Auditor-General's overview

It is my pleasure to present my final annual report as the Controller and Auditor-General of New Zealand. It has been another very good year for the Office. I am proud of our achievements during 2015/16.

This year we welcomed a new Deputy Auditor-General and new members to our Leadership Team. The Office is in good hands. Deputy Auditor-General Greg Schollum has led by example from day one. Assistant Auditors-General Andrea Reeves, Melanie Webb, and Todd Beardsworth bring expertise and new perspectives to the leadership of the Office, complementing the skills and experience of our existing members.

Reflecting on 2015/16 and my term as Auditor-General

Reflecting on the themes from my first annual report has been interesting. Many things have changed for the better and some have endured – namely, the Office’s spirit of collegiality, its commitment to quality, and openness to debate.

The past seven years have also been a time of turbulence and – in turn – significant change.

In my first few annual reports, I wrote about how the global economic recession created higher levels of debt and a strong drive for value for money, with the public sector required to do more with less. During my term, I have audited several innovative projects that often involved public entities working closely with each other and with the private sector. I am encouraged by the public sector’s growing willingness to work in smarter and more collaborative ways to deliver quality public services.

In 2009, my predecessor, Kevin Brady, expressed concerns about the appropriateness of New Zealand’s financial reporting standards. The new Accounting Standards Framework, adopted last year, means we now have reporting standards that are suitable for the various sizes and natures of our public entities. My hope is that this will lead to clearer, less cluttered, and more user-friendly reporting on the use of public resources.

Our two biggest regions have undergone intense challenges in the past seven years. The Canterbury earthquakes caused great upheaval and tragedy. The rebuild is complex and has cost taxpayers and ratepayers a significant amount. Auckland has undergone a major reorganisation of its local government, with eight councils merging into one. My Office’s focus has been on providing assurance that these transformations have run as effectively and efficiently as possible. We have carried out many audits with this goal in mind, with more to come. I am proud of our work relating to these events and their impact on our country.

Improving the performance of, and the public’s trust in, the public sector was as important a goal for my Office when I started as it is now. What’s changed is that we are better at using our reporting and persuasive powers.

We are getting better at planning for impact and creating opportunities to make a difference.

Improving our impact

I am pleased with how we have used multi-year themes when planning our annual work programme to provide greater insight and value from our audits. Our reflections reports, which discuss the learnings from each year’s theme, are consistently stimulating conversation and action within the public sector. These reports enable us to use our unique view across the entire public sector to make observations and pull out the “nuggets” about practices and principles that can be applied more widely. This year’s report, Reflections from our audits: Governance and accountability, has been in high demand and welcomed as timely, topical, and practical.

This year, we delivered an ambitious work programme, again carried out high-quality audits, and improved the timeliness of our reporting. Overall, our reports to Parliament and our recommendations to public entities have been well received and useful to them.

I appreciate the commitment shown by my staff and other audit service providers to meet the ongoing challenge of maintaining quality in a rapidly changing environment. Demand for our analysis and views continues to increase, along with competing pressure to deliver results more quickly. Getting the right balance between quality and timeliness is important, and we have worked hard internally and with others to put in place the right approach and support, including people, processes, and systems.

Our strategy (The Auditor-General’s strategy 2013-17) has guided us well, and we have made good progress implementing projects and activities that will have long-term impact on strengthening the public sector and our own organisation, lifting our citizen focus, and preparing for the future. I am very pleased with how my staff have taken ownership of our strategy and used it in their work to improve the impact of our audits and reports.

Making a difference

During the year, I have encouraged staff and other audit service providers to be the Auditor-General’s eyes and ears, and more recently voice, and to continually seek to provide greater value in our audits. This has mutual benefits for my Office and the public entities that we audit. My auditors and other staff are engaging in conversations to better understand each public entity’s business environment and to share learnings from our reports and other work. This approach makes a difference to our ability to influence and encourage improvement in the public sector, and enhances the quality of our audits and our working relationships. The difference our approach has made is evident in the increasing number of recommendations from our annual audits and performance audits that entities are putting into practice.

We also gained momentum in helping to improve Parliamentary scrutiny. With the support of Parliamentary staff, we have been able to brief select committees in a more timely way about our work and matters that need attention. This has led to improvements in the information we present so that committee members can properly hold public entities to account.

The success of these approaches is evident in the positive feedback received in this year’s client and stakeholder surveys.

In 2015/16, we joined the dots from our work with citizens as users of New Zealand’s public services to help plan and inform our future work. We were very encouraged by the results of our first citizen panel exercise and intend to do more to connect directly with citizens.

Making a difference overseas

Internationally, we have also continued to build our reputation and make a difference through the International Organisation of Supreme Audit Institutions (INTOSAI). This year, we were invited to lead our international colleagues in planning how to strengthen INTOSAI’s global influence and voice. This work is going well, and we have made solid preparations for the final discussion at the three-yearly congress of INTOSAI at the end of 2016.

I am also very proud of our role in improving public sector auditing in the Pacific through the hard work of my colleagues throughout the region, supported by the Pacific Association of Supreme Audit Institutions (PASAI) secretariat and staff from my Office.

Developing our capability

As part of our strategy, we have been looking at what else we need to do to be a model organisation and ensure that we are well-prepared for the future. In 2015/16, we put in place several important building blocks for developing our capability.

We established an Inquiries Team, which is now fully staffed and delivering improved processes and practices for our inquiry work. We also added data analysis capability and have been upgrading our information systems to support new and ongoing requirements.

We are currently preparing a workforce strategy to ensure that we continue to have the appropriate capability and capacity to deliver the work of the Auditor-General.

Reporting on our performance

The results of the first stage of our move towards integrated reporting is included in this annual report as a taste of how organisations can give a more comprehensive yet concise picture of their performance. We have been building our understanding and capability for integrated reporting in-house and assessing how integrated our own planning and reporting is.

Conclusion

The environment we live and work in is constantly changing. As I prepare to leave office, I note New Zealand’s fall from second to fourth in Transparency International’s Corruption Perceptions Index 2015. At the time of my first annual report in 2010, we were ranked first.

Our public management system has strong accountability foundations, but those in positions of governance and management cannot afford to be complacent. This is a wake-up call for everyone.

My team is well positioned to continue working towards its goal of improving the performance of, and the public’s trust in, the public sector. I thank them all for their excellent work, and I wish them well for the future.

Lyn Provost
Controller and Auditor-General

12 September 2016