New Zealand Agency for International Development: Management of overseas aid programmes

The New Zealand Agency for International Development (NZAID) was part of the Ministry of Foreign Affairs and Trade (MFAT).¹ It was responsible for managing New Zealand's Official Development Assistance (ODA) programme. For 2007/08, the ODA programme budget administered by NZAID was $428.8 million, an increase of $70 million from 2006/07.

The scope of our audit

We examined the effectiveness of NZAID's management of overseas aid programmes, given the increases in budget since it was established in 2002. We focused on how NZAID planned, implemented, monitored, and evaluated its overseas aid programmes. We specifically looked at how NZAID managed three programmes – the Papua New Guinea bilateral programme, the Indonesia bilateral programme, and the Pacific Regional Health programme. For each of the three programmes, we examined six aid projects and initiatives.

The Foreign Affairs, Defence and Trade Committee (the Committee) asked us to report on NZAID's progress in implementing the recommendations we outlined in our 2008 performance audit report. In response, we analysed NZAID's February 2009 progress report to its internal audit committee and wrote to the Committee about our results. Our analysis provided the Committee with assurance that the progress reported to NZAID's internal audit committee was an accurate account of the work that NZAID had done in response to our recommendations. That analysis forms the basis for this follow-up report.

Our findings

Our performance audit made 17 recommendations in the four areas we examined – planning, implementing, monitoring, and evaluating aid programmes. We identified a need for more clarity, consistency, and direction for NZAID staff, its contractors, and its development partners.

The response to our findings and recommendations

Based on our analysis and the work done as part of our 2007/08 and 2008/09 annual audits of NZAID, we consider that NZAID responded positively and comprehensively to our recommendations. For 11 of our 17 recommendations, NZAID either completed work to implement them or incorporated work to address them as part of its "business as usual". NZAID has partially completed work to implement our other six recommendations.

Our performance audit report noted a lack of comprehensive, clear, and accessible processes and procedures for putting in place and monitoring funding arrangements for delivering aid programmes. NZAID has focused its work to improve its processes and controls for funding arrangements through its Control Environment Strengthening programme. In our view, this was an appropriate approach. NZAID carried out a substantial amount of work as part of the Control Environment Strengthening programme. This aspect of its funding arrangements has improved since we completed our performance audit.

We will continue to assess MFAT's management control environment and financial information systems and controls to monitor progress through our annual audits. We will report on whether the improvements made are sustained.

As well as the Control Environment Strengthening programme, NZAID had several other internal improvement programmes and projects under way to address various aspects of our recommendations. This work includes the Activity Planning Framework Project, which is intended to streamline staff direction and guidance through the aid planning process. As part of the Activity Planning Framework Project and other initiatives, NZAID prepared staff guidance documents and provided supporting workshops and training sessions. Several of these guidance documents are still draft documents. We encourage NZAID to finalise these documents, and to continue to regularly monitor and review their use and effectiveness with staff.

It is MFAT's responsibility to ensure that all of the work identified in NZAID's February 2009 progress report is completed, and to demonstrate that the ongoing work identified as part of its "business as usual" leads to sustained improvement in how aid programmes are managed. That is a responsibility accepted by MFAT, and is identified as a crucial and ongoing topic for scrutiny in its internal audit process.

1: In April 2009, Cabinet agreed to remove NZAID's status as a semi-autonomous body. The International Development Group within MFAT is now delivering New Zealand's Official Development Assistance.