Auditor-General's overview

Annual Report 2010/11.

Lyn Provost.

I started the 2010/11 year conscious of the significant challenges the public sector faced from wider international events. During the year, we have weathered the ongoing challenge of financial and economic turbulence in the wake of the global financial crisis as well as challenges arising from the tragic Canterbury earthquakes. In response to the Canterbury earthquakes, many public servants have made extraordinary contributions to maintain essential public services for their fellow New Zealanders.

At the end of 2010/11, our challenges remain very real. As we adapt to our current environment, we strive to safeguard the long-term sustainability of our public services as well as our society and economy. Adapting while safeguarding our future services will require us all to continue to focus on delivering value and, in doing so, to be willing to question our assumptions and current ways of doing things.

I am glad to be able to tell Parliament and the public that, looking over the body of my Office's audit work, I have seen a responsive and responsible public sector willing and working to deliver more for less. We have found that most public sector organisations have good financial management systems and controls over the resources they manage, and are asking themselves how they can continue to deliver value in our changing environment.

My Office's service achievements

I am proud of the Office's achievements during the past year. We delivered an ambitious work programme, completing timely and quality annual audits that our clients have told us built on a better understanding of their environments, businesses, and risks. They also told us that we can offer them yet more insight and advice based on learning from our audit work. I am committed to working on this feedback to address the change in, and growing complexity of, the public sector and the higher expectations of the public.

We achieved strong results in our other areas work, carrying out yet more performance audits and other reports than in previous years and completing several major inquiries. Among these reports was How the Department of Internal Affairs manages spending that could give personal benefit to Ministers. This is the ninth public report in 10 years by an Auditor-General about spending on parliamentary and ministerial support. So, I am personally heartened that useful improvement work is under way, which I hope will lead to a better system to support appropriate spending by Ministers. The political leaders of any country must be accountable for their actions. However, they should also be supported by financial management processes that help them spend public funds reasonably and appropriately.

In 2010, I said our focus for the next two to three years would be on these main themes:

  1. the local government reorganisation in Auckland;
  2. performance reporting;
  3. analysis and reporting of sector information (sector knowledge);
  4. changes to financial reporting standards (and, more broadly, auditing standards and regulation of auditors); and
  5. adding value through our 4000-plus annual audits, inquiries, and performance audits.

I am pleased to say that we have made very good progress during the year with the first two matters identified – Auckland and performance reporting. The Office completed the audits of the initial planning document and the dissolution accounts of the eight outgoing councils, as well as publishing a suite of reports to Parliament on the Auckland local government reform. For all but three local government audit reports, we issued unqualified reports on the appropriateness of their performance reporting – a very pleasing result. I would also like to acknowledge and congratulate all public entities that have achieved significant improvements in their non-financial reporting. It has been hard work, but entities are beginning to reap the benefits of better information for their decision-making and resource prioritisation.

In addition, during this time, I wanted to identify a cross-cutting theme to underpin our audits and other work in 2012/13. After a wide range of discussions with people in the public sector and other interested groups in the later part of the year, we have identified a long list of ideas. We will seek feedback on these ideas in the next couple of months so that we can complete the necessary planning and research before starting work on the cross-cutting theme during 2012.

Our internal management and capability

Looking at our internal operations, we improved our financial management and professional development. Along with others in the public sector, we challenged ourselves to look for and better understand ways to be more cost-effective. I am satisfied that we moved swiftly to ensure the safety of our staff as well as our ongoing service delivery in the aftermath of the Canterbury earthquakes. The Audit New Zealand office is in the red zone, and we are committed to finding new permanent premises. I thank the staff in Christchurch for their forbearance, as we know our temporary accommodation, like many others, is sub-optimal.

Our Gallup staff engagement scores are showing a slight downward trend, which was unsurprising, given the growing volume and quality of the work we carried out, and the challenging environment. We will continue to explore ways to reverse this trend.

I am committed to making sure that my Office continues to be well positioned to contribute to a more effective and efficient public sector, including looking at the efficiency of our own operations and processes. But, in doing so, we must be careful not to lose effectiveness. I want to maintain and improve on my Office's 2010/11 service, quality, and timeliness results, while investing in building our infrastructure and capability to deal with the opportunities ahead of us.

I sincerely thank the staff of the Office and our wider community of contracted audit service providers for their good work during the year and congratulate them on their achievements. With their support, I look forward to the challenges and opportunities of 2011/12.

Signature - LP

Lyn Provost
Controller and Auditor-General

23 September 2011

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