Our paper for the 18th PASAI Congress

When our colleague Bruce Robertson retired in August, it gave us cause to think about how much the Audit Office, as we were once known, has changed over the past few decades.

This served as a useful reminder that New Zealand has one of the most independent Supreme Audit Institutions in the world. We enjoy a level of freedom and independence that many others aspire to.

It was not always this way. My office used to be a government department, overseen by a Minister of Audit. The State Services Commission set our salaries and sat on all appointment panels for directors and above. Our budget was approved through the standard government process.

Now, as an officer of Parliament, my office sits outside the public service. We no longer answer to a minister or the Executive. We have the final say over our work programme. Budgets are set through the Officers of Parliament Committee, not the government of the day. My office is free to appoint its own staff, set its own staff remuneration, and scrutinise the public sector and government without fear of reprisal from either.

Our path to independence

Gaining this level of independence was not easy. It was recommended that the Auditor-General and Deputy Auditor-General be made officers of Parliament in 1989. It took another 12 years, after the passing of the Public Audit Act 2001, for this to happen.

The main obstacle we encountered was a lack of political will. Persuading a government that your cause is important, when there are so many other priorities to compete with, can be challenging.

We were fortunate to have, over this period, good Ministers of Audit who appreciated our role. We were even more fortunate to have people at the Office who worked tirelessly, over many years, to draft and implement audit legislation that would cement our independence and protect our autonomy, regardless of any future changes in the political climate.

However, attempts at getting new legislation passed inevitably came up against resistance from officials and long delays. One significant challenge faced by the then Audit Department was a suggestion from Treasury that Parliament be given the authority to issue directions to the Auditor-General. This idea was ultimately rejected in 1998. In 2000, the Public Audit Bill was introduced, and it was passed the following year.

Our powers

In terms of setting out our mandate, and providing the autonomy essential to a fully independent audit office. New Zealand’s Public Audit Act is world class.

The Act sets out the appointment process, length of term, remuneration process (which is set by the independent Remuneration Authority), and conditions under with an Auditor-General can be removed from office.

It gives the Office the power to carry out financial audits, performance audits and hold inquiries. To fulfil these duties, the Act also grants the Auditor-General the power to obtain information from people and public entities, examine people under oath, inspect bank accounts (as long as a District Court Judge provides a warrant) and enter a public entity’s premises.

We are fortunate in that these enforcement powers are rarely, if ever, needed to be used. Our relationship with the public sector is built on trust and cooperation, rather than force; this makes for a stronger, more fruitful partnership.

Our relationship with Parliament

Our relationship with Parliament is also crucial. Parliament is our primary stakeholder. Our overall goal – to improve the performance of, and the public’s trust in, the public sector – cannot be achieved without the support of those in positions of power.

Our power lies in our reporting. We cannot make rulings, or issue binding decisions. We need members of Parliament to use our findings to hold the public sector to account. So having a constructive, trusting relationship with Parliament, and the public sector, allows us to be heard, and our recommendations to be enforced.

We do have certain ties to Parliament under the Public Audit Act. Among them:

• We must submit our draft annual plan to Parliament, and consult with members of Parliament about our proposed performance audits.
• We must also prepare and present to Parliament an annual report, including audited financial statements. Our annual budget is also submitted directly to Parliament through the Speaker.
• We must table our reports in Parliament before they are publicly released, although the gap between these steps is often no longer than a few minutes.
• At their request, we brief Parliament’s select committees on almost every report we publish. Explaining our findings in more detail improves Parliament’s scrutiny of public entities and improves the public sector’s performance.

Conclusion

New Zealand has one of the most independent SAIs in the world, and long may it last. The challenges encountered in getting there are similar to those faced across the PASAI region.

There will always be a need to maintain a healthy relationship with Parliament, based on mutual respect and trust. Likewise, there will always be the possibility that any government can use whatever legislation is in place to lessen the influence and independence of any SAI. The best insurance against political interference, and to attain the level of independence set out in INTOSAI’s eight principles, is for SAIs to continue to build their capability and capacity. A strong, self-reliant SAI will be in a better position to work with lawmakers to ensure their governing legislation is empowering, rather than limiting.