Part 3: The Auditor-General’s work in the transport sector

Overview

3.1
We carry out annual and performance audits of central and local government entities. Every three years, we audit local authorities’ LTPs.

Annual audits

3.2
Annual audits are carried out in keeping with the Auditor-General’s auditing standards, which incorporate the auditing standards of the New Zealand Institute of Chartered Accountants. Annual audits involve auditing the financial statements and other information (such as performance information) that public entity must have audited. In an annual audit, the auditor:

• examines an entity’s financial statements, performance information, and other information that must be audited;
• assesses the results of that examination against a recognised framework (generally accepted accounting practice); and
• forms and reports an audit opinion.

3.3
The audit involves gathering all the information needed to have reasonable assurance that financial statements and other information do not have material misstatements caused by fraud or error. The auditor evaluates how adequately the information is presented. Also, local authorities often measure and report road safety statistics in their annual report (within the reported statement of service performance). Our auditors will form conclusions and report on whether the information provided in the statement of service performance fairly reflects the service provided by the local authority.

Audits of central government agencies

3.4
As part of the annual audit, we examine, assess, and grade Crown entities’ environment, systems, and controls for managing and reporting financial and service performance information.

3.5
Our auditors recommend improvements to ensure that there are effective internal controls for sound management and good governance, and to help entities to manage risks (such as errors and potential fraud).

3.6
In our annual audits of central government entities during the last three years, we have put more emphasis on helping public entities to improve their performance information and reporting.

3.7
Good-quality service performance information and reporting enables public entities to account for, and be held to account for, the effective and efficient use of resources and achievement of their objectives. It enables Parliament and the public to see what an entity said it would do, what it achieved, and the difference it made.

3.8
These audits found that central government transport entities continue to have effective management control environments and financial systems and controls. Figure 2 summarises our audit findings for the three financial years from 2008/09 to 2010/11 for:

• management control environment (MCE);
• financial information systems and controls (FISC); and
• service performance information and associated systems and controls (SPIASC).

3.9
Appendix 1 includes a full definition of these terms.

Figure 2
Assessment of management systems for the three financial years from 2008/09 to 2010/11