Note 20: Explanations of significant variances against the Main Estimates

Explanations of significant variances from the Office’s original 2021/22 budget figures (2021/22 Main Estimates) are as follows:

Statement of comprehensive revenue and expense

The overall deficit for 2021/22 was $1.813 million, compared to a deficit of $1.268 million budgeted in the Main Estimates. Revenue was $5.213 million higher than the Main Estimates and expenditure was $5.758 million higher. These increases primarily reflect more work completed and more fees earned on audits of public entities carried out by contracted auditor service providers. These increases were offset by a lower level of revenue and, to a lesser extent expenditure, generated by Audit New Zealand due to capacity constraints and a lower level of expenditure by the rest of the Office on various projects, including implementation of the Information Systems Strategic Plan.

Statement of financial position and Statement of changes in equity

Net assets at 30 June 2022 were $0.464 million less than the Main Estimates. This reflects higher levels of annual leave and deferred revenue due to capacity constraints and the deferral of audits due to Covid-19. The increases in liabilities were offset by the receipt of capital contributions received during the year to address the deficit ($6.800 million) in the Audit and Assurance Services memorandum account plus a further contribution of $1.800 million for future investment in our Information Systems Strategic Plan.  

Assets at 30 June 2022 were $7.972 million higher than the Main Estimates. This reflects higher cash levels from the receipt of the capital contributions noted above and increased receivables from billing clients based on contract schedules, partially offset by reduced software expenditure related to the Office’s Information Systems Strategic Plan.

Liabilities at 30 June 2022 were $8.436 million higher than the Main Estimates. This reflects higher levels of income received in advance (including the repayment of surplus to the Crown) and higher employee liabilities due to the effect of the Covid-19 pandemic on annual leave taken and accumulated time off in lieu.