Office of the Auditor General


The Controller and Auditor-General (the Auditor-General) handles the auditing of all New Zealand public entities.

The Auditor-General's aim is to improve the performance of, and the public trust in, the public sector.

The Auditor-General is an officer of Parliament and the role has been in place since the 1840s. The current role and functions are set out in the Public Audit Act 2001 and the Public Finance Act 1989.

The Auditor-General is independent of central and local government, with two functions: Auditor-General (the audit function) and the Controller.

Why is there an Auditor-General?

Parliament authorises all government spending and provides public entities with their statutory powers.

Public entities, including local government, are accountable for their use of public resources and the powers that Parliament gives them. Parliament seeks independent assurance from the Auditor-General that public entities are operating and accounting for their performance in the way Parliament intended.

It is not part of the Auditor-General’s mandate to question the policies of the government or local authorities. Policies are determined by democratically elected representatives of New Zealanders. However, the Auditor-General can report on how those policies are implemented.

How does the Auditor-General maintain independence?

To be effective and credible, the Auditor-General and their staff must be independent of the public entities being audited. To ensure independence, the Public Audit Act 2001 provides that the Auditor-General:

  • is an officer of Parliament and can report directly to Parliament and anyone else;
  • reports to the Officers of Parliament Committee, which is chaired by the Speaker of the House of Representatives;
  • is appointed by the Governor-General on the recommendation of the House of Representatives for a single term of no more than seven years;
  • is paid by Parliament, with the amount determined independently by the Remuneration Authority; and
  • makes any requests for funding directly to Parliament (rather than through the Executive Government).

The Auditor-General appoints auditors to carry out annual financial audits on their behalf. Appointed auditors must also be independent. The Auditor-General’s auditing standards put strict constraints on appointed auditors, including:

  • personal involvement with an audited entity (such as between family members);
  • financial involvement with the entity (such as financial investments);
  • providing other services to the entity (such as carrying out valuations); and
  • doing other work for the entity.

Who does the work on behalf of the Auditor-General?

The Auditor-General employs staff in two offices. One is the Office of the Auditor-General and the other is Audit New Zealand. The Auditor-General also contracts private sector accounting firms.

The work of the Office of the Auditor-General is to:

  • plan the work programme for the organisation as a whole;
  • carry out performance audits, special studies, and inquiries;
  • plan other audit work;
  • report to Parliament and to Select Committees;
  • set auditing standards (the Auditor-General’s auditing standards);
  • allocate annual audits to appointed auditors;
  • monitor audit fees to ensure that they are fair and reasonable;
  • oversee auditors’ performance; and
  • carry out quality assurance reviews of all work done on behalf of the Auditor-General, including annual audits by appointed auditors.

The work of Audit New Zealand is to:

  • carry out annual audits on the Auditor-General’s behalf; and
  • provide other auditing and assurance services to public entities.

The Auditor-General also appoints auditors from private sector accounting firms to carry out annual audits on their behalf.

What does the role of Auditor involve?

The Auditor-General is responsible for auditing all public entities, including:

  • government departments – such as Inland Revenue and the Ministry of Education; 
  • Crown entities – such as the Commerce Commission, district health boards, the New Zealand Tourism Board, and all school boards of trustees; 
  • State-owned enterprises – entities that are owned by the Government and have a strong commercial focus such as New Zealand Post Limited or Airways Corporation of New Zealand Limited; 
  • local authorities and their subsidiaries – city, district, and regional councils, and council-controlled organisations such as charitable trusts and incorporated societies associated with local authorities; and 
  • statutory boards and other public bodies – such as airport authorities and reserve boards.

The Auditor-General audits about 3500 public entities. Almost 3000 of the audits are schools or very small entities.

What is the Auditor-General looking for?

Public entities are accountable to Parliament and NZ public for their performance and use of resources. They report this through their annual reports. The Auditor-General’s work is to give assurance that the annual reports reflect the results of the public entities' activities.

The Auditor-General also keeps an eye on whether public entities are carrying out their activities in an effective and efficient manner. This includes matters of waste, integrity, legislative compliance, and financial prudence in the public sector.

What type of work does the Auditor-General do?

Under the Public Audit Act 2001, the Auditor-General:

  • carries out annual audits;
  • carries out performance audits; and
  • may inquire into any matter relating to a public entity’s use of its resources.

Under the Local Government Act 2002, the Auditor-General must audit every local authority’s long-term plan.

The Auditor-General can also perform other auditing or assurance services at the request of a public entity, such as auditing financial information in a prospectus or giving assurance to a public entity about its purchasing or contracting procedures.

Annual audits

Annual audits are carried out in keeping with the Auditor-General’s auditing standards, which incorporate the auditing standards issued by the New Zealand Audit and Assurance Standards Board of the External Reporting Board.

In an annual audit, the auditor:

  • examines an entity’s financial statements, performance information, and other information that must be audited;
  • assesses the results of that examination against a recognised framework (usually generally accepted accounting practice); and
  • forms and reports an audit opinion.

The audit involves gathering all the information and explanations needed to obtain reasonable assurance that financial statements and other information does not contain material misstatements. The auditor also evaluates the overall adequacy of the presentation of information.

This audit of the annual financial statements and other information results in two reports. One is the audit report (including the audit opinion) that is included in the public entity’s published annual report. The other report is for the entity’s governing body and management on matters arising from the audit.

The audit report on a public entity’s annual financial statements and other information gives readers information to help them understand the accuracy of those statements.

The report for the governing body and management of a public entity sets out the audit findings. It highlights areas in the underlying environment, systems, and controls where the public entity is doing well. It also highlights areas of recommended improvement.

Most public entities provide their annual report to Parliament. However, in the case of local authorities, the annual report is for ratepayers and other residents, so they can see how their local authority has managed the public resources for which it is accountable.

Performance audits

A performance audit examines one or more of the following aspects of a public entity’s performance:

  • effectiveness and efficiency;
  • compliance with statutory obligations;
  • use of public resources;
  • probity; and
  • financial prudence.

The findings, conclusions, and recommendations from that examination are usually reported to Parliament. There are two constraints on examining effectiveness and efficiency:

  • The effectiveness and efficiency of the Reserve Bank or a registered bank cannot be examined.
  • It is not the Auditor-General’s role to question the policies of the Government or local authorities.

The Auditor-General chooses the issues to be examined by performance audits and other studies through an annual work planning process. This involves examining each sector and identifying the main areas of actual and potential concern that would benefit from being examined by a performance audit or other special study. The Auditor-General consults parliament and other stakeholders before deciding what is included in the annual plan.

You can find out more about the Office of the Auditor-General by visiting the Office of the Auditor-General website.