Auditor-General's overview

Annual report 2018/19.

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

Improving trust, promoting value.

Trust and confidence are the foundations of our system of government. They are fundamental to giving government the ability to govern on behalf of the people. To earn New Zealanders' trust and confidence, the public sector must be accountable (trusted) and high-performing (delivering value).

Our work is focused on improving the trust in, and the value of, our public sector. This report looks at how we contributed to this in 2018/19, and how we are positioning ourselves for the future.

Reflections on our achievements

Reflected in this report is what I have seen over the past 12 months: New Zealand's public sector is largely in good shape. Key indicators show that trust and confidence in the public sector remains high. New Zealand is seen as generally free of corruption and enjoys strong governance and accountability. I am proud of our contribution towards these outcomes.

However, we cannot afford to be complacent. We operate in a challenging and changing environment. New Zealand's public sector landscape is increasingly complex with many reviews and major reforms underway. At the same time, the public's expectation of government generally continues to grow. Different groups have different expectations, and matters affecting perceptions of performance and integrity are ever present. In this context, our work to hold public organisations to account for their use of public resources is more important than ever. In addition, auditing is under increased scrutiny internationally due to growing concerns about audit quality and auditor independence. This has the potential to lead to significant changes in the auditing profession.

Our annual audit work is fundamental to what we do, and where we do the most to improve trust and promote value. Each year, we audit about 3500 public sector organisations, which makes up nearly 90% of our total workload. My auditors routinely identify strengths and weaknesses in organisations' financial and performance reporting, systems, and processes, and recommend ways in which public organisations can improve. In an increasingly complex operating environment, it is even more critical that public organisations provide reliable, meaningful and timely information so they can be held accountable.

Our annual audits also inform our other work – including our performance audits (where we look at effectiveness and efficiency) and inquiries. Our performance audit work plan is thematic; we have made good progress on our procurement work programme, and we are close to completing our water management work. Our inquiry work (where we look at matters that concern us about the use of public resources) has reinforced some important messages about setting the right tone at the top and remembering that, where public money is concerned, the ends do not justify the means. We are active in sharing all the key messages from our work.

The Government has a major reform agenda under way affecting many parts of the public sector. During the year, we have chosen to actively engage in these reforms to give our views on both the practical aspects of the proposed reforms and matters affecting public accountability. We have taken the view that helping to get things right is better than reporting on what is wrong. Engaging early to help avoid issues, rather than reporting on them after they have occurred, has also meant getting involved in reviewing major programmes of work, such as the Provincial Growth Fund and the firearms buy-back scheme, as they have progressed. Timely recommendations for improvement help ensure that public money is spent well.

Similarly, raising the profile of our Controller work through separate reporting is aimed at helping agencies maintain appropriate spending within the authority provided by Parliament. We also substantially increased our support for select committees from the previous year.

We continue to assist our colleagues in the international auditing community to raise the standard of auditing around the world. We work particularly closely with our Pacific colleagues, including through "twinning" arrangements with the Cook Islands and Samoa audit offices (where staff from these offices work alongside our staff on matters of shared interest), and supporting Auditors-General around the Pacific through my role as Secretary-General for the Pacific Association of Supreme Audit Institutions.

Areas for improvement

This annual report also highlights where we need to improve. Although our work is highly regarded by Parliament and by most of the organisations we work with, we know we can do more to add value to the public sector by giving more insights from our audit work.

We also need to improve the timeliness of our performance audit and inquiry work in particular. Timely reporting will increase the impact of this work. New investment in the form of increased Crown funding from 1 July will help this.

Looking ahead

Our work is increasing in scale and complexity.

Our work programme for the coming year is focused on several new areas. We will be placing more emphasis on how government activities contribute to outcomes through our multi-year work programme Improving the lives of New Zealanders, with a particular focus on family violence in the first year. We will be updating our good practice guidance. We will be focusing on ethics and integrity, given they are key to trust. We will also continue to actively engage in the reform agenda on matters related to effectiveness, efficiency, and accountability.

I thank Parliament for its extra investment in us from 2019/20, which will enable the Office to better help Parliament hold the public sector accountable for its performance.

We intend to use this increase to address the demand for all our services, particularly for inquiries, performance audits, and supporting agencies to do the right thing. We will also use it to improve the timeliness of our work, increase its impact, and invest to improve our capability. We expect to see results from this during 2019/20, with the full effect from 2020/21.

Thank you

I thank all staff and audit service providers for their work during 2018/19. We are fortunate to have staff who strongly align with the values of the Office and the importance of the work we do to support accountability for public spending.

Nāku noa, nā

Signature - JR

John Ryan
Controller and Auditor-General

27 September 2019