The Office of the Controller and Auditor-General originated as a government function in 1840. After restructuring in the early 1990s, which separated the operational and parliamentary reporting functions of the office, there were calls to make the controller and auditor general independent of executive government. The auditor-general became an officer of Parliament under the Public Audit Act 2001.
Tenure and responsibilities
The auditor-general is appointed for a single seven-year term. The deputy auditor-general is appointed for a five-year term, with the possibility of reappointment.
The auditor-general has three main areas of responsibility:
- audit and assurance services
- supporting accountability to Parliament (services to Parliament and the controller function)
- performance audits and inquiries.
The auditor-general’s staff are organised into two business units. The Office of the Auditor General is responsible for planning, policy development, quality assurance activities and reporting to Parliament. Audit New Zealand carries out annual audits and provides other assurance services to public entities.
The auditor-general is the auditor of all central and local public entities. Around 4,000 entities are audited annually by Audit New Zealand, or contracted auditors from the private sector. This work accounts for most of the auditor-general’s expenditure – 87% in 2009/10. Audits are conducted to set standards, and the audited entities are charged fees.
These annual audits provide independent assurance of the disclosure of both financial and non-financial information in an entity’s annual report. They examine the legal authority for expenditure, the propriety of actions taken by the entity, the efficiency of its operations and how open disclosure of its operations has been. Where necessary, the auditor-general makes recommendations for improvements to address any deficiencies that are identified. The auditor-general also advises local-authority councillors on legislation relating to conflicts of interest.
The controller function gives Parliament assurance that public expenditure has been incurred for lawful and approved purposes. The auditor-general performs the controller function by conducting annual audits of the entities and by reviewing monthly expenditure reports from Treasury. Each year the auditor-general reports to Parliament on any significant issues arising out of performance of the controller function.
The auditor-general supports the accountability of public-sector entities by providing reports and advice to Parliament and parliamentary select committees, and to ministers. Reports to Parliament identify major issues arising from the annual audits of central and local government. Reports and advice to select committees help them when approving the government’s annual spending proposals, and conducting a financial review of the performance of each central government department in the previous year. Reports to ministers advise them on the results of the audits of departments and entities for which they are responsible.
The watchdog barks
The spending of political parties prior to the 2005 election led to a highly controversial inquiry by Auditor-General Kevin Brady. He found that most parties, especially the governing Labour Party, had unlawfully used Parliamentary Service funds for election advertising. Although politicians pressured him to alter his findings, he stood firm, earning public confidence as an independent watchdog. The Labour Party subsequently repaid public money spent on its election ‘pledge card’.
Performance audits and inquiries
The auditor-general also has authority to carry out performance audits and other inquiries to examine any public entity’s use of resources. These can look at whether an entity acted effectively and efficiently as well as lawfully and properly.
Each year the auditor-general prepares an annual work programme after consulting with select committees and other stakeholders. However, additional, unanticipated audits may also be undertaken when necessary.