6.6 Controlling sensitive expenditure: Guidelines for public entities

Local government: Results of the 2005/06 audits.

Spending by a public entity that could be seen to give some private benefit to a staff member, such as overseas travel, can be controversial. We call this type of spending "sensitive expenditure". Although it may be perfectly justified, its potential sensitivity means that careful decision-making is needed.

Public entities' sensitive expenditure decisions have featured in a number of our past reports, as well as in the many enquiries we receive. There is a need for general guidelines to help public sector leaders and senior managers. These people, who should "set the tone at the top", have a major influence on an entity's sensitive expenditure.

In February 2007, we published Controlling sensitive expenditure: Guidelines for public entities,1 which outlines the principles applicable to sensitive expenditure and an organisational approach that embraces leadership from the top of the organisation and having suitable sensitive expenditure policies and procedures. It also provides practical guidance on specific types of sensitive expenditure.

Ultimately, public entities are responsible for their own sensitive expenditure controls and decisions, with good judgement required when making decisions. Good controls and good judgement should enable entities' sensitive expenditure to withstand Parliamentary and public scrutiny.

The guidelines are our view of good practice that public entities should use to control sensitive expenditure. The guidelines outline expectations and guidance that we may use in future when carrying out performance audits or inquiries under section 16 or section 18 of the Public Audit Act 2001 or in annual financial audits.

1: ISBN 0-478-18171-X

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