Auditor-General's overview

Central government: Results of the 2012/13 audits (Volume 2).

This report presents the aggregate results from my audits of central government agencies for 2012/13. It also sets out my observations on those results for government departments, tertiary education institutions, and Crown entities. I will publish separate reports on the health sector, schools, and State-owned enterprises later this year.

My auditors issued 669 audit reports for central government agencies. Of these, 557 were standard reports, which means that the auditors were able to obtain reasonable assurance that the audited information is free from material misstatement. The other 112 were non-standard audit reports (containing a modified opinion or an explanatory paragraph, or both), the reasons for which varied widely.

Central government agencies sought better ways of delivering public services under ongoing financial constraint. Some agencies have continued to adjust to new systems and structures from mergers in recent years.

When organisations' structures change, the management and financial control environments are often at increased risk, especially when functions from different organisations are brought together. We have looked at the treatment of assets, liabilities, and business-critical information, and how public entities subject to structural change manage the risks of fraud. Overall, public entities are appropriately identifying and managing risks associated with organisational change.

The size and investment in physical assets throughout the public sector is significant. The Crown owns $110 billion of property, plant, and equipment. Our audits have found that the performance of public entities in managing assets is mixed. Public entities need to better manage the risks of deferred maintenance and improve how they report the condition of assets to decision-makers.

Problems with the security and management of private and sensitive information were highlighted in 2012/13 by some high-profile breaches of information security. This report also includes a section on observations arising from our auditing of information systems throughout central government. The audit work is carried out as part of our annual audits. The purpose is to test and provide assurance on the underlying systems and controls necessary to produce the information that appears in the financial statements.

This report also describes our analysis of the financial statements of selected central government agencies. It shows that government departments, Crown research institutes, and other Crown entities are planning and aligning their financial resources to help ensure that services are stable, resilient, and sustainable. Crown entities and government departments show the greatest consistency over time, which could be because of the greater number of entities, the stability of their operating environments, and/or ongoing consequences for Crown research institutes that followed a taskforce review in 2010.

Generally, central government agencies are responding to the range of challenges facing them by maintaining the systems and controls necessary to ensure that they manage public expenditure well.

Signature - LP

Lyn Provost
Controller and Auditor-General

14 April 2014

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