Here’s what auditors noticed during the 2014 audits

Service performance reporting for the audits of TEIs for the year ended 31 December 2014
(letter sent in September 2015 to the leaders of all tertiary education institutions).

I’m pleased to once more write to you summarising my auditors’ findings on TEIs’ performance reporting based on the results of the 2014 audits.

As you know, my office has commented on TEIs’ performance reporting for successive years now. We actively report these results to you and to Parliament in an effort to assist continual improvement. Our related reports can be accessed online at

Our previous reports have set out the expected components of high quality reporting in this area. Please read this letter as an update in addition to those previous reports—many of our findings for the 2014 audits are similar to, and build on, those of previous years.

Given the unique statutory requirements of TEIs, our findings on performance reporting for 2014 did not affect our TEI audit reports unless there were material deficiencies against performance as forecast in investment plans – we did not modify our audit opinions for any parent TEIs in 2014. Where our auditors found that further improvements were needed in performance reporting, these were raised in management reports or as part of normal liaison with your TEI.

Main findings:

  • The quality of TEIs’ performance reporting continues to improve year-by-year and across the board, albeit with some significant variation between individual institutions.
  • Improvements may be reaching a point where many TEIs consider their reporting to now be ‘fit-for-purpose’ and that the cost of making further improvements outweighs the benefits.
  • However, we consider there are some fundamentals that could still be improved if the full benefit of performance reporting is to be realised. For instance:
    • Management and governance bodies could create more demand for good performance information, including from subsidiary or related entities. Regular reporting and use of performance information supported by meaningful measures/indicators and targets remain crucial to aiding assessment of institutions’ effectiveness and to encouraging staff and stakeholders’ to engage with an institution’s strategic direction. We think this area in particular requires continued effort.
    • Comprehensiveness. Not all TEIs have yet instituted a breadth of performance reporting that links together and informs readers about the full extent or effect of all their core activities.
    • Services like teaching and research need to be clearly differentiated from inputs like staff capability or information about assets. In turn, the effect of providing those services need to be differentiated from the provision itself, for example, obtaining commercial returns and/or patents from research differentiated from the delivery of the research projects themselves. This kind of clarity should enable effectiveness to be more accurately assessed.
    • Explanation of variance from targeted performance could form more of the annual report explanatory narrative.
    • Costs of services information is part of good service performance reporting. If attaching costs to classes of outputs does not assist with decision-making, then consideration needs to be given to where cost information can best be reported and used effectively for decision-making.

Based on our auditor’s feedback across the sector, Figure 1 indicates the frequency that some of these issues arose. Please note that the data is representative only. It does not necessarily capture the full extent of the issue or all of the communication about these issues between appointed auditors and TEIs.

Figure 1

Indication of type and volume of issues.

As I observed last year, improving performance reporting takes resources and expertise, but, done well, it can greatly enhance governance and management practice. My auditors will continue to work to assist you and your staff with improvements where they can.

I have copied this letter, and the information therein, to the Chair of the Finance and Expenditure Committee as part of our regular reporting to Parliament on public sector performance. I have also copied other interested parties, i.e. the Ministry of Education, the New Zealand Qualifications Authority and the Tertiary Education Commission.

Please note that my office is currently planning work on investment in tertiary education assets for 2015/16 and that we may be in touch with some of you on this subject.

Yours sincerely

Signature - LP

Lyn Provost
Controller and Auditor-General