Part 5: Promoting improvement: Performance audits, inquiries, and other studies

Annual Plan 2011/12.

The Public Audit Act 2001 provides the Auditor-General with discretion to carry out performance audits and to inquire into a public entity's use of its resources.

Performance audits look at:

  • the extent to which activities are carried out effectively and efficiently;
  • compliance with statutory obligations;
  • any acts or omissions to determine whether waste has resulted or may result; and/or
  • any act or omission showing or appearing to show a lack of probity or financial prudence by a public entity or its members, office holders, or employees.

Our inquiries work largely reacts to issues of public concern. If there is general public interest in an inquiry, we may publicly report the results.

Our performance audits, inquiries, and other studies (such as those that lead to us publishing good practice guidance) have benefits for the audited entities and for the wider public sector. For example, our work can help to:

  • develop methods to evaluate aspects of public sector management;
  • encourage beneficial changes and best practice in the performance of public entities; and
  • increase understanding of an audited entity, the wider environment in which public entities operate, and/or of public sector management.

Our performance audit and inquiries work allows the Auditor-General to consider and provide advice about the above matters in greater depth than is appropriate within the statutory scope of an annual audit.

In 2011/12, the Auditor-General proposes to start a range of performance audits and other studies, including work that will result in good practice guidance, on topics that we consider warrant examination.

We briefly describe our proposed performance audits and other studies for 2011/12 in Figure 3, and list the work we currently have under way in Figure 4. The work we do and the reports we deliver in 2011/12 may differ from the description in Figure 3. That will happen if we need to alter our priorities to carry out other more urgent work – such as an inquiry – or because changes in government policy or the circumstances of a particular public entity mean that a proposed examination is no longer relevant.

Reports on many of our performance audits, other studies, and inquiries that we started in 2010/11 will be completed and presented to Parliament during 2011/12, and some will be presented in 2012/13.

Each year, we also report on public entities' progress in implementing the Auditor-General's recommendations and, in 2011/12, we will be following up on our 2009 report Effectiveness of arrangements to check the standard of services provided by rest homes.

Figure 3
Proposed performance audits and other studies to be started in 2011/12

Biosecurity: Preparedness for, and response to, incursions from unwanted organisms
Certain plants, animals, and associated diseases can be detrimental to our social, economic, and/or physical environment if they become established. The Ministry of Agriculture and Forestry (the Ministry) is responsible for prevention (through border control), surveillance, investigation, and responding to incursions of these unwanted organisms.

We propose to audit the Ministry's preparedness for an incursion of unwanted organisms and its systems for responding to an incursion. We anticipate that our work will examine how the Ministry has responded to some actual incursions. Where appropriate, this work will also examine how well the Ministry has worked with industry and other partners as part of the response.
Defence acquisitions
In recent years, our audit work in the defence sector has focused on major acquisition projects. This work culminated in the November 2010 release by the Ministry of Defence and New Zealand Defence Force – collectively referred to as the defence agencies – of the first Major Projects Report.

The report provided detailed information and an assessment of project management performance across eight major capability projects that were under way in the defence agencies at that time. We will continue to work with the defence agencies on the annual update of the report, which will be prepared at the time the defence agencies publish their annual reports.

We have mentioned previously to the defence agencies and the Foreign Affairs, Defence and Trade Committee that we intended to follow the first Major Projects Report with an audit of a specific acquisition project and/or an audit of an aspect of the new acquisition process.

We still intend to take this approach and are currently working with the defence agencies and central government agencies to identify a suitable project or an aspect of the new acquisition process to examine. Among the projects we are considering for audit are the project to procure and introduce into service the new NH90 medium-utility helicopters and the project to acquire a replacement pilot training capability.
Information communications technology
New Zealanders rely on the smooth operation of information communications technology (ICT) to underpin the management and delivery of, and access to, a range of public services. In 2008, the State Services Commission (SSC) estimated that the Government spent $2 billion a year on ICT. The SSC also found that ICT was fragmented, there was duplication in infrastructure, and more could be made of online channels and other forms of electronic service delivery.

The Office of the Government Chief Information Officer is developing a new ICT strategy for the whole of government. The strategy will aim to create more effective and efficient use of ICT to deliver public services and to realise the potential to reduce back-office costs while improving delivery of the services.

In the past, attention has tended to focus on the failures of ICT in the public sector. However, there is evidence of good practice in some important ICT systems that deliver public services.

We plan to examine ICT projects to detail some of the key factors that need to be in place if ICT projects are to deliver improved public services. Our study and report will provide guidance for ICT managers responsible for public sector ICT, and will promote good practice and beneficial change in the use of ICT to deliver public services.
Ka Hikitia: Māori education strategy 2008-2012
Māori underachievement in education has long been seen as a significant national issue because of its future effect on the capabilities and skills of our working-age population. Ka Hikitia – Managing for Success: The Māori Education Strategy 2008-2012 is the education sector's strategy to lift Māori participation and achievement in education.

Implementing Ka Hikitia depends on a whole-of-government response involving educators, iwi, communities, and the Government working in partnership. The Ministry of Education (the Ministry) is responsible for leading and supporting the implementation of the strategy, including building better connections among government and education agencies.

Our proposed audit will examine how effectively the Ministry carries out its role to help implement and embed Ka Hikitia into the complex, multi-entity, educational sector.
New Zealand Blood Service
We plan to examine the effectiveness and efficiency of what the New Zealand Blood Service (NZBS) has in place (or plans to have in place) to ensure the safety and surety of supply of blood and blood products:
  • "Safety" covers matters such as donor selection, testing of donations, and maintenance of the integrity of the cold chain and the vein-to-vein supply.
  • "Surety" means ensuring that the donor pool is adequate to meet demand.
The NZBS does more than provide blood and blood products. It also "banks" tissues and bone, and provides laboratory services. Our audit will also examine the safety and surety of these products. We exclude from the audit the laboratory services provided by the NZBS.
Protecting and maintaining our biodiversity and natural ecosystems
Globally, the increasing loss of biodiversity is a major concern. Much of New Zealand's biodiversity is unique and makes a significant contribution to our quality of life. Our biodiversity and natural ecosystems have considerable economic, social, and cultural value.

The Department of Conservation (the Department) has a lead role in working, together with other agencies, to ensure that the diversity of our natural heritage is protected and our natural ecosystems are healthy. We plan to audit the work of the Department and other agencies to protect and maintain our biodiversity and natural ecosystems.
Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: Third monitoring report
We have committed to monitoring, over a 10-year period, the New Zealand Police's implementation of recommendations arising from the 2007 Commission of Inquiry (COI) into Police Conduct.

This will be our third monitoring report. It will focus on whether there have been sustainable improvements to the level and quality of police services as a result of the programmes and initiatives arising in the Police's response to the COI.

Our 10-year monitoring plan and details on earlier findings can be found in Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: First monitoring report (2009); and Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: Second monitoring report (2010).
Road safety: Enforcement efforts to reduce drink-driving
In the last decade, there has been no reduction in the number of fatal road accidents caused by alcohol-impaired driving.

We intend to audit the effectiveness and efficiency of the various agencies with responsibilities for dealing with this issue. We are currently scoping this audit with the Ministry of Transport, the New Zealand Transport Agency, and the New Zealand Police.
School governance: How well school boards of trustees plan and review
School governance is important because each school's board of trustees is ultimately responsible and accountable for almost everything that happens in their school. This includes setting priorities and goals for learning and student achievement, and monitoring the school's performance against student achievement outcomes.

Although boards of trustees have considerable discretion, they are not autonomous. They need to be able to demonstrate that:
  • students in the school are receiving a high quality standard of education;
  • the school is addressing national priorities for school education; and
  • the school's resources are being used prudently to ensure that the highest possible quality programmes are provided for students.
Previously, we have looked at how well the Ministry monitors and supports boards of trustees. However, we have not assessed the quality of governance by boards. We also note that the Ministry and the Education Review Office intervene only where problems with a board of trustees have been identified.

We plan to assess a sample of boards to see how well they carry out strategic planning and self-review. In particular, we will focus on:
  • how well the board uses information to underpin its strategic planning and self-review;
  • how coherently the school focuses its efforts on student achievement, including alignment of resources, policies, and practices; and
  • how well the board uses and responds to assessment data.
The audit will build on the work that we have done with analysis of variance reports. We will report on examples of good governance practice that we identify during the audit. We therefore expect the audit to add considerable value by helping boards to focus and improve their strategic planning and self-review function.

Figure 4
Performance audits started in 2010/11 and due to be finished in 2011/12

Demand for water - Auckland region*
Effectiveness of government planning and support for housing on Māori land
Freshwater quality in New Zealand: Effectiveness of management responses*
Ministry of Health and district health boards: Provision of home-based support services for older people*
New Zealand Customs Service: Effectiveness of the customs revenue assurance strategy and programme*
New Zealand Qualifications Authority: Quality assurance and administration of internally assessed standards for the National Certificate of Educational Achievement*
New Zealand Transport Agency: State highway maintenance – Part 2*
Role of teacher registration and initial teacher education course approval processes in ensuring the quality of teaching in New Zealand schools*
The Treasury: Administration of the Retail Deposit Guarantee Scheme
Transpower: Managing the national grid*

*From our 2010/11 work programme.

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