Part 6: Our appropriations

Annual report 2020/21.

Our services are funded through the appropriations for Vote Audit 2020/21. In the table below, we show the links between the appropriations and our services.

Our services	Our appropriations
Provide advice and support for effective Parliamentary scrutiny. Our advice to select committees, and our support for the international public sector auditing community.	Statutory Auditor Function MCA MCA means multi-category appropriation – more than one aspect of our work is covered by this appropriation.
Monitor spending against Parliamentary appropriations. Our Controller function.	Statutory Auditor Function MCA
Audit information reported by public organisations about their performance. Our annual audits of public organisations and our audits of councils' long-term plans.	Audit and Assurance Services RDA RDA means revenue-dependent appropriation – the amount of money depends on the audit fees charged for audits of public organisations. Audit and Assurance Services This appropriation is funded by the Crown, not by the small organisations that we audit.
Carry out inquiries into matters of public interest. Our inquiries work and also our work on sharing good practice.	Statutory Auditor Function MCA
Assess public sector performance and accountability. Our performance audits and special studies.	Statutory Auditor Function MCA

Our appropriation statements are provided in the pages that follow in this Part.

Appropriation statements

The following statements report information about the expenses and capital expenditure incurred against each appropriation administered by the Office for the year ended 30 June 2021.

Statement of budgeted versus actual expenses and capital expenditure incurred against appropriations for the year ended 30 June 2021

This statement reports actual expenses incurred against each appropriation administered by the Office.

End-of-year performance information for all appropriations is reported in this annual report.

Annual and permanent appropriations for Vote Audit	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000¹	Supplementary Estimates 2020/21 $000¹	Main Estimates 2021/22 $000¹
Output expenses
Audit and Assurance Services RDA²	95,011	81,818	94,429	92,919	89,345
Audit and Assurance Services	150	3,535	150	150	2,150
Total appropriations for output expenses	95,161	85,353	94,579	93,069	91,495
Other expenses
Remuneration of Auditor-General and Deputy Auditor-General PLA (permanent legislative authority)³	1,011	1,099	1,099	1,011	1,099
Multi-category appropriations
Statutory Auditor Function MCA
Performance Audits and Inquiries	9,319	6,769	11,040	12,026	11,875
Supporting Accountability to Parliament	6,934	6,620	5,636	5,964	6,210
Total Statutory Auditor Function MCA	16,253	13,409	16,676	17,990	18,085
Total appropriations for operating expenditure	112,425	99,861	112,354	112,070	110,679
Capital expenditure
Controller and Auditor-General Capital Expenditure PLA⁴	1,389	1,520	2,525	1,672	4,393
Total annual and permanent appropriations	113,814	101,381	114,879	113,742	115,072

1: All Estimates information is unaudited. The figures under Main Estimates 2020/21 reflect the forecasts published in Budget 2020 and in the Office's 2019/20 annual report, and the figures under Supplementary Estimates 2020/21 reflect the updated forecasts published in Budget 2021.

2: The Office is permitted to incur expenditure up to the amount of revenue earned for this appropriation. In 2020/21, revenue under this appropriation was $95.395 million – see page 49, Financial performance for Audit and Assurance Services RDA.

3: Costs incurred pursuant to clause 5 of Schedule 3 of the Public Audit Act 2001.

4: Costs incurred pursuant to section 24(1) of the Public Finance Act 1989.

Statement of expenses and capital expenditure incurred without, or in excess of, appropriation or other authority for the year ended 30 June 2021

The Office did not incur any expenses or capital expenditure without, or in excess of, appropriation or other authority in the year ended 30 June 2021 (2020: Nil).

Statement of capital injections without, or in excess of, appropriation or other authority for the year ended 30 June 2021

The Office did not receive any capital injections without, or in excess of, appropriation or other authority in the year ended 30 June 2021 (2020: Nil).

Statutory Auditor Function MCA

About the appropriation Statutory Auditor Function MCA

The purpose of this appropriation is to support Parliament in ensuring accountability for the use of public resources. It includes two categories:

Supporting Accountability to Parliament

This category is limited to reporting to Parliament and others as appropriate on matters arising from audits and inquiries, reporting to and advising select committees, and advising other agencies in New Zealand and abroad to support Parliament and the public in holding public organisations to account for their use of public resources.

This category is intended to provide advice and assistance to Parliament and our other stakeholders to assist them in their work to improve the performance and accountability of public organisations. Our Controller function operates under this category and provides independent assurance to Parliament and the public that public money has been spent lawfully and within Parliamentary authority.

Performance Audits and Inquiries

This category is limited to carrying out and reporting on performance audits and inquiries relating to public organisations under the Public Audit Act 2001 and responding to requests for approvals in relation to pecuniary interest questions regulated by the Local Authorities (Members' Interests) Act 1968.

This category is intended to provide Parliament and the public with assurance about how well public organisations use resources and manage a range of matters and programmes. We make recommendations where we consider that improvements can be made.

Financial performance for Statutory Auditor Function MCA

	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000*	Supplementary Estimates 2020/21 $000*	Main Estimates 2021/22 $000*
Income
Crown	17,219	14,633	16,233	17,219	17,644
Other	631	522	443	771	441
Expenditure	(16,253)	(13,409)	(16,676)	(17,990)	(18,085)
Surplus	1,597	1,746	-	-	-

* All Estimates information is unaudited. The figures under Main Estimates 2020/21 reflect the forecasts published in Budget 2020 and in the Office's 2019/20 annual report, and the figures under Supplementary Estimates 2020/21 reflect the updated forecasts published in Budget 2021.

Statutory Auditor Function MCA costs were $1.737 million lower than in the Supplementary Estimates, mainly due to the deferral of some projects related to the Office's Information Systems Strategic Plan to 2021/22 and a reduced number of publications as a result of delays caused by Covid-19.

The surplus of $1.737 million is subject to an In-Principle Expense Transfer (IPET) of $1.100 million approved by the Officers of Parliament Committee (OPC) in February 2021. OPC will be requested to confirm or approve an amended amount in October 2021. The IPET currently allows the Office to increase the available budget in 2021/22 by up to $1.100 million for the deferral of projects that were not completed in 2020/21.

Audit and Assurance Services RDA

About the appropriation Audit and Assurance Services RDA

This appropriation is limited to audit and related assurance services as authorised by statute. It provides for audit services to all public organisations (except smaller public organisations, such as cemetery trusts and reserve boards) and other audit-related assurance services. The audit services we provide are funded by audit fees charged to public organisations.

Financial performance for Audit and Assurance Services RDA

	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000*	Supplementary Estimates 2020/21 $000*	Main Estimates 2021/22 $000*
Income from third parties	95,395	81,818	94,429	92,919	89,345
Expenditure	(95,011)	(81,818)	(94,429)	(92,919)	(89,345)
Surplus**	384	-	-	-	-

** Note 15 to the financial statements provides more information about the transfer of surpluses and deficits to and from the Office's memorandum account.

The higher level of actual income and expenditure compared to the Main Estimates primarily arose from more work completed on audits of public organisations carried out by contracted audit service providers. This additional work was partially offset by a lower level of work completed by Audit New Zealand on 30 June 2021 audit engagements due to capacity constraints.

Because this is a revenue-dependent appropriation, expenditure appropriations for this output class are capped at the revenue total for the year. In years where there is a deficit, the remainder of the costs relating to these outputs are reported in the Audit and Assurance Services appropriation below.

Audit and Assurance Services

About the appropriation Audit and Assurance Services

This appropriation is limited to the performance of audit and related assurance services as required or authorised by statute. It provides for audit and related assurance services of smaller organisations, such as cemetery trusts and reserve boards, which are funded by the Crown, rather than by audit fees charged to these organisations.

This appropriation also provides for when costs exceed revenue under the Audit and Assurance Services RDA appropriation. Deficits reported through this appropriation are attributed to the Audit and Assurance Services memorandum account.

Financial performance for Audit and Assurance Services

	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000*	Supplementary Estimates 2020/21 $000*	Main Estimates 2021/22 $000*
Income	150	150	150	150	150
Expenditure	(150)	(3,535)	(150)	(150)	(2,150)
(Deficit)**	-	(3,385)	-	-	(2,000)

** Note 15 to the financial statements provides more information about the transfer of surpluses and deficits to and from the Office's memorandum account.

A combined view of the financial performance for the two appropriations is shown below:

Combined financial performance for Audit and Assurance Services RDA and Audit and Assurance Services

	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000*	Supplementary Estimates 2020/21 $000*	Main Estimates 2021/22 $000*
Income from Crown	150	150	150	150	150
Income from third parties	95,395	81,818	94,429	92,919	89,345
Total Income	95,545	81,968	94,579	93,069	89,495
Expenditure	(95,161)	(85,353)	(94,579)	(93,069)	(91,495)
Surplus/(Deficit)**	384	(3,385)	-	-	(2,000)

** Note 15 to the financial statements provides more information about the transfer of surpluses and deficits to and from the Office's memorandum account.

Remuneration of Auditor-General and Deputy Auditor-General PLA

About the appropriation Remuneration of Auditor-General and Deputy Auditor-General PLA

This appropriation is limited to remuneration expenses for the Auditor-General and the Deputy Auditor-General, as authorised by clause 5 of Schedule 3 of the Public Audit Act 2001. This permanent appropriation provides for payment to the Auditor-General and Deputy Auditor-General as determined by the Remuneration Authority.

Financial performance for Remuneration of Auditor-General and Deputy Auditor-General PLA

	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000*	Supplementary Estimates 2020/21 $000*	Main Estimates 2021/22 $000*
Income	1,011	1,099	1,099	1,011	1,099
Expenditure	(1,011)	(1,099)	(1,099)	(1,011)	(1,099)
Surplus	-	-	-	-	-

The Auditor-General and Deputy Auditor-General lead the performance of the Office. The performance of the Office's activities, including this appropriation, is reflected in the information provided in this annual report. The reduced income and expenditure in 2020/21 compared with the prior year and Main Estimates reflects the pay reduction taken by the Auditor-General and Deputy Auditor-General in response to Covid-19, as determined by the Remuneration Authority.

Controller and Auditor-General – Capital Expenditure PLA

About the appropriation Controller and Auditor-General – Capital Expenditure PLA

This appropriation is limited to the purchase of assets by, and for the use of, the Auditor-General, as authorised by section 24(1) of the Public Finance Act 1989. It is intended to achieve the renewal and replacement of assets that support the delivery of the Auditor-General's operations.

Financial performance for Controller and Auditor-General – Capital Expenditure PLA

	Actual 2020/21 $000	Actual 2019/20 $000	Main Estimates 2020/21 $000*	Supplementary Estimates 2020/21 $000*	Main Estimates 2021/22 $000*
Property, plant, and equipment	1,060	1,034	685	1,063	1,850
Intangible assets	21	290	1,688	305	2,467
Other	308	196	152	304	76
Total Capital Expenditure	1,389	1,520	2,525	1,672	4,393

Our capital expenditure programme provides for the purchase of facilities and tools to enable our staff to carry out their work – for example, hardware and software for information systems, vehicles, building fit-outs, and furniture and fittings.

This year, we spent significantly less on software assets than planned as we deferred the implementation of several software projects related to our Information Systems Strategic Plan until 2021/22 so we could focus on the delivery of our core audit and assurance work.