Part 1: Background

Nature and scope of the Auditor-General’s functions

The Controller and Auditor-General (the Auditor-General) is an Officer of Parliament. The Public Audit Act 2001 sets out his mandate and responsibilities.

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 keeping 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 carries out 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 keeping with the Auditor-General’s auditing standard on the independence of auditors.

The Auditor-General also engages private sector accounting firms to carry out his statutory functions for some public entities.

Figure 1 shows these different elements of our operating model.

Figure 1
Our operating model

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. The Auditor-General can also perform other services reasonable and appropriate for an auditor to perform and to audit other quasi-public entities.

Supporting accountability 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 departments and Officers of Parliament have incurred expenses and capital expenditure for purposes that are lawful and within the scope, amount, and period of the appropriation or other authority.

Performance audits and inquiries

The Office of the Auditor-General carries out 19 to 21 performance audits, special studies, and major inquiries each 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 responds to requests for approvals for pecuniary interest questions regulated by the Local Authorities (Members’ Interests) Act 1968. There are 50 to 100 enquiries each year about this Act.

Our current staff and contracted resource base

We employ about 315 staff in eight locations throughout New Zealand. We also engage about 60 audit service providers, in addition to Audit New Zealand, to carry out annual audits of public entities.