Part 9: Auditor-General's good practice guides

Central government: Results of the 2006/07 audits.

The Auditor-General has a statutory responsibility to audit the financial and other accountability information of every public entity, and has the ability at any time to examine performance on a range of dimensions or to inquire into an entity's use of public resources. Putting these various functions together has resulted in us focusing our efforts on five main areas:

  • performance;
  • acting within authority;
  • waste;
  • probity; and
  • accountability.

Although the Auditor-General's primary role is to provide independent assurance to Parliament on these matters, our work should also contribute to improvements in public sector management and performance. To help entities understand our approach and to address their own responsibilities effectively, in recent years we have renewed our emphasis on the development of good practice guides on topics of general interest.

Producing a good practice guide

As a result of our general work with public entities on annual audits, other assurance services, performance audits, and inquiries, we may recognise that certain aspects of public sector management are problematic or that a number of entities are grappling with similar issues. Where a pattern emerges, we may conclude that some general guidance would be helpful for the public sector.

We are aware that good practice expectations come from a range of other entities, such as State Services Commission and the Treasury, which have a leading role in providing such guidance to the state sector. Therefore, we carefully consider the circumstances in which we issue good practice guidance. We note, however, that no other agency covers the whole public sector. The communication of the Auditor-General's expectations, both to entities and to auditors, helps develop a common understanding of important issues facing the public sector.

Once the need has been identified, we follow a careful development process to produce a guide. This includes research on the New Zealand and international legal, administrative, and practical context, as well as consultation with other agencies with an interest in public management and/or the topic in question. It is important that the guidance, once produced, is in harmony with other support and advice available to public entities.

A good practice guide is generally written on the basis of providing principles rather than detailed rules, although it will usually also address some of the more detailed practical issues that many entities face. This approach means the guidance is flexible enough to apply to the wide range of central and local government entities within the Auditor-General's mandate. The aim is that the guidance will state the Auditor-General's view of good practice, and will help entities to develop policies appropriate to their own situation.

How we use good practice guides

Good practice guides have a life cycle, which reflects that it takes time for entities to digest and apply the relevant principles to their own systems, and that management systems and approaches will evolve over time.

Once a good practice guide has been issued, therefore, our initial focus is on education and information - ensuring that the guide is widely available and that its contents are being considered. We may later seek assurance that, where applicable, the guidelines have informed the development or revision of each entity's own policies.

We also use the principles, expectations, and guidance contained in good practice guides as a basis for setting our expectations when carrying out performance audits and inquiries under the Public Audit Act 2001.

Over time, it may become apparent that new developments, later audit findings, new legislation and policy, and changing expectations are affecting the relevance of the good practice guide on a particular topic. At that point, we would review and update the guide.

Recent and current work on good practice guides

In the past two years, we have issued the following good practice guides:

  • Principles to underpin management by public entities of funding to non-government organisations (June 2006);
  • Local government codes of conduct (June 2006);
  • Controlling sensitive expenditure: Guidelines for public entities (February 2007);
  • Managing conflicts of interest: Guidance for public entities (June 2007);
  • Guidance for members of local authorities about the law on conflicts of interest (June 2007);
  • Turning principles into action: A guide for local authorities on decision-making and consultation (September 2007); and
  • Audit committees in the public sector (April 2008).

Part 10 of this report discusses audit committees, the topic of our most recent good practice guide.

During 2008, we expect to issue updated guidelines on procurement. We are also preparing a good practice guide on public entities setting fees to recover costs.

The good practice guides we have published are listed on our website at

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