$300k In Misallocated Funds Returned To Martinborough

Friday, 5 July 2024, 6:27 pm
Article: Emily Ireland - Local Democracy Reporter

Just over $300k in historically misallocated funds has been returned to Martinborough.

An internal review has found that South Wairarapa District Council [SWDC], which is in charge of the administration of Martinborough's Pain Farm, had overcharged the farm’s account for more than a decade.

The funds have now been paid back and are available for the Martinborough Community Board to distribute through community grants.

Pain Farm was gifted to the Martinborough community in 1932.

Any income from the estate is used for the benefit of Martinborough residents and is distributed by the Martinborough Community Board [MCB] which has a governance role of the Pain Farm Trust Lands.

The victory comes more than five years after the previous community board asked SWDC to see the financial records for the 85-hectare Pain Farm Estate.

MCB chair Storm Robertson said he was grateful for the work the council’s chief executive Janice Smith had done to identify the “fair chunk of money” that was incorrectly taken from the Pain Farm accounts for more than a decade.

“We, and the previous community board, have been aggressively pushing our case and what Janice has delivered in the end is something that was more than what our expectation was.

“Repaying that is an act of trust and faith.”

MCB member Angela Brown agreed and said the move had improved trust in the council “which we didn’t have before”.

“This is a big thing for them to admit and I don’t think we could have had this result under anyone but a new chief executive.”

In a report to the community board, which meets next week, SWDC chief executive Janice Smith said Pain Farm accounts had been reviewed from 2006 to 2024.

The review found that too much money had been taken from the Pain Farm account for “administrative costs”.

“It was clear that something changed in the accounting treatment for the Pain Farm accounts in 2011-12 where a significantly increased level of internal charges occurred,” Smith said.

“As the farm is leased as well as the dwellings, it is appropriate that some form of allocation of administrative costs occurs, but the difference that occurred between 2010-11 and 2011-12 was significant at $14,384.

“This increased level of allocation continued and increased over time until the total allocation in 2023-24 became $59,237.

“This level of internal recovery is not appropriate.”

Smith said that from the 2019-20 financial year, the level of detail provided in the accounts was also reduced “which made it difficult for the Board to understand the work taking place on Pain Farm”.

“This led to a number of questions from the Board and a decreased level of trust in the information being presented,” Smith said.

As a result, the Pain Farm accounts have been credited $302,326.

Of this, $222k is “overhead allocation correction”, almost $54k is “personnel cost correction", $14k is “expenses correction”, and almost $12k is “rates repaid by tenants correction”.

Smith said the ongoing allocation for administrative purposes was now about four hours per week.

The amendment to the Pain Farm accounts will not result in any additional charge to ratepayers.

The movement will be between reserves identified in the Annual Report as “Public equity”.

It is an accounting transaction between the two reserves accounts, Smith said.

- LDR is local body journalism co-funded by RNZ and NZ On Air.

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