Appendix 1: Status of the 2021 school audits

This appendix reports on how many schools provided draft financial statements for audit and how many audits have been completed as at 31 October 2022, including audits of public organisations related to schools.

Schools must provide their draft financial statements for audit by 31 March (the statutory deadline). In recent years, we have continued to work with the Ministry and the school sector to encourage schools to provide their draft financial statements for audit as soon as possible, and at the latest by the statutory deadline.

This year, we received about 92% of draft financial statements for audit by 31 March 2022. As Figure 1 shows, this is the lowest result in the past five years.

Figure 1: Number of draft financial statements received for audit during the past five years

This year was another challenging year for our school audits. We completed 1400 (57%)¹ of the 2021 school audits by 31 May 2022 (the statutory deadline). This is a significant decrease from the 70% completion rate for the 2020 audits.

The main reasons for the delays are the continued global shortage of auditors, which has been exacerbated by border closures because of Covid-19, and greater than normal levels of sickness, because of the Omicron outbreak during the early part of 2022.

As part of the recent allocation of school audits to appointed auditors for the 2021 to 2023 financial years, we worked to better match auditor capacity, and sought additional audit capacity from current and new audit firms. Despite this, we still expected to have some delays due to the continued global shortage of auditors (albeit we expected timeliness to be better than for the 2020 audits). However, the outbreak of Omicron in early 2022, during the main school audit period, affected our ability to get the audits completed on time, and the rate of completion was lower than we expected.

Contributing to the delay in completing the 2021 school audits were changes to the school payroll system by Education Payroll Limited and additional payments made centrally by the Ministry for Ka Ora, Ka Ako (Healthy Lunches Programme). Each of these added to the audit testing required for many audits. Also, we needed to refine our audit of cyclical maintenance provisions in response to changes to auditing standards, which added to the audit work required.

We were disappointed that we could not complete more audits by 31 May 2022. However, we have made steady progress completing further school audits since May. As at 31 October 2022, we have completed 2066 (84%) of the 2021 school audits.

In a pre-Covid-19 year, it was typical for about 100 (4%) of the previous year’s school audits to remain outstanding on 31 October. Because of the delays experienced this year, 392 (16%) of the 2021 audits were still outstanding on 31 October. This is more than double the amount last year, where 185 (8%) of the 2020 audits were outstanding on 31 October.

We completed 166 school audits from previous years since we last reported on the results of the school audits in November 2021. There were 99 previous-year audits of 59 schools outstanding on 31 October this year, compared with 80 audits at the same time last year. Figure 2 shows the number of outstanding school audits by year.

Figure 2: Outstanding audits, at the end of October, by audit year

1: This includes public organisations related to schools.