20 Jul 2015

Earthquake recovery agencies cleared of financial wrongdoing

7:55 am on 20 July 2015

The Auditor-General has cleared several of Canterbury's earthquake recovery agencies of any wrongdoing, following an investigation into concerns about public spending and reporting.

Christchurch cathedral.

Photo: RNZ / Alexander Robertson

An eight page reply to a Christchurch homeowner about several aspects of the region's recovery has been published online by the Auditor-General, Lyn Provost, as a matter of public interest.

Cameron Preston has filed numerous Official Information Requests over what he believes is the Government's mishandling of the earthquake recovery.

In a reply to Mr Preston, Ms Provost said after considerable investigation she was satisfied there had been "no wrongdoing and that spending and reporting has been appropriate and transparent".

She said Mr Preston's concerns included the way the Government purchased properties in the residential red zones after the earthquakes and the outstanding claims estimates reported by the insurance firm Southern Response.

She said the financial mechanism - similar to the petty cash system - which the Government used to buy red zone properties was lawful and the delay in validating the spending was because 2011 was an election year.

Her conclusions were:

  • The Government's use of imprest supply to incur expenditure for the purchase of properties in the Christchurch Red Zone was lawful.
  • The estimates of outstanding claims liability and reinsurance receivables as at 30 June 2012 were appropriately reported by Southern Response.
  • The scope of the 2015 disestablishment report for the Canterbury Earthquake Recovery Authority is appropriate.
  • It is appropriate for the Department of the Prime Minister and Cabinet (DPMC) to report on the appropriations in Vote Canterbury Recovery in the DPMC annual report 2014/15.

Mr Preston asked why a 2012 audit by the Office of the Auditor-General made no mention of the fact that valuations used in Southern Response's financial statements were "materially different" to those provided by its independent actuary.

Ms Provost said the difference could be accounted for because the amount of reinsurance Southern Response had received was less than the amount assumed by its actuary.

Auditor-General Lyn Provost.

Auditor-General Lyn Provost. Photo: OFFICE OF AUDITOR-GENERAL

"My staff have spent a considerable amount of time looking into these matters," Ms Provost said.

"I see no reason to investigate these matters further, and I do not intend to do so."

She said her office would continue monitoring public expenditure on the recovery through ongoing audit work.

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