Part 1: Completing the school audits

1.1
In this Part, we discuss how many audits have been completed, including audits of public organisations related to schools.¹ We also discuss how many schools provided draft financial statements for the 2021 year for audit.

1.2
It was another challenging year for our school audits. We completed 1400 (57%) of the 2021 audits by the statutory deadline of 31 May 2022. This is a significant decrease from the 2020 audits, where we completed 70% of audits by the statutory deadline, and a slight decrease from the 2019 school audits, where we completed 59% of audits by the statutory deadline. Both of those years were also affected, to varying degrees, by the Covid-19 pandemic.

1.3
A global shortage of auditors and the Omicron outbreak in early 2022 (which resulted in higher levels of staff illness in both our audit teams and at the schools we audit) affected our ability to complete audits on time.

1.4
Changes to our audit approach also resulted in many school audits taking longer than planned. These changes included having to carry out additional audit testing due to 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). We also needed to refine our audit of cyclical maintenance provisions in response to changes to international auditing standards, which added to the audit work required.

1.5
As we have said since the onset of Covid-19, it is vital that we do not compromise the quality of audit work carried out. Despite enormous efforts from auditors and schools, our auditors could not complete all of their audits on time. This is not an ideal situation, but the circumstances (described above) have made this unavoidable. However, we have made steady progress completing outstanding school audits since May 2022. As at 31 December 2022, we had completed 2231 (91%) of the 2021 school audits.

1.6
Schools must provide their draft financial statements for audit by the statutory deadline of 31 March every year. In 2022, we received about 92% of draft financial statements for audit by the statutory deadline. This is slightly fewer than previous years because of higher levels of sickness at schools and their financial service providers.

1.7
Before the onset of Covid-19, it was typical for about 50 (2%) of the previous year’s audits to remain outstanding by 31 December. Because of the delays in 2022, 231 (9%) of the 2021 audits were still outstanding by 31 December 2022.

1.8
We completed 180 school audits from previous years since we last reported on the audit results in November 2021. There were 85 previous-year audits of 51 schools outstanding as at 31 December 2022. This involved multiple years for some schools. Figure 1 shows the number of outstanding school audits as at 31 December 2022.

Figure 1
Outstanding audits as at 31 December 2022

1.9
Figure 1 shows that there are more than 20 school audits that are more than three years outstanding. The main reasons for this include:

• ongoing fraud investigations; and
• incomplete/missing records.

1.10
We are working with our audit service providers and the Ministry of Education to get these outstanding audits completed as soon as possible.

1: When we refer to schools this includes all state and state-integrated schools and kura, including their subsidiaries and associated trusts.