Part 2: Statement of service performance

Annual Report 2014/15.

In this Part, we report on the services that we are paid to deliver and how well we delivered those services. We discuss:

Achieving our 2014/15 work programme

We selected Governance and accountability as our theme for our 2014/15 work programme in recognition of the changes in legislation and financial reporting standards that affected the public sector's accountability requirements and our annual audits. The theme linked to our previous year's work when the importance of good governance and proper accountability to delivering public services was highlighted.

The performance audits and other work under the Governance and accountability theme focus on how governance and accountability mechanisms in the public sector support effective public spending and investment.

We looked at whether public entities have appropriate governance and accountability arrangements to help them to focus on strategy, risk, and performance, and to adapt to new information and change. For example, we examined the governance and accountability policies and practices of a selection of local and central government agencies in the arts, culture, and heritage sector.

We examined whether the roles and responsibilities of the various people in new and changing governance arrangements are clear and understood. Our report on the Department of Inland Revenue's business transformation programme examined how the Department is governing the programme to deliver a modern revenue system and ensure that risks to effective governance are managed well. Our work on public sector audit committees reflected on current good practice and aspects of audit committee effectiveness.

We will publish a report reflecting on our work under this theme in 2015/16. We will also report on the introduction of the new accounting standards and new public sector legislation.

During 2014/15, we looked at future themes for our work programme. We confirmed that the theme for audits and other projects in 2015/16 is Investment and asset management and explored the content of our proposed themes for 2016/17 – Information, and for 2017/18 – Water.

Output class: Audit and assurance services

We audit all public entities2 that are required, or choose, to prepare general purpose financial reports – from large government departments and district health boards to every state school and local authority. In 2014/15, our annual audits and other assurance services accounted for 89% of our total expenditure.

Annual audits

Annual audits provide independent assurance about the reliability of financial statements – and, in many instances, performance information – that public entities are required, or choose, to report. The Auditor-General, as the auditor of all public entities, has a statutory duty to audit the information that public entities are required to prepare. We produce an audit report for each audit we carry out, which includes our opinion about the fairness of the presentation of the financial statements (and performance information, where relevant).

We use information about public entities gathered from our annual audits to help us advise Parliament and others, and to assist our other work. To have a trusted public sector, public entities must fairly report their performance, and respond to audit recommendations to improve their systems and controls. They must also report on time. In 2014/15, most entities met their reporting obligations in a timely manner. Those that did not were mostly subsidiaries or small public entities.

The main processes supporting annual audits

Appointing auditors and monitoring audit fees

The Auditor-General appoints auditors from Audit New Zealand and private sector accounting firms to carry out the annual audits of public entities. When appointing these auditors, the Auditor-General follows principles that are designed to ensure that auditors are independent, audits are of a high quality, and audit fees are reasonable. We continually monitor the allocation of audits among Audit New Zealand and private sector accounting firms to ensure that these principles are followed.

This year, we implemented the changed standards for rotating key audit team members. We also updated our policy on appointing auditors to carry out issuer audits, in response to the Financial Markets Conduct Act 2013.

Each year, an independent reviewer examines the probity and objectivity of the methods and systems we use to allocate and/or tender audits, and to monitor the reasonableness of audit fees. This year's review confirmed the probity and objectivity of those methods and systems. Appendix 3 contains the review report by Sir David Gascoigne.

We regularly monitor audit fees to ensure that they are fair to public entities, and provide a fair return to auditors for the work required to meet the Auditor-General's auditing standards. In 2014/15, fees were increased for various reasons, including changes in the scale of operations of some entities, the variable quality of the financial statements and performance information prepared by some entities, and small changes in auditor charge-out rates (the average hourly cost of carrying out audits).

Figure 5 summarises the movements in audit fees from 2012/13 to 2014/15, based on the agreed audit fees at the time the analysis was prepared. It shows how changes in the time spent on audits and the average hourly cost of carrying out audits have affected fees. The figures exclude additional audit fees negotiated with public entities as a result of unforeseen problems arising after audit fees had been agreed. These are usually the exception. However, for the school audits for the years ended 31 December 2012 and 31 December 2013, additional audit fees were agreed with the Ministry of Education for the extra audit work resulting from problems with the payroll system for teachers (Novopay). While this was not necessary for the 2014 school audits, some additional audit work continues as a result of those problems. We are continuing to work with the Ministry of Education to minimise the effect of the Novopay problems on auditors' costs and audit fees.

Figure 5
Changes in audit fees, 2012/13 to 2014/15

2012/13 to 2013/142013/14 to 2014/15
SectorIncrease in total feeBecause of changes in timeBecause of changes in charge-out rateNumber of entitiesIncrease in total feeBecause of changes in timeBecause of changes in charge-out rateNumber of entities
Central government 1.8% 0.3% 1.5% 396 2.4% 0.2% 2.2% 409
Local government 4.2% 3.6% 0.6% 421 2.3% 0.3% 2.0% 455
Schools 1.9% -0.9% 2.8% 2426 2.7% 0.3% 2.4% 2404
Total 2.6% 1.2% 1.4% 3243 2.4% 0.2% 2.2% 3268

Maintaining auditors independence

The Auditor-General's staff (including at Audit New Zealand) and appointed auditors and their staff from private sector accounting firms must meet high standards of independence. We monitor compliance regularly. The Auditor-General works to reduce all identified threats to auditors' independence.

Publishing The Auditor-General's Auditing Standards

The Public Audit Act 2001 requires the Auditor-General to publish her auditing standards in a report to the House of Representatives at least once every three years, and that each annual report include a description of any significant changes to those standards.

We last published The Auditor-General's Auditing Standards in March 2014, including updates on various technical matters. There were no significant changes to these standards in 2014/15. The updated Auditor-General's Auditing Standards are available on our website.

Carrying out quality assurance reviews

We carry out quality assurance reviews of all appointed auditors to ensure that they have complied with the Auditor-General's Auditing Standards. We aim to review the performance of each of our appointed auditors at least once every three years.

Responding to regulatory and external reporting changes

In 2013, legislative reforms changed the obligations for subsidiaries reporting under the Crown Entities Act 2004 and for those who now report under the Companies Act 1993 (instead of the now repealed Financial Reporting Act 1993). Those reforms took effect in 2014/15. As a result, some subsidiaries are no longer required to report separately, and their parent entities are now required to report only group information, rather than parent and group. The changes also allow public entities to report performance information more flexibly and collaboratively. We are now monitoring how the entities affected are implementing those reforms.

The External Reporting Board (XRB) is an independent Crown entity, which is responsible for developing and issuing accounting and auditing and assurance standards in New Zealand. The XRB's new accounting standards for public benefit entities came into effect on 1 July 2014, and will affect many public entities for their financial year ended 30 June 2015. During 2014/15, we continued our preparation for auditing the application of the new standards across the public sector.

Our performance in 2014/15

Novopay-related problems for the schools' financial year ended 31 December 2014 were significantly fewer than for 2012 and 2013. However, year-end Novopay reports continue to be produced later than was the case with the previous payroll system, which has delayed the completion of some school audits.

In the pages that follow, we set out the measures we use to assess our performance and how we have performed against those measures.

Audit and assurance triangle.

Output class: Audit and assurance services

2014/15 results and previous performance for Audit and assurance services

Public entities accept management recommendations and act on them
Measure At least 70% of the key recommendations our auditors include in management reports are accepted and acted on.
Result Achieved.
Comment In 2014/15, 73% of our key recommendations were accepted, and acted on.

For the year ended 30 June 2015, a sample of 45 entities was assessed against this performance measure.

Figure 6
Percentage of management report recommendations accepted by public entities, 2010/11 to 2014/15

Figure 6 - Percentage of management report recommendations accepted by public entities, 2010/11 to 2014/15.
Audit reports are produced within statutory time frames
Measure At least 75% of public entities' audited reports are signed by the statutory time frame.
Result Achieved.
Comment In 2014/15, 83% of public entities' audited reports were signed within the statutory time frame. Although there were significantly fewer problems with teachers' payroll than in the two previous years, continued delayed production of year-end payroll reports resulted in some school audits being completed after the statutory deadline.

Figure 7
Percentage of audited financial reports signed within the statutory time frame, 2010/11 to 2014/15

Figure 7 - Percentage of audited financial reports signed within the statutory time frame, 2010/11 to 2014/15.
Measure Less than 30% of the audit reports not signed by the statutory time frame are because of inaction on our part.
Result Achieved.
Comment 15% of audit reports not signed within the statutory time frame were because of inaction on our part.

Previously, this measure assessed our responsibility for those audit reports due but still outstanding at the end of the financial year. This year, we broadened the scope of this measure to also include audit reports that have been signed, but signed after the statutory deadline.
Management reports are produced within set time frames
Measure 100% of management reports are issued within six weeks of issuing the audit report.
Result Not achieved.
Comment 94% of management reports were issued within six weeks of issuing the audit report, about the same percentage as in previous years.
Audit reports on local authorities' long-term plans are produced within statutory time frames
Measure 100% of long-term plan (LTP) audit opinions are signed by 30 June (unless held up by the local authority).
Result Achieved.
Comment The Auditor-General has a statutory duty to issue audit reports on local authorities' LTPs which are prepared every three years. This year, we audited local authorities' 2015-2025 long-term plans. Amendments to the Local Government Act 2002 in August 2014 introduced changes to the requirements for preparing long-term plans. Local authorities are now required to prepare a consultation document to consult with their communities about the significant issues facing the local authority. They are also now required to prepare a 30-year infrastructure strategy. Our auditors issue audit opinions on the consultation documents and on the final LTP. This year the audit work was intensive and dominated the workload of our audit service providers from February to June 2015.
Measure 100% of long-term plan (LTP) management reports are issued within six weeks of issuing the LTP audit opinion.
Result No result as measure requires review.
Comment After we adopted this measure, the Local Government Act was amended to include changed requirements for preparing LTPs. The changes shifted the focus on to consultation documents. To prepare these documents for community consultation, local authorities required timely feedback from our auditors on their consultation documents.

This measure relates to our auditors' feedback on the final phase of the long-term planning process. A more meaningful measure of the timeliness of our management reporting would relate to our feedback on the first phase of the long-term planning process – the audit of the consultation documents and preparation of information to support the LTPs. We will review the measure in time for the next round of LTP reporting.
Objective methods are used to allocate audits and set reasonable fees
Measure An annual independent review confirms the probity and objectivity of the methods and processes we use to allocate and tender audits, and monitor the reasonableness of audit fees.
Result Achieved.
Comment The 2014/15 review confirmed that we achieved this measure. The review report by Sir David Gascoigne is provided in Appendix 3.
Skilled auditors, with a good understanding of public entities, carry out quality audits
Measure The results from our satisfaction survey of public entities show that, overall, at least 85% of respondents are satisfied with their audit (including the expertise of audit staff and the public entity's relationship with those staff).
Result Achieved.
Comment Overall, 87% of respondents were satisfied with the quality of the audit work, which is slightly more than the 85% in 2013/14.
Measure All appointed auditors have a quality assurance grade of at least "satisfactory", based on our most recent quality assurance review.
Result Not achieved.
Comment This revised measure reports on the quality assurance grades of all appointed auditors. Over a three-year period, we review the quality of the work for all our appointed auditors. The "most recent quality assurance review" could have been in 2014/15, 2013/14, or 2012/13. Previously, we reported on the results of only those auditors reviewed in the reporting year.

Over the past three years, 95% of our appointed auditors overall achieved a grade of "satisfactory" or better based on the most recent quality assurance review. The 5% who did not achieve a grade of "satisfactory" were auditors of schools from small audit firms. A follow-up review of these auditors is carried out in the year after their main review.

Figure 8
Financial performance of output class: Audit and assurance services

2014/15
Actual
$000
2013/14
Actual
$000
2012/13
Actual
$000
2014/15
Supplementary Estimates
$000*
2015/16
Main Estimates
$000*
Income
Crown 150 150 150 150 150
Other 78,164 72,139 70,089 78,095 75,222
Expenditure (76,503) (71,755) (69,448) (78,245) (75,672)
Surplus/(Deficit) 1,811 534 791 - (300)

* All Estimates information is unaudited.

Multi-class output: Statutory auditor function

This multi-class output includes the following:

  • Services to Parliament – providing advice and reports to help select committees and other stakeholders;
  • Controller function – providing assurance to Parliament that public money has been spent lawfully and within the authority provided by Parliament; and
  • Reports, studies, and inquiries – reporting on the results of annual audits, performance audits, and other studies, and inquiring into a public entity's use of its resources.

Services to Parliament

Our advice and support assists Parliament in its scrutiny of the performance and accountability of public entities. We use information from our annual audits and from our performance audits to advise and inform Parliament, and our other stakeholders. Our reporting and advice to Parliament identifies and addresses issues and risks in the public sector.

Our advice and support includes:

  • reports and advice to select committees to help their annual reviews of public entities and their examination of the Estimates of Appropriations; and
  • reports to Parliament on matters arising from our annual audits.

We also report to Ministers on the results of the annual audits for entities in their portfolio.

Controller function

The Controller function provides independent assurance to Parliament that what is spent by government departments and Offices of Parliament is spent lawfully, and is within the scope, amount, and period of the appropriation or other authority.

The OAG and appointed auditors carry out standard procedures for the Controller function in keeping with The Auditor-General's Auditing Standards and a Memorandum of Understanding with the Treasury. We review monthly reports that the Treasury provides. We inform the Treasury of any problems and advise the action to be taken.

Each year, we report to Parliament on any significant matters related to the Controller function. Our report on the results of the 2013/14 central government audits showed that there were 21 instances of unauthorised expenditure. Most of these were associated with uncertainties arising from the Canterbury rebuild, and they equated to 0.26% of the total funding approved through the 2013 Budget.

Reports, studies, and inquiries

The Public Audit Act 2001 allows the Auditor-General to carry out performance audits, to inquire into how a public entity uses resources, and to study other matters affecting the public sector.

Each year, we publish reports on the results of our annual audits, performance audits, major inquiries, and other studies. Through this reporting to Parliament and other stakeholders, we consider matters in greater depth than is possible within the statutory scope of an annual audit, and examine ways that public entities can perform better.

Performance audits are comprehensive examinations of effectiveness and efficiency that the Auditor-General chooses to carry out. We plan our work programme carefully to provide Parliament with assurance about how well public entities manage a range of matters and programmes, making recommendations where we consider that improvements can be made.

By contrast, our inquiries work reacts to matters of current public concern. We usually receive about 200 requests for inquiries each year, spanning a wide range of concerns about central and local government entities. We deal with most requests through routine correspondence, but, each year, some require significant work. Although a request for an inquiry may not result in a full inquiry, each request takes a considerable amount of research and resource to determine whether the Auditor-General should carry out an inquiry. We have noticed the increasing complexity of the matters raised with us. If there is general public interest in an inquiry, we will usually publicly report the results.

The Auditor-General administers the Local Authorities (Members' Interests) Act 1968, which regulates pecuniary interest matters in local government. Each year, we usually receive about 50 to 100 enquiries under that Act.

We bring together matters arising from our annual audits in our sector reports, and carry out other studies that result in a range of published reports and information on topical matters affecting public sector accountability and performance.

International contribution

Each year, we make a significant international contribution. We aim to strengthen public sector accountability and promote good governance by sharing our skills, information, and advice with other audit bodies throughout the world, particularly in the Pacific region.

We support accountability, transparency, and good governance in the Pacific through our commitment to the Pacific Association of Supreme Audit Institutions (PASAI). PASAI is the regional organisation of 27 audit institutions in the Pacific. The Auditor-General is Secretary-General of PASAI and represents PASAI on the governing board of the International Organisation of Supreme Audit Institutions (INTOSAI). Our focus this year was on re-organising the PASAI secretariat to support the implementation of PASAI's strategy for 2014-24. We also assisted with renegotiating development partner funding agreements to ensure ongoing resourcing of the strategy.

Hosting international delegations provides opportunities to exchange information and build professional networks. This year, we were pleased to assist representatives from the Parliaments, Treasuries and/or audit offices of Tonga, Vietnam, Japan, Thailand, Indonesia, and Malaysia.

We provided a comprehensive international secondment programme to assist the Audit Board of the Republic of Indonesia in their country's transition to accrual accounting. We were pleased that the significant investment of our time and resources contributed to increased capacity-building in the Audit Board of Indonesia.

One of the year's highlights was the Global Audit Leadership Forum (GALF) meeting in Wellington. GALF is an annual think-tank for the Auditors-General of certain developed countries to discuss global trends and issues facing public sector auditing. It was hosted this year by the Office, and delegates shared their perspectives on how the auditor's role might evolve between now and 2030.

New Zealand has been selected to chair the professionalisation meeting theme at the 2016 International Congress of Supreme Audit Institutions (INCOSAI). Preparations for this role began this year and will continue.

Our other INTOSAI involvement continued. We are a member of the INTOSAI Professional Standards Steering Committee charged with developing international public sector auditing standards. We are also a member of the project team revising the INTOSAI code of ethics.

Our performance in 2014/15

Services to Parliament

Our work plays an important part in supporting accountability to Parliament. Strong demand from select committees for our advice continued. In 2014/15, we provided advice in support of 89 annual reviews and 42 Estimates of Appropriation examinations, and advised or gave evidence to committees on several of our reports.

To help assess the impact of our work, each year we survey a sample of our stakeholders about how they perceive the quality and usefulness of our work. In 2014/15, we interviewed 13 select committee chairs, and 12 senior public servants. The interview results indicated that, overall:

  • the Office's work is highly regarded;
  • stakeholders consider that the Office carries out its work impartially, and with integrity and professionalism;
  • stakeholders see the Office as playing a critical role in improving public sector performance and improving trust in the public sector;
  • our reports and services provide value for stakeholders in improving the performance of the public sector and in monitoring accountability of government; and
  • our staff generally have a high level of understanding of the issues they report and advise on.

All 13 select committee chairs agreed that our advice and reports assist committee members to effectively scrutinise the performance of public entities and hold them to account. Eleven of the 12 senior public servants agreed that the reports and advice they receive from us add value and assist their organisation, and one was neutral. Some of those we interviewed suggested that we explore greater citizen engagement to influence change. They also suggested that we consider innovative ways to explore with our stakeholders the role of audit in a high-performing public sector. We will act on the helpful suggestions made. We thank the respondents for their considered and thoughtful input.

Reports, studies, and inquiries

Our reports

Our reports encourage high performance in the public sector, and often highlight complexities to be managed and factors that support good decision-making. Where appropriate, they make recommendations for improvement. Our work benefits the audited entities and the wider public sector by informing and promoting strong public sector management and performance.

In 2014/15, we completed reports on a range of matters. Appendix 1 lists these reports, which are available on our website. Four reports made up the core of this year's work programme. The reports examined case management and the handling of complaints in the Accident Compensation Corporation and the Ministry of Social Development. They identified strengths and made recommendations for improvement to raise the standard of these entities' services. The reports have lessons for the whole public sector. They highlighted how complaints, if dealt with correctly, can help public entities to change and improve their services. They drew attention to the importance of a people-centred approach to delivering services, in tandem with the required technical skills, systems, and tools.

Our second overview report, Reflections from our audits: Service delivery, brought together our insights into, and observations about, our work on our 2013/14 work programme. The report poses questions for public sector leaders and people working in and with public entities. We hope that the report will encourage discussion and debate about how the public sector can rise to the challenges and opportunities to deliver better services.

Independent assessment of quality

Every year, two of our performance audit reports are independently reviewed for quality. This year, our reports were again highly rated. The reviewers considered that the reports were easy to read, were well structured, and had clear overviews that drew out the key issues. The conclusions were considered logical, convincing, and clearly supported by evidence. The reviewers suggested that the way the recommendations were linked to the conclusions would help agency or programme effectiveness and efficiency.

We also welcomed the reviewers' comments on how we could broaden the impact of the reports and make them more visually engaging.

Public entities' progress in acting on our recommendations

We regularly monitor public entities' progress in implementing recommendations from our performance audit reports, and publicly report on progress. This year's reporting showed that, overall, public entities have made good progress in implementing our recommendations.

Our July 2014 report to Parliament discussed the progress that public entities made in implementing recommendations from eight performance audit reports published between 2010 and 2011. Although the entities had made improvements by acting on our recommendations, not all of our recommendations had been fully implemented. In some instances, this was because the recommendations were not "quick fixes". In other instances, the public entities needed to do more to secure the intended improvements.

In December 2014, we reported on progress after publication of our 2011 performance audit report, Government planning and support for housing on Māori land. The report showed that, although steady progress was being made, an ongoing and genuine commitment to effectively acting on our recommendations and on the Māori Housing Strategy was essential.

Progress with completion of our 2014/15 work programme

Figure 9 shows our progress with the performance audits and studies we expected to start in 2014/15.

In 2015/16, we plan to publish an overview of our work on the 2014/15 Governance and accountability theme, presenting our reflections about what enables effective governance and proper accountability in the public sector.

Figure 9
Progress with performance audits and studies we expected to start in 2014/15

Work under our Governance and accountability theme:

Completed and published: Started and expected to be published by the end of 2015:
  • Public accountability system – How people can hold public entities to account
  • Auckland Transport – Governance and accountability of the Auckland Manukau Eastern Transport Initiative
  • Council-controlled organisations – Governance and accountability
  • Governance models in the environment sector
  • Canterbury rebuild – Follow-up of Earthquake Commission: Managing the Canterbury Home Repair Programme
  • Canterbury rebuild – Governance arrangements for community projects in Christchurch
Started and expected to be published in 2016:
  • Education for Māori – Performance information and accountability
Work under our Investment and asset management theme:

Completed and published: Started and expected to be published by the end of 2015/16:
  • Asset management by district health boards
Work under our Service delivery theme:

Started and expected to be published in 2016:
  • Suicide in New Zealand
Commission of Inquiry into Police Conduct::

Completed and published:

Consultation on our 2015/16 work programme

Consultation with Parliament and other stakeholders helps ensure that the Office's work is relevant and useful to Parliament, public entities, and the public. Select committees endorsed our proposed 2015/16 work programme and its theme ‒ Investment and asset management. They gave us useful comments, which we will keep in mind as we carry out our future work.

Investment and asset management is an important focus for our work in 2015/16. The New Zealand public sector manages significant investments and assets that are critical to providing public services. Public entities are accountable to Parliament for the public money they invest in financial and physical assets. It is important that these public resources are used wisely and that public assets continue to support long-term delivery of public services.

The importance of meeting the future challenges of infrastructure assets-based services was highlighted in our report Water and roads: Funding and management challenges. We welcomed the discussion and debate that the report has encouraged in the local government sector. We will continue to work with local authorities as they meet the challenge of delivering future water and road services to their communities.

Inquiries

The most notable feature of the past year has been the increase in the number of requests for inquiries and other assistance that we have received. We usually receive about 200 requests annually. In 2014/15, we received 281 requests, compared to 181 in 2013/14. Most of the increase was in relation to central government matters. We usually receive 60-65 central government enquiries, but this year we received 119. Enquiries relating to local government matters also increased, by about 50% to 162. This is to be expected in a year when local authorities were preparing and consulting on their long-term plans.

In contrast, enquiries concerning Local Authorities (Members' Interests) Act 1968 (LAMIA) matters decreased. We received 46 requests, compared with 69 in the previous year.

We completed work on 269 inquiries matters and 47 LAMIA matters during the year. We met our timeliness targets for routine inquiries in central and local government, and for LAMIA matters.

When the Auditor-General decides to inquire into an issue, we determine whether that inquiry will be routine, or whether it is to be a "significant" or "major" inquiry. The primary distinction between the two is scope. We expect to complete a major inquiry within 12 months, and a significant inquiry within six months.

We completed five significant inquiries in 2014/15. Three concerned the restructuring of AgResearch and allegations of conflicts of interest on the part of a member of the Health Promotion Agency and some members of the Ashburton District Council. The other two cannot be identified, as they were the results of protected disclosures.

We started one other significant inquiry, which was ongoing at year-end – into how the Queenstown Lakes District Council and its chief executive have managed the chief executive's interest in a proposed special housing area. We started one major inquiry this year – into Auckland Council's management of the project to develop a new town centre at Massey North ‒ which was also ongoing at year-end.

As previously signalled, we have reviewed the way we manage our inquiries work to respond to the growing pressure on workload and public expectations of what we can deliver. The Budget for 2015/16 includes a small increase in Vote Audit to establish a dedicated inquiries team with three additional staff members. We expect this team to be operating by the second quarter of 2015/16.

Statutory auditor triangle.

2014/15 results and previous performance for Statutory auditor function

Public entities respond to the recommendations for improvement from our reports
Measure Entities accept the recommendations made in our reports, and the reports influence improvement.
Result
  • Achieved for performance audits.
  • Achieved for inquiries when last assessed.
Comment Performance audits

We publish articles on our website that discuss the progress public entities have made in implementing recommendations from some of our previous performance audit reports. Periodically, we bring these articles together in a report to Parliament, and sometimes we do more in-depth follow-up reports.

The articles and reports we published in 2014/15 showed that, overall, entities had made good progress in putting our recommendations into effect. In some instances, entities needed to do more to achieve the intended improvements.

Inquiries

Our inquiry reports do not always include recommendations. In 2014/15, no assessments were necessary. In 2013/14, we followed up on a major inquiry report from 2010. The entity had acted to address all the points we raised.

In 2012/13, no assessments were necessary. In 2011/12, we followed up on three major inquiry reports. In two instances, our recommendations were accepted in principle. In 2010/11, we followed up on three inquiries. In all instances, the entities accepted our comments and acted to address our concerns.
Parliament, local government, and other stakeholders are supported and get value from our advice
Measure At least 85% of stakeholders we survey confirm that our advice assists them.
Result Achieved.
Comment This year's stakeholder survey sample size was 25. Thirteen select committee chairpersons and 12 senior public servants were interviewed.

All but one of the stakeholders interviewed agreed that our advice assists them.

All 13 select committee chairpersons agreed that our advice and reports assist them in their work. Of the 12 senior public servants, 11 agreed that our reports and advice add value and assist their organisation. One was neutral.
We deliver an appropriate work programme on time
Measure Select committees and other stakeholders are satisfied with the proposed work programme (as indicated by feedback on our draft annual work programme).
Result Achieved.
Comment We received helpful comments from five select committees and from other stakeholders, which we considered in finalising our work programme. Consultation on our work programme helps to ensure that our proposed work will be relevant and useful to Parliament, public entities, and the public.

From 2010/11 to 2014/15, Parliament has mainly supported our proposals and approach, with useful suggestions for improving the scope of some of our performance audits.
Measure At least 75% of the projects in the programme of work under this output class are delivered within their planned time frames.
Result Not achieved.
Comment This new measure reports on the timeliness of project completion within our work programme. It was introduced to bring more disciplined processes into our work programme. We consider that 75% is a fair but challenging target for timeliness of project completion.

17% of projects (4 out of 23) were delivered within their planned time frames in 2014/15, well below our target of 75%.

Of the 83% that were not completed on time:
  • 39% (9 out of 23) were completed up to 3 months later than planned;
  • 22% (5 out of 23) were completed between 3 and 6 months later than planned;
  • 17% (4 out of 23) were completed between 6 and 9 months later than planned; and
  • 4% (1 out of 23) were completed 10 months later than planned.
We have carefully examined why most of our projects were completed later than planned. Each year, we plan an ambitious work programme, and these results have highlighted the need to set more realistic time frames and be more disciplined in managing the dependencies that influence timeliness of project completion. For example, we need to better plan for unexpected delays in receiving information from entities and contractors, and allow more time to consult. We also need to plan for unexpected turnover or leave of absence of our staff.

We expect to progressively improve our planning and project management, and improve the timeliness of completion of our work programme projects.
We use quality standards and follow appropriate process to carry out our statutory auditor function
Measure Quality standards are consistently met.
Result Achieved.
Comment This new composite measure was created to give a more comprehensive picture of quality standards across our Statutory auditor function work.

Overall, we are satisfied that quality standards were consistently met in 2014/15. For example, 92% of our stakeholders confirmed the relevance and usefulness of our reports and services, and an independent assessment of a sample of our reports concluded that they were of high quality.
Measure Process standards are consistently met.
Result Achieved.
Comment This new composite measure was created to give a more comprehensive picture of process standards across our Statutory auditor function work.

Overall, we are satisfied that process standards were consistently met in 2014/15. For example, the Australian National Audit Office reviewed two of our performance audits and found that our audit methodology was largely in keeping with the Office's processes and practices.

The most recent internal quality assurance reviews across our statutory auditor function work, confirmed that our policies, procedures and standards have been applied appropriately and that they meet relevant standards and procedures.
Our advice and inquiries are completed in a timely way
Measure 100% of briefings are given to select committees at least two days before an examination, unless otherwise agreed.
Result Achieved.
Comment From 2010/11 to 2014/15, all reports and advice given to select committees was at least two days before an examination, unless otherwise agreed.
Measure At least 80% of our findings on inquiries are reported to the relevant parties within three months for routine inquiries, six months for significant inquiries, and 12 months for major inquiries.
Result
  • Achieved for routine inquiries.
  • Not achieved for significant inquiries.
Comment 91% of findings for routine inquiries were reported within three months, and 67% of findings for significant inquiries were reported within six months. There were no major inquiries completed in 2014/15.

Figure 10
Percentage of findings on routine inquiries and significant inquiries reported to the relevant parties within the target period, 2010/11 to 2014/15


Figure 10 - Percentage of findings on routine inquiries and significant inquiries reported to the relevant parties within the target period, 2010/11 to 2014/15.

Figure 11
Number of findings on major inquiries reported to the relevant parties within the target period, 2010/11 to 2014/15
Year Major inquiries Reported within 12 months
  2014/15 0* 0
  2013/14 2 0
  2012/13 4 4
  2011/12 1 1
  2010/11 3 1
* We started a major inquiry (into Massey North town centre development) in January 2015, but this had not been completed at 30 June 2015.
Measure At least 80% of Local Authorities (Members' Interests) Act 1968 matters are completed within 30 working days.
Result Achieved.
Comment 85% of enquiries were completed within 30 working days.

Figure 12
Percentage of enquiries under the Local Authorities (Members' Interests) Act 1968 completed within 30 working days, 2010/11 to 2014/15


Figure 12 - Percentage of enquiries under the Local Authorities (Members' Interests) Act 1968 completed within 30 working days, 2010/11 to 2014/15.
Controller function is carried out effectively
Measure Monthly statements provided by the Treasury are reviewed for the period September to June inclusive. Advice of issues arising and action to be taken is provided to the Treasury and appointed auditors within five working days of receipt of the statement.
Result Achieved.
Comment 2010/11 to 2014/15: All monthly procedures were followed and agreed time frames achieved.

Figure 13
Financial performance of multi-class output: Statutory auditor function

2014/15
Actual
$000
2013/14
Actual
$000
2012/13
Actual
$000
2014/15
Supplementary Estimates
$000*
2015/16
Main Estimates
$000*
Income
Crown 9,047 9,047 9,047 9,047 9,627
Other 199 176 156 260 230
Expenditure (9,012) (8,799) (9,065) (9,307) (9,857)
Surplus/(Deficit) 234 424 138 - -

* All Estimates information is unaudited.


2: In accordance with section 19 of the Public Audit Act 2001, we also audit some organisations that are not public entities. See Appendix 2.