Part 3: Performance audits and other work we will start in 2015/16

Annual Plan 2015/16.

Figure 3 provides brief descriptions of the performance audits and other work we will start in 2015/16.

Figure 3
Outline of performance audits and other work we will start in 2015/16

*Investment and asset management – Does New Zealand get the best from its public assets?*
1. Public asset management – strategy, practice, and information Both central and local government need to serve communities well over the long term. Many of the public services that communities depend on are delivered through long-lived assets. In our 2014 report, Water and roads: Funding and management challenges, we said the local government sector needed to "step up" to meet the future challenges. We also know that asset management is variable in central government, from both our annual audits and a range of specific audit work that we have carried out on state highways, the national electricity grid, and district health boards. We think that asset management strategy, practices, and information in the public sector should continue to reinforce: relevant, comprehensive, and long-term planning about assets and their funding; good asset management practices; and integrated asset, financial, and service information that is useful for decision-making, both within entities and across the public sector. In this audit, we will examine and bring together: local government – the public accountability information produced by local authorities and our audit work and analysis of it (see item 2 below); central government – the national strategy and the results of the four-year plans produced by a selection of asset-intensive government departments and Crown entities providing asset-reliant services that communities depend on (see item 5 below); and public sector asset management co-ordination and integration – the extent and maturity of initiatives that support long-term planning for assets and asset management improvement.
2. Matters arising from local authority long-term plans Every three years, local authorities provide an insight into their position and future intentions through their 10-year long-term plans (LTPs). The future sustainability of local government services such as roads, water, libraries, and rubbish disposal are critical to our communities, and local authorities are accountable for the public money they invest in these assets. We will report on our audits of the 2015-25 LTPs, and specifically: provide an overview of the local government sector's response to the three-year planning requirement; discuss any major trends or features; comment on the quality of information in the LTPs; and comment on any other matters arising from our audits of the LTPs.
3. Auckland Council – Complaints management The Local Government (Auckland Council) Act 2009 requires the Auditor-General to review and report on the Council's service performance. The Auckland Council funds that work. In considering possible projects for 2015/16, we have considered four principles, which reflect our understanding of the legislative intention of our review of service performance role: Review work should be focused on service delivery and quality. Review work should cover the activities of both Auckland Council and its council-controlled organisations (CCOs). The activities of Watercare Services Limited should be addressed, particularly its accountability, transparency, and pricing practices. Review work should be co-ordinated with the internal mechanisms of Auckland Council for the monitoring of substantive CCOs and assessment of the effectiveness and efficiency of its own activities. How an organisation manages complaints is a useful barometer of its commitment to service delivery that meets people's needs. Public entities that welcome complaints signal to citizens that someone is listening to them, and that they can influence public services. Complaints can provide valuable insight into poor service, systemic errors, or problems with specific processes. Complaints also give public entities an opportunity to understand the motives, feelings, and expectations of the people using their services. Organisations committed to delivering excellent services that meet people's needs welcome complaints. Complaints must be easy to make, consistently recorded, thoughtfully analysed, openly reported, and acted upon. Focusing on the Council, we plan in 2015/16 to audit Auckland Council's complaints system to assess whether it is robust and effective, and whether it is operating as intended. We will consider whether the system meets good practice. We will particularly focus on responsiveness to the issues raised by the "customer", considering timeliness and also quality and usefulness of the responses provided to meet the needs of complainants.
4. Tertiary education: Optimising investment in assets Our work in the tertiary education sector will be aimed at improving the effectiveness of Crown investment in tertiary education sector assets. Effective investment and use of tertiary education assets should support the educational success of New Zealanders and the quality of research and innovation in New Zealand. The Government's business growth agenda recognises the importance of tertiary education to achieving national economic aims and societal health. Multiple factors influence future development of tertiary education assets. These include: demographic changes affecting the domestic student population; a competitive international market for students and for research funding; the effects of information technology on teaching and learning; and information needs and decisions on system optimisation and the right network of provision. We intend to develop an understanding of the overall context and system for investing in assets in the tertiary education sector. We specifically plan to audit some significant investments in the sector.
5. Are central government entities' medium-term financial plans reasonable and supportable? Central government entities have carried out four-year planning since 2011. The information they hold and their assumptions are fundamental to entity management, as well as to central government financial forecasting. Four-year plans provide an integrated view of an entity's (or sector's) medium-term strategy. A four-year plan sets out: what an entity is seeking to achieve and how it plans to achieve this; and how an entity intends to address the challenges facing the delivery of its strategy, including how it will manage using existing funding. We propose to review a selection of plans prepared by asset-intensive entities delivering services to communities that interact with local authorities' activities, to assess whether: the financial forecasts and underlying assumptions are reasonable and supportable; and the financial forecasts are integrated with capital and achievement intentions. From this review work, we will consider the objectives of central government entity four-year planning, and draw on our experience in auditing local government long-term plans, to make suggestions for improvement.
6. Schools: How the management of school property affects the ability of schools to operate effectively The management of school property should help schools to operate effectively. School boards of trustees rely on the Ministry of Education to provide most of the land and buildings that schools use. The Ministry and school boards of trustees are involved in the management of school property. We have published a number of performance audit reports on the management of school property in the past, the most recent in 2006. These reports raised some concerns about the Ministry's policies and processes for managing this significant property portfolio, valued in excess of $11 billion. The main concerns arising from our most recent review related to: the quality of asset information on which school property decisions are based; the responsibility for maintaining school property being devolved to school boards of trustees, with no mechanism for monitoring whether the maintenance has been carried out; and the capability and capacity of school boards of trustees to manage significant property projects. The Ministry is changing its school property management processes. We propose a performance audit to examine how well the changes have addressed our recommendations, whether they are the right changes, and whether the changes are achieving the intended outcomes. We will also ask some of our school auditors to assess how well current property practices are working for schools, and the extent to which they are affecting the ability of schools to operate effectively.
7. Energy lines companies: Managing critical infrastructure Electricity distribution businesses play a fundamental part in distributing electricity to households and businesses. Out of 29 such entities, the Auditor-General audits the 21 that are publicly owned. The sector has different ownership, operating, and regulatory profiles. The prime concern to every business is the stability, resilience, and durability of its assets, operations, and distribution capability. We will consider how well the financial resources of the lines companies contribute to their ability to manage their service commitments. We propose to use the audited financial statements of all the electricity businesses and what we know of their asset management practices, to consider the financial sensitivity of these entities to potential changes in their operating and/or business environments. Using this analysis, we will then develop case studies to show what relationships exist between financial sensitivity and asset management practices, to understand how these are driving the businesses' operations and distribution capability.
8. Return on investment in modernising the courts The Ministry of Justice provides administration, case management, and support services to the Supreme Court, Court of Appeal, High Court, District Courts, special jurisdictions, and a range of tribunals and authorities in 103 locations around New Zealand. The Ministry delivers registry services, claims administration, research services, hearings management, and judicial support. We intend to examine the investments made over the last five years in improvements to enhance the efficiency of courts and court user experience. We are interested in understanding the costs of driving improvement and change within the courts and the benefits realised. As part of this work, we want to look at: whether change is managed well; whether the predicted benefits have been realised; and whether the Ministry has adapted its approach based on lessons learned and experience gained through the change process.
9. The effectiveness and efficiency of arrangements to repair pipes and roads in Christchurch – follow-up audit In 2013, we reported on how well the arrangements to repair the pipes and roads in Christchurch were carried out. That report was one of a series and covered one of the most significant and complex contracts in the Canterbury recovery to rebuild the underground water, wastewater, and stormwater pipes in Christchurch (commonly referred to as horizontal infrastructure). The repairs to pipes and roads are now more than half complete. Service levels have been revised since 2013, and a different approach to repairing the infrastructure network has been agreed between the Christchurch City Council, the Canterbury Earthquake Recovery Authority and the New Zealand Transport Agency. We propose to look at how the recommendations we made in our 2013 report have been acted on, the effect of changes to the five-year rebuild programme since 2014, the transition arrangements for the handover of assets from the Stronger Christchurch Infrastructure Rebuild Team (SCIRT) to Christchurch City Council, and overall value for money.
10. Major asset investment: Planning and delivering benefits – the contribution of the Gateway process This audit will assess the performance of the Gateway process in ensuring that large investment has appropriate care and attention to value, risk, and process management. It will also consider Gateway's contribution to ensuring that benefits are realised. The methodology used will draw on that used in other jurisdictions that have implemented the Gateway process. This will provide international comparison as well as insight into the specific application of the Gateway process in New Zealand.
11. Assurance review of financial assets in the public sector 2011 was the first year that central government's consolidated financial assets (for example, cash, shares, and other marketable securities) were worth more than its physical assets. According to Treasury forecasts, this situation is expected to continue. We plan to prepare a report that highlights and considers the increasing significance of financial assets across the public sector. We will explore the spectrum of financial assets across central and local government; review how they are managed, governed, and monitored; and discuss the opportunities and challenges that arise with holding and using financial assets in a public sector context. We plan to include Crown financial institutions, local authorities, tertiary education institutions, Crown entities, district health boards, and state-owned enterprises in our review.
12. Effectiveness and efficiency of broadband roll-out – Crown Fibre Holdings Limited The Government believes that faster and better broadband services are essential to improving productivity in the economy, New Zealand's global competitiveness, and the lives of New Zealanders. If put into effect well, ultra-fast broadband has the potential to lower transaction costs and improve the public's connectivity to government services through online platforms. We intend to carry out a performance audit to examine how well ultra-fast broadband has been rolled out.
*Service delivery*
13. Delivering mental health services More than 150,000 New Zealanders (3.5 per cent of the population) accessed specialist mental health and addiction services in 2013, mostly community-based services. We are interested in looking at how well mental health services are meeting needs. Mental health services cover a broad spectrum of need, and we will focus our audit work where we can usefully add insight.
Other work and analysis
14. Education for Māori – Information, educational progress, and resources It is important that the education system serves all students well. Many Māori students do not take part in education as well as they might; nor do some achieve as highly as they could. In 2012, our report Education for Māori: Context for our proposed audit work until 2017 set out the Auditor-General's intention to carry out a five-year programme of work to examine how well the education system is serving Māori students. We published a report on our second performance audit in that programme of work in February 2015 Education for Māori: Relationships between schools and whānau. We found that relationships are more effective when there is good communication, there is a willingness to be flexible to enable effective participation, and communities feel listened to. This is not easy and requires constant attention. Over the next 18 months, we intend to look at whether the education sector has the right information about Māori educational success, whether information is used to accelerate Māori educational progress, and whether resources are being targeted effectively and efficiently. The Auditor-General's Māori Advisory and Reference Group, comprised of eminent Māori education experts and representatives, will continue to advise the Office throughout the five-year Māori education audit programme.