Our financial and physical resources

Our use of financial and physical resources to support our work.

We are mostly funded through audit fees that are collected directly from public organisations that we audit. We also receive Crown funding for aspects of our work that directly support Parliament, such as advising select committees and reporting to Parliament and the public on audits and inquiries.

Covid-19 has had a significant impact on the fee-funded functions of the Office, particularly Audit New Zealand. This, along with the challenges the auditing profession is facing, has resulted in audits taking significantly longer than usual to complete.

The Covid-19 pandemic, planned investment in essential technology upgrades, remuneration increases to support recruitment and retention of skilled staff, and other initiatives to support further enhancements to audit quality and efficiency have led to forecast deficits in the Audit and Assurance Services memorandum account in 2022/23 and beyond.

After a decade of restraint, increases in audit fees are now essential to address rising costs in the audit profession and to invest for the future. Audit New Zealand and other audit service providers typically negotiate contracts with public organisations once every three years. We have raised fees by more than 8% on recently negotiated contracts and expect to make similar increases in the next 12 months as we review audit fees for the local government sector.  

We sought, and received in Budget 2022, a capital injection of $11.4 million to address increased costs arising from Covid-19 for various 2020 and 2021 audits that could not be recovered through fees. For example, we incurred additional travel costs to ensure that audit teams across the country had appropriate capacity in the required audit locations.

Despite implementing the above initiatives, the outlook is still uncertain. It is likely that Covid-19 variants will cause further disruption and inefficiencies. We expect to update the Officers of Parliament Committee in 2022/23 on our forecasts and further mitigation actions that might be required.