Part 2: Our strategy

The outcomes we seek and what we aim to achieve are shown in the top section of our performance framework.

Our medium-term strategy (our strategy) describes how we will build on our core functions and what we will do differently to generate the impact we need to achieve our outcomes.

Our strategy is organised around four strategic shifts we need to make to respond to the changing operating context in which we work, and enhance the impact of our activities.

Figure 3
The four strategic shifts we aim to make

Our four strategic shifts
1 – Focus more on examining how well the public sector achieves positive change for New Zealanders	2 – Help New Zealanders become better informed about public sector performance and accountability	3 – Be more active in sharing insights about what "good" looks like	4 – Help improve the public sector accountability system

Our performance framework, strategy, and organisation development plan shape our work programme.

The next section provides more information about each of the strategic shifts, why we are focusing on them, what we have achieved so far, and what we intend to do next.

Strategic Shift 1: Focus more on examining how well the public sector achieves positive change for New Zealanders

Why is this important?

The ultimate objective of public expenditure is to achieve improved outcomes for New Zealanders. Examining outcomes will increase our relevance to New Zealanders because it will put people at the centre of our work. We will focus more on changes that affect people, including their communities, environment, living standards, and society at large. We will work to understand the disparities in outcomes that different communities experience and report on what the public sector is doing to address those disparities.

To progress this shift, we set out to increase the emphasis in our work programme on examining the public sector's performance in delivering better outcomes for New Zealanders, including where public sector organisations are explicitly seeking to achieve improvements through their interventions.

Achievements so far include:

• We have started a programme of work to assess public sector performance in achieving better outcomes for those experiencing family violence.
• We have work under way to examine New Zealand's preparedness to deliver on the United Nations' sustainable development goals.
• Our draft annual plan for 2020/21 includes work to examine where and how the Government is improving outcomes in housing, health, education, and improving outcomes for Māori.

What are we going to do next?

In the next few years we will conclude performance audits on how well agencies participating in the joint venture on family violence are working together to achieve reductions in family violence.

We will use this experience to help refine our approach to auditing outcomes, and inform other performance audits and special studies aimed at better understanding how well the public sector is improving housing, health, and education. We will carry out specific work aimed at understanding how the public sector is supporting Māori to achieve their potential.

We will work with sector leaders and public organisations, including through our audits of non-financial performance information, to encourage improved reporting on outcomes by individual organisations and collectively, using meaningful and reliable performance measures.

We will consider new ways of providing advice and support to Parliament to help it scrutinise the achievement of better outcomes for New Zealanders. We will also explore ways of making information we have gathered on the public sector's performance in achieving outcomes accessible to New Zealanders and to understand how well public organisations are performing in delivering on New Zealand's international commitments to the United Nation's sustainable development goals.

Strategic Shift 2: Help New Zealanders become better informed about public sector performance and accountability

Why is this important?

The Auditor-General has a core role in the accountability of the public sector for its use of public money, which in turn supports the public's trust and confidence in the public sector. Providing robust information about the performance of public organisations is an important part of this.

To progress this shift, we set out to help New Zealanders to be able to hold public organisations to account by better informing them about public sector performance. Our regular reporting is a key way we do this, but we are also focusing on making the information we report more accessible to New Zealanders. This includes exploring the tools we use to explain audit results, the methods we use to gather information, and the way in which we report.

We also want to influence improved reporting by public organisations by continuing to encourage open and transparent reporting, with reliable, meaningful, and timely information that is accessible to the public.

Achievements so far include:

• Since 2018, we have published more than 40 reports on a range of matters in central and local government, including water management, procurement, information, and the timeliness of reporting by public organisations.
• Our reports on the findings of major inquiries have examined matters such as sensitive expenditure and procurement in the public sector, and we have reported our insights on the future of public accountability.
• We have prepared engagement and impact plans for performance audits and inquiries to sharpen our impact and the messaging in our reports so they were relevant to New Zealanders, and many of these have been supported by videos that highlight our key findings.
• We have prepared and implemented a training programme for Audit New Zealand's Audit Directors to lift their level of engagement with those charged with governance in organisations, such as boards, audit and risk committees, and senior management. This training will also be made available to OAG staff.
• We have regularly reported on the results of our audits in central and local government, and in specific sectors such as schools, port companies, district health boards, and tertiary education institutions.
• We have reported on the results of the Financial Statements of the Government and prepared regular updates on our Controller function. We produced a short animated video about our Controller function to promote understanding about the importance of this work.
• We have been developing a deeper understanding of the performance information that public organisations are providing to the public. We are assessing whether it is meaningful in relation to public organisations' strategies, and whether it evidences effectiveness, efficiency, and overall value for money of their services.
• We have also invested in specialist performance reporting expertise in the Office.

What are we going to do next?

To influence more meaningful reporting by public organisations, we will publish a report setting out our views about the state of performance reporting in the public sector and what we consider needs to change. We will continue to encourage improvement by seeking to influence changes to the reporting requirements as they are considered by central agencies and other sector influencers.

We will consider what we can do differently to help improve reporting, and develop a strategy to guide our work on this.

To make our own reporting more meaningful, in the next few years we are planning to better understand the issues that are important to specific communities, so that we can prepare and provide relevant information and data sets. We will report on our findings, and we will work to make this information available through our website in different ways and forms, other than our traditional text-based reports.

We will also explore ways to make our traditional reports more accessible, including thinking about opportunities for shorter summaries, presentations, and translations into other languages.

Strategic Shift 3: Be more active in sharing insights about what "good" looks like

Why is this important?

As the auditor of every public organisation, we have both "assurance provider" and "improver" roles. We are well positioned to help public organisations understand where they can improve their financial and non-financial performance. One of the ways we seek to do this is by using our knowledge and experience to provide insights into what "good" looks like. We can also play a key role as an information broker, to point individual organisations to other public organisations that may do similar things better or well.

To progress this shift, we set out to review the good practice guidance we had published in the past and prepare a plan for writing more guides. We are also considering the different ways in which we can disseminate good practice information and connect organisations so they can share experiences.

We are also focusing on better equipping ourselves to develop and share insights about what "good" looks like through improving the tools and approaches we use to share our information, and lead by example by continuing to improve our own internal systems and processes.

Achievements so far include:

• In the last few years, the OAG and Audit New Zealand websites were updated to include sections focused on good practice.
• We updated Audit New Zealand's Reports to Governors template to include references to relevant guides.
• We completed a stocktake of our good practice guides and prepared a three-year plan for how and when they will be updated. We are now including this work in our annual plans.
• We have published updated good practice guidance on severance payments and are soon to publish good practice guidance on the Local Authorities (Members' Interests) Act 1968, conflicts of interest, sensitive expenditure, and charging fees.
• We shared good practice in different ways. For example, we provided induction sessions and materials for new councillors on conflicts of interest, audit and risk committees, and building trust and confidence. We also ran a procurement speaker series to share good practice between public organisations.
• We launched an Audit and Risk Committee Chairs' forum for chairpersons in three cities, and encouraged local authorities to appoint independent chairpersons for their audit and risk committees. We see audit and risk committees as critical to effectively sharing good practice information.

What are we going to do next?

We will be deliberate about the new guidance we develop, focusing on what is most relevant and updating the guidance as needed. Over the next year, we plan to review good practice guidance on procurement, purchases, grants, and gifts, and the effective use of audit and risk committees. We are also developing new guidance for public organisations on what a good framework for ethics and integrity looks like. We will build on that work with some subsequent integrity-related performance audits.

We will explore developing useful self-assessment tools and case studies. We will also explore opportunities to connect public organisations – making wider use of forums and speakers' series to share what we have learned from our work and encourage others to share their experiences. We will focus on better supporting our own staff to play an information broker role with more training and better resources.

We will continue to explore strategic partnerships that will help us share good practice – with audit and risk committees in particular. We are also interested in the role of monitoring agencies and whether that is working as well as it could. We see opportunities to build a stronger community of practice between these agencies, and we will explore our role in this.

Strategic Shift 4: Help improve the public sector accountability system

Why is this important?

The effectiveness of the public sector accountability system is paramount in providing assurance to Parliament and the public that public organisations are fulfilling their responsibilities and meeting the standards expected of them. The public sector accountability system needs to change in line with public expectations and as society evolves. Our accountability system is far from broken, but it is critical that it keeps pace with changes in the expectations of the public.

To progress this shift, we set out to form our own view about the state of the public accountability system, to position us to influence improvements where needed.

Achievements so far include:

• We published a range of submissions on government proposals for public sector reform or major reviews of aspects of the public sector, including:
  • the Public Finance (Well-being) Amendment Bill;
  • the Public Service Legislation Bill;
  • the establishment of an Independent Fiscal Institution;
  • proposals looking at the role of the Reserve Bank and how it should be governed;
  • the Productivity Commission's report into Local Government Funding and Financing;
  • the Tomorrow's Schools Independent Taskforce Report;
  • the Reform of Vocational Education proposals; and
  • the Education (Vocational Education and Training Reform) Amendment Bill.
• We published our first discussion paper in a programme of work on the current state of the public accountability system: Public accountability: A matter of trust and confidence.
• We have substantially progressed our second phase of research into public accountability, including a survey to understand the public's views on accountability.
• We trialled a new format for Annual Review briefings with select committees as well as in-person briefing opportunities for all members of Parliament on key reports and inquiries to help Parliament exercise scrutiny over public organisations.
• We progressed our work to examine the current state of public sector performance reporting.

What are we going to do next?

We will continue to seek to influence the direction of public sector reforms to support changes that strengthen the accountability of the public sector.

We will publish our second phase of research into the state of the public accountability system and our views about what needs to change to improve the quality of performance reporting in the public sector.

We will continue our work on understanding New Zealand's public accountability system, its strengths and weaknesses, understanding where it could be improved, and influencing the improvements needed. We are planning some specific work to look at Māori perspectives on the accountability system, and ways in which the public sector can be more accountable to communities.

We will also progress our thinking about the future of public sector audits in the accountability system.

How we will know our strategy is having an impact

We will know our focus on examining how well the public sector achieves positive change for New Zealanders is having an impact when people who use our reporting tell us that:

• our work is providing assurance about whether key outcomes have been achieved, including how well outcome achievement is measured and reported; and
• our work provides insight about how well public organisations work together to achieve outcomes, and we are influencing improvements that support better outcomes for New Zealanders.

We will know we are helping New Zealanders become better informed about public sector performance and accountability when we see that public organisations are making their reports more meaningful and publicly available. The feedback on our own reporting, and the data and information we are making available, indicates it has provided meaningful reporting to communities, in that it has helped people to be better informed and hold public organisations to account.

We will know our efforts to share insights about what "good" looks like are working when we:

• see and hear of more good practice in action and there will be less evidence of poor practice underpinning failures;
• are aware through our audit and other work of more examples of public organisations sharing good practice;
• get feedback that the guidance we produce and presentations we make are relevant and useful, and there is an increase in requests for us to present and talk about our guidance;
• there is more and active sharing of insights in the Office using the tools we develop to facilitate this; and
• public organisation survey scores improve for "How satisfied are you with your audit service provider's engagement with you to help you make improvements to your organisation?"

We will know we are helping to improve the public sector accountability system when we get feedback from key parties to public sector accountability that we have informed a better understanding of the system and are influencing improvements through our work.

Ultimately, if we are delivering our core services and successfully implementing our strategy, we would expect to see evidence of increased impact and progress against our intended outcomes.