The Office of the Auditor General says the Solomon Islands government has lost an estimated 4.25 million US dollars in revenue by granting timber duty exemptions last year.
A special audit of the Forestry Department found this was a significant increase from the year before.
Solomon Islands Broadcasting says the Audit report says a lack of proper forestry and accounting records indicates significant arrears in timber royalty payments.
The report says the Department of Forestry has not taken any action, which has resulted in continuous breaches of agreements by logging companies.
It says a number of irregularities were noted, in particular unlawful ex-gratia payments, unaccounted for advances made to individuals from logging companies and timber royalty payments diverted to private accounts.
The Audit Report has recommended the suspension of exemptions until further notice so that consideration can be given to reviewing the current system