T

he Supreme Audit Agency (BPK) deems Badung regional administration to have an inefficient internal control system, causing the regency to lose Rp 141 billion (US$15.2 million) during the 2009 fiscal year.

Head of the agency's Bali office I Gede Kastawa said the regional revenues were Rp 120.89 billion in deficit.

The office also reported inefficient budget management that caused Rp 20.4 billion in losses.

"The local authority should be able to give sanctions or to send those involved in these irregularities to court," Kastawa reported the agency's findings to Bali Legislative Council on Thursday.

"They *related officials* were proven to have neglected their duties."

Kastawa explained the Rp 141 billion deficit mainly occurred in the regency's tax office.

"Badung administration has failed to collect taxes from hotels, restaurants and hospitality businesses from 1996 through the second quarter of 2009."

The other financial leak took place in a building permit agency.

"The administration was unable to apply the standard fee for the issuance of different building permits, causing a Rp 1.2 billion loss," Kastawa said.

He said the BPK was preparing a regulation to penalise irresponsible government officials involved in the case as well as those who failed to follow up the findings.

BPK reported as many 17 hospitality businesses, including hotels, condotels, restaurants and 12 villas and spa are already operating without necessary permits.

In addition, 54 buildings were constructed without permits and 129 businesses were not registered with the local tax office.

I Made Sumer, chairman of Bali Legislative Council, admitted the local authority had been overburdened with massive investment projects.

Badung covers popular tourist destination areas, including Kuta, Nusa Dua and Jimbaran where hotels and villas were sprouting.

"We will soon establish a special task force team to monitor this leakage," Sumer said.

Computerized taxation system and tight monitoring efforts would be among the council's suggestions to eliminate taxation system leaks.

The administration, Sumer said, has limited human resources to enforce the taxation system.

"This should not be a reason. They can add more staff to do so."

Efforts must be focused on major taxpayers who violated the regulations, he added.