Auditor General highlights recurring challenges in the recent audit report of the government

While recognising recent improvements, the Auditor General’s report to the Niue Assembly highlighted recurring issues and challenges for the Niue government in terms of its capability and capacity to prepare its financial statements for annual audits.

The report noted the reasons for the delays in previous years audits is due to the lack of capability and capacity of the finance functions and supporting systems of the treasury and SOEs.After many years of delays, the government’s audit reports are finally up to date with the help of Deloitte New Zealand.

The Auditor General John Ryan said that it is critical that the normalized annual accountability and reporting cycle is maintained. Mr. Ryan said in his letter that the significant costs incurred by both the government of Niue and his office in addressing the deferred reporting and audits will be wasted if the timely preparation and audit of all government entities is not maintained for future reporting periods.

According to the Minister of Finance, Hon. Crossley Tatui, the government paid around one million dollars to Deloitte to help the government prepare its outstanding accounts and paid another million dollars for the audit of the government and its entities.

Here is a look at some of the findings and key recommendations contained in the Auditor General’s report to the Niue Assembly for the year ended 30 June 2024.

Capability and Capacity

Minister of Finance Crossley Tatui agreed saying that the government is working on improving its capability and capacity at the Treasury department. In the meantime, the government will continue to utilize the services of Deloitte until the capacity and capability of the treasury is at a level where the government will be able to prepare its own financial statements.

In his report, the Auditor General John Ryan clearly supports the continuing engagement of Deloittes to assist the government and SOEs with the compilation of financial statements.

Given the governments is increasing in size and complexity of its entities, the Auditor General highlighted the need for improvement in capability and capacity to prepare financial statements for auditing.

Tax collection

The Auditor Generalagain expressed his concerns that the government is missing out on revenue due to outstanding tax payments. He also highlighted that the in the audit they found that not all import duty and port charges are being collected.

He highlighted that many of Niue’s registered companies and where applicable public sector entities are not completing tax returns for company tax or the NCT.

Recurring issue of unauthorized expenditure

Another concern is that the government has consistently breached the requirements articles 56(3) and 59(4) of the constitution and section 19 of the Public Revenues Act 1959 by incurring unauthorized expenditure.

“The financial statements for 2021/2022, 2022/23 and 2023/24 indicate that the government has continued to incur unauthorized expenditure that was not approved by Cabinet”

The auditor noted in his report that in accordance with the constitution the unauthorized expenditure of more than 1.5% of the appropriated budget requires a supplementary appropriation act and not doing so is in breach of the constitution.

Prior outstanding audit findings and recommendations

The report highlighted several prior outstanding audit findings to remind the government what still needs to be addressed from previous audits.

The auditor noted that the government had developed an asset management plan but further progress is required. This will help the government in assessing the need for maintenance and funding for infrastructure projects. The auditor general says that this is an area where they will continue to review developments. It noted also that the government had appointed an Asset and Infrastructure Management Advisor.

Despite this recommendation reminder from the Auditor General, BCN News understands that the contract of the Asset and Infrastructure Advisor was terminated last month.

The Auditor General also reminded the government of the recommendation from previous audits to seek advice regarding the risks and responsibilities related to the outsourcing of the shipping registry responsibilities. There is very little public information about Niue’s shipping registry but BCN News understands that a company is Singapore is managing Niue’s shipping registry.

The Auditor General reminded the government of the outstanding prior recommendation for an interest register, to keep tract of related party transactions and disclose those that are material. This is a register of public servants who in addition to their government job are also providing services to the government through a business or other arrangement. The government noted this saying that the terms of the register will need to reflect the circumstances of Niues small population including family relationships.

The Auditor General also noted that the government has implemented a prior recommendation for a fraud policy, and that this policy will be reviewed in the next audit.

The Auditor General’s report for the year ended 30^th June 2024 is currently with the Niue’s Assembly’s Public Accounts Committee that will present their report to the Assembly in due course.

BCN obtained a copy of the Auditor General’s Report to the Assembly from the Office of the Speaker Hon. Hima Douglas last week.