify the working conditions and entitlements for all employees as well as guidelines for financial and accounting procedures.
5. The Corporation responded as follows:
• One of the Corporation objectives is to control operating expenses and improve efficiency and productivity per unit of land, labour and capital and hence increases revenues from agricultural activities, property investments including land leases and renewable energies;
• In the past, the Corporation faced cash flow problems due to the lack of funds to start new economic activities. The Corporation was operating on bank overdraft towards the end of every financial year. At present, the Corporation implements cash cropping and long term crops to improve its cash flow as well as collecting rents of land leases and seeking projects to finance agricultural and renewable projects to improve its cash flow positions;
• There were documents including the Samoa Development Strategy (SDS) plan, Agriculture Sector plans and other plans that Samoa committed to implement in order to improve the level of social economic development of the country. STEC in its corporate planning and development strategy 2011 to 2016 highlights key priorities for STEC to work and implement to improve its financial position and perform sustainably;
• STEC management is now working to finalise the Human Resource manual and Financial and Accounting manual for the endorsement of the Board of Directors and the Minister of STEC.
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