Part 7: An overview of sources of requirements and guidance

Public sector purchases, grants, and gifts: Managing funding arrangements with external parties.

7.1
This overarching guide has described:

  • the fundamental principles that apply to all funding arrangements with external parties;
  • the types of funding arrangements with external parties that public entities enter into and manage;
  • the strategic considerations relevant to how a public entity plans for funding arrangements with external parties, both at a business level and for particular proposals for funding arrangements; and
  • our high level expectations for how public entities will manage different funding arrangements throughout their life cycle.

7.2
More detailed rules and guidance are contained in a wide range of other sources, including other guides we have published. This Part describes the other sources of guidance or advice that public entities need to be familiar with when they develop and manage funding arrangements with external parties. Any specific laws or other rules that apply to a sector will prevail over the general expectations outlined in this or other good practice guides issued by the Auditor-General.

Legal requirements

7.3
All public entities need to prepare their policies and procedures in a way that supports compliance with any applicable legal obligations. Acting lawfully is a fundamental obligation for public entities, and is reflected in the basic principles discussed in Part 2. The particular obligations will vary according to the nature of the public entity and the sector, but may include:

  • general public and administrative law duties to act fairly, reasonably, and in keeping with the law;
  • obligations arising from international law and international trade agreements that bind the Government;
  • sectoral legislation relevant to the management of public funds and the powers of public entities;
  • any other limits or rules in the specific legislation that establishes a public entity or group of public entities (such as the Human Rights Act establishing the Human Rights Commission, the New Zealand Superannuation and Retirement Income Act 2001 establishing the Guardians of New Zealand Superannuation, or the Private Schools Conditional Integration Act 1975 setting out the terms on which private schools can integrate with the public school sector); and
  • specific rules in general legislation that may affect particular funding arrangements, such as the Commerce Act 1986, the Fair Trading Act 1986, or the various contract statutes.

7.4
Relevant sectoral legislation includes:

  • the Public Finance Act 1989 and the annual Appropriation Acts, for central government departments;
  • the Crown Entities Act 2004, for Crown entities;
  • the Local Government Act 2002, for regional and territorial authorities;
  • the New Zealand Public Health and Disability Act 2000, for district health boards; and
  • the Education Acts of 1964 and 1989 for schools and tertiary institutions.

The Auditor-General’s good practice guides

7.5
The Auditor-General publishes good practice guides on topics where experience suggests that public entities would find some guidance useful. Because the Auditor-General’s mandate covers the whole public sector, the guides are usually written at a level of principle. Different public entities are then expected to consider how they can best reflect those principles in the policies and procedures they put in place to meet their own working needs.

7.6
The good practice guides provide the basis for any later assessment by the Auditor-General of the adequacy of a public entity’s systems or practices, whether in the course of annual audits, performance audits, or inquiries. Good practice guides relevant to managing funding arrangements with external parties include:

  • this guide, which explains how the various sources of guidance fit together, and sets out our overall principles and expectations;
  • Procurement guidance for public entities, which is relevant to all four purchasing categories;
  • Principles to underpin management by public entities of funding to non-government organisations, which is relevant to all categories, but particularly to relational contracts and grants;
  • Achieving public sector outcomes with private sector partners, which is relevant to major contracts, both conventional and relational;
  • Managing conflicts of interest: Guidance for public entities, which is relevant to all categories and all decision-making; and
  • Controlling sensitive expenditure: Guidelines for public entities, which is relevant to gifts.

Other publications by the Auditor-General

7.7
There are a range of other publications from this Office that include relevant advice and comment. A full list of publications is available on our website (www.oag.govt.nz).

7.8
Recent performance audit reports on grants include Te Puni Kōkiri: Administration of grant programmes, New Zealand Trade and Enterprise: Administration of grant programmes – follow-up audit, and New Zealand Agency for International Development: Management of overseas aid programmes.

7.9
Recent reports on inquiries include Management of conflicts of interest in the three Auckland District Health Boards, Inquiry into the Ministry of Health’s contracting with Allen and Clarke Policy and Regulatory Specialists Limited, and Inquiry into certain aspects of Te Wānanga o Aotearoa.

7.10
The auditing standards published by the Auditor-General set out the general standards that we apply on topics such as waste, probity, performance, accountability, and legislative compliance.

Central government policy and mandatory rules on procurement

7.11
On behalf of the Government, the Ministry of Economic Development oversees the government’s general policy on procurement, and the mandatory rules that Cabinet has set for the way government departments purchase goods and services (Mandatory Rules for Procurement by Departments). The policy and rules apply to and bind government departments, and other public entities in the state sector are encouraged to consider them. For a public entity bound by them, the rules take precedence over our general guidance if there is any conflict. We discuss the rules further in our publication Procurement guidance for public entities. The rules will usually be relevant to major conventional contracts, and may sometimes be relevant to other purchase categories depending on the value of the contract and the sector. (The mandatory rules do not apply to the purchase of services for public health, education, or social services purposes.)

State sector requirements, standards, and guidelines

7.12
The Treasury, the State Services Commission (SSC), and others publish rules and guidelines on relevant topics. The main publications in this category at present are:

  • Treasury Instructions;1
  • Treasury circulars;2
  • Treasury NGO guidelines Guidelines for contracting with Non-government Organisations for Services sought by the Crown;3
  • SSC code of conduct Standards of Integrity and Conduct;4
  • SSC Guidelines for Treatment of Intellectual Property Rights in ICT contracts;5
  • Ministry for the Environment Govt3: towards sustainable practice;6
  • Department of Labour Construction Tendering – Health and Safety Guide;7
  • Office of Community and Voluntary Sector – general information and guidance is available on their website, particularly for funding community, voluntary, and Maori organisations;8 and
  • Ministry of Social Development – general information and guidance is available on their website on the Pathway to Partnership programme and other government initiatives to support the non-government organisation social services sector.9

Industry-specific standards

7.13
Different industries, particularly those operating in specialised and complex environments, may also have their own standards or operating guidelines. When interacting with that industry, public entities should be familiar with the relevant industry standards.

The public entity’s own policies and procedures

7.14
Finally, it is important that any staff member who is entering into or managing a funding arrangement with an external party is familiar with the public entity’s own policies and procedures. Usually, these internal systems and guidance will have been prepared carefully and will cover the whole range of considerations and obligations discussed in this guide. They should provide a solid basis for a staff member to proceed with confidence, by drawing attention to any external or internal procedural requirements and supporting the exercise of careful judgement when needed.

1: Available at www.treasury.govt.nz.

2: Available at www.treasury.govt.nz.

3: Available at www.treasury.govt.nz.

4: Available at www.ssc.govt.nz.

5: Available at www.e.govt.nz.

6: Available at www.mfe.govt.nz.

7: Available at www.osh.govt.nz.

8: Available at www.ocvs.govt.nz.

9: Available at www.msd.govt.nz.

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