International Journal of Auditing – July 2009
Controller and Auditor-General of New Zealand
I was honored to be invited to write this editorial. After 38 years with the New Zealand Audit Office, the last 7 as Auditor-General, I am retiring this July. I am pleased to have this opportunity to pass on my views and also to thank the many members of the international auditing community who have supported and provided inspiration to my office. I have been fortunate to attend a number of international conferences, including those hosted by INTOSAI, ASOSAI, PASAI, and the Commonwealth. The spirit of cooperation and collaboration at these events has always made the inevitably long journey from New Zealand worthwhile.
As with all other supreme audit institutions (SAI), the New Zealand SAI has continued to evolve and adapt to changes in our environment. We have responded to changes in legislation governing the audited entities, developments in accounting and auditing standards, the need to keep on top of emerging information technology initiatives, and the increasing complexity of the operations of those we audit. We have also changed our skill base to respond to the expansion of our mandate into performance and environmental auditing. In all my dealings with the international auditing community, I have been impressed by the caliber of the people employed by SAIs. They are dedicated to doing the best for their communities and ensuring that public resources are used wisely and in keeping with the wishes of their Parliaments or equivalents. The SAIs’ success or lack thereof rests totally on the caliber of the people they employ; in that regard, SAIs throughout the world are fortunate that their role attracts such high quality people.
In addition to competence, the hallmarks of any SAI are independence and credibility. Independence needs to be guaranteed by our mandates, but all staff members need to ensure that their own individual independence is not compromised through personal or family conflicts of interest. Our strength comes from our independence, and it must be guarded zealously. The second attribute is credibility. When we speak as an SAI, we must be right. We must also be fair. The ability to report is an SAI’s major strength. However, as was pointed out to me early in my career, we are only as good as our last report. Credibility that has taken years to develop can be lost in one careless moment. Our reports can also affect individual reputations. We need to ensure that criticism is not only right but also justified.
Looking to the future, I have the utmost admiration for the work of INTOSAI under the leadership of Dr. Josef Moser. The strategy that INTOSAI has developed is excellent and forward-looking. It deserves the full support of all INTOSAI members. The work of the Communications Strategy Task Force that was established in 2007 is of special interest to us in the Pacific. In particular, the task force’s work will give smaller SAIs easy access to an incredible range of materials.
For the past 15 years, I have had the pleasure of acting as Secretary-General for PASAI (previously SPASAI). While many Pacific countries are small, the auditors-general and their staffs have demonstrated a continued commitment to excellence. The adoption of the Pacific Regional Audit Initiative, cofunded by the Asian Development Bank and the Australian government, is already starting to strengthen the Pacific SAIs. I have no doubt that with the establishment of an enhanced PASAI secretariat, the aims of the initiative will be achieved.
I believe that we can do better in two areas internationally. The first area relates to reporting financial information to the public. I am concerned that accounting standards are getting too complex, resulting in financial statements also becoming so complex that many members of the public (and indeed members of the audited entities) are no longer getting information in a format that enables them to hold entities to account. The whole purpose of accounting is to convert information into a report that enables the public and those involved in governance to hold the entity to account. Most members of the public do not have an accounting background, so unless we find a way to make accounting more user friendly, then we are not accomplishing our purpose.
The second area relates to reporting nonfinancial information. Most public sector agencies (other than those that have a corporate basis) exist not to make money but to deliver services to the community. Reporting financial information is not enough. The real test of a public entity’s success or lack thereof is whether the entity delivered the services expected in an effective and efficient way. To judge this, the community needs information that indicates not only where the money was spent, but also what was achieved as a result of that expenditure. I feel that this area has not received the attention it deserves. Until the community’s needs for performance information are addressed, public entities will not be truly accountable.
In conclusion, I would like to reiterate my thanks to those who have provided support to my SAI. I have enjoyed my term as Auditor-General immensely, and I have met some amazing people throughout the international auditing community. I wish you all the best in your future endeavors.