Effectiveness of the New Zealand Debt Management Office.

The New Zealand Debt Management Office (NZDMO) is a unit within the Treasury. It is responsible for the efficient management of the Crown’s debt and associated financial assets within an appropriate risk management framework. Its broader responsibilities include providing capital market advice and financial transaction services to other agencies of the Crown. NZDMO manages gross debt of about $40,000 million and financial assets of approximately $18,000 million.

In carrying out a performance audit of NZDMO, my overall objective was to determine NZDMO’s level of performance, under the authority of the Minister of Finance, in managing the Crown’s public debt and financial asset portfolios.

Given the specialist technical functions of NZDMO, I sought expert technical assistance with the audit. I appointed KPMG under section 33(1) of the Public Audit Act 2001 to carry out the performance audit on my behalf under section 16(1) of the Act.

The material in my audit report is of a very technical nature because of the specialist functions undertaken by NZDMO. The non-technical reader can be assured that the audit did not identify any fundamental concerns with the performance of NZDMO.

Comparison of NZDMO’s internal policy framework against internationally recognised guidelines was used to assess NZDMO’s effectiveness.

Within the context of its existing mandate, the achievements of NZDMO in a period of significant change are considerable. NZDMO has made appropriate adjustments to its operating framework as the Crown’s fiscal position has changed. NZDMO has moved from being primarily a debt manager to an asset and liability manager.

NZDMO’s continuous improvement approach has enabled it to, among other things, introduce better risk management techniques, develop and maintain its own information technology, and achieve operational efficiencies.

The audit identified areas of governance, risk management, portfolio management policy, and performance reporting where NZDMO could make some further improvements.

I would like to thank the NZDMO Treasurer and staff of NZDMO for their positive assistance with this audit.


K B Brady
Controller and Auditor-General

22 June 2007

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