Part 4: The status of Māori Trust Board audits

Central government: Results of the 2009/10 audits (Volume 2).

In this Part, we report on the current status of audits for those Māori Trust Boards (the Boards) governed by the provisions of the Māori Trust Boards Act 1955 (the Act). We set out:

  • what Māori Trust Boards are;
  • the Boards' audit arrangements and the status of the audits; and
  • changes proposed to those arrangements.


We have previously been concerned about the timeliness of the completion of the audits governed by the Act, and the number of audits in arrears. We have continued to work with the Boards to complete the audits. It is pleasing to see that there are many fewer audits in arrears since our last report to Parliament, though the timeliness with which these audits are completed still needs to improve further.

We also discuss the policy changes proposed in legislation introduced to Parliament in November 2010. The legislation addresses the concerns we have expressed over many years about the audit and accountability arrangements for Boards.

What is the Māori Trust Board sector?

Boards manage tribal assets for the general benefit of their beneficiaries. They are able to provide money for the benefit or advancement of their beneficiaries and to use the money for promoting health, and social and economic welfare, and for providing education and vocational training.

The number of Boards subject to the Act has gradually reduced – from 19 in 1993 to 15 in 2010. The 15 Boards subject to the Act for the 2009/10 audit period were:

  • Aorangi;
  • Hauraki;
  • Maniapoto;
  • Ngāti Whātua o Orakei;
  • Taranaki;
  • Tauranga-Moana;
  • Te Aupōuri;
  • Te Tai Tokerau;
  • Te Rūnanga o Ngāti Porou;
  • Te Rūnanga o Ngāti Whātua;
  • Tūhoe-Waikaremoana;
  • Tūwharetoa;
  • Wairoa-Waikaremoana;
  • Whakatōhea; and
  • Whanganui River.

What are the audit arrangements for Māori Trust Boards?

Under current legislation, Boards are public entities under the Public Audit Act 2001. They are therefore audited by the Auditor-General.12

The Act requires Boards to prepare annual statements that set out their financial position and financial operations at the end of each financial year. These must be audited by the Auditor-General, who in turn forwards copies of the financial statements and audit reports to the Minister of Māori Affairs.

The Act does not specify a deadline for providing accounts for audit and completing the annual audit. However, the Auditor-General requests that her auditors complete the annual audit on her behalf within five months of the balance date. Nine Boards have a balance date of 30 June, which means that their audits should be completed by 30 November each year. Five have a balance date of 31 March (so the audits should be completed by 31 August) and one a balance date of 30 September (so the audit should be completed by the end of February). We regard audits not completed within five months of the balance date as being late and those that remain uncompleted as being in arrears.

We have often expressed our concern about the timeliness with which Boards prepare their financial statements, and how this detracts from the purpose of having audited financial statements. Improving the timeliness of Board audits has been a focus in recent years.

Figure 19 shows the timeliness of audit completion over the last three years. Figure 20 shows the number of audits in arrears as at 28 February 2011, compared to the same time in 2009, as noted when we last reported to Parliament on the status of these audits.

Figure 19
Timeliness of audit completion

2009/10 2008/09 2007/08
Percentage of audits completed on time 33% 13% 13%

Figure 20
Māori Trust Board audits in arrears as at 28 February in 2011 and 2009

28 February 2011 28 February 2009
Number of audits in arrears 13 35

The figures show that the timeliness of completion of audits improved in 2009/10, although it remains low compared to other sectors we audit. However, there has been a pleasing reduction in the number of audits in arrears, compared to the situation two years ago.

As of 28 February 2011, we had completed the audit of eight of the 15 Boards for the 2009/10 year.

Five Boards also had audits for earlier years still in arrears.

The reasons for the audits being in arrears include:

  • delays by Boards or their accountants in producing financial statements for audit;
  • delays by Boards or their accountants in making the necessary amendments after initial audit work has been completed;
  • delays in completing the Board subsidiary audits needed for Group consolidation purposes;
  • difficulty resolving technical accounting and auditing issues, such as the valuation of assets; and
  • competing demands on audit resources when the initial time frames set to complete the audit are not met because of the reasons outlined above.

The oldest audits in arrears at 28 February 2011 are for the 2007/08 financial year. Good progress is being made on many of the outstanding audits.

Changes proposed to the audit arrangements for Māori Trust Boards

We have reported before about shortcomings in the current accountability framework for Boards. In our view, the current framework does not adequately cover the usual characteristics of modern accountability frameworks, nor does it reflect the current operating environment for Boards.

Our main concern has been that each trust's beneficiaries and Board should have a direct accountability relationship. Such an arrangement would enable beneficiaries to hold Board members to account for their performance. We also suggested that any review of the Act should examine and clarify the audit arrangements.

We have previously recommended that the Minister of Māori Affairs and Te Puni Kōkiri give urgent attention to reforming the legislation for Boards.

We are pleased to note that there is now a Bill before Parliament that addresses these issues. The Māori Purposes Bill (the Bill) was introduced into Parliament in November 2010 and referred to the Māori Affairs Committee. The Committee has called for submissions and is due to report to the House by 16 May 2011.

We consider that the Bill (as introduced) will address our concerns with the current accountability arrangements for Boards. It provides for a direct accountability relationship between each trust's Board and beneficiaries. It also requires Boards to prepare an annual report, including financial statements that comply with generally accepted accounting practice. The Bill also establishes a statutory time frame within which an audit must be completed.

The Bill removes Boards from the definition of a public entity under the Public Audit Act, with the result that the Auditor-General will no longer be the auditor of Boards. Instead, the audit will be carried out by a chartered accountant or someone eligible to act as an auditor under the provisions of the Companies Act 1993.

We welcome the reforms to the accountability framework for Boards as contained in the Bill.

12: The Auditor-General is not the statutory auditor of any Māori Trust Board subsidiary entities. However, she has accepted audit appointment requests for some Māori Trust Board subsidiaries under section 19 of the Public Audit Act 2001.

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