14 Feb 2019

Quotable Value questioned over 'reasonable' spend on booze

8:26 pm on 14 February 2019

An audit of a government property service has revealed declining revenue and hundreds of instances where company money was used to buy alcohol.

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Photo: 123RF

Quotable Value Limited (QV) was at parliament this morning for its annual review.

MPs from across the political spectrum hammered board members over aspects of an audit report provided to the Primary Production Select Committee ahead of the review.

New Zealand First MP Mark Patterson pointed out that the information provided by QV in its annual review was so sparse, that it was almost meaningless.

"If it wasn't for questions and the work from the auditor-general, it would be almost impossible to know what's going on in this organisation which has clearly got challenges," he said.

The audit pointed to major issues with QV's financial results and forecasting, saying the entity's performance was below already downgraded expectations.

QV's group revenue has been declining or flatlining since 2011-12 and it fell another $2.37 million in the last financial year, down to $38.2m for 2017-18. Its forecasts show a decline to $35.5m next year, before rising again to $38m in three years' time.

QV chair Raewyn Lovett accepted they did not have good systems in place but said they had been undergoing a transformation, which meant things should improve from here.

She said they would be dealing with any further improvements on a case-by-case basis.

Chief financial officer Greg Cate promised a staged roll-out between now and the end of June to deal with the issues raised by the audit in regard to QV's financial management systems.

Quotable Value CFO Greg Cate

Quotable Value CFO Greg Cate Photo: Supplied.

"Mostly related to automation of process and controls that you'd expect to see in a modern finance system, which we haven't had in place for a few years," he said.

National MP Hamish Walker questioned Mr Cate about what expenditure had flagged up concern.

"Possibly it's alcohol. They had some discrepancy on what is a reasonable level of alcohol which we've now defined and been clearer on," Mr Cate said.

"Probably the wording in some of our policies didn't help us to police it and it doesn't help an auditor to validate it and leaves it open to interpretation."

Upon further questioning Mr Cate said there were hundreds of cases within the organisation where alcohol was purchased to entertain clients.

Ms Lovett interrupted to say those cases were not all outside of policy and didn't all contribute to the findings of the auditor-general.

But she said they had now "closed that gap" by removing the word "reasonable" from the entity's guidelines around expenditure and had now put in place guidelines for spending.

The audit summary also noted QV had "a number of breaches of legislative requirements, some more significant than others".

But Ms Lovett said they were "not very serious".

She said if they had the detail they could go into it better, but she thought that would be in reference to a contractual issue they had with Auckland Council.

"Rather than there being breaches of legislation. They certainly haven't been raised."