Suspension of Infrastructure Ministry’s funding lifted

In response to a question relating to the recent suspension of Ministry of Infrastructure’s bulk funding, (see story page 2) the acting Secretary of Finance provided this response on Friday afternoon.
“The former acting Finsec, Henderson brought the issue of non compliance with the MFEM reporting requirements to the attention of the Commissioner shortly before his departure. The PS Commissioner then called the former MOIP HOM to discuss this.
On the financial side, I can confirm that their bulk funding was suspended since the beginning of the financial year. As standard practise, MFEM suspends ministry bulk funding when they fail to submit reports. This is intended to encourage compliance with MFEM Act reporting requirements. Once reports are submitted then MFEM releases funding to Ministries. In this case, MOIP still failed to comply with MFEM instructions until PSC intervened.
Since the meeting with the PS Commissioner, and upon the PS Commissioner’s instruction to submit the latest MOIP report to MFEM, MOIP provided their report last month and bulk funding has since been released. Part of the reason for the non compliance as advised by the Director of Finance, Teina Frank was the difficulty in confirming opening account balances and other technical accounting issues that arose from the merger of the OMIA and MOW financials.
I can confirm that MFEM is working closely with PSC with the funding assistance of NZAID to recruit an experienced accountant in the interim to review the books of MOIP to:
• Update all financial statements to June 2011 in compliance with Accounting Standards set by the MFEM Act ready for the Audit Office.
• Identify and address internal control weakness.
• Assess efficiency and effectiveness of current financial workflow and recommend improvement where practical through changes to structure or procedures.
• Produce documentation on the work processes to be filed at MOIP for maintenance.
• Assess readiness and capacity of the MOIP finance division to manage add-on project funding and recommend options on how project funding can be better managed and accounted for.
• Prepare a fixed asset register management framework and commence the work towards addressing significant anomalies in this area
• Assist with capacity building and/or recruitment of appropriate financial and accounting capabilities within MOIP for ongoing responsibilities
• Prepare strategic financial management plan for MOIP with the intention of addressing anomalies and qualifying issues going forward
• Report on material financial and management practices that may be in breach of the MFEM and PERCA and PS Act.
I am working with the Acting HOM of MOIP to get this funding application through to PSTAF (NZAID) based on the above TOR and then proceed with recruitment. We need a qualified accountant to do this work, someone who is very familiar with the Cook Islands government financial policies and procedures manual and someone who has extensive experience in both financial and management accounting.
There is a significant amount of funding being poured into MOIP for infrastructure projects, and as a matter of priority we would like to assist MOIP by putting in financial and reporting systems for infrastructure spending be it government, donor or loan funded. The accountant we are looking to employ for this short term arrangement will also assist in the identification of a qualified accountant that can manage ongoing financial management responsibilities for this ministry going forward.”
The PSC has advised that no further enquiries will be actioned or discussions with the media entered into until further notice and an internal inquiry completed.

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