Part 1: Our role and outcomes
Everything we do is about improving the performance of, and the public's trust in, the public sector.
Our role
The Auditor-General is an Officer of Parliament who carries out her role independently of executive government and Parliament. She is accountable to Parliament for the public resources she uses to do her job. By law, the Auditor-General audits all public entities in New Zealand that are required to prepare general purpose financial reports – about 3800 public entities, such as government departments, central agencies, Crown entities, schools, and State-owned enterprises. The role includes auditing local authorities, which are accountable to the public for the activities that they fund with rates and other revenue that they raise.
The Auditor-General's audits give independent assurance to Parliament and the public about how public entities are performing. Auditing and reporting is an important way of holding public entities accountable for their use of public resources and powers.
Our organisation
Our work is carried out by about 360 staff in two business units – the Office of the Auditor-General (OAG) and Audit New Zealand supported by a shared team of corporate services staff. We contract auditors from about 50 private sector accounting firms. We call this whole organisation "the Office".
The OAG sets strategy, policy, and standards, appoints and oversees auditors, carries out performance audits, provides reports and advice to Parliament, and carries out inquiries and other special studies.
Audit New Zealand, the larger of the two business units, has offices in seven cities and carries out annual audits of public entities that the Auditor-General allocates to it. Audit New Zealand provides other assurance services to public entities within the Auditor-General's mandate, in keeping with the Auditor-General's auditing standard on the independence of auditors.
How we are funded
The Office is funded through Vote Audit, which has two appropriations for our output expenses – Audit and assurance services, and the multi-class appropriation Statutory auditor function.1
The Audit and assurance services appropriation pays for us to carry out audits and related assurance services as required or authorised by law, and is largely funded by audit fees collected directly from public entities.
The multi-class appropriation Statutory auditor function is largely Crown-funded and includes two classes of outputs: Performance audits and inquiries, and Supporting accountability to Parliament.
How we make a difference
In carrying out our statutory role, we are able to play an important part in influencing and promoting improvements in the public sector's performance and in building trust in the public sector.
The main impacts we aim for are that our recommendations are acted on, and that Parliament and public entities are supported and get value from our advice.
Our vision
Our vision is that our work improves the performance of, and the public's trust in, the public sector. Everything we do is directed to ensuring that New Zealand has a public sector that is trusted, demonstrates responsible behaviour, and performs well. These outcomes are shown at the top of Figure 1. The rest of this report outlines how effectively we worked towards these outcomes during 2013/14.
The outcomes we aim for
Figure 1 summarises the outcomes we aim for, the effects we aim to have, and the services that we provide.
Figure 1
Our outcomes framework
Achieving the outcomes we aim for
We assess that, in 2013/14, we mostly maintained or improved our outcomes.
| Trusted public sector | ||
|---|---|---|
| Measure | Result | Comment |
| New Zealand is ranked in or above the 90th percentile of the Worldwide Governance Indicators.* | Achieved in 2012 | Results for the Worldwide Governance Indicators are usually published every September for the previous calendar year, but are not yet available for 2013. |
| Figure 2 New Zealand's ranking in the Worldwide Governance Indicators, 2009 to 2012  |
||
The State Services Commission's Kiwis Count Survey** shows improved (or at least maintained) rates of public trust with:
|
Achieved | For this measure, respondents rate their perceptions of trust in the public service and their trust based on their most recent public service experience. Data collection has been reported quarterly since June 2012. From June 2012 to March 2014, perceptions of trust in the public service improved overall (42% in June 2012 to 44% in March 2014). Trust based on experience also improved overall (74% in June 2012 to 77% in March 2014). |
| New Zealand's score on the Transparency International Corruption Perceptions Index*** is improved (or at least maintained). | Achieved | New Zealand's 2013 score of 9.1 put it joint-first in the world with Denmark. From 2009 to 2013, New Zealand's score has consistently been between 9.0 and 9.5. |
* See the World Bank website, http://info.worldbank.org.
** For survey results, contact the State Services Commission, www.ssc.govt.nz.
*** See the Transparency International website, http://cpi.transparency.org/cpi2012.
| Appropriately responsible public sector behaviour | ||
|---|---|---|
| Measure | Result | Comment |
Public entities' financial reports:
|
Not achieved for audit opinions Not achieved for audit timeliness |
An unmodified audit opinion is an indicator that public entities are reporting appropriately and that their financial reports fairly reflect their actual performance. In 2013/14, 97% of audit opinions were unmodified, just short of our 98% target. In 2013/14, only 57% of audits were completed on time, well short of our 90% target. More than 60% of the audits we are required to complete each year are school audits, and in 2013/14 only 45% of those audits were completed on time because of problems with Novopay. |
| Figure 3 Percentage of unmodified audit opinions and audits completed on time, 2009/10 to 2013/14  |
||
| High-performing public sector | ||
|---|---|---|
| Measure | Result | Comment |
| The State Services Commission's Integrity and Conduct survey shows improved (or at least maintained) rates of State servants who report that State service agencies promote their standards of integrity and conduct.* | Achieved | This survey is held every three years. Changes to the survey mean that the 2013 results are not directly comparable with those from 2007 and 2010. The 2013 survey looked at whether State servants think that their organisation promotes standards of integrity and conduct: 62% of State servants agreed that their agency actively promotes standards of integrity and conduct. The 2007 and 2010 surveys looked at State servants' awareness of their agency's training on integrity and conduct. Results from 2007 (55%) and 2010 (56%) showed that more State servants were aware of integrity training that their organisation provides. |
| The State Services Commission's Integrity and Conduct survey shows improved (or at least maintained) rates of State servants who reported that, where they observed misconduct breaches in the past year, they reported it. | Survey changes mean results may not be comparable | This survey is held every three years. In 2013, changes were made to the survey. The 2013 survey asked whether State servants reported observed misconduct in all instances, in some instances, or not at all.
To the extent that the results are comparable, the survey appears to show that the rate of State servants reporting observed misconduct has slightly declined from 63% in 2010 to 58% in 2013. |
| The State Services Commission's Kiwis Count Survey shows improved (or at least maintained) rates of public service quality for all public services. | Achieved | Results for this measure are collected every quarter. Between June 2012 and March 2014, respondents scored the quality of public services at a consistently high level of at least 72. |
* See the State Services Commission's website, www.ssc.govt.nz
Strategic risks and risk management
The Auditor-General faces four ongoing strategic risks:
- loss of independence;
- audit failure;
- loss of capability; and
- loss of reputation.
We manage these risks mainly through processes that support the work we do. Details on how we manage these risks are available on our website. We will continue our focus on managing risks, particularly strategic risks. Our leadership team regularly discusses risk management, including assessing environmental or internal changes that might affect the Office's position. The Office's Audit and Risk Committee meets four times a year and gives further insight and advice to help us to identify and manage risk. The Committee's report for 2013/14, available on our website, outlines the Committee's purpose and summarises its work during 2013/14.
1: An appropriation is a parliamentary authorisation to incur expenses or capital expenditure. A multi-class output expense appropriation allows expenses to be transferred between the output classes concerned, without the need for separate Parliamentary authority.