Insights and reflections: Our 2017/18 central government audit work

9 May 2019

Letter sent on 9 May 2019 to chief executives of government departments and Crown entities by John Ryan, Controller and Auditor-General. It sets out some reflections and insights from our central government audit work over the last year.

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INSIGHTS AND REFLECTIONS: OUR 2017/18 CENTRAL GOVERNMENT AUDIT WORK

I am writing to set out some reflections and insights from our central government audit work over the last year. I hope you find this useful when preparing your financial statements and related information and for your ongoing work on improving systems, processes, and accountability in your organisation.

I want to start by acknowledging the good work that you and your teams do to ensure that the processes for making decisions and accounting for the use of public resources are generally very sound. My auditors have also reported improvements in a number of areas that had been highlighted as requiring attention in previous years. Among all the other pressures that you work under, I greatly appreciate this solid foundation and commitment to ongoing improvement.

The attachment to this letter records more detailed areas that you may wish to focus on when considering the robustness of your current systems and processes. These general observations are not targeted at any one agency but you may nevertheless find them useful.

From my point of view, there are three key matters I would like to bring to your attention.

The first is that we have seen instances where it appears that organisations have taken the view that the ends justify the means. Poor decision-making and poor procurement practice have led, in one instance, to an inability to show money was well spent. In another, the organisation is unable to justify the spending that has occurred and has not met the standard required when dealing with public funds. Although these kinds of issues rarely arise, I ask that you take care, particularly when under pressure to deliver, to also ensure that the principles and practices appropriate for dealing with public money continue to be followed.

Secondly, I want to reinforce something that you already know well. The tone from the top is critical to ensuring that we continue to build on the high integrity, high performance reputation of the public sector. Active interest by leaders in ensuring that the organisation has strong governance and accountability mechanisms, well-functioning systems and processes, and a culture that supports integrity are all critical to reinforcing an expectation that staff should always do what is right.

Finally, I encourage you to consider how to enhance the value of your performance reporting. It is worth remembering the basics of good reporting, such as the importance of maintaining alignment of your performance measures and reporting with your strategy and to ensure that external reporting measures are linked to internal management processes. To maintain trust and confidence in the public sector, it is important that you can show what outcomes have been achieved and what difference your organisation is making to New Zealanders. As the complexity and the demand for meaningful reporting are increasing, I expect my Office to put a stronger focus on performance reporting in the future.

Thank you again for the support you have shown to my auditors and the work of the Office over the last year.

Nāku noa, nā

Signature - JR

John Ryan
Controller and Auditor-General