The Audit
Audit Rationale
The Log Export Development Levy (LEDL) came about upon the realisation that after the expiry of the logging projects in many areas of the country, over the years very little by way of tangible and durable development was achieved in the logging localities.
In almost all instances, following the cessation of commercial logging operation logging roads disappeared, school buildings deteriorated, people faced diminished opportunities for earning cash income, loss of employment associated with logging operations, communities suffered from poor and worsening health status including increase in incidences of malnutrition especially in children, increase in mother and child mortality rates, etc.
To address these issues faced by people in the logging areas, the Government through the PNG Forestry Authority has established this project financing facility to provide tangible and durable benefits to the people whose natural forests have been acquired by the State for commercial logging.
Audit objective, scope and criteria
The objective of this performance audit was to assess the effectiveness of the management of the Log Export Development Levy (LEDL) with particular emphasis on:-
- the legal and policy framework to establish the LEDL;
- the effectiveness of the Levy collection and transfer procedures;
- the effectiveness of project proposal and approval procedures in the application of LEDL funds; and,
- the monitoring, evaluation and reporting arrangements.
The audit was focused on the Log Export Development Levy and did not examine other government revenue derived from Log Exports such as Royalties, the Project Development Benefit, the Log Export Tax, the Restoration Levy or other Agricultural levies. The AGO consulted with responsible agencies; the PNG Forestry Authority, PNG Customs Services, Department of Finance and the LEDL Trustees.
Audit Methodology
In order to meet the audit objective the audit took the following approach:
- examined the legislations, policies and guidelines that governs the establishment, operations and management of the trust account;
- reviewed the export procedure documents, PNG Customs Services reports and documents including documented reports from the SGS. Documented reports from the PNG FA were also reviewed including the management guidelines;
- interviewed relevant officers from the audited entities including field inspections and observation on the procedures involved in the actual revenue collection on the port sites and the project sites funded under the LEDL.