Audit Practice Statement
We have issued this audit practice statement in accordance with section 24 of the Auditor General Act 2006. This section of the Act requires the Auditor General to inform Parliament of any major change in the extent or character of the audit function.
This statement replaces the February 2010 Audit Practice Statement. This statement offers an updated, concise, and consolidated summary of:
How we audit
In achieving our purpose of ‘serving the public interest’, we follow the principles of:
- integrity – we conduct our business in an independent, professional and ethical manner. We apply an open and honest approach to our stakeholders
- quality – we provide credible work that makes a difference. We take pride in our work and strive to deliver above expectations, using continuous improvement opportunities to improve our efficiency and effectiveness
- respect – we value the contribution of our people, our clients and the community and encourage a collaborative approach to our work
- compliance – we conduct all audits in accordance with applicable Auditing Standards
- fairness – we approach all audits in a fair and constructive way
- professional judgement – we report matters of significance arising from audits to Parliament.
There are some common elements to all audits performed within our Office: quality, communication and collaboration, human resources and methodology:
There are limitations to any external audit. Audits are not an absolute guarantee of the truth or reliability of agency information or the effectiveness of internal controls. They may not identify all matters of significance. This is because external audit techniques involve:
- use of reasonableness as a professional judgement
- materiality whereby absolute assurance is not provided
- use of sample testing
- assessment of the effectiveness of internal control structures
- assessment of risk
- limited scope in relation to fraud.
The primary responsibility for the detection, investigation and prevention of irregularities, fraud, illegal acts and errors always rests with agencies. Consequently, the agency’s management is responsible for keeping proper accounts and maintaining adequate systems of internal control, preparing and presenting the financial statements and performance indicators, and complying with the Financial Management Act 2006 and other relevant legislation.
The interest in our reports to Parliament, and their impact, mean it is extremely important that we select the right topics for audit. Deciding what to audit is a key part of the Auditor General’s independence and is not subject to direction from Parliament or government though the Auditor General does have regard for the priorities of Parliament. This independence has to be exercised responsibly, so we have processes in place which make sure that the selection of topics is objective, robust and transparent.
Opinions on Ministerial Notifications
Where a Minister decides not to provide certain information to Parliament concerning the conduct or operation of an agency (usually a decision taken in response to a parliamentary question), then certain requirements under the Financial Management Act 2006 (FM Act) and the Auditor General Act 2006 (AG Act) come into force. Section 82 of the FM Act requires a Minister who decides that it is reasonable and appropriate not to provide certain information to Parliament, to give written notice of the decision to both Houses of Parliament and the Auditor General within 14 days of the decision. Section 24 of the AG Act requires the Auditor General to provide an opinion to Parliament as to whether the Minister’s decision was reasonable and appropriate. Read more...