Auditor-General's overview

The Public Audit Act 2001 established an independent Auditor-General for New Zealand with a robust and broad mandate that is the envy of Auditors-General around the world. The citizens of New Zealand benefit from a mature public sector accountability regime.

To protect the integrity of the public sector and deliver the greatest possible value to all New Zealanders, we must always seek to deliver on our mandate. We must also strive to maintain the highest standards in all our work.

The International Organisation of Supreme Audit Institutions (INTOSAI) Working Group on the Value and Benefits of Supreme Audit Institutions (SAIs) has developed a framework for SAIs to assess their own performance. The Supreme Audit Institution Performance Measurement Framework (the Framework) has been piloted in recent years and is expected to be formally adopted at the INTOSAI Congress in December 2016. The Framework is based on the International Standards for Supreme Audit Institutions and other international good practice standards for public sector auditing. The Framework is used to assess both the quality of audit work and how SAIs are managed.

My Office chose to pioneer application of the Framework and release the results. Our goal is to be a model for others and demonstrate that we are prepared to practise the transparency and accountability we expect of the New Zealand public sector.

This report presents the overall results of our assessment of my Office using the Framework. We have published on our website detailed findings and information about the methodology and the environment in which we work.¹

Strengths in our operating environment

The work of an Auditor-General can be significantly hampered when the reporting requirements for public sector entities are not clear. New Zealand legislation very clearly sets out reporting requirements for public sector entities, particularly the content of, and time frames for, reports. We are fortunate in New Zealand that enough resources are invested into preparing and auditing accountability documents.

This is not the experience of many of my colleagues in the Pacific region. We must not take our position for granted and must continually strive to maintain and enhance New Zealand’s public management and auditing regime.

Strengths in our audit work

My Office carries out financial audits for about 3700 entities and carries out about 12 performance audits every year. This is a large number compared with many of my international counterparts. To maximise my ability to complete all audits on a timely basis and in accordance with auditing standards, many of our financial audits are outsourced to appointed auditors who carry them out on my behalf. Because of the risks to the Auditor-General’s reputation from outsourcing, we carefully manage our contracting and monitoring arrangements.

Our assessment showed that we have the policies and procedures needed to manage these risks. Our financial audit quality assurance processes were found to be of a high standard when assessed against the Framework. These processes also mitigate the risk of poor-quality audits.

We have established clear standards for all auditors and support these with policies and procedures. We have an effective approach to recruiting, remunerating, and training our audit staff. All of these factors are critical to delivering consistently high-quality audits.

Supporting these parts of the audit process are good practices in how we manage our relationship with Parliament and report on audit findings or the results of our other work. Our communications with Parliament meet all of the Framework’s requirements to be considered of the highest possible standard.

Strengths in management

Leadership is critical to any organisation. Based on the good practice expectations of the Framework, we have a leadership structure that clearly defines leadership roles and responsibilities. My leadership team uses appropriate meeting and reporting approaches to complete work and shares any decisions made with staff.

Our vision and values (independence, integrity, and professionalism) firmly ground all of our communications. Both our vision and values are clearly communicated in corporate documents, including strategic and annual plans. This is a significant strength. The Auditor-General’s Professional and Ethical Standards also set the tone and expectations from which all actions are assessed.

Our operational planning processes are robust and thorough, based on engagement with a broad range of staff and good external consultation. Clear delivery responsibilities are established, and projects are monitored until they have been completed. Our reporting is of a high standard, as are our websites. These tools assist us to achieve impact and reach citizens.

Areas for further attention

We need to improve two parts of our audit work. These are maintaining the quality of small audits (such as schools) and specialist compliance audits (such as regulatory audits). Additionally, we need to improve the training of non-audit staff.

We also need to give attention to our approach to corporate planning. Although the Auditor-General’s strategy 2013-17 is of a high standard, it would be more effective if its goals were better prioritised and how these would be achieved was clear. This would clarify how we should implement annual planning work to achieve the strategy’s ambitious goals.

At an operational level, the Framework has highlighted that some of our internal processes need improvement, particularly the independence and frequency of internal audit work and the periodic external assessment of our corporate functions and audit practice. The Framework has also confirmed that we need to further develop our risk assessment and monitoring processes and an overall human resources strategy to guide all aspects of staff management.

Conclusion and thanks

I wish to thank my staff who completed the assessment work for this report, my leadership team who support me in presenting the results for the scrutiny of Parliament, and the citizens of New Zealand. I also wish to thank the staff of the INTOSAI Development Initiative (IDI) who completed the peer review of both this report and the detailed report. The quality assurance statement from IDI that is attached as an appendix signals that both our work and the report have been completed to the standard that the developers of the Framework expect.

I am proud of the results of this assessment. They suggest that my Office is serving the citizens of New Zealand well. I hope that, by making this report publicly available, it will be a valuable resource to my SAI colleagues around the world. I am confident that my Office can address the areas we have identified for improvement, and I commend them as focus areas for my successor.

Lyn Provost
Controller and Auditor-General

28 November 2016

1: See our website: www.oag.govt.nz/2016/sai-pmf/detailed-assessment