Overspending by the Penrhyn Island Administration led to the Cook Islands Ministry of Finance withholding four months of funding last year.
A Public Expenditure Review Committee investigation shows the Ministry of Finance and Economic Management wanted to highlight its concerns over the mismanagement of the northern islands' personnel budget.
The island, which has a population of about 200, had overspent its personnel budget by $US49,000 dollars.
The executive administrative officer at the time, Vaine Wichman, could not identify for the committee any actions taken to reduce the overspend, such as a lay off of staff, reduced wages, or change to part time duties.
But some did take leave without pay, cutting the bill slightly.
Another PERC report showed overspending of more than $US600,000 dollars by the Cook Islands power authority, Te Aponga Uira.
The accounting firm KPMG says the overspend was caused by a breach of procurement policies.