Auditor-General's foreword

Controlling sensitive expenditure: Guidelines for public entities.

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 past reports by Auditors-General, as well as in the many queries my Office receives. 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.

This guide 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.

The guidelines are grounded in general public sector norms, and summarise my view of good practice. I may use aspects of them when conducting performance audits or inquiries under section 16 or section 18 respectively of the Public Audit Act 2001, or in annual financial audits.

For those working close to the centre of government and political debate, this guide may simply draw together material on the types of judgements they make every day. For others, who work in a range of entities spread across the public sector (including local government), these issues may arise less frequently. I hope that this guide will become a useful source of advice for both groups.

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.


K B Brady
Controller and Auditor-General

5 February 2007

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