Part 7: Reviewing and reporting on the performance of Crown entities
7.1
The responsible Minister needs clear information about a Crown entity’s performance for assurance purposes or to have early warning of any performance issues and risks so they can take action to address them.
7.2
Thorough reviews of each Crown entity’s performance can provide departments with a rich source of information to help them carry out other tasks. For example, a department’s review of a Crown entity’s financial performance should inform its review of, and advice about, the entity’s financial planning.
7.3
In this Part, we set out our findings about:
- briefings to responsible Ministers about the performance reports of Crown entities;
- standardised reports about the performance of Crown entities; and
- monitoring and reporting on cross-sector activity.
Key messages
7.4
We make two recommendations about how the departments can improve the way they review and report on the performance of Crown entities.
7.5
Typically, the departments provided the responsible Ministers with information about a Crown entity’s performance more than two months after the end of a performance review period. The information they provided was not always clear or set out in a consistent way.
7.6
In many cases, information provided to the responsible Minister did not set out the monitoring department’s conclusions or overall view on the Crown entity’s performance or significant issues it faced.
7.7
The 2007 requirement for monitoring departments to report to a Cabinet committee on the performance of some Crown entities (including several entities we selected) using a standard format has been valuable. It has resulted in succinct, clear information and conclusions about the financial and non-financial performance of those entities.
7.8
MED has adopted this standard format for internal reports on all Crown entities it monitors. This has resulted in clearer information about the performance of these Crown entities. We commend MED for this initiative.
Briefings to responsible Ministers about the performance reports of Crown entities
Ministers often do not receive clear and timely information about the performance of Crown entities from the departments.
7.9
The 10 selected Crown entities must each prepare regular performance reports for the responsible Ministers. For nine of the 10 entities, the reporting requirement was part of their output agreement or memorandum of understanding with the responsible Minister.
7.10
All the Crown entities prepared performance reports, most of which were long and included detailed information. Representatives from three Crown entities told us that they saw little value in preparing the performance reports. The chairperson of one Crown entity told us that the board did not use the performance reports and that it relied on other performance reporting.
7.11
The departments reviewed and reported on a Crown entity’s performance and results mainly by preparing a written briefing to the responsible Minister on the entity’s performance report. MCH and DIA carried out this work regularly for the entities we looked at. MED carried out this work regularly for three of the Crown entities we looked at. It did not carry out this work for the other entity that we looked at.
Timeliness of briefings
7.12
There was often a delay between the end of the performance reporting period for the Crown entity and the department preparing a briefing for the Minister on the entity’s performance. The delay was usually two to three months. The shortest delay we saw was five weeks – the longest, nearly seven months.
7.13
Part of the reason for the delay may have been because Crown entities were typically expected to deliver performance reports 4-8 weeks after the end of each reporting period.
7.14
Figure 4 shows the average time between the end of a reporting period and the monitoring department preparing a written briefing for the Minister on the entity’s performance results for that period.
Figure 4
Average time between the end of a reporting period and the monitoring department preparing a briefing for the Minister
* Note: There was only one briefing on MED’s file for this Crown entity.
7.15
It is undesirable to have a long delay between the end of a reporting period and the department preparing a briefing. It could result in a delay in detecting and addressing any performance issues and risks. It may also mean that the Minister does not have all the information they need when having a routine catch-up meeting with the Crown entity’s chairperson.
7.16
We are concerned that some of the departments were providing their written briefings to Ministers very late. We question what value a Minister will get from a performance briefing that is more than three months old. Most Crown entities must prepare a performance report every quarter. This means that a briefing that is more than three months old is likely to reach the Minister at, or after, the time that the entity’s next performance report is due.
| Recommendation 6 |
|---|
| We recommend that the departments carry out work to improve the timeliness of information they provide to the Minister about each Crown entity’s performance. |
Content of briefings
7.17
In many cases, written briefings did not set out the monitoring department’s conclusions or overall view on the Crown entity’s performance. Briefings usually set out information about detailed aspects of the entity’s performance.
Are Crown entities on schedule to deliver results specified within the statement of intent?
7.18
Each Crown entity must prepare an SOI. One of the reasons it must do so is to provide a base against which the entity’s performance can be assessed. We expected that the departments’ briefings would provide clear information about whether entities were on schedule to meet the targets and outcomes in their SOIs. Figure 5 shows whether briefings usually included this information. Briefings for only one of the selected 10 entities set out this information clearly.
7.19
All of the departments can improve the reporting of this information. It is important that they do so, so the Minister has clear information about actual or potential performance issues.
Clarity and consistency of briefing information
7.20
The clearest briefings we saw followed a standard template, and presented financial and non-financial information about the entity’s performance in a table. They included a “traffic-light” judgement about whether performance was satisfactory – both overall, and for specific performance areas. This was very effective because performance information was clear and easy to understand (see also paragraphs 7.27-7.29).
7.21
The standard format made it easy for staff to see what types of information the report needed to include.
7.22
There was far less consistency in other reporting formats we saw. Each department’s briefings for a Crown entity presented information differently from one briefing to the next. Some briefings used different headings, followed a different structure, and/or reported information in a different way. For example, briefings on one entity reported on its performance as “year to date” in some briefings and “rolling average over last 12 months” in others. Another set of briefings presented information about variances differently – sometimes as a percentage, sometimes as a dollar figure.
7.23
Inconsistent reporting meant that the departments did not always have a good benchmark or review trends of a Crown entity’s performance. This suggests that the departments did not review how the entity’s performance had changed from one quarter to the next.
Figure 5
Clarity of departments’ briefings on the performance of Crown entities
| Monitoring department | Crown entity | Clear information?* | Comment |
|---|---|---|---|
| Department of Internal Affairs | Crown entity 1 | Partly | There was some financial tracking for the quarter. DIA has started to comment on non-financial performance. |
| Crown entity 2 | Yes, usually | Older briefings have detailed information about financial performance. There was less information in recent briefings. | |
| Ministry for Culture and Heritage | Crown entity 1 | Partly | There was a statement about overall performance. It is not clear whether this covers both financial and non-financial performance. We question the rigour of MCH’s assessment. |
| Crown entity 2 | Partly | ||
| Crown entity 3 | Partly | There was clear information about tracking of non-financial performance. Information about financial performance was not clear. | |
| Crown entity 4 | Yes | ||
| Ministry of Economic Development | Crown entity 1 | Partly | There was a statement about overall performance. It was not clear whether this covers both financial and non- financial performance. The full-year briefing included clear information about performance over the year and included useful trend information. |
| Crown entity 2 | Partly | Briefings provided qualitative information about activities carried out, noting outputs or deliverables that were not on track. Some information about financial performance was included. There was no statement about overall performance. | |
| Crown entity 3 | No | MED prepared one briefing for the Minister on the entity’s performance. This included some information about aspects of the entity’s financial and non- financial performance. There was no statement about overall performance. There was very limited information about non-financial performance. | |
| Crown entity 4 | No | Although briefings discussed aspects of financial performance, there were no clear conclusions about overall financial performance. |
* Was there clear information about whether the entity is on schedule to meet targets and outcomes within the SOI?
7.24
Some briefings used text rather than tables to present information about actual performance against what had been planned. This was effective when commenting on overall performance or a key performance measure. However, when multiple measures were commented on (particularly financial information), it was difficult to understand how the entity was performing and where any issues existed.
Anticipating future performance issues
7.25
Most briefings were not forward-looking. The departments seldom drew information together in briefings to reach conclusions about significant issues facing a Crown entity or environmental changes that could affect the entity’s future performance.
7.26
The main exception we saw for this was briefings that MED prepared for one Crown entity that it monitors. The briefings included brief comments about external issues that could affect the entity’s future performance. The briefings also noted actions that would improve MED’s monitoring performance, or the way the entity’s performance was reported.
| Recommendation 7 |
|---|
| We recommend that the departments set out performance information within briefings to the Minister clearly and consistently, so that it is easy to see whether there are any actual or potential performance issues for the entity. |
Standardised reports about the performance of Crown entities
Standard reporting requirements for the performance of Crown entities resulted in better quality reporting.
Departments reporting to a Cabinet committee about the performance of Crown entities
7.27
In 2007, Cabinet introduced a requirement for departments to report to them every six months on the performance of selected Crown entities, using a common reporting format. The decision to introduce this requirement arose from the findings of a review of monitoring work for Crown entities commissioned by the Treasury and SSC in 2006.
7.28
Two of the three departments we reviewed were required to report to a Cabinet committee on the performance of at least one Crown entity they monitored.
7.29
The reports that the departments prepared set out succinct, clear information about each entity’s financial and non-financial performance and significant issues that the entity faced. Overall, the quality and presentation of information within the reports was far more sophisticated and easier to understand than information we had seen in regular briefings to Ministers on each entity’s performance. This was partly facilitated by the standard report template, which specified the type of information that departments needed to report.
7.30
The introduction of the standardised reporting has been valuable. It has resulted in significantly improved reports to Ministers on the performance of some Crown entities. The standard report format means information for various Crown entities can be readily compared, and that common issues and trends for Crown entities are likely to be easier to identify.
7.31
The departments could improve their reports by using the information in them to draw conclusions about any significant issues or risks for the capability and governance of the entity. The reports we saw included factual information about aspects of the entity’s capability and governance, but did not include conclusions about any related issues and risks.
The Ministry of Economic Development’s internal reporting initiative
7.32
In 2008, MED prepared internal reports about the Crown entities it monitors using the report template for six-monthly reports to the Cabinet committee. MED did this to help its senior management team to better understand and discuss issues about Crown entities. MED intends to continue this initiative and has started preparing further internal reports using a standard report template.
7.33
The reports that MED prepared for the Crown entities we selected set out succinct, clear information about each entity’s financial and non-financial performance and significant issues that the entity faced in the same way as the reports we discussed in paragraph 7.29.
7.34
It is likely that this initiative has improved MED’s capability in monitoring Crown entities.
7.35
This reporting was the clearest example we saw of MED’s staff using performance information to draw out strategic issues and important messages about a Crown entity. It also meant that they had information to compare the relative size and performance of Crown entities.
Monitoring and reporting on cross-sector activity
The departments did not monitor or report on cross-sector activity.
7.36
MED and MCH each monitor groups of two or more Crown entities that form sectors or part of a sector of government-funded agencies. For example, MCH monitors several Crown entities that are part of the arts and cultural heritage sector. MED monitors two Crown entities that are part of the energy sector.
7.37
Neither MED nor MCH had an explicit agreement with responsible Ministers to monitor and report on how well Crown entities within a sector were working together.
7.38
MED’s output agreement with responsible Ministers included several leadership and co-ordination activities intended to result in some co-ordination of Crown entities and other government agencies within sectors.
7.39
It is desirable for monitoring departments to give Ministers a clear description of how Crown entities are working together. Whether the departments carry out the work to provide this information may depend on whether the Minister expects them to do so. If they do, this should be explicit within output agreements or detailed information (such as appendices or monitoring plans).