Part 1: Introduction

Education sector: Results of the 2010/11 audits.

In terms of spending as a percentage of gross domestic product (GDP), New Zealand's spending on education (6.2% in 2010) is among the top of the countries in the Organisation for Economic Co-operation and Development (OECD). However, in absolute terms, New Zealand's spending on education on each student is below the mean for countries in the OECD.1

In 2010, at 1.7%, New Zealand's public expenditure on tertiary education as a percentage of GDP was above the OECD average of 1.2%.2

The Government has identified education and skills as central to building a strong platform for growth. For 2011/12, Vote Education and Vote Tertiary Education (a new Vote in the 2011 Budget) total $12.160 billion, which represents the third largest (and steadily increasing) category of government spending.3

Each year, we audit all schools, tertiary institutions, and the range of other public entities that make up our education system. This report provides an overview of the results of our audits of, and work with, public entities in the education sector in 2010/11.

Part 2 reports on the results of our audits for 2010 of tertiary education institutions. We note recent changes to tertiary education institutions' operating environment and the Government's current tertiary education priorities. We then comment on tertiary education institutions' financial performance in 2010 and provide some comparative statistical data. Finally, we comment on the audit results for 2010, including our audit opinions, the timeliness of the audits, and other focus areas. We also discuss what we will focus on during the 2011 audits of tertiary education institutions.

Part 3 provides our observations on the non-financial performance reporting of tertiary education institutions, based on a preliminary assessment of their current investment plans. We include a table that defines outcomes, impacts, and outputs alongside examples taken from current investment plans.

Part 4 explains that we issued 2614 audit reports for entities in our education portfolio during the year ended 31 October 2011. It discusses the 163 non-standard audit reports issued on the financial and non-financial information of those entities.

Part 5 comments on the Ministry of Education's management of early childhood education funding. Our comments are based on some additional assurance work on the management of early childhood education funding that we carried out as part of the annual audit of the Ministry of Education.

Part 6 considers matters arising from our annual audits of Māori immersion schools (kura). We identified these matters in our report on the results of the 2008/09 audits.4

Part 7 notes our recent and ongoing work in the education sector. We summarise recently completed reports on variance reporting and payments to principals above normal remuneration. We also note our work on four performance audits.

The first Appendix describes the three levels of education providers (early childhood education, schools, and tertiary education institutions). The second Appendix summarises the roles of government agencies working in the education sector.

The third Appendix is a flowchart that explains how an auditor decides on the most appropriate form of audit report, and the fourth Appendix sets out the details of the non-standard audit reports discussed in Part 4.

1: See "State of Education in New Zealand: 2008 (Part 6 – Appendices)" on the Ministry of Education's Education Counts website (

2: See "Total public expenditure on education" on the Ministry of Education's Education Counts website (

3: Ministry of Education, Statement of Intent 2011/12-16/17, page 10.

4: Controller and Auditor-General (2009), Central government: Results of the 2008/09 audits, Wellington.

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