Part 1: About the Office of the Auditor-General

Draft annual plan 2020/21.

Who we are

The Controller and Auditor-General (the Auditor-General) is responsible for auditing all of New Zealand’s public organisations. The Office of the Auditor-General (the Office) is an important pillar of the national integrity system that helps ensure that New Zealanders can have trust and confidence in the public sector and in government.

Why is there an Auditor-General?

Parliament authorises all government spending and gives statutory powers to public organisations. Public organisations 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 Auditor-General that public organisations 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 organisations 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 responsible for making improvements can take action. The Auditor-General does not have the power to enforce his recommendations. 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 our Office and public organisations.

About our work

The ultimate outcome we are working towards is that Parliament and New Zealanders have trust and confidence in the public sector. For this to happen, the public sector has to perform well and with integrity and provide reliable, meaningful, and timely information so it can be held accountable. Everything we do is directed towards achieving these outcomes. We discuss our strategic direction in more detail in Part 2.

Our purpose is improving trust and promoting value in the public sector.

Our vision is of a high performing and trusted public sector.

The Auditor-General’s work is carried out by just over 400 staff in two different business units – the Office of the Auditor-General (the Office), and Audit New Zealand – supported by staff in a shared Corporate Services Team (CST).

The Auditor-General also contracts auditors from private sector accounting firms to carry out audits on his behalf.

Our core functions are to:

  • audit information reported by public organisations about their performance (annual audits);
  • assess public sector performance and accountability (through performance audits and special studies);
  • provide advice and support for effective parliamentary scrutiny;
  • monitor spending against parliamentary appropriations (the Controller function); and
  • carry out inquiries into matters related to the use of public resources.

Annual audits

Annual audits of public organisations are the core work of the Office, accounting for nearly 85% of our resources. These result in the issuing of about 3300 audit reports each year, as well as reports to those charged with governance on how their organisations could improve their control environments and reporting. Our annual audits fundamentally support the integrity of the financial and performance reporting of public organisations. All our work is built on this solid foundation.

Our annual audits give us direct interaction with, and insight into, every public organisation in New Zealand. Through our audits, we gather intelligence on how the public sector is operating and the main challenges and emerging issues affecting the public sector. We use this information to help Parliament scrutinise public organisations’ performance. We also use this information, along with our other intelligence-gathering activities, to inform our work programme.

Every three years, our auditors carry out the audits of the long-term plans (LTPs) of local authorities. A council’s LTP outlines how it will co-ordinate its resources and provides a basis for accountability to its community over the long term. As councils plan for significant issues such as water quality, climate change, and their communities’ recovery from Covid-19, long-term planning has never been more important. Our work supports stronger council accountability to, and scrutiny from, local communities.

Appendix 1 provides a summary of the number and type of public organisations in the Auditor-General’s audit portfolio at March 2020. Each year, our auditors also expect to carry out audits of the financial statements of the Government, the Government of Niue (and its subsidiaries and other associated organisations), the Government of Tokelau (and related organisations), and organisations the Auditor-General has agreed to audit under section 19 of the Public Audit Act 2001.

All our audit work is carried out by either the Auditor-General’s in-house audit service provider, Audit New Zealand, or private sector audit firms. Our audit work is funded by fees charged to each audited organisation, which are agreed after consultation with the organisation.

The quality of the audit work carried out on behalf of the Auditor-General is paramount. Quality assurance reviews of appointed auditors take place usually once every three years to ensure that they have complied with The Auditor-General’s Auditing Standards.

Maintaining our independence is critical. The credibility of our work relies on being free of influence (real or perceived) so that we can carry out our work and report without constraint. We have high standards of independence, which we have enhanced further during the last year, and we closely monitor compliance with those standards.

Our independence and reputation are also critical to maintaining Parliament’s and the public’s trust and confidence in our work, and enables us to maintain our position as one of the strongest “pillars” in New Zealand’s national integrity system.1

Assessing public sector performance and accountability

The Public Audit Act 2001 empowers the Auditor-General to assess the performance and accountability of public organisations, particular sectors, and the public sector as a whole. Every year, we carry out a wide range of work to assess public sector performance and accountability.

We identify and prioritise work that we consider will best contribute to the changes we want to bring about, as described in our medium-term strategy, and to achieving our ultimate outcome – that Parliament and New Zealanders have trust and confidence in the public sector.

Our work includes evaluation and assessment work, special studies, as well as advice and recommendations for improvement.

Performance audits are an important part of our work programme. They enable us to delve more deeply into particular areas of performance than is possible through our annual audits. Their purpose is to influence the public sector to improve its performance and provide assurance to Parliament and the public that public organisations are delivering what they have been set up and funded to do.

Each year, we assess the progress public organisations make in acting on the recommendations of a selection of our previous performance audits. We describe our proposed programme of follow-up work in more detail in Part 3.

Advice and support for effective parliamentary scrutiny

Parliamentary scrutiny of the performance and accountability of the public sector is primarily carried out through select committees. We work closely with select committee chairpersons and clerks to provide advice and support that meets their needs.

Our services to Parliament are informed by our annual audits, performance audits, and inquiry work. We use our information to advise and inform Parliament about issues and risks in the public sector.

We provide reports and advice to select committees to help their annual reviews of public organisations and their examination of the Estimates of Appropriations. We publish reports on the results of our annual audits, performance audits, major inquiries, and other work. 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.

Monitor spending against parliamentary appropriations

Our Controller function provides independent assurance to Parliament that spending by government departments and Offices of Parliament is lawful and within the scope, amount, and period of the appropriation or other authority.

Our Controller function is a core part of the Auditor-General’s role as “public watchdog”. It supports the important constitutional principle that the government cannot spend, borrow, or impose a tax without Parliament’s approval. We normally publish six-monthly reports on our Controller function work (described in Part 3). However, in response to the unprecedented spending associated with Covid-19, we are currently publishing monthly Controller updates.

Carry out inquiries into matters of public interest

The Public Audit Act 2001 allows the Auditor-General to carry out an inquiry into any matter concerning a public organisation’s use of resources. Our inquiries function is an important mechanism for maintaining and improving Parliament’s and New Zealanders’ trust and confidence in the public sector.

Inquiries can arise from our audit or other work, requests from members of Parliament or a public organisation, or concerns raised by the public. We consider many issues and receive many requests for inquiries, and the number of requests increases each year. We decide whether issues warrant investigation when those issues arise. For this reason, our inquiries work is not included in our planned work programme.

Our international contribution

Each year, we contribute to the international auditing community, particularly in the Pacific region. We aim to strengthen public sector accountability and promote good governance by sharing our skills, knowledge, and expertise with other audit bodies throughout the world.

We take part in international efforts to develop accounting and auditing guidance and standards, and we are active members of the International Organisation of Supreme Audit Institutions (INTOSAI) and the Global Audit Leadership Forum. A senior member of our staff represents New Zealand on the International Public Sector Accounting Standards Board.

Our largest time and resource commitments are to the Pacific Association of Supreme Audit Institutions (PASAI), which is the regional body of INTOSAI focused on the Pacific. The Auditor-General of New Zealand is the Secretary-General of PASAI.

Through our commitment to PASAI, we support accountability, transparency, and good governance in the Pacific, which in turn helps to ensure stability in the Pacific and accountability for the resources that New Zealand invests in the region. A contract with the Ministry of Foreign Affairs and Trade funds our work with PASAI.

As part of our PASAI work, we are also privileged to have twinning relationships with the Audit Office of Samoa and the Cook Islands Audit Office. These relationships provide specific support and development opportunities for staff in these offices to work closely with our staff, both in New Zealand and in their home countries.

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

1: According to Transparency International New Zealand, the New Zealand arm of the global anti-corruption agency.