Government has also tabled its formal response to the report of the Auditor General dated 12th December 2019 at the Fale fono meeting held last week.
The Auditor General provided the Assembly with an update on the status of the audits of the financial statements of the Government of Niue and its subsidiaries, and set out various matters for attention.
Responding specifically to key concerns in the audit report.
On Financial stability:
Government states it is reliant on the New Zealand government’s ongoing support which includes budget support and various funding or other support initiatives.
Government states they are aiming to improve financial stability over time by setting achievable break-even budgets, diversifying Revenue streams and more timely preparation of financial information.
Increased capacity and capability would also allow for improvements in tax receipts to assist improving our financial position. Having up to date accounts will equip us with the information to allow for more accurate budgeting.
On NPNC:
Government confirms that filing is overdue and is not compliant with Niue tax regulations.
Government says it has noted that the payment of tax , PAYE to treasury would not improve the group consolidated position as the inter – entity income would be eliminated upon consolidation. This is an important issue to be remedied.
It states there is no legal requirement to make distributions to the government but grants have been made under NPNC legislation. Given the recent changes and inclusion of a number of departments in NPNC as well as outstanding records there has been no capacity or ability to distribute income to the government as no income has been generated given loss making position for June 2015.
Regular distributions will only be possible once NPNC starts generating a profit over and above the expenses incurred.
Government acknowledges there is missing information for some of the divisions within NPNC.
Government has also noted that there also potential issues in subsequent years however again this is not able to be rectified and our advisors will work with Audit NZ to ensure this is considered as part of the audit process.
Government will look to implement improvements as part of their next steps.
As part of the wider finance function improvement process, the government states they will consider the best reporting method for the SOE’s and applicable statutory entities including NPNC.
Government says they are also proposing to review aspects of the structure, governance and administration of those entities.
On unauthorised expenditure:
The report which stated that the appropriation for 2014/2015 was exceeded by $1,476,711 of which cabinet only approved $224,000 leaving unauthorized expenditure of $1,252,711.
Government has acknowledged this stating part of the remedial work to be undertaken is to have processes that address this issue.
On donor funds and aid management
Government states it has established the PCMU but the key to its success is ensuring that the team has the necessary resources, systems and capability.
On capability and capacity:
As noted in this letter, the Government states the limited capacity and capability is a primary cause of most of the items mentioned in the report. This is an area government says they have acknowledged by utilizing Deloitte and looking for assistance from ADB. However the government says they realize that sourcing extra capacity and capability from Niue itself is limited.
Regarding the management of tax collection this is a previously identified capacity and capability issue area and options are constantly being considered or ways to manage the tax collection for a country of this size and nature including systems and people. This will be considered as part of government’s finance function improvement project.
Government stated they agreed that in conjunction with the Niue Public sector transformation, the current level of resources is insufficient to be able to prepare Government of Niue and group accounts including up to 9 subsidiaries or associated financial statements.
In its response to this matter, government stated they agree that this is part of the wider capacity issue acknowledged. This is part of the process of remediation to look to what areas need additional resourcing or where existing resources can be more effectively utilized and steps are in process for more temporary solutions such as ADB, Deloitte assistance.
Government further stated their finance function improvement project will also consider long term solutions.