What does the audit function involve?

The Auditor-General is responsible for auditing all entities in the public sector. This includes the financial statements of the Government and all types of public entity:

• government departments – such as the Department of Inland Revenue and the Ministry of Education;
• Crown entities – such as the Commerce Commission, district health boards, the New Zealand Tourism Board, and all school boards of trustees;
• State-owned enterprises – entities that are owned by the Government and have a strong commercial focus, such as New Zealand Post Limited or Airways Corporation of New Zealand Limited;
• local authorities and their subsidiaries – city, district, and regional councils, and council-controlled organisations such as charitable trusts and incorporated societies associated with local authorities; and
• statutory boards and other public bodies – such as airport authorities and reserve boards.

The Auditor-General audits about 4000 public entities, of which 3000 are schools and other very small entities.

What does the Auditor-General look for?

As auditor of the public entities listed above, the Auditor-General has five main concerns:

• Performance: Have public entities carried out activities in keeping with Parliament’s intentions in an effective and efficient manner?
• Authority: Have activities been carried out, and accountability requirements observed, within the authority granted by Parliament?
• Waste: Have resources been obtained and applied in an economical manner? Are taxpayers’ dollars being wasted?
• Probity: Are entities meeting Parliament’s and the public’s expectations of an appropriate standard of behaviour?
• Accountability: Have entities given full and accurate accounts of their activities? Are governance and management arrangements able to address any concerns?

The Auditor-General’s staff and appointed auditors apply audit procedures that address the five main concerns. These audit procedures are set out in the Auditor-General’s auditing standards.

Quality assurance and monitoring audit fees

The Auditor-General appoints auditors who have relevant sector expertise to ensure that the audit will be consistent with the Auditor-General’s auditing standards, and that the auditor’s expertise can be maintained and enhanced. Quality assurance processes regularly review the performance of auditors.

The Auditor-General also carries out independent fee monitoring to ensure that audit fees are fair and reasonable – so that the public entity gets the right level of audit effort for its circumstances and risks, and the auditor is fairly paid, in line with the market for audit services.

Page last updated: 29 April 2010