Parliament approves govt’s response to O.P.C.

The long-awaited government response to the report by the Officers of Parliament Committee (O.P.C) has been tabled and passed by Parliament.

The approval was given in the House on Tuesday night when Parliament worked into the night to complete its list of tasks on the Order Paper for January’s sitting.

A key item on the Order Paper was the O.P.C Report.

In 2013, the O.P.C, Chaired by Muagututagata Peter Ah Him was tasked to investigate a report to Parliament by Controller and Chief Auditor, Fuimaono Camillo Afele for 2010 and 2011. In his report, Fuimaono highlighted a number of deficiencies, corrupt practices and mismanagement in the running of some government bodies.

The O.P.C’s investigation confirmed a number of allegations raised by Fuimaono. In its report tabled in Parliament in April last year, it also recommended that legal action be taken against the public servants implicated.

Under the law, the government had 90 days to respond.

This did not happen. Questioned repeatedly about why it had failed to respond on time, Prime Minister Tuilaepa Sa’ilele Malielegaoi said the government officials were busy with the Small Island Developing States conference hosted by Samoa last year.

Last week, a copy of the government’s response was obtained by the Samoa Observer from the Legislative Assembly.

Signed by Prime Minister Tuilaepa Sa’ilele Malielegaoi, the response is dated 12 October 2014.

The gist of the government’s response dismisses the O.P.C recommendations.

While it acknowledges the issues raised by both the Chief Auditor and O.P.C, Prime Minister Tuilaepa said that remedial actions have been taken and the lessons from the reports have been incorporated by the government to improve its performance, heading into the future.

Today, we are re-publishing the government’s response in full for the information of our readers.

This response was obtained by the Samoa Observer last week and initially published last Thursday:

12 October 2014 Hon Speaker Legislative Assembly MULINU’U

REPORT OF THE OFFICERS or PARLIAMENT P.P.2013/2014 No.12 REPORTS or THE CONTROLLER AND CHIEF AUDITOR TO THE LEGISLATIVE ASSEMBLY FOR PERIODS ENDED 30th JUNE 2010 and 30th JUNE 2011

As required by the Officers of Parliament Committee (‘OPC’), provided below is the Government’s response to the issues raised as well as remedial actions that have already been put in place in line with the OPC recommendations. At the outset, I acknowledge the in-depth OPC review of the Controller and Chief Auditor’s (‘CCA’) report for the financial years ending 30th June 2010 and 30th June 2011. The comments have been noted and frameworks for improved performance will be put in place. Government in maintaining its core values of accountability and transparency provides responses to the recommendations in the OPC’s report. It should be noted that whilst the report of the CCA is on the 2010 and 2011 Financial years, the OPC also did an extensive review of performance of some Government Ministries and Public Bodies in financial years 2007 and 2008.

1. Review of Finance System to include statement of Cashflow

The Public Finance Reform program in its early stages focused heavily on the reporting of public accounts. Recently, the Chart of Accounts has been reviewed to include the Statement of Cashflow and the Public Accounts for the year ending 30“ June 2014 will include a Statement of CashFlow as required by the International Public Sector Administration Standards as well as demonstrating full accountability of Government.

2. Strengthening Internal Control within Government Ministries and Public Bodies No doubt the most common issue raised in the OPC report in the Ministries and Corporations concerned relates to internal controls and the need for them to be reviewed for further improvement.

We concur with the need for proper internal control systems to be in place to ensure effective financial management and overall efficiency in the management of Government assets.

The Government through the Ministry of Finance has recently established an Internal Audit Forum which will be tasked with identifying internal control issues in Ministries and SOE’s and to come up with strategies for remedial actions. This Forum will involve all internal auditors in Ministries and SOE’s and is supported through technical assistance under the Pubic Finance Management Reform Program where it develops an implementation plan for the Internal Audit Strategic Plan that will be administered by the Ministry of Finance.

The Ministry of Finance has had discussions with Ministries and Corporations included in the OPC report and confirmed that the internal control issues raised in the report have not been addressed for some of the Ministries and SOE’s.

There is a call to strengthen the role of the Internal Audit Forum of Government so that there is consistency in monitoring of internal control issues and also to assist Ministries and Corporations that have yet to establish Internal Auditor functions. For the information of Parliament, under the same Public Finance Management reform plan, the Ministry of Finance through its Internal Audit and Investigation Division will support Ministries and Corporations that do not have Internal Auditors in house.

The current framework will be reviewed in the future to determine whether all Ministries and Corporations should have internal audit functions. This work will have to balance the compliance reporting needs with the associated costs of having individual Internal Auditors in house.

3. Response on specific Ministries included in the report
The OPC report also highlighted issues which were raised during meetings with Government Ministries and Corporations relating to the years ending 30th June 2007, 2008 and 2009. We note that a number of Ministries and SOE’s have provided confirmations of remedial actions to be put in place for further improvement going forward. This section will provide clarifications on the issues raised which government agencies did not respond to at the time of the meetings and for which Government is responsible to provide an update of where the implementation of recommendations are at to date.

3.1 Ministry of Finance -

Public Accounts 2007-2008

The official response to the Committee’s report for the Public Accounts 2007 and 2008 will be tabled separately as this reflects the responses on specific issues raised as well clarifications provided by the Ministry of Finance on key areas such as actual results compared to budget estimates, the relevance of Output budgeting and allocation of resources, as well as the controls put in place to monitor the Grant and Loan financed projects.

3.2 Ministry of Police & Prisons 2007- 2008
The registry of dealers of Arms and ammunitions has been updated. The Ministry has developed processes and procedures for application for license by dealers and the registration of dealers is done on an annual basis. There is also a documented process for application for license of ammunition.

The Ministry in ensuring full implementation of the Fire and Ammunition Act 2014 is now reviewing the license to own a firearm. The license is specifically referenced to the use of the firearm unlike the motor vehicle (license for both vehicle and the driver is mandatory) there is no license relating to the owner of the firearm(s) - an area the Ministry will further review for possible amendments to the legislation in the future. The Asset registry is now updated and internal processes have been reviewed for timely reconciliations for payments. Moreover, personal files are updated following the recruitment of the Records Officer who manages and ensure all records and personal files are updated.

3.3 Office of the Prime Minister 2007-2008 Issues were raised with the management of passports that there is no proper record of passport movements. To date, the internal control measures put in place since 2012 is effectively implemented. Separate systems for passport, permits and citizenship are in place, although they are all stand alone systems from the Finance One, it provides all the reconciliation and can also serve as a check and balance mechanism with the cash collected on a daily basis. Measures are in place to address damaged passports and the staff has been trained to ensure enforcement of the process to minimize damaged passports in future.

3.4 Ministry of Health 2007-2008
The decision by the Tenders Board to demolish the incomplete Nurses Residence in 2009 was based on an independent report from the supervisor of the project. The structural fault of the building was the key reason for its demolition.
With hindsight it was the most appropriate decision as it posed a greater risk and possibly higher financial liability for government if the building was allowed to continue. It should be noted that the construction of the new nurse’s residence has now been completed and nursing students from the rural areas as well as officials travelling from Savai’i for trainings at Moto’otua Hospital are being accommodated there.

In relation to the catering expenses, the Ministry has provided clarifications to the Committee which confirms that the catering output was within approved allocation both in the Government’s Budget Estimates and provisions allowed by the donors who are working closely in the Health sector.

It should also be noted that government budget is based on output budgeting and it is within the Chief Executive Officer’s discretion to reallocate expenditure items within the Output should the need arises as long as the total Output provision is maintained within the approved estimates.

3.5 Ministry of Justice and Courts Administration 2007-2008
For MJCA, there are internal controls that have been put in place to ensure the receipting of adoption and divorce cases are adequate and that reconciliations with manual registration are to be completed before the end of each day. With regards to warranting of fines, the forthwith payment have been an effective measure to date.
Recovery plans are documented by the Ministry and although it takes time, the constant follow up and working closely with the community and village councils have improved. However, the Ministry still has a problem relating to long ten arrears which is difficult to be recovered. A paper to Cabinet is being prepared to consider these long term arrears and how they may be tackled.

3.6 Ministry for Revenue 2007-2008
The blacklist of dishonoured cheques is provided by the Ministry of Finance on a monthly basis to all Government Ministries and this helps the government cashiers. Personal cheques are no longer accepted. The Ministry is working on updating the list of dishonoured cheques for possible write off before the end of this financial year.

3.7 Ministry of Works, Transport and Infrastructure 2007-2008
As at 1st July 2013, the management of Government housing has been transferred to the Samoa Housing Corporation. The Corporation is now working in reviewing the rental fees as well as major repairs and maintenance for these houses. The Ministry is currently working to clear all the outstanding rentals to date.

3.8 Ministry of Women, Community and Social Development
The Government has made arrangements for inter-departmental transactions under the supervision of the Ministry of Finance to ensure Printing arrears are minimised and that costs of services rendered are paid on time. This not only involve Government Ministries but also with Corporations such as Electric Power Corporation and Samoa Water Authority. The Ministry of Women has confirmed to the OPC that the long outstanding debts have been cleared and that measures are in place to ensure the current bills are paid within the financial year it relates.

3.9 Ministry of Education, Sports & Culture 2007-2008
The trust funds have ceased operations following the closure of the hostels for Samoa College, Avele College and Vaipouli College. With the existence of Committees for every school, raising funds for school uniforms, maintenance of facilities and cleaning services have been the sole responsibilities of these Committees while the provision of stationeries are still under the Ministry’s administration.

4. AUDIT OF PUBLIC BODIES
Whilst the report include twelve (12) Public Bodies, most of these Public Bodies have provided clarifications to the OPC at their previous consultations and hence Government would not repeat itself but will focus on clarifying the issues raised in some of the Public Bodies below. For the information of parliament, recent SOE reforms undertook by the Ministry of Finance saw a substantial change in the Board of Directors where all Ministers have been removed from the Boards. All the 25 Public Bodies Boards have appointed directors from the private sector. This was an initiative of Government to strengthen the performance of its Government businesses for improved service delivery and a good return on Government investments. The monitoring of Public Bodies will become the sole responsibility of the Minister of Public Enterprises once the Public Bodies Amendment Bill 2014 comes into effect. The Board of Directors are now obligated to the Shareholding Ministers on the performance of SOEs and the new Ministry will ensure effective frameworks are in place for a smooth transition.

4.1 Electric Power Corporation 2008-2009; 2009-2010
The Corporation has developed a flowchart of the process to be followed as a response to the audit findings. The change in the financial system (Daffron) has led to capacity development workshops for key staff involved in the financial reporting process.

The various modules of the system have been gradually integrated into the General Ledger with the Transportation module in progress.

The Asset module update has also been completed after the Corporation undertook an Asset Valuation exercise in the beginning of 2014.

Moreover, the Cashflow statement is available online effective in the beginning of the current financial year. There is an organisational review currently underway for the Corporation, and this is also done in parallel with the review of its financial systems processes and procedures.

4.2 Samoa Land Corporation 2008-2009
The Government note the recommendations provided by the OPC. Weaknesses in internal control systems and the incompetency of senior staff have resulted in the poor performance of the Corporation. The Government has put in place remedial actions to ensure these weaknesses and any potential risk as a result would not happen again in the future. The budgeted revenue for the year under review was not realised due to investments that projected returns but did not materialise within the financial year. However, revenue was realised in the later years.

This includes the sale of the Lighthouse at Tauese and the exchange of lands with the Land Board (MNRE) at Sogi where the TATTE Building is now located.

The process for lease to own of the Corporations’ lands at Vailele, Letogo and the Vaitele Industrial Zone was not completed during the year under review and thus the revenue forecasted were not actually generated at that time but in the later years.

The overspending stated in the OPC report is incorrect as it was not actual cash spent by the Corporation but a book entry which relates to the depreciation of its non current assets. The other underestimated spending was related to maintenance of the Golf Course and payment for electricity however other operating expenses were within budget levels. In relation to the issue of middleman for identified projects, the main issue identified in the OPC report was the non compliance of SLC with Government Tender requirements.

There is however no evidence to suggest that the Minister or anyone else in SLC obtained any monetary or other benefit by direct appointment of the middle man company. On land benefits, there is a policy, approved by the Board which allows SLC employees to buy land from SLC at 60% of the market value. This was the verification provided relating to the purchase of the General Manager’s land highlighted in the OPC report.

The ministerial expenses also included allocations for the Advisory Committees for the Salelologa Township and Land Sub Committees which assist SLC with collection of land rental and fees. The outstanding leases are mainly to the agricultural business communities. With regards to the landscaping contract for the SLC headquarters, there’s evidence that shows that the three quotations system was followed by the Corporation where separate bidders were awarded contracts for the Golf Course and the Salelologa market.

We concur with the Committee’s recommendations to strengthen the capacity not only of SLC but all Government Ministries and Corporations on government tender and procurement guidelines. Moreover, clear policies and procedures relating to Human Resources, Procurement, Governance and Financial Management should be effectively in place to guide the employees with performance of their duties and responsibilities.

The reporting requirements in both the Public Finance Management Act 2001 and the Public Bodies (Performance & Accountability) Act 2001 are very clear and the Government through the Ministry of Finance will ensure that these provisions are effectively adhered to.

The Government acknowledges the issues raised by the OPC in its report and is working to the best of its ability to ensure effective measures are in place and that implementation is monitored closely going forward.

Ma le fa’aaloalo tele,

Tuilaepa Lupesoliai Fatialofa Sailele Malielegaoi
PRIME MINISTER