Auditor-General's overview
2013/14 has been a year of extraordinary challenges and achievements; a year that has reminded me that the strength of an organisation relies on its people. I am privileged to work with a talented group of committed and hard-working people, and I thank my staff and private sector audit service providers for their contributions in the last year.
Highlights
A highlight of the year was the publication of our overview report Reflections from our audits: Our future needs – is the public sector ready?, which was a first in New Zealand public sector auditing. Our report gave useful insight into how the public sector is preparing to play its part in helping to build the sustainable and prosperous future that New Zealanders want. The response to that report has shown me the value of applying a theme throughout our annual audits, an approach that is now firmly embedded in the way we prepare and carry out our work programme.
This year, we have seen the benefits of putting our Office strategy into practice. The Auditor-General's strategy 2013-17 relates to my entire Office – the Office of the Auditor-General, Audit New Zealand, our shared corporate services teams, and audit service providers. We introduced a five-year programme of work, with a theme for each year, and saw how this longer-term thinking has helped our planning and that of public entities.
In line with the aim of our strategy to see our work reach more people, we adapted our reporting and made more use of social media and blogs. We expanded the range of our sector reports, which are adding valuable insight. The reports focus on significant matters in sectors such as local government, health, and schools. We know that they are being used to help to work out the "state of play" in these sectors.
Our strategy described our intent to add more value to the public sector by using our ability to anticipate and prepare for change. This was evident in our work preparing and training our auditors to effectively and efficiently put into practice new accounting standards and legislative requirements. My staff are working through the consequences of amendments to laws and have contributed to guidance for public entities about the changes. Much of this work will become more visible in 2014/15, when many of the changes come into effect.
Quality work cannot be produced without quality tools. This year, we took a big step forward in how we share, store, and manage our wealth of information and knowledge by introducing the information management system we call "the Source" to Audit New Zealand. The Source is the beginning of our mission to extract better value from the information and knowledge we hold, and turn it into insight for the benefit of Parliament, public entities, and the public.
Challenges
Our inquiry into Kaipara District Council's poor management of the Mangawhai community wastewater scheme dominated our work in 2013. This exceptionally large and complex inquiry required a huge collaborative effort throughout my Office. My staff take a lot of pride in their work. I know that they found it difficult to hear questions raised about the quality of some of the work this Office carried out in the past. I am proud of the way that they managed this challenging period, and showed integrity and professionalism at all times. We have been using this experience to create positive and meaningful change within the Office, among the local authorities that we audit, and in the wider public sector.
It is interesting how during challenging times the spirit of an organisation can reveal itself. Despite the challenges of the Kaipara inquiry, our overall staff engagement increased. Audit New Zealand has had the greatest increase in engagement, and that tells me a lot about how staff responded to the demands put on them.
Another challenge we tackled strongly during the year was recalibrating how we audit the way local authorities set rates. We addressed various problems and gave the message that "near enough is not good enough" when it comes to using a taxing power. The positive response from local authorities and the improvements in practice we have observed are reassuring.
Financial performance
My Office recorded a surplus of $989,000, or about 1% of total income. Usually, this surplus would be returned to the Crown. This year, we received approval to establish a memorandum account related to our audit and assurance services, which are funded by fees charged to public entities. As a result, about half the surplus will be repaid to the Crown, while the other half is retained in the memorandum account. We will manage the balance in the memorandum account.
International focus
The international auditing community often seeks my Office's knowledge, skills, and expertise. This year, we chaired an international working group preparing guidance for national audit institutions worldwide. The guidance outlines how audit institutions can make a difference to the lives of people, and received the strong endorsement of Auditors-General around the world. We particularly focus our international effort in the Pacific, and it was satisfying to be involved in preparing a strategy to guide auditing in the Pacific to 2024.
Concluding comments
Throughout the year, I have talked about the importance of people. Our public sector is strong because of its ability to serve the needs of people and support the communities of New Zealand. We need to remember that our public sector is strong because of the people who work in it and their commitment to serving New Zealanders. I hope that our system of public accountability, including my Office's significant role, continues to recognise that people are at the centre of our efforts to improve the public sector's performance.
Lyn Provost
Controller and Auditor-General
30 September 2014