FIJI REVENUE & CUSTOMS AUTHORITY

2015 ANNUAL REPORT

I MANAGEMENT REPORT

01 Board of Directors 4

02 FRCA Management Team 5

03 Chief Executive Officer's Report 6

II CRITICAL SUCCESS FACTORS 2015

01 Financial 7

02 Customer 10

03 Environment & Community 11

04 Internal Process 12

05 Employee Satisfaction 13

06 Innovation and Learning 14

III FINANCIAL STATEMENTS 2015

01 Members Report 15

02 Statement by the Members 16

03 Independent Auditor's Report 17

04 Statement of Financial Position 18

05 Statement of Financial Performance 19

06 Statement of Changes in Equity 20

07 Statement of Cash Flows 20

08 Notes to and Forming Part of the Financial Statements 21

About FRCA

Our Vision (Where we want to be):

A world class revenue authority delivering excellence in revenue collection, border protection, trade and travel facilitation.

Our Mission (Our purpose and role):

Helping Fiji Grow as a leading contributor and funder of sustainable economic, security and social initiatives.

VALUES

One Organisation:

We will all work as one toward the goals of FRCA displaying teamwork and respect for each other.

Leadership:

We will set direction and create a customer orientation, clear and visible values and high expectations. The leaders will ensure the creation of strategies, systems, and methods of achieving excellence and building knowledge and capabilities.

Results Focus:

Our performance measurements will focus on key results. Results should be guided by and balanced by the interest of all stakeholders that includes Government, taxpayers and intermediaries. The use of a balanced set of performance measures offers an effective means to monitor actual performance, and to marshal support for improving results.

Continuous Improvement and Learning:

Achieving the highest level of performance requires a well-executed approach to continuous learning and improvement. The term "continuous learning" means incremental and breakthrough improvement. The term" learning" refers to adaptation to change, leading to new goals and or/or approaches.

Design Quality and Prevention:

We will emphasize design quality - problems and waste prevention at the design stage are less costly than correcting problems that happen "downstream."

Partnership and engagement:

We will build internal and external partnerships to better accomplish our goals.

Valuing Employees:

Our success depends increasingly on the knowledge, skills and motivation of our workforce. We will invest in the development of our workforce through education, training, welfare and giving opportunities for their continual growth. In return FRCA has the right to expect high levels of productivity and integrity from its employees

CHIEF EXECUTIVE OFFICER'S REPORT

Mr. Jitoko Tikolevu

It is my pleasure to present the 2015 results of Fiji Revenue and Customs Authority. The Authority delivered its output under the guidance of a dedicated Board of Directors and concluded yet another year of customer-centric service to the nation hence strengthening our position as the premier revenue collection, border protection and trade facilitation agency in the region.

Our achievements reflect the commitment of many people working together with a common vision and goal and FRCA has once again proven its ability to transform challenges into opportunities, achieving growth under challenging economic conditions. We are also of the view that stakeholders play a very critical and important role in the achievement of our goals, hence we value them and continuously review our business processes to save time and cut costs to foster voluntary compliance and make tax paying obligation an easy one.

Financial Performance

Economic growth moderated to 4.0% in 2015 from 5.3% a year earlier as agricultural activity in sugar, fisheries, and timber slowed, due largely to the effects of a strong El Nio weather system affecting the country over most of the year (Source: ADB)

Despite this, FRCA achieved a total revenue collection of $2.354b, yet another record achievement. This collection was below the forecast by 2.2% but exceeded the 2014 collection by 11.3%.

The back-to-back significant levels of revenue growth of 7.1% in 2013, 13.7% in 2014 and 11.3% in 2015 is a result of strong economic performance led by continued pro-growth and expansionary government policies; reform of the tax system into a low rate and broad based regime; improving tax compliance; and effective debt management strategies. Debt levels increased only slightly over the past year.

In addition, Government expenditure and the provision of tax incentives and concessions translated to increased investment activity contributing to positive GDP growth and tax revenue collection. The total value of incentives and concessions in 2015 was $653.3m.

The authority continues to improve its processes and systems to help serve our customers better and bring about efficiency in our operations. Some highlights include:

The ASYCUDA World system was rolled out in 2015. Its immediate objectives include increasing efficiency in the customs clearance process, monitor and enhance revenue collection, to develop and install a state-of-the-art computerized system for the recording and monitoring of international trade transactions, the production of Customs and trade statistics and to reduce the administrative burden on the trading community to a minimum.

Fiji's partnership relationship with New Zealand Customs has been valuable, a Canine (K-9) unit has been set up by FRCA in conjunction with The Fiji Police Force whereby 6 Fijian Detector dog teams have completed NZ training and graduated. An effective detector dog capability will enable the FRCA and Police to strengthen border security and help counter organized criminal groups using Fiji as a transit point for illicit activities.

In July of 2015, the SOP for Tax Compliance Certificate was launched which now empowers all Districts to process applications and meet taxpayers expectation and reduce the cost of administering voluntary compliance for FRCA.

The VAT assessing processes were reviewed as part of FRCA'S modernization program and reforms. The SelfAssessment project was rolled out in all Districts and the processing time has since been reduced from the normal 4-6 weeks to 2 days.

Looking Ahead

We are transforming how we conduct our core business to make FRCA a more contemporary, service oriented and a world class organization. Our Corporate Plan 2015-2019 outlines our strategies to achieve this.

I am pleased with the 2015 result and I continue to emphasize to staff ther need to do better. The solid performance is a direct result of the dedication, commitment to service and sheer effort put in by all employees and stakeholders of the Authority. I wish to thank the Prime Minister and Minister for Finance, the Government and the Board for their assistance and guidance throughout the year. Their co-operation contributed to the achievement of the Authority's goal for the year. I also wish to acknowledge the FRCA staff, colleagues in other agencies, members of consultative forums, business partners, suppliers and general public who helped us do our job. These achievements reflect our commitment and progress towards a contemporary service -oriented revenue collection, border protection and trade facilitation agency in the region.

2016 is poised to be another challenging year for the Authority but we are prepared to meet the expectations of government and our stakeholders and customers.

Jitoko Tikolevu Jitoklo Tikolevu

Chief Executive Officer

FINANCIAL MANAGEMENT

Critical Success Factor 1

The majority of fiscal duty collected was from the 32% band and the specific duty band, which totaled around 71% of total fiscal duty collected in 2015.

Table 4 shows the Top 10 chapters that contribute to the total Fiscal duty. Chapter 27 on Mineral fuels remains the top contributor to fiscal duty revenue followed by Chapter 87 (vehicles) and Chapter 22 (Beverages and spirits).

Import Excise Duty recorded a collection of $43.22m in 2015, which is below the revised forecast of $43.82m by $0.61m, and was also below the original forecast of $48.8m by $5.6m. Compared to the revenue collections 2014, it recorded a negative growth of 0.5%.

Local Excise Tax recorded a collection of $106.0m in 2015, which is below the revised forecast of $106.5m by $0.54m, and was also below the original forecast of $123.3m by $17.3m. Compared to the revenue collections 2014, it recorded a growth of 7.6%.

Export Tax recorded a collection of $9.7m in 2015, which is above the revised forecast of $8.9m by $0.8m, and was also below the original forecast of $11.2m by $1.4m. Compared to the revenue collections 2014, it recorded a negative growth of 7.6%.

Water Resource Tax recorded a collection of $36.5m in 2015, which is below the revised forecast of $37.0m by $0.52m, and was also below the original forecast of $38.03m by $1.54m. Compared to the revenue collections 2014, it recorded a growth of 5.2%.

Departure Tax recorded a collection of $136.1m in 2015, which is below the revised forecast of $140.6m by $4.5m, but was above the original forecast of $132.2m by $3.9m. Compared to the revenue collections 2014, it recorded a growth of 0.6%.

VAT REFUNDS AND TAX ARREARS VAT refunds issued by FRCA in 2015 increased by a mere 1.3% over the same period last year. A total of $307.7m was refunded in 2015whereas in 2014 a total of $303.8m was issued as VAT refunds. This was below the forecasted VAT refunds for 2015 which was $382.4m.

The VAT refunds outstanding as at December 31, 2015 stands at $69.3m, which is higher than that recorded as at December 2014 which was around $59.0m. While this remains a challenge to FRCA, there is continuous emphasis to reduce this amount in 2016.

The level of tax arrears as at December 2015 currently stands at $52.7m, while total tax arrears collected was around $61.3m, which is slightly lower than that which was collected in 2014.

2016 REVENUE OUTLOOK

The total revenue target for 2016 stands at $2.58b, a 10.0% growth over 2015 collections. The overall forecast looks positive but challenging. As a result, due to the 2015 revenue shortfall, the gap between the 2015 collections and 2016 target has widened.

Solid revenue performances for 2013 and 2014 were attributed to the positive shocks to the economy through fiscal changes. However, this year, heavy emphasis is placed on compliance generated revenues with $120.0m as the forecast.

In addition, further stimulus in the 2016 Budget such as increase in STT rate from 5% to 10%, introduction of Environmental and Health Levy and changes to VAT regime (reduction from 15% to 9% and imposition on zerorated supplies) will aid in meeting the 2016 target.

Conducive economic conditions with GDP projection of 3.5% will also have positive impact on tax revenue collections, carrying on from the last 6 consecutive years of positive economic performance.

CUSTOMER

Critical Success Factor 2

Customer Service

FRCA continues to recognize the significance of establishing a culture of excellent Customer Service. As the saying goes "The more you engage with customers the clearer things become and the easier it is to determine what you should be doing. "Looking back on what we have lacked in the previous years has invigorated us to be more innovative with our approach on improving customer services.

Customer Service Kiosks

The Customer Service kiosks initially trialed at Nadi International Airport have now been set up in Savusavu, Labasa, Sigatoka, Levuka, Suva and Nausori on 30th September giving the organization an outlook of customer service satisfaction. So far, the customer service feedback results have been progressive obtaining more than 80% of positive feedback from satisfied customers. Taking on board a Customer Service Champion was the best move by the organization and this year we have successfully implemented up to 100% recommendations of the 2014 Customer Survey. In addition to the Kiosks there is a feedback survey form that is evaluated by the Customer Service Champion at the end of every month. The specific comments made by taxpayers help us identify our strengths and identify more opportunities to improve our service delivery and the manner in which we treat our customers. In 2015, 90.2 % of 391,573 respondents registered a happy rating at our kiosks.

Customer Service Page

A customer service page that includes all relevant information on customer service, feedback survey, charter, happy-or-not kiosks has been set up on the 9th of October with an aim of FRCA associates get to check on their performance and motivate themselves to do better and fully understand why the customer is important. In addition, Customer Service Training for front-line employees is also conducted to ensure that customer service is on top of its game.

Customer Service Call Centre

The unwavering commitment towards Customer Service Excellence has steered the organization to set up a call center where the general public can call at any time between 7:00 am to 6:00p.m enquiring about Tax (Returns status, Refunds, Registration, and Liability/Payment Status) and Customs (Duty Concessions, Duty rates, Revenue Measures) issues. The Call Centre operators are senior and experienced officers including former staffs who have retired.

Public Education and Awareness

The Public is constantly informed through various forms of mediums encompassing newspapers, Television, Radio, workshops, Roadshows and C.E.O's Forum. This year we had mobile visits to business houses and educational institutions and working with other respective ministries in regards to awareness and Joint card registrations. We only managed to cover approximately 60% of the business house employees, 30% of Educational institutions and 70% of the public education awareness.

Gold Card Services

The Gold Card Premium Services continues to reward and recognize deserving FRCA customers who have a consistent history of excellent compliance in both taxation and customs. The increase in Gold Card Taxpayers (members) from 35 to 63 and announcement in the 2016 Budget speech by the Minister of Finance of a further increase is indicative of the success of the Gold Card initiative. In 2015 the Gold Card Taxpayers and subsidiaries' total revenue contribution towards Tax and Customs was $1,432,954,969.71. This is 61% of total revenue collected by FRCA. The growth in Tax and Customs collection signifies that there have been improvements in Business performances by traders. Gold Card's role to improvise Business activities by providing faster facilitation and turn-around time in business have also had a positive impact in the economic growth.

New initiatives implemented in terms of provision of services are

Partnership Agreements amongst the Gold card service members to initiate discounted deals amongst the members.

Electronic Seal-Gold card companies to use letterhead/Stationaries. Seal acts as a Gold Card Branding and Tax Compliance marketing for Gold Card companies and their Subsidiaries.

Gold card on tiered approach-5 companies to be selected to become Platinum members who will receive more preferential treatment above other Gold card members

Customer Enquiries Centre (CEC) Initiative

Customer Services FITS data has been used to identify Customers who need FRCA Services on a daily basis, in the course of their business. Tax Clearance is arguably the biggest challenge for Companies, to remit funds overseas to secure importation of goods and services.

FRCA CEC has short-listed customers who have been issued with Blanket Tax Clearances, to manage their own remittances and tax payments, without queuing up at FRCA Offices day-in day-out. The Blanket Tax Clearances have been issued to Taxpayers whose track record at FRCA on Taxation and Customs matters, are relatively very good.

The initiative has been very positive and the message very clear that FRCA will assist taxpayers in the business needs, provided they are compliant in their matters of Taxation and Customs. This has improved voluntary compliance and tax collection.

ENVIRONMENT AND COMMUNITY

Critical Success Factor 3

The Authority works in conjunction with its stakeholders signing Memorandum of Understanding to ensure objectives are achieved.

The Fiji Electricity Authority(FEA) and FRCA

A Memorandum of Understanding that will enable both parties to share data and information. This strengthens tax compliance as latest and current information of tax payers can be extracted from the F.E.A database.

Consumer Council of Fiji(CCF) &Commerce Commission and FRCA

The purpose of the agreement is to put surveillance on prices ensuring that traders set prices according to tax payable.

Itaukei Land Trust Board(TLTB) & FRCA

A Memorandum of Understanding working towards the common role of achieving Governments development action plan. The partnership will ensure compliance by Landowners. Providing expertise and assistance pertaining to clearance for investors.

Fiji Police and FRCA

A Memorandum of Understanding signed between the Fiji Police and FRCA working in partnership with regards to K-9 unit (Detector Dog Unit) capabilities to strengthen and protect border security. Fiji Institute of Accountants(FIA) & FRCA The authority has teamed up with FIA (Fiji Institute of Accountants) to enhance the tax systems and tax policies enabling it to be transparent and customer consistent. Recommendations by the FIA have been accounted for and operational changes have been made to boost compliance and efficiency.

Bank of the South Pacific(BSP) and FRCA

The authority signed a Memorandum of Understanding with the Bank of the South Pacific to provide services for tourists from cruise vessels. The MOU will allow bank staff members to board the cruise ships when they come in and provide money exchange services to tourists to do their shopping. When they do come back on a cruise vessel, it will allow them (tourists) to process their VAT refunds.

Unit Trust of Fiji and FRCA Unit

Trust of Fiji signed a Memorandum of Understanding with FRCA for the employee investment scheme expected to provide a platform for savings. The Investment Scheme will allow the Unit Trust of Fiji the ability to partner with employers in reaching out or tapping the workforce and get direct deductions for people who are interested in investments with the Unit Trust. Ministry of Justice and FRCA The MOU was signed between the two parties on 25th March where the ministry has allowed FRCA to directly access tax payer's on-line information kept by the Companies Office, the Registrar of Titles Office, the Official Receivers Office and the Births Deaths and Marriage Office. The agreement allows FRCA to view business and individual name and certificates in its efforts to improve compliance.

FRCA DAY

Besides the Family & Fun Sports day that we normally have every year, the authority for the first time as part of the 2015 Public Relations Team Plan, went out of its way to host a FRCA day to mark the beginning of our new and exciting journey to re-branding. The FRCA day included our exhibition booths set up at Sukuna Park and other exhibitions agencies such as Land Transport Authority(LTA),Bank of the South Pacific(BSP), Australia and New Zealand Bank(ANZ), Westpac, Fiji National Provident Fund(FNPF),Home Finance Company(HFC), Ministry of Health and Biosecurity Authority of Fiji set up their information booths as well. The objective of the day is to learn more about tax and customs issues in a friendly environment. There were live cross-overs on Fiji Broadcasting Corporation's five radio stations.

The CEOs forum was one of the highlighted events as FRCA held its first inviting stakeholders at international level to be speakers from their specialized field of work. The theme of the event was "Partnership for Progress". The engagement of the international speakers as well as our local stakeholders is critical as we need to learn as much as possible while we mould the new FRCA. The Honorable Prime Minister Mr.Voreqe Bainimarama officially opened the forum and launched the FRCA Day celebration.

World Environment Day

FRCA takes part in Environment Day celebrations at Savusavu foreshore. FRCA Savusavu had setup a FRCA booth for the National Environment Celebration with the theme, "Sustainable Consumption & Production". The Public Relations Team had assisted by sending FRCA displays and giveaways such as calendars & water bottles. Other ports also celebrated by wearing "Green" and holding a cleanup campaign within the port areas.

Breast Cancer Awareness Pinktober

As the world commemorated Pinktober, the month of Breast Cancer Awareness, we also joined hands to raise awareness amongst staffs and pledged to raise funds for the Fiji Cancer Society. Suva Headquarters, Suva Wharf Office including outer ports organized a morning tea and wore Pink to share the pain of Breast Cancer survivors and those who did not survive. Few Breast Cancer survivors were also present to share their experience and raise awareness as to how we can all detect cancer at an early stage.

INTERNAL PROCESS

Critical Success Factor 4

ASYCUDA WORLD

The implementation period of the changeover of the Automated Systems Customs Data (ASYCUDA) from ASYCUDA ++ to ASYCUDA WORLD began in December 2014 in the Suva Port. Its immediate objectives include increasing efficiency in the customs clearance process, monitor and enhance revenue collection, to develop and install a state-of-the-art computerized system for the recording and monitoring of international trade transactions, the production of Customs and trade statistics and to reduce the administrative burden on the trading community to a minimum. The official transition from ASYCUDA ++ to ASYCUDA World at the Suva Port which involved refresher trainings was then made in mid of May 2015.Beginning from December the declaration process of ASYCUDA WORLD was then implemented in other ports at Nadi and Lautoka.

CANINE (K-9) UNIT

Fiji's partnership relationship with New Zealand Customs has been valuable, a Canine (K-9) unit has been set up by FRCA in conjunction with The Fiji Police Force whereby 6 Fijian Detector dog teams have completed NZ training and graduated. The Police and Customs officials underwent a fairly robust training package which took them through the full role and requirements of a handler to look after their dogs, to the proper management of dogs ensuring they are focused on what they are trained to protect, be it money or drugs. An effective detector dog capability will enable the FRCA and Police to strengthen border security and help counter organized criminal groups using Fiji as a transit point for illicit activities.

Fiji Business Excellence Awards (FBEA)

The authority has already attained the Prime Ministers Award in 2014 for the PSC Service Excellence Awards, As our drive for continuous improvement, FRCA has then decided to participate in the Fiji Business Excellence Awards organized by the National Training and Productivity Centre .The participation is primarily aimed at supporting our goals and objectives to achieve a culture of excellence, effective leadership, higher productivity, operational efficiency and effectiveness. This paves the way for improvement of performances as it includes an external opinion of the organization allowing feedback on strengths and opportunities for improvement, equip the organization with competencies to manage its performances and prompt the organization to seek best practices and learn from the superior organizations. After thorough Scrutinizing by the FBEA reporting team, the authority managed to scoop the Achievement in Business Excellence Award which is a good start for us.

Formation of Objection Review Team

In May 2015, the Objection Review team was formed with the main goal of having independence in the review of normal and audit objections cases. This development was also implemented after the IMF TADAT assessment recorded a lack of data by FRCA to provide the time taken to resolve taxpayers' objections and dispute.

Tax Compliance Certificates

In July of 2015, the SOP for Tax Compliance Certificate was launched which now empowers all Districts to process applications and meet taxpayers expectation and reduce the cost of administering voluntary compliance for FRCA. A notable achievement was the new legislative amendment in the Tax Administration Decree through the 2016 Budget amendments that now brings more emphasis on tax compliance certificates for Government and the Public sector.

Industry Bench Marks

In 2015 Audit Compliance had undertaken a targeted approach through a systematic audit process by developing an Industry Matrix that guided the teams in identifying growth industries in the economy and identification of associated risks. The emphasis is always on voluntary compliance and industry audits was key for coverage and working with industry stakeholders in ensuring there is uniformity in the application and general understanding of the various tax laws. One of the important leanings picked during the year was the implementation of the Risk Differentiation Framework which was a commitment that we cover cases based on industries and the use of industry ratios and industry risks identification and taxpayer classifications. The limited resources are used effectively and partnership with industry stakeholders provides the leverage that is required for the much needed voluntary compliance.

VAT Self Assessments

The VAT assessing processes were reviewed as part of FRCA'S modernization program and reforms. The Self-Assessment project was rolled out in all Districts and the processing time has since been reduced from the normal 4-6 weeks to 2 days. This change not only contributes to up skilling of our Staff but has successfully been implemented to address the huge VAT leakage that exists in the system.

Tax Type Payments Monthly Reminders

The PAYE Inspection team through partnership with IT Team managed to develop and successfully implemented the sending of the authority's monthly reminders for all the tax type payments to registered payers. This blast email was operational from the month of July 2015.Through this monthly blast emails we managed to reach across to around 5,000 taxpayers reminding and following up on their tax obligation hence we in turn save the Authority money from telephone calls.

EMPLOYEE SATISFACTION

Critical Success Factor 5

Employee satisfaction is an essential ingredient for success. Here at FRCA, as a Team "Let's Exceed it" was the motto of every individual worker who all share a common goal of transitioning the organization to world class.

Wellness Centre

In line with Governments move to issue a National Wellness Policy, The authority has just opened a "Wellness Centre" located within the premises. In line with our aspirations to become a "World Class" organization, it is now time for a new agenda and a mindset transformation-from 'counseling' to 'wellness'. We are embarking on this initiative as a partnership between management and staff with the sole objective to increase productivity, boost morale and reduce stress.

Balance Scorecard Performance Bonus

According to the Balance Scorecard Performance,Performance Bonus was awarded to exceptional performers in recognition to their hardworking and outstanding efforts. The total cost of the 2014 Balance Scorecard staff performance bonus totalled up to $1.4 million(including FNPF/FNU Levy) for 762 staff.

Family Fun & Sports Day

The 2015 family fun & Sports day was held in Suva on the 3rd of October. It was an opportune time for the FRCA staffs and their families to come together and enjoy a fun filled sports day at the Suva Grammar grounds. Staffs from all outer ports were also present with their families to mingle with Suva staffs. As a build up to the Family Fun Day, a Tarakoro was organized as Suva staffs welcomed outer ports staffs for the event. Indoor games such as carom board and cards were played.Sporting activities included Rugby,Soccer,Netball,Basketball and Volleyball and the awards night and dinner was held at night where we celebrated the night away with food and drinks.

Recruitment & Promotions

The Authority continues to uphold EEO (Equal Employment Opportunities) through its recruitment process. At the end of 2015, the Authority had completed 100 placements with 33 internal staff promotions and 67 new recruitments. Of these placements, 42 were for the Corporate Services Division, 17 for Customs and 41 for Taxation Division.

Staffing Quality

Of the 810 staff, 95.3 percent (772) possess formal qualifications. The highest level of qualification is at Masters' Degree, of which, around 3.60 per cent are staff in Senior and Management positions. The majority 67 percent (543) have base diploma/degree qualifications. Around 21.4% (173) staff hold in-service qualifications acquired prior to 2000. These are no longer available and J1 and JII are for Customs; with FTax for Tax.

Staff Job Description Review

The HR Team also completed the JD Review exercise for all staff positions during the year. It required a lot of sacrifice by the team and management support in the process is acknowledged.

Staff Medical Checks

In association with the Ministry of Health team, HR also organized free Staff Medical Checks for staff during the year for staff at the FRCA Nasese Office. A similar session was held in Nadi for our West staff.

INNOVATION AND LEARNING

Critical Success Factor 6

International Monetary Fund(IMF) Asesses FRCA

FRCA this year was being scuitinized and assessed by the International Monetary Fund(IMF).Fiji was one of the 5 selected countries out of the many Revenue administrations around the world to be assessed by their new piloted TADAT(Tax Administration Diagnostic Assessment Tool) team.The tool assesses performance in the areas of Risk Management, Integrity of the Registered Tax Payer Base,Supporting Voluntary Compliance,Filing of Tax Returns,Payment of Obligations,Ensuring Accuracy of Reporting,Tax Dispute Resolution,Operational Efficiency and effectiveness and Accountability and Transparency. The TADAT Report gave realistic assessments on the improvements that are required to be carried out.Reminding us that aligning ourselves to international standards is the way forward.The Outcome Report helped us in the setting of our reform agenda, reform objectives, priorities, initiatives, and an implementation timeline.

Strengthening Partnership with AUS and NZ Counterparts

The authority ensures to strengthen its partnership with Border Control Agencies in Australia and New Zealand .The bigger vision is to contribute to long term regional security and economic growth, strengthening of national border control, the removal of barriers at the border to legitimate trade and tourist flows, accurate identification, collection and accounting for revenues, and mitigation of illegal border activity such as drug trafficking, money laundering, trade in firearms, people smuggling and bio-security risks. After a joint operation between the authority, Fiji Police, New Zealand Customs and Australia Federal Police, has resulted in a seizure of 80kg of illicit drugs, a total of $FJD100 million of methamphetamine.

Pacific Leadership Program (PLP)

Two years in a row, FRCA has taken part in the Pacific Leadership Training Programme delivered by New Zealand Customs. This is to assist the authority in boosting its human resource capacity, in turn improve revenue collection. The nine months long Programme objectives were: Support the Customs and other organizational modernization programmes, Increase leadership and management capability, Build confidence as leaders, Equip participants with resources and tools to address day-to-day issues and challenges and deliver better results. Selected participants from the authority have found the program to be rewarding as they have utilized the learnt leadership tool and implemented at their leadership level role, working on new projects such as the Knowledge Management & Multitasking Project and creating Quality Circle team. Other Training Programs that the authority attends locally and internationally covering wide range of taxation and management topics are Transfer Pricing Guidelines, Money Laundering, Audit Techniques, Double Taxation Agreement and other International Taxation issues.

Pacific Islands Tax Administrators Association (PITAA)

The Pacific Islands Tax Administrators Association (PITAA) released their first ever newsletter. The PITAA is a great platform for Pacific Islands tax administrations to come together to share information and experience. PITAA has made major progress towards becoming a standalone regional tax association capable of organizing and delivering a regional training and capacity building plan. This Year, the PITAA Secretariat, through funding assistance from donors, has coordinated capacity building workshops such as 1)Managing a Modern Tax Administration 2)Industry Partnership 3)Arrears, Filing & Payment 4)Extractive Industry Conference on "Leveraging Impact of Fiscal Regimes for Investment & Growth" and 5) Compliance Risk Management. They intend to be a forum where the tax administration and policy issues most relevant to Pacific Island countries can be discussed and where experiences can be shared. Promote closer cooperation and coordination of information sharing in tax administration and policy formulation in pacific countries. Moreover, their vision is to help promote international standards and best tax administration practices, suitable to the characteristics of the Pacific Island countries.

Organization for Economic Co-operation and Development (OECD)

For the first time ever, a number of Fiji Revenue and Customs Authority (FRCA) staff participated in the Organization for Economic Co-operation and Development (OECD) Korea Policy workshop. The aim of the workshop was to help improve and maintain high standards of FRCA. The workshop was based on International Taxation and Korean experience. The workshop would improve our role as the revenue collector for Government,"

Pacific Financial Technical Assistance Center (PFTAC) and International Monetary Fund (IMF) trains Audit Managers.

FRCA Audit and Compliance Chief Auditors, Principal Auditors and Senior Auditors were trained by PFTAC and IMF Fiscal Affairs Division. The aim of the workshop was to strengthen the roles of Managers and Team Leaders of the Audit and Compliance Division. The course provided a clear overview of their roles and responsibilities to lead change and effectively manage their respective teams. The course covered the following topics: Strategic Planning & National Audit Plans, Role of managers, focusing on targets, Team Building and Conflict Management, Time Management and Case Selection & Workload Management, Audit Manager Tools and Documenting Performance Feedback, Monitoring Results and Leading Effective Meetings, Developing Your Employees and Influencing Your Manager, Integrity and Internal Controls

Training

Here at FRCA, training programs are ongoing in order improve effectiveness and productivity. 53 different overseas trainings were attended to in 2015 by a total of 63 FRCA staff. 26 trainings were conducted in-house by external facilitators/trainers and these were attended by a total of 541 FRCA staff.

74 trainings were conducted in-house by FRCA staff and these were attended by a total of 1410 participants. 32 external trainings were attended to by 178 FRCA staff. A total of 10 regional trainings were recorded in 2015 and these were attended by a total of 129 staff.

FINANCIAL STATEMENTS

For the year ended 31 December 2015

Contents:

Members Report

Statement by the Members

Independent Audit Report Statement of Financial Position

Statement of Financial Performance

Statement of Changes in Equity

Statement of Cash Flows

Notes to and forming part of the Financial Statements

MEMBERS' REPORT AS AT 31 DECEMBER 2015

In accordance with a resolution of the Authority, the members herewith submit the Statement of Financial Position and Statement of Changes in Equity of the Authority as at 31 December 2015, and the related Financial Performance and Cash Flows Statements for the year then ended and report as follows:

THE NAMES OF THE MEMBERS OF THE AUTHORITY IN OFFICE AT THE DATE OF THIS REPORT

Mr. Ajith Kodagoda Chairman Appointed on 28 July 2011 to date

Mr. Jone Vatukela appointed on October 29 2009 to date

Mr. Faiz Khan appointed on 23 September 2010 to date

Mrs. Makereta Alifereti Konrote appointed on 21 December 2015 to date

PRINCIPAL ACTIVITIES

The principal activities of the Authority during the year were to act as the Agent of the State in the provision of taxation and customs.

OPERATING RESULTS

The net surplus of the Authority for the year was $6,917,393 compared to $6,938,435 for 2014.

BAD AND DOUBTFUL DEBTS

Prior to the completion of the Authority's financial statements, the members took reasonable steps to ascertain that action had been taken in relation to writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provisions made for doubtful debts.

As at the date of this report, the members are not aware of any circumstances which would render the amount written off as bad debts, or the provision for doubtful debts inadequate to any substantial extent.

CURRENT ASSETS

Prior to the completion of the financial statements of the Authority, the members took reasonable steps to ascertain whether any current assets were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Authority. Where necessary these assets have been written down or adequate provision has been made to bring the values of such assets to an amount that they might be expected to realise.

As at the date of this report, the members are not aware of any circumstances which would render the values attributed to current assets in the Authority's financial statements misleading.

UNUSUAL TRANSACTION

Apart from matters specifically referred to in the financial statements, in the opinion of the members, the results of the operations of the Authority during the financial year were not substantially affected by any item, transaction or event of a material unusual nature, nor has there arisen between the end of the financial year and the date of this report any item, transaction or event of a material unusual nature likely, in the opinion of the members, to affect substantially the results of the operations of the Authority in the current financial year, other than those reflected in the financial statements.

EVENTS SUBSEQUENT TO BALANCE DATE

There were no events subsequent to balance date that materially affect the financial statements, except for those already noted in the accounts.

OTHER CIRCUMSTANCES

As at the date of this report:

a) no charge on the assets of the Authority has been given since the end of the financial year to secure the liabilities of any other person;

b) contingent liabilities could not be reliably estimated at the end of the financial year which could become liable; and

c) can become or are likely to be enforceable within the period of twelve months after the end of the financial year, which in the opinion of the members, will or may substantially affect the ability of the Authority to meet its obligations as and when they fall due.

As at the date of this report, the members are not aware of any circumstances that have arisen, not otherwise dealt with in this report or the Authority's financial statements, which would make adherence to the existing method of valuation of assets or liabilities of the Authority misleading or inappropriate.

MEMBERS' BENEFIT

Since the end of the previous financial year no member has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by members) by reason of a contract made by the Authority with the member or with a company/firm which he or she is a partner, or in which he or she has a substantial financial interest.

For and on behalf of the Authority:

FINANCIAL STATEMENTS

For the year ended 31 December 2015

STATEMENT BY THE MEMBERS AS AT 31 DECEMBER 2015

In accordance with a resolution of the members of the Fiji Revenue & Customs Authority, we state that:

In the opinion of the members:

1. the accompanying Statement of Financial Position and Statement of Changes in Equity of the Authority are drawn up so as to give a true and fair view of the state of affairs of the Authority as at 31 December 2015.

1. the accompanying Statement of Financial Performance of the Authority is drawn up so as to give a true and fair view of the results of the Authority for the year ended 31 December 2015;

1. thcompanying Statement of Cash Flows is drawn up so as to give a true and fair view of the cash flows of the Authority for the year ended at 31 December 2015;

1. at the date of this statement there are reasonable grounds to believe that the Authority will be able to pay its debts as and when they fall due; and

1. all related party transactions have been adequately recorded in the books of the Authority.

Dated at Suva this 25th day of April 2016.

For and on behalf of the Authority and in accordance with a resolution of the members.

INDEPENDENT AUDITOR'S REPORT

To the members of the Fiji Revenue and Customs Authority Board

I have audited the accompanying financial statements of Fiji Revenue and Customs Authority which comprise the statement of financial position as at 31 December 2015, and the statement of financial performance, statement of changes in equity and statement of cash flow for the year then ended, and Notes 1 to 27 comprising of a significant accounting policies and other explanatory information.

Directors and Management's Responsibility for the Financial Statements

The directors and management are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the req uirement of the FijI Revenue and Customs Authority Act, the Income Tax Act and the VAT Decree. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I have conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on my judgments, including assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, I consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Audit Opinion

In my opinion:

(a) proper books have been kept by the Fiji Revenue and Customs Authority, so far as it appears from my examination of those books; and

(b) the accompanying financial statements which have been prepared m accordance with the International Financial Reporting Standards:

(i) are in agreement with the books of account; and

(ii) to the best of my information and according to the explanations given to me:

give a true and fair view of the state of affairs of the Fiji Revenue and Customs Authority as at 31 December 2015 and of the results, and cash flows of the Fiji Revenue and Customs Authority for the year ended on that date; and

give the information required by the Fiji Revenue and Customs Authority Act, income Tax Act and VAT Decree in the manner so required.

Read about Fiji Revenue & Customs Authority's (FRCA) critical success factors in its 2015 Annual report and answer the following questions.

Question:

1.Draw up a customized Balanced Scorecard for FRCA. In drawing up the Balanced Scorecard, each appropriate perspectives of the customized BSC must have at least three objectives, three lag and three lead indicators.

2.From your customized BSC in (1), draw up FRCA's strategy map and discuss the routes that is showcased in the strategy map.