Buller District Council Programme Management Office review enters next stage

Independent reviews show Buller District Council’s Programme Management Office (PMO) is delivering for ratepayers, but further investigation is needed to resolve outstanding questions about financial management.

Buller District Council has today released two reports from Morrison Low on the operation of the Programme Management Office and is also commissioning an independent forensic audit.

Chief Executive Steve Gibling says overall the Morrison Low reports (Review and Health Check Update) show the PMO has been effective in delivering a large volume of infrastructure work, while noting areas for further improvement. The review report notes that there are adequate checks and balances in place to provide transparency and accountability.

The review report outlines the history of the PMO including reviews in August 2021 (Morrison Low first health check for the Department of Internal Affairs) and November 2021 (Team Projects Advisory). It outlines actions taken following these reviews to establish an appropriate structure, processes, systems and guidelines including standard financial and project reporting formats. It finds this has ensured cost-effective and efficient practices that can be used across Council, not just in the delivery of infrastructure BAU.

“However Morrison Low was not specifically asked to review the financial statements in detail. The reports therefore do not conclusively determine whether there has been any mismanagement or misappropriation of funds.

“Serious allegations of mismanagement of funds have been made and must be addressed carefully and in a timely manner. For this reason council has decided to commission an independent financial forensic audit.”

A financial forensic audit is a process of reviewing financial statements to determine if they are accurate and lawful, or whether there has been any mismanagement or misappropriation of funds.

The audit will address external and internal complaints alleging irregular use of public funds, mismanagement and conflicts of interest relating to roading projects and unplanned expenditure of $3 million relating to Westport Trunk Main, Bulk Flow meters and treatment plant optimisation.

The Terms of Reference for this audit have been developed by a sub-committee consisting of the Mayor, Independent Chair of the Audit and Risk Committee Sharon Roche, Councillor Colin Reidy and Chief Executive Officer Steve Gibling. The audit will cover the period 1 January 2021 to 31 August 2023.

“The Terms of Reference set out objectives (listed below) that are intended to establish whether there is any truth to the allegations. Council is seeking to address these serious allegations in a way that balances transparency with respect for the privacy of all the individuals involved. For that reason, the full Terms of Reference will not be released.

“It is not possible to say how much the forensic audit will cost at this point, but it will be funded from within existing budgets. There is no firm timetable yet but my expectation is that this is to be completed by the end of this year,” says Mr Gibling.

“Given the multi-millions of taxpayers and ratepayers funding being managed by the PMO, it is a good investment in identifying any issues and ensuring best practice.”

Council will consider whether further action is required after the audit is complete.

Further information

Financial audit objectives

The objectives of the financial (forensic) audit are to:

1. Determine if conflicts of interest arise between entities employed and/or contracted by Council;
2. Determine if procurement processes required by external funders and/or Council have been adhered to;
3. Determine if employees and/or contractors are acting within their delegated responsibilities;
4. Determine if there have been incidences of irregular use of public funds;
5. Determine that appropriate supporting documentation is in place and relevant approvals obtained for invoice payments and / or accounting journals; and that the work performed in relation to said payments or journals are consistent with approved budgets / budget allocations;
6. Determine why the unplanned spending of $3 million arose, and further, why these expenses were not identified / budgeted for previously;
7. Determine whether the correct processes and procedures have been followed in regard to the procurement of services related to the $3 million unplanned spending; and
8. Identify process improvement opportunities in relation to the findings of the forensic audit.

Health check update 2023

Morrison Low were initially engaged by council in June 2023 to provide an update to the Infrastructure Health Check that was completed in 2021. The purpose of the Health Check was to provide continued assurance both internally and to the external funding partners on delivering an expanded and significant capital programme.

The findings identify that overall council is performing consistently within the level that can be expected from an organisation our size. There have been improvements made across the three waters and roading programmes of work compared to its 2021 review based on the Asset Management Maturity Assessment Model. Council still has further work to do to get towards the target range performance in these areas, and will act on the recommendations in the report.

MORRISON LOW PMO review

Following issues being raised internally and externally about the management of third party funds, an additional review was commissioned by Acting CEO Rachel Townrow to go further into the operation of the PMO.

As noted in the report, the establishment of the PMO has enabled council to deliver an almost unprecedented volume of capital works through external funding. With limits in Council’s ability to attract, recruit and retain an in-house team, the engagement of external contractors to resource the PMO is considered appropriate although the report notes this reliance on external resources can increase overall delivery costs.

Without this upscaling of skilled resource, it is unlikely that council would have been able to deliver the programme of works that has been achieved and would have been unlikely to secure the funding due to those limits.

There are recommendations for the PMO to adapt as the volume of work changes, and council will act on these.

-ENDS-

further information please contact:
Chief Executive Officer
Steve Gibling
Steve.Gibling@bdc.govt.nz