Buller District Council releases Project Management Office audit report findings

Buller District Council (BDC) commissioned a review of its Project Management Office (PMO) operations in 2023, following allegations of mismanagement of funds, publicised in the media.

An initial review was conducted by engineering consultancy Morrison Low and led to a subsequent forensic audit by KPMG.

The KPMG report pinpoints shortcomings by BDC in relation to governance and operational matters concerning the management of capital projects overseen by the PMO.

KPMG has established that while council staff have acted outside of council policy, no evidence was found of behaviour that is in KPMG’s view, serious enough to warrant a complaint to the Police or the Serious Fraud Office.

KPMG’s report details several other key findings. The auditors found that the scope of the initial review of the PMO conducted by Morrison Low was not appropriately targeted to adequately address the allegations made in relation to the PMO.

The most significant issue raised in relation to the PMO was the allegation that BDC was claiming costs from external funders that it was not entitled to.

Evidence was found supporting the allegations that BDC submitted claims for costs associated with management of the PMO that in KPMG’s view, fell outside the parameters set by external funding agencies.

Until recently, BDC did not have a Protected Disclosure Policy, and at the time of the allegations, when the misconduct was reported, only limited actions were taken.

The severe weather events of 2021/22 and resulted in a significant increase in capital expenditure for BDC.

The increased risk and spend resulting from these circumstances were not adequately assessed by the Risk and Audit Committee and/or councillors, which would have helped mitigate this risk. There was a lack of oversight by management and a lack of controls.

An increased level of scrutiny over the PMO through use of additional controls and/or internal audit procedures could have helped prevent some of these issues.

KPMG noted that despite the above issues, the PMO appears to have delivered the projects it was responsible for delivering.

Council acknowledges the shortcomings detailed in KPMG’s report and is now turning its focus firmly to the future.

Since receiving KPMG’s report, council’s management team have been working on a series of improvements to processes and procedures, including the creation of a Protected Disclosure Policy and the establishment of a new Capital Works team.

A workplan of improvements will be reported through the Risk and Audit Committee, including revised Conflict of Interest, Procurement and Fraud Policies. The Risk and Audit Committee will be meeting this week to discuss the action plan.

-ENDS-
 
For further information please contact:
Community Engagement Team 
Buller District Council
Media.Enquiries@bdc.govt.nz