Part 3: The impact of our work

To maintain our reputation as a source of trusted information, it is important that our work influences improvements in the public sector. Our work in 2023/24 made a significant contribution to improving how public organisations perform, act, and make themselves accountable to others.

The impact of our performance audits

We published five new performance audits in 2023/24, covering topics from housing to infrastructure (see Appendix 3 for the full list of publications). We also followed up on progress on our recommendations from six past performance audits.

Our findings and recommendations have resulted in a number of improvements to public sector performance. Some of these improvements have been immediate and others have taken longer to be realised. Longer-term change is usually identified through follow-up reports which revisit a particular aspect of public sector performance, usually within two years of our initial report.

Immediate responses to our reports in 2023/24

New Zealand Food Safety (part of the Ministry for Primary Industries) broadly agreed with the recommendations in our report on monitoring importers of high-risk foods. Since the report was published, regulations have been approved to permit a new food importer levy, which the Ministry for Primary Industries will use to maintain and improve New Zealand Food Safety's monitoring and education services, as recommended by our review.

Following our briefing to the Finance and Expenditure Committee on our Making infrastructure investment decisions quickly report, the Committee called for public submissions on our recommendations, how the process for and public reporting on infrastructure investment could be improved, and how to improve the Infrastructure Management System.

Our follow-up work in 2023/24

We regularly follow up with audited organisations to establish how they have responded to our performance audits. These updates are published on our website to provide transparency on progress. We published six follow-ups in 2023/24.

In our follow-up work about regional councils' relationships with iwi and hapū for freshwater management, we found that all four regional councils we looked at have carried out work to further understand iwi and hapū aspirations and have taken steps to involve tangata whenua in their governance structures. Many of the iwi and hapū representatives we spoke with highlighted increasingly stronger relationships with their respective regional councils and council staff.

When we followed up on our 2021 report Strategic suppliers: Understanding and managing the risks of service disruption, the Ministry of Business, Innovation and Employment told us it is providing comprehensive guidance and regularly engaging with organisations to help them identify their strategic suppliers and manage those risks and relationships well. However, we found that the data used to identify strategic suppliers for public organisations does not provide a full picture, making it difficult to actively manage the risks of service disruption. We will continue to monitor the Ministry's progress in this area.

When we followed up on our 2022 report Improving value through better Crown entity monitoring, we found that some monitoring departments had invested in proactive working relationships with their Crown entities, leading to improved communication and collaboration. In those cases, they reported good progress in addressing our recommendations, including the development of agreed monitoring frameworks that reflect the operating context of Crown entities and a more collaborative approach to preparing accountability documents.

When we followed up on our 2022 report Co-ordination of the all-of-government response to the Covid-19 pandemic in 2020, we found that all four organisations involved in that work reported progress towards improved co-ordination and clearer roles and responsibilities. There had also been collaboration to prepare and maintain workforce plans.

In 2022, our report Governance of the City Rail Link project made four recommendations to help ensure that the City Rail Link project is successfully completed alongside wider network improvements, operates effectively from opening day, and achieves its intended benefits over the long term. Since then, responsible organisations report that they have established a new governance group to provide collective oversight of the programme and better integration between the organisations, and have made improvements to their Benefits Realisation Plan. We will continue to monitor this progress into 2024/25.

Our work does not always lead to the change we recommend or change at the pace we would expect. In 2021, we assessed the government's preparedness to implement the sustainable development goals, and this year we followed up on its response to our recommendations. It is difficult to see whether any progress has been made. New Zealand signed up to the 2030 Agenda almost 10 years ago – this should have been enough time to have established a foundation from which to achieve the sustainable development goals. We have continued to raise these matters with public organisations and have been told that those decisions sit with Ministers.

The impact of our inquiries

In 2023/24, our inquiries team looked at some important issues in the public sector and influenced a range of improvement work.

In December 2023, we published our inquiry into a procurement process run by Callaghan Innovation, which focused on how Callaghan Innovation carried out due diligence on potential providers for its Founder and Start-up Support Programme. The inquiry found processes for due diligence checks were not transparent or fair, risks of bias were not properly managed, and Callaghan Innovation did not meet its confidentiality obligations during the procurement.

Callaghan Innovation is making several changes in response to our inquiry, including writing a new code of conduct for providers in the Start-up Programme, improving how it manages conflicts of interest, and reviewing its processes for procurement, due diligence, and managing confidential information.

After the official results of the 2023 General Election were published, the Electoral Commission became aware of problems with the counting of votes. Although these errors had no effect on the election results, the Electoral Commission asked us to independently review the effectiveness of its controls and checks for counting votes and to recommend any improvements needed.

We identified how the errors occurred and suggested improvements to the Commission's processes. We also provided some observations about the Commission's challenges, such as the limited flexibility and manual nature of its processes (set by the Electoral Act), and how the Commission is funded. The Electoral Commission welcomed our report and accepted the recommendations we made.

Enhancing our impact in te ao Māori

The public sector needs to perform well for all New Zealanders. We know that Māori experience poorer social and economic outcomes and generally have lower levels of trust in government compared to other populations. It is essential not only to influence the public sector to improve on how it delivers for Māori, but also to be seen by Māori as a relevant and trusted organisation.

We have worked with our rōpū Māori and have drawn on members' advice to enhance the Office's understanding of the work that is most important for Māori.

In 2023/24, we published a follow-up report about regional councils' relationships with iwi and hapū for freshwater management. The iwi and hapū we spoke to highlighted their strengthening relationships with their respective regional councils, but also noted that councils could do more to support enduring and meaningful relationships.

We have continued to examine how well the public sector is supporting improved outcomes for Māori and how it is held accountable to Māori communities. As part of this work, we have begun a performance audit on how well prepared public organisations are to meet their Treaty settlement commitments.

Strengthening parliamentary scrutiny

We ran several information sessions with select committee chairpersons and members of Parliament to help them understand our work and to share our insights. We also provided briefings on our findings from particular performance audits, inquiries, and sector reports to aid their scrutiny of public sector spending and performance, focusing on the quality of performance reporting.

We survey select committees every two years to determine whether the quality of our advice and reports are meeting their expectations. In our 2023/24 survey, 100% of select committees rated our advice, and our reports on performance audits, inquiries, and other studies as at least "satisfactory".

Our work to support select committees increased in response to changes to Parliament's Standing Orders. Those changes have meant a significant increase in the time we spent supporting committees. This year, we supported:

committees' longer annual review hearings (almost double the time allocated in the previous year), including developing structured agendas for in-depth reviews;
the preparation of committees' scrutiny plans to cover the full parliamentary term, including a focus on scrutiny priorities and our priority organisations; and
longer Estimates hearings (double the time allocated in the previous year) during the inaugural Scrutiny Week in June 2024.

We will continue to work closely with committees and the Office of the Clerk of the House of Representatives to support the changes under the new Standing Orders.

Our work in local government

We work with stakeholders in the local government sector (including councils, Local Government New Zealand, Taituarā, and professional bodies), reporting the findings from our audits and sharing good practice.

Councils are facing rising debt and costs, the impacts of climate change, and the increasing need to deal with severe weather events. Many councils are facing challenges in balancing what they and their communities can afford with the various complex issues they face. Changes to water reforms in 2024 meant councils were given the option to extend their deadline for adopting their long-term plans. As a result, 36 long-term plans were audited in 2023/24.

We worked closely with councils to support the preparation of their 2024-34 long-term plans by:

briefing local government audit and risk chairpersons, chief executives, management, and staff on the focus areas for our long-term plan audits;
publishing a good practice guide on performance information in long-term plans; and
carrying out a consistency review of the audit reports we issued on 2024-34 long-term plans.

Our Local Government Group briefed the Governance and Administration Committee on the insights from our audits of councils' 2020/21 and 2021/22 annual reports. We delivered induction sessions to newly elected council members about the role of the Office, public accountability, integrity, conflicts of interest, and improving the effectiveness of audit and risk committees. We also hosted our regular forums for Audit and Risk Committee chairpersons, which focused on local government matters and were well attended.

Our work on influencing better performance reporting

In 2023/24, we continued to support improvements to how the public sector reports on its performance.

Our publications on this topic included:

setting out the need for consolidated reporting that allows Parliament and the public to understand a programme's costs, scope, and performance as a whole (as part of our performance audit of the Shovel-Ready and New Zealand Upgrade programmes);
a case study on performance reporting in the transport sector, which showed how a sector can set clearly defined and meaningful indicators and provide consolidated and integrated reporting on a key outcome (such as road safety) and a key programme (such as the Rail Network Investment Programme); and
a good practice guide for councils to help them establish more meaningful performance frameworks in their long-term plans and better performance reporting in their annual reports.

We also we strengthened our advice on performance reporting to select committees to help support Parliament's changes to Standing Orders. Most committees have noted an intention to focus on this for the rest of this parliamentary term. We also enhanced our advice to individual organisations to help improve their performance reporting.

Our latest central government report highlighted the need to review system settings and legislation for public accountability and reporting, given the issues in the quality of performance reporting at different levels of government. An inquiry into performance reporting and public accountability led and overseen by Parliament would provide the opportunity to reform the public accountability system and make it fit for the 21st century. The Finance and Expenditure Committee has indicated that it intends to conduct such an inquiry.

Our work on promoting integrity

Our audit work underpins integrity practices in the public sector, and integrity issues can be part of the scope of a public sector audit.

In February 2024, we launched our inaugural Public Sector Integrity Day to promote the importance of integrity in the public sector and encourage conversations about integrity. We also continued to support Transparency International New Zealand's regular leaders integrity forums.

We also published our procurement reflections report. This report confirms the extensive guidance on good procurement practice, and the repeated examples of disappointing weaknesses in some of the most fundamental elements of procurement – planning, managing conflicts of interest, transparency, contract management, and safeguarding strategic supply chains. We will continue to monitor this area closely.

We continued our work to more fully understand what the concept of integrity means and looks like for Māori and how that could be applied in the public sector. This will lead to an updated integrity framework and accompanying guidance that better integrates te ao Māori concepts. We expect to publish this in 2024/25.

Our international work

Each year, we make a significant contribution to strengthening public sector accountability, transparency, and good governance in the Pacific region, both as Auditor-General of the governments of Niue and Tokelau and through the Pacific Association of Supreme Audit Institutions (PASAI). PASAI is funded by the Ministry of Foreign Affairs and Trade.

We also work with the global auditing community through the International Organisation of Supreme Audit Institutions to share and develop best practice and tackle common problems faced by supreme audit institutions (SAIs).

Progressing audits for the governments of Niue and Tokelau

Work progressed to bring the audits of the financial statements of the governments of Niue and Tokelau up to date. These audits have been in arrears for several years. All the Niue subsidiary entity audits for the year ended 30 June 2022 were completed, and significant progress was made on the consolidated group audit for the year ended 2022 and subsidiary audits for the year ended 30 June 2023. The audit of the financial statements of the government of Tokelau for the year ended 30 June 2017 was completed.

This year we also reached an agreement with the Ministry of Foreign Affairs and Trade to enable us to provide support to improve accountability processes in Niue and Tokelau over the next five years. Our support will focus on enhancing the use of audit findings to hold their governments to account.

Working collaboratively to improve public sector accountability and integrity in the Pacific

In 2023/24, we supported the development of the next 10-year strategy for PASAI, and we also supported PASAI to secure development partner funding to implement the strategy. The new strategy focuses on increased technical support for PASAI's programmes through greater collaboration with development partners and other SAIs in the Pacific region.

We have continued to provide support and technical expertise through our twinning partnerships with the Controller and Auditor-General of Samoa and the Director of Audit of the Cook Islands. This year, we focused our support on improving financial audit quality and addressing the backlog of their financial statements of government.

We also supported a number of improvement initiatives:

We supported the SAI of the Cook Islands to advocate for strengthened SAI independence.
We hosted a webinar series for SAIs, Ombudsmen, Public Service Commissioners, other public organisations, and civil society organisations in the Pacific region, promoting topics to support good governance, transparency, and accountability for effective national integrity systems.
We supported nine SAIs in the Pacific region to take part in a global co-ordinated audit looking at climate change adaptation actions, which will be completed in 2024/25.
We supported the use of International Organization of Supreme Audit tools by SAIs in the Pacific, including an integrity self-assessment tool and a climate scanner tool for assessing countries' responses to climate change.