Auditor-General's overview
As citizens, we need reliable and timely information about the performance of public entities to ask valid questions of those who govern and lead them. Public entities are required to report on:
- the amount of public money they have spent;
- the outputs they have delivered for that money; and
- the results they have achieved.
If public entities' reporting is not timely, the information they provide is less relevant and proper accountability is more difficult to achieve.
My staff took a "snapshot" of how well public entities met their reporting deadlines during 2013/14. This report sets out the results of that analysis and discusses why some entities are not meeting their obligations.
This is my first report on the timeliness of reporting for the entire public sector. Before now, we have included information about the timeliness of entities' reporting in broader reports to Parliament about our audits of different groups of public entities.
Link between reporting and annual audits
I am responsible for auditing the financial statements of the government, the student loans scheme, and every type of public entity. Those audits give the people who govern and lead a public entity some assurance about their systems and controls. The audits also assure citizens that they can rely on the information we have audited.
Once an audit is complete, the auditors that I appoint to an entity will issue an audit report. The audit report is included in the public entity's accountability document – usually an annual report. No agency monitors whether public entities release their annual reports on time. Because the content of the entity's annual report has to be finalised before the auditor will issue an audit report, the date when the audit report is issued is the best measure we have for assessing whether public reporting is timely.
For many entities, the deadline for reporting is set by an Act of Parliament. Depending on the type of entity, the deadline can be three, four, or five months after the end of the entity's financial year. If no date is prescribed, we use a deadline of five months.
Reporting deadlines are mostly met
Most entities meet their reporting obligations. Between 1 July 2013 and 30 June 2014, we expected to issue 3809 audit reports. Of these, 2461 (64%) were for schools and 1348 for other entities – including government departments, local authorities, and Crown entities.
Of the 1348 other entities:
- 1081 audit reports (80%) were issued on time or early;
- 184 audit reports (14%) were issued late; and
- 83 audit reports (6%) had not been issued by our cut-off date of 30 June 2014.
When we prepared this report, the entities whose audit reports were issued late or had not been issued were mostly subsidiaries and small public entities.
By 30 June 2014, 45% of schools (1116) had met their reporting deadline and 55% (1345) had not. Difficulties with the Novopay payroll system meant that schools were late in finalising their financial statements for us to audit. At 30 June 2014, which was just one month after their deadline, 25% of schools' audit reports (608) were late and 30% (737) had not been issued.
The public deserves better
It is clear that some public entities need to give greater priority to meeting their reporting obligations.
Some public entities are struggling, sometimes because of limited capability or capacity to prepare financial statements and performance reports that comply with generally accepted accounting practice. Public entities that have failed to meet their reporting obligations for successive years tend to be very small.
I encourage all public entities to carefully consider the costs and obligations of reporting before they set up subsidiaries and other related entities.
I have named the public entities that were late or had still not been issued an audit report by 30 June 2014. I have done so to encourage people with governance and leadership responsibilities for those entities to ensure that appropriate effort and resource is allocated to meeting their reporting obligations.
I acknowledge that my auditors can sometimes contribute to delays in reporting. I monitor the performance of my auditors and work with them to address any systemic issues. Delays often occur because an entity does not meet the agreed timetables for providing information to the auditor and the auditor needs to honour commitments to other entities.
Opportunity for further reform
Several recent legislative changes and changes to accounting standards are expected to help improve the quality and timeliness of reporting by public entities. Some subsidiaries will no longer need to separately report, and some other entities have had their reporting obligations simplified.
The question raised in this report is whether there is scope for further reform to ensure that we get the right balance between the costs and benefits of public reporting.
Lyn Provost
Controller and Auditor-General
26 May 2015
Photo acknowledgement: mychillybin © Steve Harper