And millions of kina has to be reimbursed to operating accounts, money used illegally on several occasions, events and for individuals, the report says.

The audit report was undertaken for the years 2005 and 2006 and completed two months ago.

The report details illegal account transactions, funds not acquitted, and the budgetary control not done according to the Finance Management Act.

The National Government confirmed yesterday they received a copy of the report and have requested specific detailed information on 11 financial subject matters not carried out under the respective Appropriation Act.

The ABG and its administration confirmed this report but could not comment whether it was plain criminal activity or some error, however, said these years under review had been the trial years for the newly formed government.

In the report it states: "An unsigned and unapproved copy of the budget book detailing the estimates of revenue and expenditure provided for the ABG revealed original budget appropriation of PGK98,387,400 [US$37.3 million].

"Review of the expenditure and commitment ledgers revealed an amount of original appropriation of PGK73,121,100 [US$27.7 million], a difference of PGK25,276,300 [US$9.6 million] on the donor funding which are not posted to the commitment and expenditure ledgers.

"Further, an unsigned and unapproved revised budget detailing the estimates of PGK93,397,000 and additional expenditure of K13,000,000. Without the approved signed budget book detailing the original and revised estimates of revenue and expenditure, the office was unable to confirm the actual original and revised appropriation received and expended and whether the funds were expended in accordance with the Appropriation Act as required during the year ending 2006.

The office also noted estimated aid donor funding totalling PGK25,276,300 was not reflected in the provincial government accounting system (PGAS).

No internal audit has been set up since the establishment of the ABG and without this ABG faces the risk of malpractices, illegal, improper and fraudulent payments not being discovered during the year under review. For assets management PGK2.5 million was spent on assets but no proper records have been kept of what was left and what was not there.

Grants and subsidies totalling PGK4 million, including other grants to churches, schools and individuals, were not recorded properly.

All contracts awarded during the period under review were deemed to be null and void. The audit found there were seven members of the tenders board but only two were legitimate members.

Maintenance of non-bank trust accounts have not been carried out accordingly because three of these accounts were overdrawn.

The audit also recommended the ABG to immediately reimburse more than K3 million for specifics. Of this K860,000 was paid to Bougainville People’s Congress, K172,007 for Martin Miriori and Moses Havini for their repatriation as they were not employees of the ABG when the operation was carried out (the report said), K1.6 million for staff houses because money was drawn from a wrong account and K282,134 for Mr Kabui’s medical expenses in Port Moresby and Australia because the audit was unable to validate, verify and ascertain the amount spent for that matter. ABG’s Invincible Mining deal was also described as illegitimate because so many transactions were done illegally, the report alleged.

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