Overview

It has been a year of significant challenges and changes for the Office. It has also been a rewarding year that has seen increasing impact from our work.

Every seven years, the Office transitions from one Auditor-General to their successor. In January this year, former Auditor-General, Lyn Provost, completed her seven-year term. Her outstanding contribution to public sector accountability and transparency, in New Zealand and internationally, was acknowledged in this year's Queen's Birthday honours when she was made a Companion of the New Zealand Order of Merit.

Martin Matthews succeeded Lyn Provost as Auditor-General on 1 February 2017. However, not long into his term, Martin decided to step aside as Auditor-General while a review into his suitability to continue in the role was carried out. This action followed questions raised in Parliament about his former role as Secretary for Transport. Martin later resigned on 2 August 2017.

Despite the challenges that this unprecedented situation has created for the Office, we have continued to deliver high-quality work. Our work can continue because, as Deputy Auditor-General, I have the same powers, duties, and functions as the Auditor-General that are set out in our governing legislation – the Public Audit Act 2001. The Auditor-General's position will remain vacant until Parliament appoints a new Auditor-General.

Despite a year of significant challenges and changes, we have seen increasing impact from our work.

Influencing our future

A highlight of the year was when staff throughout the Office worked together to help shape The Auditor-General's strategic intentions to 2025. This document describes how, during the next eight years, we intend to use our unique perspective and independent voice to influence the changes needed for New Zealand's public sector to operate and be accountable in ways that will meet the needs of Parliament and New Zealanders in the second quarter of the 21st century.

Our strategic objectives are:

• Strengthening the public sector. We want to use our influence to improve the performance of public entities and the public management system in which they operate.
• Improving New Zealanders' trust and confidence. We want to ensure that accountability arrangements work to improve New Zealanders' trust and confidence in the public sector.
• Leading by example. We want to be a role model for public sector performance and accountability.

We are currently working on our Strategy 2018-21, which will set out how we intend to contribute to our strategic objectives over the next four years.

Our performance during 2016/17

Despite the challenges facing the Office, we have continued to carry out our core role effectively and, in doing so, have contributed positively to the performance and accountability of the public sector. Parliament and other key stakeholders continue to value the work of the Office, as do the majority of public entities that we audit.

We have published a range of reports on different topics, focused on our work programme themes of Investment and asset management (2015/16 theme) and Information (2016/17 theme).

We incurred a financial deficit of $2.1 million. A deficit result was planned and is consistent with our use of the memorandum account covering our Audit and Assurance Services output class.

Influencing improvement in the public sector

We carefully consider how to deliver the findings from our work in ways that influence improvement in the public sector. For example, we brought together the key messages from our work over five years on Māori education to help effect positive change. We summarised the important lessons and actions from our work on assessing the effectiveness and efficiency of the Canterbury Earthquake Recovery Authority. The lessons were useful for our discussions with those agencies that have responsibility to plan for the next time New Zealand needs to co-ordinate a major recovery effort.

Our reports on reflections from our audits continue to stimulate conversation and action in the public sector. Our April 2016 report, Reflections from our audits: Governance and accountability, is still in high demand because of its topical and practical messages. The discussion and debate initiated by our proposal for a Water-themed work programme signal a timely topic of keen interest to many New Zealanders.

Through our work, we play an important part in helping the public sector to be transparent and accountable. This year, we completed inquiry work that reinforced the importance of transparency about the use of public resources. It was gratifying to note that Transparency International's Corruption Perceptions Index recently ranked New Zealand alongside Denmark as the least corrupt countries in the world. However, New Zealand cannot afford to be complacent. We will continue our support to strengthening integrity systems and practices in the public sector.

International influence

Internationally, it was a big year for the Office. We invested significant time and resources into our preparations for leading the Professionalisation theme at the three-yearly Congress of the International Organisation of Supreme Audit Institutions. At the Congress, it was reinforced how highly regarded New Zealand is in the international public sector auditing community.

This year, we chose to assess ourselves against an international framework for public sector auditing, and to publicise the results to show the way for other audit offices. The results of the assessment suggest that we are serving New Zealanders well. We are working on some improvement areas that were identified.

Acknowledgements

Following the Kaikoura earthquake in November 2016, our Wellington office was cordoned off for five weeks as a result of damage to a neighbouring building. Almost 60% of our workforce is based in Wellington. I thank these staff for the resilience and adaptability they displayed as they found ways to continue producing timely, quality work during this period. We were able to continue operating and have learned lessons for the future from this experience.

I am proud of our achievements and how well we have managed the challenges of the year. I am grateful to our senior leadership team for their professionalism and support during what has been an unprecedented year for the Office. I also thank all our people and other audit service providers for their dedication and contribution to the Office's work.

We continue to be well positioned to contribute to a public sector that Parliament and New Zealanders can have trust and confidence in.

Greg Schollum
Deputy Controller and Auditor-General

25 September 2017