The Solomon Islands Auditor General, Floyd Augustine Fatai, says the system of granting timber duty exemptions needs to be reviewed.
Mr Fatai has just released a report of a special audit of the Forestry Department which found the government lost an estimated four and a quarter million US dollars in revenue through the granting of exemptions last year.
The audit report says that lack of proper forestry and accounting records indicate huge arrears in timber royalty payments.
Mr Fatai says the granting of exemptions doesn not have clear guidlines.
"The legal framework may be ambiguous in that there is no clarity as to whether or not the minister of finance has the power to grant exemptions."
Mr Fatai's audit report recommends the suspension of exemptions until further notice so the system can be reviewed.