The Office of the Auditor General (OAG) has taken a swipe at New Zealand government departments for not fully understanding what they are trying to achieve with some of their policies.
The comments come in the OAG's annual report for the 2022 - 23 year. It was signed off by the Controller and Auditor-General, John Ryan, and the OAG's Chief Financial Officer Aaron Crookston.
Their report picks up on earlier criticism by the Productivity Commission and the Parliamentary Commissioner for the Environment, who spoke of "systemic gaps and barriers" to informed debate on public issues.
"The Auditor-General has made it clear that without legislative change we are unlikely to see sustained improvement," the OAG report says.
"We are concerned that it is often not clear to Parliament or the public what outcomes the Government is seeking when it uses public money.
"In 2021/22, central government spent about $160 billion. In November 2022, we wrote to the Officers of Parliament Committee expressing our concerns about the transparency and accountability of public spending on new initiatives."
The OAG says it proposed changes to the Public Finance Act to remedy this, and the result was a commitment to establish a parliamentary select committee to conduct an inquiry into performance reporting and to make other changes to the scrutiny role that Parliament plays.
In another part of the report, the message is delivered bluntly.
"It is still too hard to tell what New Zealanders are receiving for about $160 billion of central government expenditure each year, and whether it represents value for money.
"I have raised this matter in several of my reports, as well as directly with the Officers of Parliament Committee. In my view, fundamental changes are needed to the system for how public organisations are required to report on performance, to ensure that the public sector meets the accountability requirements of a 21st century New Zealand.
"This is an important and urgent matter."
In its report, the OAG cited several case studies. One concerned an aspect of the Covid-19 recovery which arose from the Provincial Growth Fund (PGF).
"In June 2023, we wrote to the Economic Development, Science and Innovation Committee about how Kānoa-RDU managed the repurposing of $640 million from the Provincial Growth Fund to help regions in New Zealand recover from the economic impact of the Covid-19 pandemic," the OAG report says.
"Although some aspects of Kānoa-RDU’s management of this process were consistent with good practice, other key elements were not.
"For these reasons, we were not certain that Parliament or the public could have confidence that the investments made through the Provincial Growth Fund reset will ultimately represent good value for money."
Another case study concerned the amount of support Whānau Ora gets from state agencies such as Te Puni Kokiri.
The OAG found "limited progress had been made."
"We did not see a significant shift towards implementing these approaches, or structured consideration of where and when they would be appropriate."
The report also spoke of a huge battle by the OAG to catch up with the backlog of work caused by the Covid disruption. It says this process should be finished by the end of the current financial year.
The delays have however caused public organisations’ satisfaction with audit services to fall in the 2022/23 year to 69%, down from 71% the year before.
"One important reason for the fall in satisfaction was the delay in completing audits," the annual report says.
"Many issues are affecting the long-term sustainability of public sector audits, including a global auditor shortage, fewer people studying accountancy-related subjects in New Zealand universities.....and new standards that are increasing expectations on auditors."
The annual report says many audits were deferred, including audits of several councils and Crown entities.
The OAG says it is not all bad news. It was reviewed by the Financial Markets Authority (FMA) and the New Zealand Institute of Chartered Accountants (NZICA), and got good marks both times, for its "robust system of quality control."
It was also making great efforts to overcome its backlog of reports.
9 Comments
Great to see there is some steam building on the lack of productivity and bang for buck in the public sector. Having seen the large scale opening of many roles that IMO are pointless or well overpaid for the level of work required or done, it is refreshing to know that we may start to see some semblance of accountability moving forwards. Watch this space as many further failings of the previous government are brought to light, and the impending culture shock in the public sector as many come off the gravy train and will have higher expectations put on them. I'll be interested to see the levels of attrition over the next 12months as I'm torn between the opinions of staff putting their heads down to keep their jobs as the unemployment increases and restructures occur, and also of those resigning or changing roles - simply failing to realise that they had it very easy for the last few years and reality is simply setting back in.
As an (ex) accountant, I know the profession was hit quite hard by the Great Resignation that followed extended wfh during covid. It's not the most interesting job and the pyramid structure means lots of young people coming in and getting out all the time. Post covid there was so much money going around that business were poaching lots of staff, and even side hustles were turning into full businesses in their own right. If the economy starts pulling back I'm sure many people will be drawn back into it, especially in a govt guaranteed position.
It's a pretty messed up industry to be honest. I worked in it for a long time and it's lost its way. Ethics and accountability were a big component when I first started and I saw it all erode over time. Auditing was a big failure by both the institute itself and many in practice. Ultimately corrupted by money.
You only have to remember the big scandals and there only the ones we know about. It was discovered a few years ago that the majority of EY employees in the US cheated on their ethics exams. And much like the banking cartels and other similar institutions no one is brought to account and they get to wash it all away with their own internal reviews.
Many of accounting's major scandals come from the firm's selling a full suite of services, with consulting and advisory being the highest value. With core accounting and audit services continuing to decline in profitability (with advances in technology, on both client and IRD sides) I imagine this pressure will only keep growing. How long until we see a scandal like the one with PwC Australia happening here ?
Yep.
There's also the issue of burnout which can affect people's decision making. It can be highly stressful knowing the smallest mistake can have a high cost. And when you've got constant tax tweaks and financial standards more akin to make work rather than resolving issues, it can be an added stress affecting quality.
There's also the issue of insurance and the need to pump out quantity. I found many willing to forgo quality on the basis that insurance will cover it. There's almost a requirement for zombie staff with no critical thinking skills.
I literally have no idea which Govt departments and agencies they are talking about, it seems one of the purposes of renaming everything to Maori is to make stuff like this so obtuse and impossible to understand that people just dont bother. Should I really have to use a Google search engine to understand what is going on in this country?
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