Advice to the Epidemic Response Committee inquiry into the Government's response to COVID-19

23 April 2020: We wrote to the Epidemic Response Committee to outline the work we are planning in response to the risks and challenges posed by COVID-19.

22 April 2020

Hon Simon Bridges
Chair, Epidemic Response Committee
Parliament Buildings
WELLINGTON 6160

Tēnā koe Mr Bridges

ADVICE TO THE EPIDEMIC RESPONSE COMMITTEE INQUIRY INTO THE GOVERNMENT’S RESPONSE TO COVID-19

As you are aware, the Government’s response to COVID-19 has had a significant impact on public finances and the operation of the public sector. Public organisations are now working under extraordinary circumstances that create a wide range of risks and challenges for how public funds are used. Because of the important role my Office has in supporting Parliament’s scrutiny of Government, I wanted to inform you of the work we are planning in response to the risks and challenges posed by COVID-19.

We are approaching this work in several ways. The prospect of incurring such a large amount of expenditure together with the pace of the Government’s emergency response, and the extraordinary conditions under which the public sector is operating, mean that sound financial management, governance, and accountability are more critical than ever. I have written to the chief executives of public organisations to emphasise the importance of maintaining strong and effective systems and controls, tracking and transparently reporting COVID-19-related expenditure, and actively managing the wide range of risks the response to COVID-19 presents to public organisations.

Providing support to the Treasury to get good systems and processes in place centrally for monitoring and reporting COVID-19-related expenditure has also been a priority. The response to COVID-19 has meant that some government departments will incur significant levels of expenditure over and above current appropriations. I recently published an update on Government spending on the COVID-19 response where I noted that Parliament has given Government a rare and considerable degree of flexibility to fund its response to the COVID-19 crisis. We intend to monitor COVID-19-related spending, and we will publicly report monthly about whether the Government is accounting for it in accordance with the authority provided by Parliament. We are not yet sure what access we will have over the coming weeks to all the documentation, systems, and processes we normally look at, but we will do what we can to provide as much assurance as possible. We also plan, as we do each year, to provide select committees with advice to support their examination of the Estimates of Appropriations following the Budget on 14 May – we intend to pay particular attention to COVID-19-related spending in our advice.

I am aware of the Committee’s (and wider public) interest in the way Personal Protective Equipment (PPE) is being produced, procured, managed, and distributed to critical services. It is important that the public has confidence that those working as part of the response to COVID-19 have the equipment they need to be able to work safely. I have agreed with the Ministry of Health that my Office will examine the systems for acquiring and maintaining stocks of PPE, and its systems for distribution. I plan to report publicly on this work in the coming weeks.

The response to, and recovery from, the COVID-19 pandemic will fundamentally change the operating context for all organisations in New Zealand for the foreseeable future. We expect to publish the Office’s Draft Annual Plan for 2020/21 in late April. It will include an initial indication of the work we intend to do related to COVID-19 matters. I would welcome feedback from the Committee on this in due course.

In addition to the above, we will continue to deliver our core work of annual audits of financial statements and the performance information of public organisations, including the audit of the Financial Statements of the Government for the year ending 30 June 2020. There might be some limitations in access to systems and information within individual public organisations, and the extent to which this might affect the level of assurance we can provide through our audits of public organisations will become apparent over the coming weeks. We are currently working with the Treasury and our appointed auditors to determine what effect, if any, COVID-19 will have on the ability of public organisations to meet statutory reporting requirements and for quality audits to be delivered.

I would be happy to discuss with the Committee the work that my Office is planning related to COVID-19.

Nāku noa, nā

Signature - JR

John Ryan
Controller and Auditor-General