Part 1: About the Office of the Auditor-General

Draft annual plan 2021/22.

Who we are

The Controller and Auditor-General (the Auditor-General) is an Officer of Parliament responsible for auditing all of New Zealand’s public organisations. The role is an important part of the constitutional framework in New Zealand. The role exists as an Officer of Parliament because ultimate authority for all public sector activity comes from Parliament.

The Office of the Auditor-General (our Office) is an important pillar of the national integrity system that helps ensure that Parliament and the public can have trust and confidence in the public sector and government.

Why is there an Auditor-General?

Parliament authorises all government expenditure 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 the Government and 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 does not comment on the policies of the Government or 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 his power to report, the independent and objective nature of his work, the scrutiny by Parliament that it supports, and effective working relationships between our Office and public organisations.

About our work

Our purpose is to improve trust in, and promote the value of, the public sector. We have an important role in influencing lasting improvements in public sector performance and accountability. To do this, our Office must be, and must be seen as, independent, competent, and trustworthy.

What we do

Audits of public organisations’ accountability documents

Our audits of public organisations’ accountability documents account for nearly 85% of our Office’s work. These audits are carried out by the Auditor-General’s in-house audit service provider, Audit New Zealand, and audit service providers from the private sector. We issue about 3400 audit reports each year. We also issue reports to those charged with governance on how their organisations could improve their control environments and their public reporting. These audits support the integrity of the financial and performance reporting of public organisations.

Our 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, risks, 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 information from regular sector scans across the public sector, to inform our work programme.

Appendix 1 provides a list of the number and type of public organisations we audit as at March 2021.

The Auditor-General is also the Auditor-General of Niue and Tokelau. We carry out audits of the financial statements of the Government of Niue (and its subsidiaries and other associated organisations) and the Government of Tokelau (and related organisations). We also carry out audits of other organisations that the Auditor-General has agreed to audit under section 19 of the Public Audit Act 2001.

The Local Government Act 2002 requires the Auditor-General to audit councils’ long-term plans and associated consultation documents. Our audits provide the community with independent assurance that the long-term plans and consultation documents meet their statutory purposes and are based on good information and assumptions that are reasonable and supportable.

Our audit work is funded by fees charged to each audited organisation, which are agreed after consultation with the organisation.

We carry out quality assurance reviews of appointed auditors to ensure that they have complied with the Auditor-General’s Auditing Standards. We regularly update those auditing standards to ensure that they remain fit for purpose.

Maintaining our independence is critical. The credibility of our work relies on our being free of influence (real or perceived) so that we can carry out our work and report without fear or favour. We have high standards of independence, and we closely monitor compliance with those standards.

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

Other assurance work

Audit New Zealand also carries out other assurance work for public organisations on behalf of the Auditor-General. This work includes reviewing procurement and contract management, project management, asset management, risk management, governance arrangements, and management of conflicts of interest. It can include any services that are reasonable and appropriate for an auditor to perform.

Assurance is typically provided to senior managers and governors of public organisations. By extension, such assurance work supports trust and confidence in public organisations. It promotes value by helping public organisations to comply with rules and guidelines and to adopt good practice.

Audit New Zealand and our other audit service providers also carry out other assurance work prescribed in legislation. This assurance work includes, for example, auditing disclosures required by the Commerce Commission.

Providing advice and support for effective parliamentary scrutiny

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

Our advice and support to Parliament is informed by all our 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.

Our advice is primarily based on analysis of public organisations’ accountability documents and Budget information. In 2021/22, we will continue to carefully scrutinise how public organisations report on their spending, their performance, and the ongoing effect of Covid-19 on their operations. We will advise the relevant select committees accordingly. We also intend to focus on how chief executives of government departments (individually or collectively representing a sector) make progress with meeting new requirements to produce long-term insight briefings for Parliament.

We publish reports on the results of our annual audits, performance audits, major inquiries, and our other work. We use this information to advise select committees in their work on holding public organisations to account as part of Parliament’s scrutiny of the Government.

Monitoring expenditure against parliamentary appropriations – our Controller function

Our Controller function provides independent assurance to Parliament that expenditure by government departments and Offices of Parliament is 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.

Carrying out inquiries into matters related to the use of public resources

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

Inquiries can arise from our audits or other work, requests from members of Parliament or a public organisation, or concerns raised by a member of the public. We consider many issues and receive many requests for inquiries. The number of requests increases each year.

Included in our current work are two major inquiries that are planned for completion in 2021/22: Inquiry into the Strategic Tourism Asset Protection Programme and Inquiry into use of Auckland private rentals for emergency housing. More information about these inquiries is on our website.

Assessing public sector performance and accountability through performance audits and special studies

The Public Audit Act empowers the Auditor-General to carry out performance audits on public sector effectiveness and efficiency and to assess the performance and accountability of public organisations.

We identify and prioritise work that we consider will best contribute to the changes we want to bring about and help Parliament and the public to have trust and confidence in the public sector.

Performance audits and special studies are an important part of our work programme. They enable us to look at areas of performance in more detail than an annual audit normally would. Performance audits and special studies are intended to influence public sector improvement and provide assurance to Parliament and the public that public organisations are delivering what they have been set up and funded to do.

In 2021/22, our proposed programme of performance audits and special studies continues to primarily focus on understanding the Government’s response to, and recovery from, Covid-19.

In Part 4, we describe our proposed work programme for 2021/22, including our follow-up work.

Under the Local Government (Auckland Council) Act 2009, we are also responsible for reviewing the service performance of Auckland Council and its council-controlled organisations from time to time.

Our international work

Our Office is an active member of the International Organisation of Supreme Audit Institutions (INTOSAI).

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 is the Secretary-General of PASAI.

Through our commitment to PASAI, we support accountability, transparency, and good governance in Pacific countries. This helps to strengthen good governance and accountability in the Pacific. A contract with the Ministry of Foreign Affairs and Trade funds our work with PASAI.

Covid-19 has changed the way that the PASAI work programme is delivered. In 2020, with our support, PASAI moved quickly to establish a learning management system to facilitate online delivery through both live and self-driven learning approaches. We are assisting PASAI to support Auditors-General in the Pacific as they address new public financial and governance challenges arising from the effects of Covid-19.

As part of our PASAI work, we are 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 those offices to work closely with our staff. This work has also been adapted in response to the effects of Covid-19. We are focusing on providing practical advice to address newly emerging challenges related to the effects of Covid-19 for those countries, and a new approach to delivery based on short but frequent online activities sharing experiences and practical advice.

We also take part in international efforts to develop guidance and standards. A senior member of our staff represents New Zealand on the International Public Sector Accounting Standards Board.

As noted earlier, 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.