Timeliness of reporting by public entities

52 Pages·2015·0.55 MB·English

B.29[15i]
Being
accountable
to the public:
Timeliness of
reporting by
public entities
Ofce of the Auditor-General
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• Draft annual plan 2015/16
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• Local government: Results of the 2013/14 audits
• Education for Māori: Relationships between schools and whānau
• Response of the New Zealand Police to the Commission of Inquiry into Police Conduct:
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• Ministry for Primary Industries: Managing the Primary Growth Partnership
• Central government: Results of the 2013/14 audits
• Government planning and support for housing on Māori land
• Ministry of Social Development: Using a case management approach to service delivery
• Water and roads: Funding and management challenges
• Making the most of audit committees in the public sector
• Accident Compensation Corporation: Using a case management approach to rehabilitation
• Challenges facing licensing trusts
• Annual Report 2013/14
• Ashburton District Council: Allegations of conficts of interest afecting decisions on a
second bridge
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B.29[15i]
Being accountable
to the public:
Timeliness of
reporting by public
entities
Presented to the House of
Representatives under section 20 of
the Public Audit Act 2001.
May 2015 ISBN 978-0-478-44216-8
Contents
Auditor-General’s overview ...................................................................................................................................4
Part 1 – Introduction ................................................................................................................................................7
The importance of timely reporting ............................................................................................................................................................. 7
Time frames for reporting ................................................................................................................................................................................. 7
Our analysis of compliance with reporting deadlines .......................................................................................................................... 8
Part 2 – About the audits of public entities ...................................................................................................9
What are public entities required to report on? ....................................................................................................................................10
What are the reporting standards? ...........................................................................................................................................................11
When is an audit required? ............................................................................................................................................................................11
Auditing standards for public entities .......................................................................................................................................................11
Part 3 – Overall results and observations .................................................................................................... 13
The results of our analysis ..............................................................................................................................................................................14
Why do entities not meet their reporting deadlines? .........................................................................................................................15
Is the balance right? ..........................................................................................................................................................................................16
What are the consequences for not reporting on time? ....................................................................................................................18
Part 4 – Timeliness of reporting by central government entities ...................................................... 20
Government departments ..............................................................................................................................................................................20
Crown research institutes ...............................................................................................................................................................................21
District health boards .......................................................................................................................................................................................22
Tertiary education institutions .....................................................................................................................................................................24
Other Crown entities .........................................................................................................................................................................................26
Other central government entities .............................................................................................................................................................26
State-owned enterprises and mixed-ownership companies ...........................................................................................................28
Rural education activities programmes ....................................................................................................................................................30
Schools ....................................................................................................................................................................................................................30
Part 5 – Timeliness of reporting by local government entities ........................................................... 33
Local authorities ..................................................................................................................................................................................................33
Council-controlled organisations .................................................................................................................................................................34
Exempt council-controlled organisations ................................................................................................................................................36
Other local government entities ..................................................................................................................................................................37
Part 6 –Timeliness of reporting by energy, port, and airport companies ....................................... 39
Energy companies ..............................................................................................................................................................................................39
Port companies ....................................................................................................................................................................................................39
Airport companies .............................................................................................................................................................................................40
Part 7 –Timeliness of reporting by other public entities ....................................................................... 41
Fish and game councils ....................................................................................................................................................................................41
Administering boards and bodies ................................................................................................................................................................41
Cemetery trusts ...................................................................................................................................................................................................43
Licensing and community trusts ..................................................................................................................................................................45
Māori trust boards .............................................................................................................................................................................................46
Entities audited under section 19 of the Public Audit Act 2001 .....................................................................................................48
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Contents
Figures
1 – Number and type of reporting entities, 2013/14 ........................................................................................................................... 9
2 – Timeliness of reporting by public entities during the 12 months to 30 June 2014 ........................................................13
3 – The performance of cemetery trusts in meeting accountability requirements ..............................................................16
4 – The performance of subsidiaries of tertiary education institutions in meeting accountability requirements .17
5 – Timeliness of government departments, Ofces of Parliament, and associated trusts and functions,
as at 30 June 2014 ......................................................................................................................................................................................20
6 – Late audit reports – government departments, Ofces of Parliament, and associated trusts and functions ....21
7 – Timeliness of Crown research institutes and subsidiaries, as at 30 June 2014 ................................................................21
8 – Late audit reports – Crown research institutes and subsidiaries ...........................................................................................22
9 – Timeliness of district health boards and subsidiaries, as at 30 June 2014 .........................................................................22
10 – Late audit reports – district health boards and subsidiaries..................................................................................................23
11 – Unissued audit reports – district health boards and subsidiaries .......................................................................................23
12 – Timeliness of tertiary education institutions and subsidiaries, as at 30 June 2014 ....................................................24
13 – Late audit reports – tertiary education institutions and subsidiaries................................................................................24
14 – Unissued audit reports – tertiary education institutions and subsidiaries .....................................................................25
15 – Timeliness of other Crown entities and their subsidiaries, as at 30 June 2014 .............................................................26
16 – Late audit reports – other Crown entities and their subsidiaries ........................................................................................26
17 – Timeliness of other central government entities and their subsidiaries, as at 30 June 2014 ..................................27
18 – Late audit reports – other central government entities and their subsidiaries .............................................................27
19 – Unissued audit reports – other central government entities and their subsidiaries ..................................................28
20 – Timeliness of State-owned enterprises and mixed-ownership companies, and their subsidiaries,
as at 30 June 2014 ...................................................................................................................................................................................28
21 – Late audit reports in 2013/14 – State-owned enterprises and mixed-ownership companies, and their
subsidiaries .................................................................................................................................................................................................29
22 – Timeliness of rural education activities programmes, as at 30 June 2014 ......................................................................30
23 – Timeliness of schools, as at 30 June 2014 ......................................................................................................................................30
24 – Unissued audit reports – schools ......................................................................................................................................................31
25 – Local authorities’ performance in meeting deadlines for annual reports, 2009/10 to 2013/14 ............................33
26 – Timeliness of local authorities, as at 30 June 2014 ....................................................................................................................34
27 – Late audit reports – local authorities ...............................................................................................................................................34
28 – Timeliness of council-controlled organisations, as at 30 June 2014 ...................................................................................35
29 – Late audit reports – council-controlled organisations ..............................................................................................................35
30 – Unissued audit reports – council-controlled organisations ...................................................................................................36
31 – Timeliness of exempt council-controlled organisations, as at 30 June 2014 ..................................................................36
32 – Late audit reports – exempt council-controlled organisations .............................................................................................37
33 – Timeliness of other local government entities, as at 30 June 2014 ....................................................................................37
34 – Late audit reports – other local government entities ...............................................................................................................37
35 – Unissued audit reports – other local government entities.....................................................................................................38
36 – Timeliness of energy companies and their subsidiaries, as at 30 June 2014 ..................................................................39
37 – Timeliness of port companies and their subsidiaries, as at 30 June 2014 .......................................................................39
38 – Timeliness of airport companies, as at 30 June 2014 ...............................................................................................................40
39 – Timeliness of fsh and game councils, as at 30 June 2014 ......................................................................................................41
40 – Timeliness of administering boards and bodies, as at 30 June 2014 .................................................................................42
41 – Late audit reports – administering boards and bodies ............................................................................................................42
42 – Unissued audit reports – administering boards and bodies ..................................................................................................43
43 – Timeliness of cemetery trusts, as at 30 June 2014 .....................................................................................................................44
44 – Unissued audit reports – cemetery trusts .....................................................................................................................................44
45 – Timeliness of licensing and community trusts, as at 30 June 2014 ....................................................................................45
46 – Late audit reports – licensing and community trusts ...............................................................................................................46
47 – Unissued audit reports – licensing and community trusts ....................................................................................................46
48 – Timeliness of Māori trust boards, as at 30 June 2014 ...............................................................................................................47
49 – Unissued audit reports – Māori trust boards ...............................................................................................................................47
50 – Timeliness of section 19 entities, as at 30 June 2014 ...............................................................................................................48
3
Auditor-General’s overview
As citizens, we need reliable and timely information about the performance of
public entities to ask valid questions of those who govern and lead them. Public
entities are required to report on:
• the amount of public money they have spent;
• the outputs they have delivered for that money; and
• the results they have achieved.
If public entities’ reporting is not timely, the information they provide is less
relevant and proper accountability is more difcult to achieve.
My staf took a “snapshot” of how well public entities met their reporting
deadlines during 2013/14. This report sets out the results of that analysis and
discusses why some entities are not meeting their obligations.
This is my frst report on the timeliness of reporting for the entire public sector.
Before now, we have included information about the timeliness of entities’
reporting in broader reports to Parliament about our audits of diferent groups of
public entities.
Link between reporting and annual audits
I am responsible for auditing the fnancial statements of the government, the
student loans scheme, and every type of public entity. Those audits give the
people who govern and lead a public entity some assurance about their systems
and controls. The audits also assure citizens that they can rely on the information
we have audited.
Once an audit is complete, the auditors that I appoint to an entity will issue an
audit report. The audit report is included in the public entity’s accountability
document – usually an annual report. No agency monitors whether public
entities release their annual reports on time. Because the content of the entity’s
annual report has to be fnalised before the auditor will issue an audit report, the
date when the audit report is issued is the best measure we have for assessing
whether public reporting is timely.
For many entities, the deadline for reporting is set by an Act of Parliament.
Depending on the type of entity, the deadline can be three, four, or fve months
after the end of the entity’s fnancial year. If no date is prescribed, we use a
deadline of fve months.
4
Auditor-Generals’ overview
Reporting deadlines are mostly met
Most entities meet their reporting obligations. Between 1 July 2013 and 30 June
2014, we expected to issue 3809 audit reports. Of these, 2461 (64%) were for
schools and 1348 for other entities – including government departments, local
authorities, and Crown entities.
Of the 1348 other entities:
• 1081 audit reports (80%) were issued on time or early;
• 184 audit reports (14%) were issued late; and
• 83 audit reports (6%) had not been issued by our cut-of date of 30 June 2014.
When we prepared this report, the entities whose audit reports were issued late
or had not been issued were mostly subsidiaries and small public entities.
By 30 June 2014, 45% of schools (1116) had met their reporting deadline and 55%
(1345) had not. Difculties with the Novopay payroll system meant that schools
were late in fnalising their fnancial statements for us to audit. At 30 June 2014,
which was just one month after their deadline, 25% of schools’ audit reports (608)
were late and 30% (737) had not been issued.
The public deserves better
It is clear that some public entities need to give greater priority to meeting their
reporting obligations.
Some public entities are struggling, sometimes because of limited capability or
capacity to prepare fnancial statements and performance reports that comply
with generally accepted accounting practice. Public entities that have failed to
meet their reporting obligations for successive years tend to be very small.
I encourage all public entities to carefully consider the costs and obligations of
reporting before they set up subsidiaries and other related entities.
I have named the public entities that were late or had still not been issued an
audit report by 30 June 2014. I have done so to encourage people with governance
and leadership responsibilities for those entities to ensure that appropriate efort
and resource is allocated to meeting their reporting obligations.
I acknowledge that my auditors can sometimes contribute to delays in reporting.
I monitor the performance of my auditors and work with them to address any
systemic issues. Delays often occur because an entity does not meet the agreed
timetables for providing information to the auditor and the auditor needs to
honour commitments to other entities.
5
Auditor-Generals’ overview
Opportunity for further reform
Several recent legislative changes and changes to accounting standards are
expected to help improve the quality and timeliness of reporting by public
entities. Some subsidiaries will no longer need to separately report, and some
other entities have had their reporting obligations simplifed.
The question raised in this report is whether there is scope for further reform to
ensure that we get the right balance between the costs and benefts of public
reporting.
Lyn Provost
Controller and Auditor-General
26 May 2015
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Introduction 1
1.1 In this Part, we explain why it is important for public entities to meet deadlines for
reporting on their performance.
1.2 We also discuss the deadlines for reporting for the various types of public entity.
Most deadlines are set by legislation.
The importance of timely reporting
1.3 Reporting in a reliable and timely way is a cornerstone of public entities’
accountability. This reporting includes:
• the amount of public money spent;
• the outputs delivered for that money; and
• the results achieved.
1.4 If public reporting is not timely, the information presented is less relevant and
proper accountability is difcult to achieve.
1.5 The Auditor-General is the auditor of all public entities in New Zealand. As well
as looking at public entities’ fnancial statements, our annual audits can also
examine information about the public entities’ performance in delivering services.
1.6 There are about 3800 public entities in New Zealand that are required to
separately report and have their fnancial statements audited. These entities
come in all shapes and sizes, from very large government departments (such as
the Inland Revenue Department), State-owned enterprises (such as Transpower
New Zealand Limited), and large local authorities (such as Auckland Council), to
very small entities (such as a small rural school or the trust that looks after a local
cemetery).
1.7 During the last 20 years, the quality and timeliness of external reporting has
steadily improved. Reasons for the improvement vary, and include requirements
for public entities to report to the Treasury (to support the government budget
process and the preparation of the fnancial statements of government), good
relationships between public entities and their auditor, and the Parliamentary
scrutiny process (which includes the annual review of some public entities).
Time frames for reporting
1.8 For many public entities, legislation specifes the time frame for reporting. The
deadline for reporting varies from three months to fve months after the entity’s
balance date – and balance dates also vary. For other entities, the time frame and
deadline are set out in their founding documents (such as trust deeds).
7
Part 1
Introduction
1.9 If a deadline for reporting or completing the annual audit is not specifed, the
Auditor-General sets a deadline of fve months after balance date for the audit
report to be issued.
uO r anaisyl s o f coilpm anc e iw t h rope rtin g dae dil nse
1.10 No agency collects data on when all public entities publish their annual reports.
We have information on the date that audited information is signed of by the
auditor. In practice, there should be little delay between an auditor issuing an
audit report and the entity inserting that audit report into its annual report and
publishing it. Therefore, we have used the auditors’ sign-of dates as our best
measure of whether public entities are meeting their deadlines for reporting.
1.11 To provide an overview of the timeliness of reporting, we looked at the timeliness
of audit reports due between 1 July 2013 and 30 June 2014. Any entities with
audit reports issued after their reporting deadline but before 30 June 2014 were
late in meeting their reporting deadlines. Entities with audit reports still not
completed as at 30 June 2014 had audit reports that had not been issued.
1.12 Care needs to be taken in comparing the performance of diferent types of public
entities. In drawing our line for analysis at 30 June 2014, entities that were late
and had a reporting deadline at the end of May 2014 were one month late.
Entities that were late and had a reporting deadline at the end of September 2013
were very late.
1.13 Although our analysis provides a snapshot of one year’s reporting, the patterns
are fairly consistent from year to year. Overall, entities have been improving their
timeliness of reporting, but it has been more difcult for some than others.
1.14 To give some broader context to our analysis, we have also included some
information on:
• the status as at 24 March 2015 of those audit reports that had not been issued
by 30 June 2014;
• whether the entities that were late and whose next audit report was due to
be issued between 1 July 2014 and when we ran our data update on 24 March
2015 were late again; and
• whether the entities whose audit reports had not been issued by 30 June 2014
had previous audit reports that had also not been issued.
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