Govt expenses system flawed - Auditor-General

Significant flaws exist at every level of the Government ministerial expenses system, a report by the Auditor-General has found.

The report, tabled in Parliament this afternoon, reveals a system plagued by poor documentation of transactions, weak internal controls and a lack of understanding from those charged with administering it.

Though there was not systematic abuse of the spending rules, there were occasional examples of spending deemed outside the rules.

Auditor-General Lyn Provost is calling for legal reform of the system to make it easier to manage.

The "myriad rules, entitlements, and procedures" for ministerial spending are puzzling and need to be clarified, her report says.

"The weaknesses we have identified in the financial controls expose Ministerial Services and Ministers to greater risk of inappropriate spending and criticism.

"More attention needs to be given to the basics of financial accountability."

The report recommends the responsibility of Department of Internal Affairs for overseeing the system be put "beyond doubt".

It also calls for the system to have a clear legal basis, better administration and improved financial recording.

"The end result should be a stronger system that better supports and protects Ministers, by enabling officials to catch and correct mistakes early and as a matter of routine."

Prime Minister John Key says he is accepting many of the reports findings about what needs to change in the ministerial expenses system.

A review of the legal framework underpinning the system will be conducted after new legislation is introduced in 2011, he says.

He is also asking the Chief Executive of the DOIA to report back to him by February on how to improve administration of ministerial services.

- NZ Herald staff