Part 1: Background

Annual plan 2007/08.

Role and functions of the Auditor-General

The Controller and Auditor-General (the Auditor-General) is an Officer of Parliament.

His mandate and responsibilities are set out in the Public Audit Act 2001.

The Auditor-General is independent of executive government and Parliament in discharging the functions of the statutory office, but is answerable to Parliament for his stewardship of the public resources entrusted to him.

Parliament seeks independent assurance that public sector organisations are operating, and accounting for their performance, in accordance with Parliament’s intentions. There is also a need for independent assurance of local government – local authorities are accountable to the public for the activities they fund through locally raised revenue. As an Officer of Parliament, the Auditor-General provides this independent assurance to both Parliament and the public.

Our operating model

The Auditor-General’s staff are organised into two business units – the Office of the Auditor-General and Audit New Zealand.

The Office of the Auditor-General undertakes strategic audit planning, sets policy and standards, appoints auditors and oversees their performance, carries out performance audits, provides reports and advice to Parliament, and carries out inquiries and other special studies.

Audit New Zealand is the operating arm, and carries out annual audits allocated by the Auditor-General. It also provides other assurance services to public entities, within the Auditor-General’s mandate and in accordance with the Auditor- General’s auditing standard relating to the independence of auditors.

The Auditor-General also engages private sector auditing firms (audit service providers) to carry out his statutory functions in relation to some public entities.

Our operating model.

For the majority of public entities (other than schools), the Auditor-General allocates annual audits to auditors. He chooses from a pool of audit service providers that includes Audit New Zealand, the four major chartered accountancy firms, and a range of smaller firms. The appointments of auditors of schools as well as some public entities that have a strong commercial focus are given the option of a contestable regime where the Auditor-General deems that option to be appropriate.

Size and scale of our operations

Annual audits

The Auditor-General has a statutory duty to conduct annual audits of the financial reports and other audits required by various statutes of about 4000 public entities, of which 3000 are schools and other very small entities.

Performance audits and inquiries

The Office of the Auditor-General aims to complete 19 to 21 performance audits, special studies, and major inquiries each financial year. It also considers 200 to 300 requests for inquiries each year from taxpayers, ratepayers, and members of Parliament. A few of these requests lead to the Auditor-General carrying out a major inquiry. The Office of the Auditor-General also administers the provisions of the Local Authorities (Members’ Interests) Act 1968. There are 50 to 100 enquiries each year in relation to this Act.

Services to Parliament

The Office of the Auditor-General provides reports and advice to select committees and responsible Ministers. Each year, we prepare 120 to 140 reports to assist select committees with their financial reviews of public entities and Estimates examinations, and 120 to 130 reports to Ministers on the results of annual financial audits. The Office of the Auditor-General and appointed auditors also provide independent assurance to Parliament that expenses and capital expenditure of departments and Officers of Parliament have been incurred for purposes that are lawful, and within the scope, amount, and period of the appropriation or other authority.

Our current staff and contracted resource base

We employ about 270 staff in eight locations throughout New Zealand. We also engage about 70 audit service providers, in addition to Audit New Zealand, to carry out annual audits of public entities.

Our strategic direction

Figure 1
Statement of our purpose, vision, strategy, and identity

Core purpose Why are we here?	To provide independent assurance that public entities are operating and accounting for their performance in accordance with Parliament’s intentions.		Our stakeholders Parliament Public entities Taxpayers Ratepayers Local authorities Audit service providers Staff Intermediate outcomes Parliament and the public know that public entities undertake activities: in an effective and efficient manner; within the authority granted by Parliament, using resources in an economical manner; according to appropriate standards of behaviour; giving full, accurate accounts of their activities, and of their compliance with Parliament’s intentions; and that, if not, we will tell them.
Vision Where are we going?	To set the benchmark for design and delivery of audit assurance products and services, both nationally and internationally.
Strategy How do we get there?	Our strategy is based on product leadership. We facilitate real change and improvement in the public sector by: shaping our services to anticipate and respond to Parliament’s and other stakeholders’ needs and our changing environment; building our capability to create and deliver our services; and fostering relationships and ways of working that support our strategic plan.
Identity What do we want to be known for?	People Professional leadership Technically strong Expert advice Adaptability Access to best people	Output classes Annual audits and other assurance services Advice to Parliament and other stakeholders and Controller function Performance audits and inquiries

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