Part 1: Introduction

Why is there an Auditor-General?

In New Zealand's system of government, Parliament authorises all government expenditure and gives statutory powers to public entities.

Public entities are therefore accountable to Parliament for their use of the public resources and powers that Parliament gives them. As part of this accountability, Parliament seeks independent assurance through the Auditor-General that public entities are operating and accounting for their performance in the way that Parliament intended.

The need for independent assurance also covers local government. Local authorities are accountable to the public for how they use the resources they collect through rates and other sources.

It is not the role of the Auditor-General to question the policies of the Government or local authorities.

The role and independence of the Auditor-General

The Auditor-General's role is to assist Parliament to scrutinise the effectiveness, efficiency, and accountability of public entities. To be effective and credible in this role, the Auditor-General must be independent of executive government. To ensure independence, the Auditor-General and the Deputy Auditor-General:

• are appointed by the Governor-General on the recommendation of the House of Representatives;
• report directly to the House of Representatives (and have the power to report to anyone else);
• are paid under a permanent authority from Parliament that does not require the approval of the Government; and
• make requests for funding directly to the Officers of Parliament Committee of the House of Representatives (rather than through the Executive), after which the House commends the sum required to the Governor-General for inclusion in an Appropriation Bill.

Consulting with members of Parliament about the proposed annual work programme is one of the ways in which the Auditor-General is accountable to Parliament.

The Auditor-General's work

The Auditor-General's work is designed to give assurance to Parliament, public entities, and the public that our public entities fairly reflect the results of their activities in their annual reports. The Auditor-General is the auditor of all public entities.

The Auditor-General also reports on whether public entities are carrying out their activities effectively and efficiently and on matters of waste, probity, legislative compliance, and financial prudence in the public sector.

The Auditor-General reports findings and makes recommendations so that those responsible for making improvements can do so. This includes highlighting examples of good practice that can help improve public sector management and performance.

The work is carried out under sections 15, 16, and 19 of the Public Audit Act 2001 (the Act). The audit processes that give effect to these matters are supplemented by:

• other auditing services, which the Auditor-General may, with the agreement of a public entity, perform for that entity – being any services of a kind that it is reasonable and appropriate for an auditor to perform (under section 17 of the Act); and
• inquiries, which the Auditor-General may carry out into any matter concerning a public entity's use of its resources (under section 18 of the Act).

The appropriate identification, scoping, investigation, and reporting of audits (under sections 15, 16, and 19), other auditing services (under section 17), and inquiries (under section 18) are underpinned by the Auditor-General's auditing standards. The work is facilitated by various processes carried out within the Office of the Auditor-General and by audit service providers contracted to work on behalf of the Auditor-General.