Challenges for our school audits

The Auditor-General is responsible for carrying out the annual audits of more than 3300 public organisations. About 2420 of these organisations are state or "public" schools, including state-integrated schools, and kura kaupapa Māori.

Public schools must report each year on their financial performance by preparing a set of financial statements. Our Office audits those financial statements, to provide assurance that they fairly reflect the school’s transactions for the year, and the school’s financial position at the end of the year. As part of our audits, our auditors also consider whether schools are spending public money appropriately. The audited financial statements form part of the school’s annual report, which it must make available to the public on its website.

Because New Zealand’s schools are generally located in the communities they serve, we engage the services of audit firms across the country to carry out the annual school audits on behalf of the Auditor-General.

Ensuring that the school audits are completed within the time frames set out in legislation can be difficult at the best of times, due to the number of audits, and the different parties involved. Many schools engage financial service providers to prepare financial statements on their behalf, and information for some of the amounts in the financial statements is sourced from the Ministry of Education.

Unsurprisingly, the Covid-19 pandemic has presented additional challenges for both auditors and schools, and there have been delays in completing the school audits in the past few years. The lockdowns and alert level changes meant having to do more work remotely and being unable to visit some schools. This has affected the efficiency of audits.

Border closures and global mobility restrictions have contributed to a shortage of auditors in New Zealand to assist with carrying out the school audits. Normally, the audit profession relies on bringing in auditors from overseas to manage the workload at peak times. This is a wide-ranging issue that has affected the audits of many public organisations, not just schools, over the past two years.

Unfortunately, the audit delays have continued for our 2021 school audits. Although borders are now open, audit firms are recruiting from a competitive international market, and it takes time for people from overseas to get an approved visa and start arriving in New Zealand.

The Omicron outbreak also meant audit teams have dealt with greater than normal levels of sickness, as well as sickness affecting the ability of some schools to prepare financial statements and respond to audit queries. We acknowledge the extraordinary efforts of schools and their financial service providers to produce their accountability documents and respond to their auditors under such difficult and unusual circumstances.

During 2021 there was also a change to the school payroll system, which meant auditors had to carry out additional and unplanned payroll work for many of the school audits. This also contributed to the delay in completing the 2021 school audits.

It’s important that public organisations, including schools, are accountable for how they spend public money.  We thank the schools, financial service providers, and our auditors for doing their part to ensure that schools can continue to be accountable to Parliament and their communities, despite the setbacks and challenges we have faced over the past few years.