KEY POINTS:
A report into the $600 million Budget miscalculation which left Treasury and the IRD red-faced has found Inland Revenue used out of date data and did not use an agreed calculation procedure.
The $600 million mistake, revealed last month, meant the operating balance appeared to have slipped into deficit by nearly $400 million, when the reality was a surplus of about $200 million. Secretary to the Treasury John Whitehead and Commissioner of Inland Revenue Bob Russell yesterday released a report into the error which lay in the calculation of tax revenue.
"The root cause of the error was that Inland Revenue did not use the accrual calculation agreed by Treasury," the report said.
"Inland Revenue varied the calculation procedure and used out of date data." The report added that "this was not a one-off event - incorrect data had been entered into the financial system each month since July 2007".
Mr Russell said IRD and Treasury had taken the error very seriously and had agreed with all the recommendations of the investigation report.
"We used the wrong tax accrual figures.
"That was a human error - but a bad one," he said previously. He has apologised to the Minister of Revenue Peter Dunne and to the Minister of Finance Michael Cullen.
Key recommendations in the report are to improve communications between the two departments, and improve administration control and quality assurance over the process for calculating provisional tax accruals at Inland Revenue.
The report reveals that concerns about the numbers were first discussed around February 12 and the numbers released early March. It says Treasury should have considered delaying the publication or providing additional information rather than publishing the accounts with unexplained variances between actual and forecast numbers.
- NZPA
