Part 5: Information on under- and over-recovery of costs

Department of Conservation: Administration of the Conservation Services Programme – Follow-up audit.

Providing the Ministry of Fisheries with timely expenditure information

5.1
In our 2002 report, we found timing difficulties arising from differences between fishing years, the Crown’s financial year, and the Minister’s timeframe for setting a levy order for the coming fishing year.

5.2
We recommended that DOC provide the Ministry of Fisheries with timely information on the Conservation Services Programme’s expenditure as soon as possible after the end of each financial year. In turn, the Ministry of Fisheries needed to give DOC timely information on services provided by the Ministry of Fisheries for relevant projects (such as observer days).

What progress has been made in implementing our recommendations?

5.3
Communication between DOC and the Ministry of Fisheries has improved. Both organisations have worked to significantly improve the flow of information relating to cost recovery, rather than focusing only upon year-end expenditure.

5.4
The Ministry of Fisheries believes that there has been considerable improvement in the cost recovery information provided by DOC, and that this is reflected in the Conservation Services Programme’s annual plan.

5.5
The Ministry of Fisheries reported a further improvement in the sharing of information between DOC and the Ministry of Fisheries. An “Expectation Letter”, dated 26 August 2004, records the framework for the working relationship between DOC and the Ministry of Fisheries in relation to setting the Conservation Services Levy.

5.6
The “Expectation Letter” includes timelines and flow charts that map the levy-setting process for the annual 1 October levy and the 1 April amendment levy (levies are reviewed and amended during the fishing year as more complete information becomes available). By recording the responsibilities of each organisation, the “Expectation Letter” should ensure that timely and appropriate information exchanges occur.

5.7
The Ministry of Fisheries and the seafood industry have established a set of operating policies to promote consistent and transparent management of under- and over-recoveries relating to previous financial years when setting a cost recovery levy.

5.8
DOC advised us that it is receiving from the Ministry of Fisheries more detailed, accurate, and timely information on the delivery of observer days.

Our conclusions

5.9
DOC and the Ministry of Fisheries have improved the process for exchanging information to manage the under- and over-recovery of costs associated with the Conservation Services Levy.

5.10
The Ministry of Fisheries is providing more detailed, accurate, and timely information on observer days.

Providing the Minister of Fisheries with information the Minister is required to consider

5.11
In 2002, we recommended that the Ministry of Fisheries ensure that it provides the Minister of Fisheries with information the Minister is required to consider under section 265 of the Fisheries Act 1996.

What progress has been made in implementing our recommendation?

5.12
The Ministry of Fisheries provided us with copies of its advice papers given to the Minister of Fisheries, for the Fisheries and Conservation Services Cost Recovery Levies for 2003-04 and 2004-05. These papers recommend the proposed cost recovery levies to be applied for the given year, and both papers refer to the mandatory obligation created by section 265 of the Fisheries Act 1996.8

5.13
During the annual audit of the Ministry of Fisheries for 2003-04, we confirmed that cost recovery levies were monitored, enabling future levy orders to be accurately adjusted for under- and over-recoveries from previous years. The audit also confirmed that the Ministry was now providing the Minister with information for his consideration when setting the levy order, and noted that communication between the Ministry of Fisheries and DOC was much improved.

5.14
In 2002, there was no method agreed with the industry for determining which expenditure or revenue variances were recoverable, although a working party had been set up to establish principles or rules for this purpose. The Ministry of Fisheries and the seafood industry have now agreed to a set of guiding principles for the recognition and analysis of cost recovery levies.

5.15
A submission by SeaFIC on the proposed levies for the 2003-04 fishing year acknowledged the success of the joint under- and over-recovery working group in establishing agreed principles for integrating recovery results into levy orders.

Our conclusion

5.16
DOC and the Ministry of Fisheries have put in place procedures for providing the financial information necessary for the Minister to meet his statutory obligations under the Fisheries Act 1996.

8: When recommending a new levy order, the Minister of Fisheries is required to have regard to the under- or over-recovery of costs of any conservation services and/or fisheries services incurred by the Crown in a previous financial year that the Minister of Fisheries has not previously had regard to.

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