Part 3: Strengthening our core assurance role

Annual plan 2024/25.

In this Part, we discuss:

The public audit system provides assurance that public organisations report relevant and reliable information about their finances and performance to Parliament, councils, governors, and the public.

In 2024/25, we will audit about 3300 public organisations. This work is carried out by Audit New Zealand and private sector audit firms appointed by the Auditor-General.

The public audit system is critical to effective public accountability. However, it is under significant pressure. We have a range of work planned and under way to continue strengthening the public audit system.

Strengthening the public audit system

The current challenges for public sector audit

We are well placed to complete audits within normal statutory reporting deadlines (that is, the deadlines that were in place before the Covid-19 pandemic). Our larger audits are now meeting or exceeding pre-pandemic timeliness. However, the timeliness of audits of schools and smaller public organisations remains a challenge. Improving the timeliness of these audits will be a focus in 2024/25.

There continues to be a worldwide shortage of auditors. Fewer people are studying accounting-related subjects in tertiary education, which means this shortage is likely to continue. We will keep working with professional bodies to promote auditing as a career and strengthen the pipeline of professionals interested in public sector auditing.

We have built relationships with public audit offices overseas (including Australia and the United Kingdom) to support peak workloads through secondment and transfer arrangements. This helps to address peak workloads and build career paths for our staff. We will continue to build on these relationships in 2024/25.

Audit allocation strategy

During the Covid-19 pandemic, the Auditor-General reallocated about 80,000 hours of audit work between audit firms. This reallocation was done to relieve pressure on audit staff and ensure that audit quality, and timeliness when possible, were maintained. Now that the effects of the pandemic on audit delivery have been largely addressed, we are focusing on ensuring that audit allocation supports a sustainable public audit system. 

In 2024/25, we will begin work to optimise the allocation of the public audit portfolio. This will involve increasing the Audit New Zealand audit portfolio in line with previous commitments, and ensuring an optimal allocation of audits across audit service providers.

Auditing schools

Every year, nearly 2500 schools and school-related organisations are audited. These audits are carried out by private sector firms on behalf of the Auditor-General.

Appointing auditors to carry out school audits is becoming increasingly challenging.

The Covid-19 pandemic and the resulting auditor shortage have created delays in completing school audits. There are also fewer firms carrying out school audits than in the past. School audit fees are also under pressure.

Work under way:* Ensuring the completion of quality and timely audits of schools
In 2024/25, to ensure that quality audits of schools are completed in a timely manner, we will implement a programme of work that is aimed at:
  • increasing audit resources by identifying and contracting new and appropriately qualified audit firms;
  • increasing audit efficiency by planning for the implementation of the new international auditing standard on less-complex entities;
  • introducing further guidance and standard working papers for key audit areas, and supporting the Ministry of Education in its work on the future of schools' financial reporting and assurance; and
  • ensuring that school audit fees remain reasonable.

* Work under way is work that we started before the publication of this annual plan. Planned work is work that we intend to start in 2024/25.

Climate-related reporting

There are new audit requirements for climate-related reporting and an increasing demand from stakeholders for quality climate-related information.

Climate-related reporting is evolving. We expect public organisations to report climate-related information that is relevant, reliable, transparent, and understandable. Our assurance work, where mandated, will support this.

The Financial Markets Conduct Act 2013 requires public organisations that meet the "climate-reporting entity" definition to prepare and report a climate statement.5 The first climate statements are required for the accounting periods beginning on or after 1 January 2023. From 27 October 2024, the Financial Markets Conduct Act also requires greenhouse gas metrics and related disclosures in the climate statements to be independently assured. The Auditor-General is the assurance provider for climate-reporting entities that are public organisations. We are advanced in this assurance work, including regularly auditing reporting on greenhouse gas emissions.

Work under way: Climate reporting assurance
Climate change iconIn 2024/25, we will continue our climate reporting-related assurance work. We will complete audits of climate-related information in public organisations' performance information where relevant and ensure that we are well positioned for new assurance requirements for climate-reporting entities. Our climate reporting assurance work includes:
  • influencing regulators and those developing standards to ensure that climate reporting and assurance standards (and guidance) are fit for purpose for all public organisations;
  • continuing to build our capability to carry out the required assurance work;
  • preparing and delivering technical advice and guidance to support auditors and climate-related disclosure assurance providers; and
  • carrying out quality audits of greenhouse gas emissions (and other climate-related measures where relevant) reported by public organisations in their audited performance information.

Audit New Zealand Practice Improvement programme

Audit New Zealand is a critical part of the public audit system. This is because it:

  • has specialist expertise in public sector accounting and performance reporting;
  • carries out audits that the private sector cannot readily carry out (for example, for national security reasons);
  • provides an auditor option where private sector firms are not willing or able to carry out the audit work; and
  • provides a benchmark for cost and quality.

In 2023/24, we completed a review of Audit New Zealand's practice management. We also started a programme of work to help better position Audit New Zealand in its role as a leader in public sector audit services.

Work under way: Audit New Zealand Practice Improvement programme
In 2024/25, we will implement the recommendations from the Audit New Zealand Practice Management Review. We will also roll out new technology to support audit delivery and efficiency and begin reallocating audit work to the Audit New Zealand portfolio (following portfolio changes to respond to the impacts of the Covid-19 pandemic on audit delivery).

Reporting on audit results

Each year, we consolidate the results of our annual audits for key sectors. We present the main findings from these audits in reports or letters and use them to advise select committees, inform the public, and inform our work programme.

Planned work: Sector reports
In 2024/25, we plan to report on our observations from the latest completed audits in:
  • central government (including the Controller function and the Government's financial statements);
  • local government;
  • schools;
  • tertiary education institutions;
  • licensing trusts;
  • Crown Research Institutes;
  • the energy sector (electricity distribution businesses); and
  • health regulatory agencies.

The Controller role

The Controller role provides assurance to Parliament and the public about whether the Government has incurred expenditure in accordance with parliamentary authority. To support this function, we monitor public expenditure and carry out appropriation audits of government departments. We report our findings and conclusions from this work to the Treasury in monthly Controller reports.

Our report on the central government audits includes our Controller function work for the financial year. We also produce an interim report on our half-year findings (our work from 1 July to 31 December of each year) as well as occasional reports on matters of interest related to the Controller function.

Planned work: Half-year Controller update
In 2024/25, we will provide our regular half-year Controller update, which provides an account of our work and findings for the first six months of 2024/25. We will also summarise findings for the year in our annual report on central government audits.

Where Controller matters arise during the year, we will report separately on these.

5: See section 461O of the Financial Markets Conduct Act 2013 for the meaning of “climate-reporting entity”.