Part 17: Good practice guide on audit committees in the public sector
17.1
In March 2008, we published a good practice guide – Audit Committees in the public sector – to contribute to improved governance of public entities.
17.2
Audit committees can make a valuable contribution to improving the governance, and therefore the performance and accountability, of public entities. They have an important role in examining an organisation's policies, processes, systems, and controls through providing objective advice and insight. In doing so, they can identify potential improvements to governance, risk management, and control practices.
17.3
An effective audit committee shows that an organisation is committed to a culture of openness and continuous improvement.
17.4
After some well-publicised international accounting and auditing failures in 2001 and 2002, there has been an increasing focus on the role of audit committees in the public and private sectors. Overseas regulatory bodies are intervening more to set clear governance and assurance standards and expectations. Although New Zealand might not legislate for mandatory audit committees, Parliament and the public expect the public sector to adopt governance principles that are consistent with good practice.
17.5
Our good practice guide sets out the principles and practices needed to set up and effectively operate an audit committee in the public sector. It also provides other useful resources, such as examples of committee charters, and checklists. The guide is not sector-specific because the principles and practices apply throughout the public sector.
17.6
The Auditor-General expects all public entities to consider setting up an audit committee in line with the good practices identified in our guide.