Auditor-General's overview

E ngā mana, e ngā reo, e ngā karangarangatanga maha o te motu, tēnā koutou.

I am pleased to present my annual report for 2021/22.

This year reinforced, more than most, the importance of the work of my Office. New Zealand has had another challenging year responding to the Covid-19 pandemic and the arrival of Omicron. The country, including the public sector, has faced many challenges dealing with the health effects of the pandemic on top of the ongoing social and economic impacts.

I am proud of our contribution to maintaining trust and confidence in the public sector in difficult circumstances.

Our annual audits

Our audits of public organisations' annual reports are our most significant work. They provide assurance to Parliament and the public on the financial and performance information that the public sector reports. They also provide recommendations on how public organisations can improve.

The ongoing global auditor shortage has severely affected the audit profession here in New Zealand. It has made it impossible for audit service providers, including Audit New Zealand, to complete all public sector audits within normal statutory deadlines. Retaining auditors in a tight labour market is difficult, and the border restrictions in response to Covid-19 have limited our ability to recruit senior qualified auditors from overseas to help with peak workloads. The Covid-19 pandemic has also caused restrictions and staff absences and increased the complexity of our audit work. In this environment, we continue to prioritise the quality of our audit work over timeliness. This has created a backlog of deferred audits that we plan to address over the coming year.

Despite these challenges, we still completed 88% of the audits of large public organisations on time. This is a significant achievement in the current environment.

Although there is no quick fix to the challenges Covid-19 has created, we are actively addressing aspects that are within our control. This includes reallocating audit work to balance workloads between my audit service providers, increasing our recruitment efforts nationally and internationally, and focusing on supporting our people as they face high workloads in a difficult environment.

We are also progressively addressing the long-term issue of some audit fees not meeting the cost of carrying out the audit. This has restricted our ability to invest in people and technology. This is no longer a sustainable position for any auditor, including for public sector auditors.

Improving trust and performance in the public sector

Our performance audits, inquiries, and other work also continue to help improve the performance of public organisations.

We have continued to focus on important government programmes in 2021/22. This includes examining key aspects of the Government’s response to Covid-19, such as our inquiries into the Strategic Tourism Assets Protection Programme and the Ministry of Health’s procurement of saliva testing services, and significant long-term projects, such as our performance audit on the governance of the City Rail Link project.

We have increased our follow-up work on previous performance audits by ensuring that all major audits are followed up 12 to 24 months after publishing the performance audit report. I am encouraged to see, through these follow-ups, that public organisations are implementing our recommendations for improvement.

We have also continued to raise the profile of our Controller work. Parliament’s control of public spending is a fundamental aspect of New Zealand’s system of government. Our Controller work provides assurance on whether public money has been spent within the authority provided by Parliament.

Our relationships help us make a difference

Our primary function is to support Parliament in its role of holding the public sector to account for its performance. Therefore, our relationship with Parliament is a key measure of our success.

This year we surveyed select committee chairpersons about our work supporting them. The results confirmed that Parliament continues to greatly value our advice and reports and holds our capability and understanding of issues in high regard. We are pleased with this positive result. However, we know we can always do more to support select committees in their scrutiny of public organisations.

The good practice guidance we produced this year has been well received. Public servants want to do the right thing, rather than be told later that they got it wrong. Our good practice guidance helps them do that.

We have also increased the promotion of our good practice material through events designed to share insights with public sector leaders, practitioners, and audit and risk committee chairpersons.

Our international work is continuing

The Covid-19 pandemic has not prevented us from having a key role in supporting good governance in the Pacific. As Secretary-General, my Office has continued to support the Pacific Association of Supreme Audit Institutions in its role to support developing Supreme Audit Institutions across the Pacific.

I am also the Auditor-General of the governments of Niue and Tokelau, where there have been significant delays in completing their financial statements of government. Both governments have made commitments to bring their annual reporting up to date over the coming year.

Building capability to support our work

We have not been immune to the challenges caused by Covid-19 that have affected every other public organisation.

Staff well-being and supporting staff in a challenging work environment has continued to be our focus. This includes ensuring that we have competitive work and remuneration practices. We are also aware that we are under-represented in Māori and Pacific staff and have begun to implement key strategies to address this.

We are well progressed in modernising our audit and back-office technologies, which we have historically underinvested in. We continue to build our capability in technical and data and analytics areas.

As with other public organisations, we have also completed a baseline assessment of our greenhouse gas emissions. In the coming year, we will target plans to further measure and then reduce these over time.

Thank you

The public sector generally performs well and operates with strong integrity. We should be proud to have a public sector of this quality and of the dedicated people who work in it.

I thank my staff and audit service providers for continuing to deliver high-quality work in an extremely challenging environment. Every day they make a positive difference to the performance of the public sector.

Finally, I thank Parliament for its deep interest and support for the Office and our work. Parliamentarians have a difficult job and I am proud that my Office plays a strong and positive role in supporting them.

Nāku noa, nā

John Ryan
Controller and Auditor-General | Tumuaki o te Mana Arotake

29 September 2022