Part 4: Timeliness of reporting by central government entities
4.1
In this Part, we look at the performance of public entities in our central government portfolio. We include a summary of our overall findings and make some observations about the nature of those entities that are not meeting deadlines for public reporting and the reasons for this.
4.2
Figures 5 to 23 show the results of the various entity types in the central government portfolio and name the entities whose audited performance information was not available by the required date.
Summary of our findings
4.3
We expected to issue 3126 audit reports for the central government portfolio during the 12 months to 30 June 2014. Schools made up 2461 of this total. The remaining 665 were for government departments, Crown entities and their subsidiaries, and State-owned enterprises and other Crown companies and their subsidiaries.
4.4
The main findings from our analysis of central government entities, other than schools, include:
- 583 audit reports (88%) were issued on or before the reporting deadline;
- 53 audit reports (8%) were issued late; and
- 29 audit reports (4%) had not been issued as at 30 June 2014.
4.5
The audit reports of parent entities were generally issued on time.
Government departments
4.6
The audit reports for all 35 government departments and two Offices of Parliament were issued on time.5 The audit report for the student loan scheme was also issued on time, as were the reports for 11 entities overseen by government departments (see Figure 5).
Figure 5
Timeliness of government departments, Offices of Parliament, and associated trusts and functions, as at 30 June 2014
| Timeliness | Entities | Related entities and functions | Total number of audit reports |
|---|---|---|---|
| On time | 37 | 11 | 48 |
| Issued late | 0 | 5 | 5 |
| Total audit reports issued | 37 | 16 | 53 |
| Audit reports not issued | 0 | 1 | 1 |
Note: The balance date for government departments and Offices of Parliament was 30 June 2013. The reporting deadline was 30 September 2013. The balance dates and reporting deadlines for trusts and subsidiaries varied.
4.7
Five small trusts overseen by the New Zealand Defence Force did not meet their reporting deadlines by 30 June 2014. By then, these entities were, on average, six months late in getting their audit reports issued (see Figure 6).
Figure 6
Late audit reports – government departments, Offices of Parliament, and associated trusts and functions
| Entity | Parent or responsible entity | Status of the next report due |
|---|---|---|
| Kippenberger Library Trust | Overseen by the New Zealand Defence Force | Late |
| Queen Elizabeth ll Army Memorial Museum | Overseen by the New Zealand Defence Force | Late |
| Royal New Zealand Naval Benevolent Fund | Overseen by the New Zealand Defence Force | On time |
| Royal New Zealand Naval Officers Benevolent Trust | Overseen by the New Zealand Defence Force | On time |
| Royal New Zealand Navy Central Fund | Overseen by the New Zealand Defence Force | On time |
4.8
The entity with an audit report not issued as at 30 June 2014 was the Ngataringa Bay Naval Sports Complex, which is a subsidiary of the Royal New Zealand Navy Museum Trust. The Sports Complex has not submitted information for audit for several years, and no audit reports have been issued since 2008. The Sports Complex has questioned whether it is a public entity and therefore subject to audit. In our view, it is a public entity.
Crown research institutes
4.9
Figure 7 shows that the seven Crown research institutes and 26 of their subsidiaries met their reporting deadlines.
Figure 7
Timeliness of Crown research institutes and subsidiaries, as at 30 June 2014
| Timeliness | Entities | Subsidiaries and related entities | Total number of audit reports |
|---|---|---|---|
| On time | 7 | 26 | 33 |
| Issued late | 0 | 2 | 2 |
| Total audit reports issued | 7 | 28 | 35 |
| Audit reports not issued | 0 | 0 | 0 |
Note: The balance date for Crown research institutes was 30 June 2013, and the reporting deadline was 30 September 2013. The balance date for subsidiaries was 30 June 2013, and the reporting deadline was 30 November 2013.
4.10
Overall, this is a positive result. The reports of two subsidiaries (which are subsidiaries of AgResearch Limited) were issued three months after the deadline: AgResearch (Pastoral Genomic Consortia) Limited and AgResearch (USA) Limited (see Figure 8). The latter is three steps removed from the parent company. Accounting issues and matters related to the "going concern" assumption were factors cited for the entities not reporting on time.
Figure 8
Late audit reports – Crown research institutes and subsidiaries
| Entity | Parent or responsible entity | Status of the next report due |
|---|---|---|
| AgResearch (Pastoral Genomic Consortia) Limited | AgResearch Limited | Late |
| AgResearch (USA) Limited | AgResearch Limited | On time |
District health boards
4.11
Figure 9 shows the results for district health boards (DHBs). Of the 36 audit reports issued on time, 19 were for DHBs and 17 were for subsidiaries. Except for Wairarapa DHB, the audit reports for DHBs were issued within the reporting deadline. (Wairarapa DHB met its reporting deadline for the following year.)
Figure 9
Timeliness of district health boards and subsidiaries, as at 30 June 2014
| Timeliness | Entities | Subsidiaries and related entities | Total number of audit reports |
|---|---|---|---|
| On time | 19 | 17 | 36 |
| Issued late | 1 | 4 | 5 |
| Total audit reports issued | 20 | 21 | 41 |
| Audit reports not issued | 0 | 6 | 6 |
Note: The balance date for district health boards was 30 June 2013, and the reporting deadline was 31 October 2013. For subsidiaries, the balance date was 30 June 2013, and the reporting deadline was either 31 October 2013 or 30 November 2013.
4.12
Ten of the 11 entities that did not meet their deadlines were subsidiaries of DHBs. Of the five late audit reports (see Figure 10), four were between 10 and 30 days late and one was more than five months late.
Figure 10
Late audit reports – district health boards and subsidiaries
| Entity | Parent or responsible entity | Status of the next report due |
|---|---|---|
| Wairarapa DHB | - | On time |
| Central Regions Technical Advisory Services Limited | A joint venture between six DHBs | On time |
| Manukau Health Trust | Counties Manukau DHB | On time |
| New Zealand Centre For Reproductive Medicine | University of Otago and Canterbury DHB | N/A – entity disestablished |
| New Zealand Institute of Rural Health | Waikato DHB and University of Waikato | Late |
4.13
Figure 11 lists the six DHB subsidiaries that, as at 30 June 2014, had not had their audit reports issued (on average slightly more than eight months after the deadline). Several of those entities also have to complete reports for previous years.
Figure 11
Unissued audit reports – district health boards and subsidiaries
| Entity | Parent or responsible entity | Update as at 24 March 2015 | Years without an audit report |
|---|---|---|---|
| Dempsey Trust | - | Not issued | 2 |
| Milford Secure Properties Limited | Waitemata DHB | Not issued | 8 |
| New Zealand Health Innovation Hub Limited Partnership | A joint venture between Waitemata DHB, Counties Manukau DHB, and Auckland DHB | Not issued | 1 |
| New Zealand Health Innovation Hub Management Limited | A joint venture between Waitemata DHB, Counties Manukau DHB, and Auckland DHB | Not issued | 1 |
| Tairawhiti Laundry Services Limited | Tairawhiti DHB | Issued | 0 |
| Three Harbours Health Foundation | Waitemata DHB | Not issued | 3 |
Tertiary education institutions
4.14
All 29 TEI audit reports were issued on time, as were the reports for 90 (81%) of the 111 TEI subsidiaries (see Figure 12).
Figure 12
Timeliness of tertiary education institutions and subsidiaries, as at 30 June 2014
| Timeliness | Entities | Subsidiaries and related entities | Total number of audit reports |
|---|---|---|---|
| On time | 29 | 90 | 119 |
| Issued late | 0 | 6 | 6 |
| Total audit reports issued | 29 | 96 | 125 |
| Audit reports not issued | 0 | 15 | 15 |
Note: The balance date for TEIs was 31 December 2013, and the reporting deadline was 31 March 2014. The balance date for most subsidiaries was 31 December 2013, and the reporting deadlines varied.
4.15
The six audit reports issued late were for TEI subsidiaries (see Figure 13). Delays in getting information to the auditor for sign-off were cited as reasons for reports being signed late. These six subsidiaries were not due to report again before 24 March 2015, so we were unable to provide data on their most recent audit reports.
Figure 13
Late audit reports – tertiary education institutions and subsidiaries
| Entity | Parent or responsible entity |
|---|---|
| Cybus | A joint venture between Universal College of Learning and Wellington Institute of Technology |
| The Open Education Resource Foundation Limited | Otago Polytechnic |
| LCB Management NZ Limited | Universal College of Learning |
| Le Cordon Bleu New Zealand Institute Limited Partnership | Universal College of Learning |
| Lincoln Hospitality Limited | Lincoln University |
| Skills for NZ Limited (to be disestablished) | A joint venture between 12 TEIs |
4.16
Of the 15 entities with audit reports still to be issued as at 30 June 2014 (see Figure 14), nine had audit reports for previous years that have not been issued. Most of the entities had not had their audit reports issued, on average, up to two months after the deadline. One entity's audit report had not been issued just under a year after the deadline.
Figure 14
Unissued audit reports – tertiary education institutions and subsidiaries
| Entity | Parent or responsible entity | Update as at 24 March 2015 | Years without an audit report |
|---|---|---|---|
| The Wintec Foundation | Waikato Institute of Technology | Not issued | 2 |
| Prima Group Limited | Waikato Institute of Technology | Not issued | 2 |
| Prima Learning Limited | Waikato Institute of Technology | Not issued | 8 |
| Learning Works Limited | Waikato Institute of Technology | Not issued | 3 |
| BR Training Limited | Waikato Institute of Technology | Not issued | 2 |
| Prima Innovation Limited | Waikato Institute of Technology | Not issued | 1 |
| Soda Inc. Limited | Waikato Institute of Technology (60%) and Hamilton City Council (40%) | Not issued | 2 |
| The University of Waikato Foundation | University of Waikato | Issued | 0 |
| Iengaged Limited | University of Waikato | Not issued | 1 |
| Waikatolink Limited | University of Waikato | Not issued | 2 |
| 11Ants Analytics Limited | Waikatolink Limited | Not issued | 2 |
| Ligar Polymers Limited | A joint venture between Learning Works Limited and Waikatolink Limited | Issued | 0 |
| Canterbury Tertiary Education Millennial Trust | - | Not issued | 1 |
| Te Tapuae O Rehua Limited | A joint venture between fiveTEIs (and Ngai Tahu) | Not issued | 1 |
| Bloktech Systems Limited (disestablished) | Auckland University | Issued | 0 |
4.17
We have been working with entities to address the number of audit reports that have not been issued.
Other Crown entities
4.18
Figure 15 shows that 97% (142) of the audit reports for other Crown entities and their subsidiaries were issued on time. Just four of the 146 entities' audit reports were issued after the reporting deadline. All four entities were subsidiaries (see Figure 16), and their audit reports were issued, on average, 19 days late. A query about the requirement to audit held up one audit, and an error about the reporting requirements for one meant a delay in issuing the audit report until the financial statements were presented as required.
Figure 15
Timeliness of other Crown entities and their subsidiaries, as at 30 June 2014
| Timeliness | Entities | Subsidiaries and related entities | Total number of audit reports |
|---|---|---|---|
| On time | 64 | 78 | 142 |
| Issued late | 0 | 4 | 4 |
| Total audit reports issued | 64 | 82 | 146 |
| Audit reports not issued | 0 | 0 | 0 |
Note: The balance dates for other Crown entities vary. For most, the balance date was 30 June 2013, and the reporting deadline was 31 October 2013.
Figure 16
Late audit reports – other Crown entities and their subsidiaries
| Entity | Parent or responsible entity | Status of the next report due |
|---|---|---|
| Annuitas Management Limited | Government Superannuation Fund Authority and Board of the National Provident Fund | Late |
| Canterbury Earthquake Heritage Building Fund | Heritage New Zealand | On time |
| New Zealand Permanent Trustees Limited | Public Trust | Late |
| New Zealand Transport Ticketing Limited | New Zealand Transport Agency | On time |
Other central government entities
4.19
The public entities in the category for other central government entities are diverse. They include the Reserve Bank of New Zealand, the New Zealand Superannuation Fund, several medical councils and boards, provincial patriotic councils, and smaller trusts. Figure 17 shows that 83% (89) of these entities had their audit reports issued on time.
Figure 17
Timeliness of other central government entities and their subsidiaries, as at 30 June 2014
| Timeliness | Entities | Subsidiaries and related entities | Total number of audit reports |
|---|---|---|---|
| On time | 69 | 20 | 89 |
| Issued late | 8 | 4 | 12 |
| Total audit reports issued | 77 | 24 | 101 |
| Audit reports not issued | 6 | 0 | 6 |
Note: Entities in this category have different balance dates and reporting deadlines.
4.20
The 12 entities that failed to meet their reporting deadlines were all smaller entities (see Figure 18). The entities whose audit reports were late had their reports issued, on average, two months after the deadline. However, one was just six days late and another slightly more than four months late.
Figure 18
Late audit reports – other central government entities and their subsidiaries
| Entity | Parent or responsible entity | Status of the next report due |
|---|---|---|
| Canterbury Provincial Patriotic Council | - | On time |
| Costley Training Institute Trust Board | - | * |
| Hunter Soldiers Assistance Trust | - | On time |
| New Zealand Government Property Corporation | The Treasury | On time |
| Ngarimu VC and 28th Māori Battalion Memorial Scholarship Fund | - | * |
| Ngati Whakaue Endowment Trust | - | * |
| Road Safety Trust | - | N/A – entity disestablished |
| Te Māori Manāki Taonga Trust | - | Late |
| The National Pacific Radio Trust | - | Not issued |
| Upstart Incubation Trustee Company Limited | A joint venture between Otago University, Otago Polytechnic, and Dunedin City Council | Not issued |
| Upstart Incubation Trust | Upstart Incubation Trustee Company Limited | Not issued |
| Otago Angels Limited | Upstart Incubation Trust | Not issued |
* Some entities were not due to have reported again by 24 March 2015, so we could not provide data on their most recent performance.
4.21
Six entities had not had their audit reports issued by 30 June 2014 – on average, four months after the deadline (see Figure 19).
Figure 19
Unissued audit reports – other central government entities and their subsidiaries
| Entity | Update as at 24 March 2015 | Years without an audit report |
|---|---|---|
| Computing and Information Technology Research and Education New Zealand | Issued | 0 |
| Otago Provincial Patriotic Society | Issued | 0 |
| Southland Provincial Patriotic Council | Not issued | 4 |
| Taranaki Provincial Patriotic Council (to be disestablished) | Not issued | 1 |
| Taranaki Scholarships Trust Board | Not issued | 1 |
| War Pensions Advisory Board | Not issued | 1 |
State-owned enterprises and mixed-ownership companies
4.22
Figure 20 shows that 104 State-owned enterprises and mixed-ownership companies and their subsidiaries had their audit reports issued on time.
Figure 20
Timeliness of State-owned enterprises and mixed-ownership companies, and their subsidiaries, as at 30 June 2014
| Timeliness | Entities | Subsidiaries or related entities | Total number of audit reports |
|---|---|---|---|
| On time | 17 | 87 | 104 |
| Issued late | 1 | 16 | 17 |
| Total audit reports issued | 18 | 103 | 121 |
| Audit reports not issued | 0 | 1 | 1 |
Note: The balance date for parent companies was 30 June 2013, and the reporting deadline was 30 September 2013. For the subsidiaries, the balance date was 30 June 2013, and the reporting deadline was either 30 September 2013 or 30 November 2013.
4.23
Although 17 companies had their audit reports issued after the reporting deadline, they did so within a month of the reporting deadline. All but one, Learning Media Limited, are subsidiaries (see Figure 21).
Figure 21
Late audit reports in 2013/14 – State-owned enterprises and mixed-ownership companies, and their subsidiaries
| Entity | Parent or responsible entity | Status of the next report due |
|---|---|---|
| Learning Media Limited | - | N/A – entity disestablished |
| BOSCO Connect Limited | Mighty River Power Limited | Not issued |
| ECNZ International Limited | Mighty River Power Limited | Not issued |
| Kawerau Geothermal Limited | Mighty River Power Limited | Not issued |
| Mercury Energy Limited | Mighty River Power Limited | Not issued |
| Metrix Limited | Mighty River Power Limited | Not issued |
| Mighty Geothermal Power Limited | Mighty River Power Limited | Not issued |
| Mighty Geothermal Power International Limited | Mighty River Power Limited | Not issued |
| Mighty River Power Geothermal Limited | Mighty River Power Limited | Not issued |
| Ngatamariki Geothermal Limited | Mighty River Power Limited | Not issued |
| Rotokawa Geothermal Limited | Mighty River Power Limited | Not issued |
| Special General Partner Limited | Mighty River Power Limited | Not issued |
| AsureQuality Asia Pacific Limited | AsureQuality Limited | On time |
| AsureQuality Holdings No.1 Limited | AsureQuality Limited | On time |
| AsureQuality Holdings No.2 Limited | AsureQuality Limited | On time |
| AsureQuality Holdings No.3 Limited | AsureQuality Limited | On time |
| Global Proficiency Limited | AsureQuality Limited | On time |
4.24
To provide some context, the parent entities for these subsidiaries have indicated that priority was given to group reporting. As we discussed in Part 3, subsequent legislative changes remove the requirements for many of these entities to report separately in future.
4.25
The audit report for Kiwi Covered Bond Trustee Limited, a subsidiary company, had not been issued as at 30 June 2014. We have since agreed that it is not a public entity.
Rural education activities programmes
4.26
Figure 22 shows that all but two of the rural education activities programmes' audit reports were issued by the reporting deadline. The report for Eastern Bays was signed two days after the deadline, and the report for Central Plateau was signed eight days after the deadline.
4.27
Overall, the rural education activities programmes are meeting expectations for their accountability information. The two rural education activities programmes that were late in reporting were not due to report again by 24 March 2015, so we were unable to provide an update on their performance.
Figure 22
Timeliness of rural education activities programmes, as at 30 June 2014
| Timeliness | Number of audit reports |
|---|---|
| On time | 12 |
| Issued late | 2 |
| Total audit reports issued | 14 |
| Audit reports not issued | 0 |
Note: The balance date for rural education activities programmes was 31 December 2013, and the reporting deadline was 31 May 2014.
Schools
4.28
Figure 23 shows that 1116 school audit reports (45%) were issued on or before the reporting deadline of 31 May 2014. Twenty-five percent were late, with an average delay between the reporting deadline and issuing of 14 days. The remaining 737 audit reports (30%) had not been issued as at 30 June 2014.
4.29
As at 24 March 2015, 40 audit reports (2%) for schools had still not been issued.
Figure 23
Timeliness of schools, as at 30 June 2014
| Timeliness | Entities | Subsidiaries and related entities | Total number of audit reports |
|---|---|---|---|
| On time | 1100 | 16 | 1116 |
| Issued late | 602 | 6 | 608 |
| Total audit reports issued | 1702 | 22 | 1724 |
| Audit reports not issued | 725 | 12 | 737 |
Note: The balance date for schools was 31 December 2013, and the reporting deadline was 31 May 2014.
4.30
We have not named the schools that are late because of the effect of Novopay on timeliness. The introduction of the Novopay system in August 2012 has significantly affected the timeliness of school audits in recent years.
4.31
As at 31 May 2013 (the reporting deadline for the 31 December 2012 audits), only 31% of audit reports had been issued. The delay in providing schools with their annual payroll reports, a significant input to their financial statements, meant that many schools' financial statements were not available for the audit on time.
4.32
Timeliness improved for the 31 December 2013 audits, with 45% of reports issued by the reporting deadline of 31 May 2014. However, this remains well below normal timeliness performance before Novopay. For example, 95% of audit reports for 2011 were issued by 31 May 2012. Although the problems experienced by the users of the Novopay system stabilised during 2013, there were still considerable delays in providing the necessary information to schools for their financial statements.
4.33
Schools also had to account for payroll errors in their financial statements, which made the process more complex and delayed schools in providing their financial statements for audit. As our appointed auditors for schools have other audit work to complete from June onwards, much of which is outside the public sector, they have to fit in any remaining audits around their other work commitments. This can affect the overall length of the delay in issuing an audit report.
4.34
In the years before Novopay, between 90% and 95% of schools usually met their reporting deadlines. Setting aside Novopay, some 5-10% of schools could improve the timeliness of their reporting.
4.35
Of the 40 schools with audit reports still to be issued as at 24 March 2015, seven have more than one year's audit report not issued (see Figure 24). The reason for the delay in completing the audits for each of the schools varies, but poor financial management and/or governance at the schools is often a contributing factor.
Figure 24
Unissued audit reports – schools
| Entity | Update as at 24 March 2015 | Years without an audit report |
|---|---|---|
| Cambridge High School Educational Trust | Not issued | 2 |
| Hukarere College | Not issued | 4 |
| Riverslea School | Not issued | 2 |
| Te Aute College | Not issued | 4 |
| Te Kura Kaupapa Maori o Te Kura Kokiri | Not issued | 2 |
| Te Wharekura o Mauao | Not issued | 2 |
| Westbridge Residential School | Not issued | 2 |
4.36
We have concerns about the financial viability of Hukarere College and Te Aute College, which both have four years of audit reports that have not been issued.
4.37
We note that Westbridge Residential School formed a combined board with Halswell Residential College from 1 February 2014. The reporting for Westbridge has been delayed because of a lack of clarity about which board would take administrative responsibility.
5: The Controller and Auditor-General is also an Office of Parliament. We are subject to an external and independent audit, and our audit report was also issued on time.