Auditing Report: Analysis of Economic Service Sector in Fiji - AF304

This report provides an analysis of the Economic Service Sector of Fiji, focusing on key areas identified in a previous audit conducted by the Auditor-General. The report begins with an executive summary that outlines the objective of the analysis: to identify critical audit areas, evaluate the financial governance, and assess the quality and timeliness of financial statements, including the year-end closing process. The introduction provides context, emphasizing the importance of the audit in forming opinions on financial statements. The discussion section gives a brief overview of the Ministry of Economy, its responsibilities, and its focus on industry, trade, tourism, agriculture, and sugar. It then details the findings of the previous audit, highlighting concerns about the quality and timeliness of financial statements, weaknesses in internal controls, and other significant matters such as anomalies in procurement and grant monitoring. The report also emphasizes the importance of asking specific questions before accepting an audit, such as inquiries about illegal activities, legal proceedings, internal controls, and auditor independence. The conclusion summarizes the firm's competence to conduct the audit based on eligibility and adherence to accounting standards and International Standards on Auditing (ISAs). The report is supplemented by references to relevant sources and an appendix containing the Auditor General's report.

Running head: AUDITING
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Name of the Student
Name of the University
Author Note

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Executive Summary:
The objective of the report is to understand the significant audit areas of Economic Service
Sector of Fiji and the presentation of the audit review of the previous audit. The critical areas
selected are “quality and timeliness of financial statement” including year-end closing process,
assessment of financial governance, and other significant matter. The report also highlights the
questions to be asked before accepting the audit.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Conclusion.......................................................................................................................................5
References........................................................................................................................................6
Appendix..........................................................................................................................................7

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Introduction
The audit is conducted to give an opinion on the financial statements of an organization/
department. This report aims to present an overview of Economic Service Sector of Fiji and the
identification of three critical areas in the previous audit. Report of Auditor General of Fiji (31 Jul
2018) is obtained to conduct the analysis for performing the next audit. This report focuses on
assessing the audit firm’s competence in conducting the audit of the Government sector
department.
Discussion
Brief Overview of the department:
The “Ministry of Economy” is responsible and accountable for implementation of
efficient “financial resource management” practice and for encouraging rigorous management of
national economy. The principal role is to upkeep the Government for effective and efficient
administration of national economy that is consistent with achievement of sustainable
development of economy (Manueli 2019). The economic service sector of Fiji is primarily
focused and based on industry trade and tourism, agriculture and sugar.
Findings on the previous audit:
The Auditor-General has conducted an audit of the Ministry of Economy of Fiji for the
year 2018. They have expressed an unqualified opinion for all the three sectors – Ministry of
Agriculture, Ministry of Industry, Trade, and Tourism and Ministry of Sugar Industry. The
Auditor has obtained appropriate and sufficient audit evidence to form an opinion and has
conducted the audit as per “International Standards on Auditing” ( IFAC 2020. IAASB). The
three highlighted areas of concern for the audit is - “quality and timeliness of financial

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statement” including year-end closing process, assessment of financial governance, and other
significant matter
Quality and timeliness and Year-End Closing Process
The financial statements are generally submitted very late by the departments for audit
purposes, but the quality of the financial statements has shown improvement. The Auditor-
General assesses the timeliness, year-end closing process, and quality of financial statements.
Ministry of Economy did not meet the timeliness for submitting the financial statements, and
quality was not maintained by the Ministry of Agriculture.
Assessment of Internal Control
It involves assessing the efficiency of internal control by designing and implementing
controls to assure that it is appropriately designed to detect, prevent, and correct material
misstatements. It is important since it involves utilization of public trust funds and central
government funds (Finau and Tavaiqia 2017). There are weak internal controls in the Ministry of
Agriculture over inventory management and payroll expenses.
There are no such weaknesses in internal control; the internal control system is efficient
and effective in Ministry of Industry, Trade, and Tourism. The management signed statements on
time and comments were provided timely.
Deficiencies exist in internal control but are not significant and hence unqualified opinion
was issued. The deficiency exists in the control environment and risk assessment. (Pan and Song
2017)

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Other Significant Matter
In the Ministry of Agriculture – unqualified opinion was issued, but there are anomalies
in the procurement processes of goods and relevant services. There are anomalies in the payment
system for “Land preparation Facility Projects.” If these are not treated adequately, it will result
in losses and material misstatements. (Parliament.gov.fj 2020)
In the Ministry of Sugar, there is an issue in monitoring the Grants. The process of
monitoring the Grant is inefficient. This is due to the lack of availability of staff to conduct the
monitoring process. There were anomalies in Cane Harvesting Program as there were no written
agreement and Ministry did not have any clear instructions over ownership and storage
(Parliament.gov.fj 2020). Assessing other key matter is significant while conducting audit
(Ratzinger-Sakel and Theis 2018)
Questions for Auditor General and Department:
Before accepting the audit, the auditor must ask a few questions from the Auditor general
and from the department personnel to assess whether or not to take the audit. The questions will
be such –
 Whether the department is involved in any illegal activities such as money laundering for
evaluating their integrity. Whether they are party to any legal proceedings.
 Whether proper internal controls have been applied within the Ministry department to
achieve the operational efficiency and objectives adequately. Whether existing internal
controls are sufficient to detect the ‘risk of material misstatement’ because of the fraud
and error.

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 Whether they understand their responsibility for the preparation of the financial
statements in compliance with the applicable framework (Finau and Tavaiqia 2017).
 Whether they will impose any restrictions on the scope of the audit and whether the
auditors independence will be affected.
The Auditor General’s right to investigate, right to follow-up are to be undertaken to decide
upon taking of the audit (Lapsley and Miller 2019). The firm is competent to conduct the audit
since there are no limitations imposed on the scope of the audit, and auditor’s independence will
be maintained.
Conclusion
However, it is to be concluded that the firm is competent to conduct the audit of since
they are eligible to conduct the government sector’s audit and are within the prescribed limits as
per the Act. The audit firm is eligible as the Ministry gives no such direction of not appointing a
particular firm or appointing any other firm. The Financial Statements for the last audit period
were prepared as per the prescribed accounting standards, and the audit was conducted as per the
ISAs.

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References
Finau, G. and Tavaiqia, L., 2017. Public accountability, public accounts committee and
constitutional design: a case study of Fiji. Journal of South Pacific Law, 2017, pp.55-72.
IFAC, 2020. IAASB. [online] IFAC. Available at: <https://www.iaasb.org/> [Accessed 31 March
2020].
Manueli, P., 2019. Fiji: national economic polices.
Pan, T. and Song, Y., 2017, October. Research on internal control audit, internal control
deficiency and audit fees. In Second International Conference On Economic and Business
Management (FEBM 2017). Atlantis Press.
Parliament.gov.fj, 2020. [online] Parliament.gov.fj. Available at :
http://www.parliament.gov.fj/wp-content/uploads/2020/01/PP-No.-147-of-2019-Economic-
Services-Sector-2018.pdf [Accessed 31 March 2020].
Ratzinger-Sakel, N.V. and Theis, J., 2018. Does considering key audit matters affect auditor
judgment performance?. Available at SSRN 3003318.

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Appendix
http://www.parliament.gov.fj/wp-content/uploads/2020/01/PP-No.-147-of-2019-Economic-
Services-Sector-2018.pdf [Accessed 31 March 2020].