Refurbishment debacle

The Ministry of health has been accused of “serious financial mismanagement” which at least looks like a mess in relation to the refurbishment of their head office.

Stuff reports:

A multimillion-dollar miscalculation on the $24 million refit of the Health Ministry’s head office in 2014 has bought a strong rebuke from Treasury, accusing the ministry of “serious financial mismanagement”.

Health Minister Jonathan Coleman also confirmed it led to a major shakeup in the the ministry’s finance department.

Independent auditors were called in to investigate how the ministry “miscalculated” the levels of its cash reserves, and came up short of funds for the refit.

Director-General of Health Chai Chuah said the ministry’s corporate finance team made a mistake in its forecasts, TVNZ reported.

It said the Treasury was very concerned about the funding miscalculation, citing papers describing it as “serious financial mismanagement”.

In a letter to Chuah, Treasury chief executive Gabriel Makhlouf said the “the new bid for funding brings into question the governance and financial management practices of the ministry”.

This is seriously embarrassing for a Government that promotes itself as a sound financial manager.

And there’s another potential embarrassment as well:

Meanwhile, the Ministry of Business, Innovation and Employment is facing a major problem in its payroll system that may affect up to 3000 employees.

MBIE Minister Steven Joyce said the issue involved how holiday entitlements and shift pay were calculated. It could potentially involve millions of dollars but ministry chief executive David Smol had told him it would involve only small amounts in individual cases, though Joyce could not put a dollar figure on those.

The system was installed more than 10 years ago at the Department of Labour but was used for the merged super-ministry MBIE.

Holiday entitlements and pay calculations are core functions of a payroll system.

How this could have taken ten years to be identified is hard to comprehend. With a big payroll in particular it is normal that some employees would query pay calculations. So why wasn’t a problem found in the first year or two?

Holiday entitlements are complex and can be very difficult to manage and are farcical under some situations, perhaps the Government could address that at the same time they sort out the MBIE payroll.