ONE News can confirm that independent auditors were called in to investigate at the Ministry of Health, following what Treasury says is the serious financial mismanagement of the Ministry's $24 million head office refit.

The Government approved the project to refit the Ministry's head office in Wellington in 2014, on the basis that the Health Ministry would self-fund the work from forecast cash reserves.

However Treasury papers obtained by ONE News show the Ministry 'miscalculated' its reserves and didn't have enough money to complete the project.

The Director General of Health, Chai Chuah, said the Health Ministry’s corporate finance team made a mistake in its forecasts.



So, prior to the last budget, it asked the Government for $18 million to finish the work.



Papers show Treasury was very concerned about the funding miscalculation, describing it as "serious financial mismanagement".



And what really upset Treasury was that the Ministry of Health never had enough money to do the project when it got the Government's approval in 2014.



Treasury believes it would have picked up the shortfall if it had been involved in the process.



Treasury's chief executive, Gabriel Makhlouf, sent a letter to the Ministry of Health's then acting director general Mr Chuah in which he said: "The new bid for funding brings into question the governance and financial management practices of the Ministry."



Mr Chuah brought in auditors PwC to investigate and a Treasury summary of the audit report shows there were failures of governance, capital planning, documentation and reporting.

Whether I should stay or resign, you need to talk to other people about that - Director of Health Chai Chuah

And that left Treasury with no confidence that funding problems like this wouldn't happen again.