Part 1: About us

Why is there an Auditor-General?

Parliament authorises all government spending and gives statutory powers to public entities. Public entities are accountable to Parliament (and their communities in the case of local government) for how they use the resources and powers that Parliament gives them. Parliament seeks independent assurance from the Controller and Auditor-General (the Auditor-General) that public entities are using these resources and powers, and are accountable for their performance in the way Parliament intended.

The Auditor-General's role is to help Parliament in its scrutiny of executive government, to ensure that public entities are effective, efficient, and accountable. To be effective and credible in this role, the Auditor-General is independent of the Government and operates in an apolitical manner. The Auditor-General is an Officer of Parliament and does not comment on the policies of the Government or of local authorities.

The Auditor-General reports findings and makes recommendations so that those with responsibility for making improvements can take action. The Auditor-General does not have the power to enforce the recommendations from his work. Rather, the Auditor-General influences improvement through the independent and objective nature of the work, the scrutiny by Parliament that it supports, and effective working relationships between the Auditor-General's Office and public entities.

Consulting with members of Parliament on our proposed work programme is one way in which the Auditor-General supports Parliament's scrutiny of executive government. To preserve independence however, the Auditor-General makes the final decisions about the work programme.

Annual audits

The Auditor-General is responsible for auditing every public organisation in New Zealand that is required to publicly report (about 3500), many of which are funded by rates or taxes. Each year, our auditors carry out audits in every part of the public sector. This includes, for example, every government department, district health board, state school, university and polytechnic, local authority, and every State-owned enterprise.

Our annual audits make up nearly 90% of our work. Appendix 1 provides a summary of the number and type of public organisations in our audit portfolio at June 2019. The number of public organisations that we audit has declined by about 300 during the past four years. This is mainly because of the removal of legislative requirements for many subsidiaries of Crown entities and some companies to report separately, and so there is no need for a separate audit of these mainly small public organisations.

Each year, our auditors also expect to carry out audits of:

• the financial statements of the Government;
• the Government of Niue, its subsidiaries, and other associated entities;
• the Government of Tokelau and related entities; and
• organisations the Auditor-General has agreed to audit under section 19 of the Public Audit Act 2001.

Our public accountability system places responsibility on public organisations to account annually for their performance. They do this mainly through publishing their annual reports, which include financial information and, where relevant, performance information. The Auditor-General's work gives assurance to Parliament, public organisations, and the public that public organisations' financial statements and performance information fairly reflect the results of their activities.

The Auditor-General can also consider whether public entities are carrying out their work effectively and efficiently, and whether they act with due probity, comply with legislation, and are financially prudent.

Our annual audits of public organisations give us direct interaction with, and insight into, how the public sector is operating. The information we gather from our annual audits gives us a unique view of the challenges, emerging issues, and trends throughout the public sector. We use this information to advise select committees in their work in holding public organisations to account as part of Parliament's scrutiny of executive government. We also use this information to help us plan our work programme. It helps us to understand the environment public sector organisations are working in, and to determine where we can best focus our efforts to improve public sector performance and accountability.

Each year, we consolidate the results of our annual audits in central and local government and other sectors and publish the key findings in our regular suite of sector reports. The sector-based reports we plan to complete in 2019/20 are described in Part 3.

Controller function

In conjunction with our annual audits of government departments, we carry out appropriation audits. These are designed to ensure that government spending is within the authority of Parliament. To increase the profile and emphasise the significance of this function, in 2018/19 we launched a separate Controller report. This report summarised our Controller work and highlighted two appropriation breaches for the six months ended 31 December 2018. Our Controller function is a core part of the Controller and Auditor-General's role as "public watchdog." We intend to continue to publish 6-monthly reports on our Controller function work.

Performance audits, inquiries, and other work

The Auditor-General also carries out in-depth performance audits on public sector efficiency and effectiveness, inquiries into how a public organisation uses its resources, and studies on other matters affecting the public sector.

Performance audits are a key part of our work programme. We also monitor public organisations' progress in implementing the recommendations from our previous performance audits and include this work in our work programme.

Inquiries are not included in our work programme because, in contrast to our planned work, our inquiries work typically reacts to matters of current concern and is therefore largely unpredictable. We make decisions about whether issues warrant investigation as matters of concern arise.

Our inquiries work is an important mechanism for improving Parliament and New Zealanders' trust and confidence in the public sector. Inquiries are often complex and involve matters of high public interest. We recently reported on procurement of work by Westland District Council at Franz Josef to address concerns about the Council's decision-making processes that involved significant public expenditure, and we carried out additional assurance work to address concerns about the Waikato Institute of Technology's use of public resources. While not formal inquiries, there is also other work we carry out into matters of public interest – for example, publishing letters on the Greater Wellington Regional Council's changes to the regional bus system, and on the Kāpiti Coast District Council's intention to borrow money in order to set up investment funds.

Reporting to Parliament

Each year, we publish reports on the results of our annual audits, performance audits, major inquiries, and other work. Through this reporting to Parliament and other stakeholders, we are able to consider matters in greater depth than we can during an annual audit, and examine ways that public organisations can perform better.

We also:

• advise Parliament and select committees in order to support annual reviews and Estimates examinations;
• carry out and report on our responsibility under the Local Government (Auckland Council) Act 2009 to review the service performance of Auckland Council; and
• consider enquiries from ratepayers, taxpayers, and members of Parliament.

Our international work

Each year, we make a significant contribution to the international auditing community. We aim to strengthen public sector accountability and promote good governance by sharing our knowledge, skills, and expertise with other audit bodies throughout the world.

For example, the Auditor-General of New Zealand is currently the Secretary-General of the Pacific Association of Supreme Audit Institutions (PASAI). We also take part in international efforts to develop accounting and auditing guidance and standards, and we are active members of the Global Audit Leadership Forum (GALF) and the International Organisation of Supreme Audit Institutions (INTOSAI).

The Auditor-General is also the Auditor-General of Niue and Tokelau under their respective accountability arrangements.