Transcript: Sensitive expenditure: Moderate and conservative
Title: Office of the Auditor-General logo
Title: Sensitive expenditure: Moderate and conservative
Greg Schollum, Deputy Auditor-General
So, sensitive expenditure: it’s important it’s not seen as extravagant or excessive. Rather, that it’s seen as moderate and conservative. And, by way of example, we see some interesting things in the office.
So, a really good example we had over the last few years was a retirement gift. Now the nature of that gift is fine, you know, someone retiring after 20 years of service, so no questions about the nature of it but there were serious questions about the amount paid, so it was seen as excessive.
So, the situation was a school principal, after 20 years of service to a particular school, receiving a ride on mower. I think by any measure that is an excessive leaving gift or retirement gift.
Another example of sensitive expenditure that has been questioned was to do with travel. So, this is overseas travel – a public entity wanting to find out what happens somewhere else - so they went to Melbourne on a 'fact finding' trip. Trouble was 21 of them went, some of them with partners, and the cost of the 21 were paid for by the entity.
So again, the nature of the trip, you know, fact finding overseas – see what someone else has done - probably fine but 21 people… quite an excessive fact-finding team there. So overall, again, that expenditure was seen as inappropriate.
So, the key question really with sensitive expenditure is how does it look? So, there is the reality of it but the perception is as important if not more important. So how does it look to an outsider? How does it look to a member of public who’s actually paying for it?
And the other important aspect is, can the business purpose be achieved at a lower cost. So, entities need to ask themselves with this sort of spending - how will it look? How will it be judged by others looking in who aren’t involved, in particular the public because they are ultimately paying? How will be scrutinised?
The other key question that entities need to think about is, yes there might be a clear business purpose but can that purpose be achieved at a lower cost. In our guidance we’ve suggested some ways to help entities. Sometimes in their policies they put limits or guidelines, for example, room rates on hotel rooms. Those sorts of things – they can be helpful to the entity and informing judgements. We encourage that sort of thing within policies and guidance, and public entities.
Title: For more information and to read our good practice guidance, visit oag.parliament.nz.