Auditor “raises doubts” on STEC’s financial stability over loss in the amount of $7.7 million


Samoa’s Controller and Auditor General has raised questions over the Samoa Trust Estate Corporation financial stability after the accumulated loss of $7 million tala; which the Auditor claims “raises doubts” on the Corporation’s “continuation as a going concern”.

This was highlighted by the Auditor the STEC’s Financial Year 2020 Annual Report.

This report was endorsed last year April, but it was submitted recently to Parliament when the FAST Administration took over under La’auli Leautea Schmidt as new Minister of STEC.

The Annual Report obtained by Radio Polynesia says the STEC’s continuation is a going concern dependent on the ability of the Board and Management to achieve the Corporations planned activities for the coming years.

“The results for the year end 30 June, 2020 showed a trading loss of $2 million and added to the profits and loss appropriation accounts of $5.62 million tala the accumulated loss amounts to $7.7 million tala as of 20 June, 2020.

“The financial statements show a working capital deficit of $1.2 million.

“These factors raise doubts that the Corporation will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of the business and at amounts stated in the financial statements.”

Furthermore the auditor advised the Corporation to engage into donor funded projects to assist in resolving the going concern issue of STEC but it is subject to management plans.

According to the Auditor report there are also receipts and payments for the New Zealand STEC Hub submitted to auditors for verification were incomplete and these could not be reconciled against the bank’s balance and also cash on hand could not be confirmed.

The Auditor report also outlined that in 2018 the Government took over the commitment to pay the Corporations loan to UTOS and that in 2019 a loan agreement was executed with a term of five years at an interest rate of 8.5 percent per annum. As of 20 June $1.15 million has been contributed to loan payments.

Despite the concerns by the Auditor, Chairman of the STEC, Muagututi’a Dr Faletoi Suavi remains optimistic about the process so far given the financial restraint and prevailing constraints confronting agricultural development especially market availability.

He said: quote: “Whilst work is progressing slower than expected, I am nevertheless confident that the Corporation is moving in the right direction in terms of its planned investments and sources of revenue to contribute to the development of our nation.”