MacArthur, Supreme Commander in the Southwest Pacific during WW2, is described as a controversial and enigmatic figure, but there is no doubting that he had impact. From 1942, MacArthur's headquarters were in Brisbane, located at the AMP building.

I’ve visited the small museum in MacArthur’s old office, with his desk still in place. Located on what is now a busy shopping street, how many of the thousands of people who pass here daily realise what life and death decisions were made from a desk overlooking the street? From here, MacArthur successfully controlled a multi-national force of more than half a million American, Dutch, Australian, New Zealand, and British troops.

I was in Brisbane for the Australasian Council of Auditors-General (ACAG) managers' conference. A major theme of the ACAG conference was the impact of audit and how to get the most value from the investment made in it.

If our aim is to make ripples go further, we must either drop bigger stones or drop them in a different way.

Following up on previous audit reports to see what progress agencies have made with improvements is one way to increase impact – one of our earlier blogs touched on this, and we follow up on public entities' progress regularly. Like MacArthur, the auditor will return.

So, what is "impact"? I’ve borrowed the definition from Performance or compliance, courtesy of Jeremy Lonsdale of the UK's National Audit Office @NAOorguk:

.. the direct and indirect effect or influence that an audit office can have on the practices, performance and culture of the audited agency as a result of performance audit work.

Put simply – what changed as a result of our work.

One of the conference delegates compared performance audits to throwing pebbles in a pond, and that analogy resonated with me. An individual performance audit is one pebble dropped in a pond. The impact is naturally strongest where the pebble enters the water – that is, the agency being audited. How then do audit offices ensure that the ripple is felt not only in the agency but in other entities, where the same lessons could be learned without repeating the audit?

If our aim is to make the ripples spread further, we must either drop bigger stones or drop them in a different way so that more ripples are created. In a time of financial constraint, bigger stones – more or larger audits – might not be a viable solution. Therefore, we auditors have to consider changing what we do.

One way to make the ripples spread further and be felt is helping those who can bring about change get the information they need at the right time and in the right way. Reflecting periodically on what business we are in is always worthwhile. Is our business producing reports or helping to effect change?

Reports can be the catalyst for change, but we need to remember that audit reports have a life beyond the office door. Not always easy to do when the pressure is on to be timely and deadlines loom large! In fact, beyond the office door is where the "gold" is buried. We do our work a disservice when we don’t remember this.

Any marketing professional will tell you that only one of the four "P"s of the marketing mix is the product. The other three are all about making the product successful in the market place. So three-quarters of the theoretical framework for marketing doesn’t involve the product.

Do we, as auditors, put enough effort into thinking about our "products" in this way?

Ever wondered what makes an editor blush? For me, it’s editing the Auditor-General’s reports on audit results and failing to explain the audit reports properly. A public museum somewhere was given an “adverse audit opinion”, and maybe some schools’ audit opinions had the words “disclaimer of opinion” in them. Is that bad? Which is worse? And what’s a “qualified opinion”, anyway? One that went to university?

The words are probably clear enough, but every time it feels like we haven’t made it clear what those audit opinions actually mean. So here’s a crack at getting the rosy glow off my cheeks.

We all pay taxes, and many of us pay rates, too. We’ve got a right to know that our money is being spent wisely. When we want that reassurance, we can take a look at the annual reports of the organisations spending our money. But how do we know that the information in the annual reports is reliable?

Well, if you’re talking absolute reassurance, auditors can’t give you that. But some of what goes into that annual report has to be considered by an independent and sceptical auditor – and that’s where the audit report comes in. The audit report is for all of us – a guide for the reader about the reliability of the information in the annual report.

The audit report says whether you can rely on information that's gone into the financial statements in the annual report – the pages and pages of dense tables of numbers and tiny little text that many of us don't take the time to read or don't understand. And the auditor gives their opinion on the service performance information, too. They’re the important bits, really – the claims made by the entity about how the money from our taxes and rates was used and what we, as taxpayers and ratepayers, supposedly got out of it. What difference has it made?

The person giving the audit opinion won’t have looked at everything, but they understand finances a lot better than most of us ever will. For many annual reports, they’ll also offer an opinion about whether bits of that annual report are reporting the right sort of information about the services being provided. For example, is the local district health board telling us how many staff or beds it has, when we’d rather know how many operations it’s providing and how it measures trends in patient safety? And how has the cost of those operations changed over time?

When the auditor gives their audit opinion, they use auditing expressions that come from international standards and conventions. Here’s an attempt at translating them...

“Nice one, Stu!”

Getting a standard audit report with an unmodified audit opinion is like getting a smiley-face stamp. The auditor didn’t spot anything that raised an eyebrow or needed pointing out to the reader.

In the auditor’s view, the information they looked at is a fair reflection of what actually happened. And that information is in keeping with the many, many practices (we’re not supposed to call them rules – that’s a whole ‘nother blog post) on how to set out the financial statements.

Makes me glad I work with words.

If the auditor didn’t say “Nice one, Stu!”, then they issued some form of non-standard audit report. A non-standard audit report can range from the equivalent of throwing your hands up in the air and walking away through to highlighting a specific matter for the readers.

Yeah, right

An adverse opinion is the worst. It’s the baddest of the bad in non-standard audit opinions.

It means that the organisation put something in the annual report that made the auditor think “I don’t think so!”. It’s a serious disagreement between the organisation and the auditor.

The adverse opinion is like the klaxons sounding – the reader should not be relying on the content to give them a solid view of the organisation’s finances or what it has delivered in services to the public.

When you see an adverse opinion, the auditor will often use words like “material misstatement” and “pervasive”.

Whatever it is that hasn’t been reported properly in the financial statements, material means that it’s big enough to matter and pervasive is even bigger.  There is no hard-and-fast rule about how much money counts as material – it all depends on how much money that organisation is dealing with. Material for some is small change to others.

Pervasive means that it isn’t an isolated problem – it affects so much that the information that's been reported, as a whole, is misleading.

Yeah, nah

When the audit opinion uses the words disclaimer of opinion, that’s a “yeah, nah” result. Yes, entity, nice try at fairly reflecting what has been happening, but no. The auditor can’t give it a clean bill of health, because they couldn’t do everything they needed to do.

It often means that the entity couldn’t provide the auditor with enough evidence about something, and that has limited the scope of the audit.

While an adverse opinion is material and pervasive, a disclaimer of opinion is pervasive – it affects a lot of the information. It’s likely to be material, too – but that limitation-in-scope thing means that the auditor can’t really tell whether the information is reliable.

Yeah, but

When the audit opinion is qualified, it means something different again. This time, whatever it is that the auditor disagrees with, it’s material – it matters – but it isn’t pervasive. So the audit report is saying “yes, this information does fairly reflect what the organisation has been doing and how it has used our taxes or rates – but ...”

Sometimes, the auditor has got all the evidence they need and concludes that the content that isn’t stated right (called “misstatements”), individually or together, is material but not pervasive. The auditor could have concerns about the pages of financial information or the information about how well the organisation performed in providing people with services, or both.

Other times, the auditor hasn’t been given or found enough evidence, and the information that’s missing could make a difference to a reader’s understanding of the audited bits of what’s in the annual report. It could be material, but the auditor doesn’t think it’s pervasive and they say “we’ve got all the evidence we need except …”

Yeah, and

Regardless of whether any of the stuff above has happened, the auditor can emphasise something – draw the reader’s attention to something that’s important to how the reader understands what’s in the audited bits of that annual report.

An emphasis-of-matter paragraph in the audit report doesn’t mean that anything’s wrong, but if you’re reading the annual report then you ought to know about whatever the auditor’s drawing attention to.

The emphasis-of-matter paragraph is the auditor’s way of calling out “Hey, reader! Make sure you take a note of this.”

It’s pretty common for the words “going concern” to crop up here. The auditor might give the “Nice one, Stu!” opinion – an unmodified opinion – and add in an emphasis-of-matter paragraph because the organisation is dependent on the continuing support of its bankers.

If the organisation is in a position to carry on, then all the financial information is put together assuming that the business is a “going concern”. If it’s winding up, then the folks preparing that financial information should not use the going-concern assumption.

There’s one other sort of paragraph that the auditor can use – the “other matter” paragraph. The auditor can include an other-matter paragraph if something isn’t quite in keeping with the auditor’s expectations or isn’t made clear enough to the reader.

Whatever it is, it’s something that, in the auditor's professional judgement, is relevant to a reader’s understanding of the financial and/or service performance information but hasn’t been highlighted by the entity in its annual report.

This has been a bit of a rough and ready guide, but did it help? If you’re interested in a more technical explanation please check out some of what we’ve formally published.

We think they deserve more. With the anniversary of the start of World War One (WWI) coming up next year, we want to − in our own small way − honour the audit employees who served with the New Zealand forces during the 1914-18 war. We’d like to bring the stories of these men to life.

Thanks to National Archives, we’ve found most of their service histories and a sprinkling of other public information about the men. We’ll pull it all together in a book that we’ll keep here at the Office as a permanent reminder of the men’s sacrifice and service. We’ll also publish their stories on our intranet.

We want the stories to touch people – to bring home that wars happen to people like us and change our lives in many and varied ways. To do that, we will need more than their service histories.

Can you help?

We’d really like to hear from the families of people who worked for the New Zealand Audit Office around the time of WWI – particularly relatives of those who went off to serve. If people are willing, we’d be honoured if the commemorative book could include their stories of the men, and copies of photographs or mementos. For the men who survived the war, what was life like afterwards? Did their stories end well?

These are the men from our office who were on active service during WWI:

If you know anything about these men or their families, please contact us.

You can comment on this post, call Tom Haslam on 917 1500, or email reports@oag.govt.nz with information or your details. If you don’t recognise any of these names, you can still help – please spread the word for us by sharing this blog post or talking to family and friends.

Kells looked at common issues or "sins" that performance auditors need to avoid. Having considered his deadly sins, I think they apply to all forms of auditing (including financial, internal, and compliance-based auditing).

Kells researched information from Australia, Canada, the UK, and other countries, and this is what he came up with...

Anti-innovation

The sin here is making recommendations that actually reduce effectiveness and block or discourage innovation. Recommendations that could lead to excessive formal controls and procedures are also a big no-no.

Auditors, to avoid this sinful pitfall, you need to stay up to date with developments in the area you are auditing, recognise and encourage innovation, and focus on improvement rather than censure.

Nit-picking

This is the sin of focusing too much on the small things – the minnows instead of the sharks and whales. You might become lost on the path to audit salvation and be constrained by concerns about straying into policy. You might be excessively adversarial, resulting in reduced "buy-in" from the entity.

So what’s an auditor to do? Well, focus on the big issues! Conduct your audits in a constructive, courteous, and professional manner, working on the basis of no surprises. Inform the entity of what you're finding, and allow for natural justice and fairness by listening. Where appropriate, amend your findings based on the new information you receive.

The expectation gap

Sinners, don’t be tempted to over-promise what your audit can deliver. It could be seen as providing more assurance than it does, or you could overstate your knowledge in the area you're auditing. This could raise faulty expectations with the entity and other stakeholders on what your audit can and will deliver.

To avoid this, always be clear about the scope and limits of your audit from the very beginning. Make sure that the entities and others know what to expect. Where there is some confusion, make sure you clarify.

The "lap dog"

Kells wants to urge his congregation to have courage. When it comes to auditing, don’t pull your punches by softening or concealing some of your more adverse findings. You must report what you find. Don’t get too close to the entity you are auditing. It could compromise your independence.

Make sure as auditors that you follow your mandate and confirm your independence from the entity. Ensure that you're objective with your findings and recommendations – report the good and the bad. Your reports should be clear and not ambiguous, so they can't be misinterpreted.

Unnecessary systems

For this sin, look at what you find from the entity’s perspective. Don’t just recommend systems because they may be "auditor friendly." If the systems you're considering wouldn't be effective or efficient for the entity, think again!

Committing this sin could cause entities to over-invest in preventing minor problems and, as an auditor, your recommendation could be flawed.

To mitigate this, base your recommendations on positive outcomes for the entity. Where possible, try to reduce red tape. It’s a good idea to test your recommendations and do a reality check to ensure you’re focused on improving the right things.

Headline hunting

Auditors should not seek the limelight for themselves or their work. Do not, my friends, try to make front-page news with your findings. Neither should you shoot or bayonet the wounded. Focus on the future and what improvements could be made.

Always be balanced and objective. Ensure that your findings and recommendations add value and show insight.

The hollow ritual

The final sin auditors need to avoid is seeking to serve the interests of either the auditing organisation or the entity being audited. This would mean the audit couldn't focus on what the entity could do to improve services to the public, or ensure efficiency savings so public services are better value for money. In short, the audit could not result in substantive benefit and be value for money in itself.

Make sure there is an external or peer review of the value of the proposed audit. Another good way of assessing the effect of the audit (and subsequent audits) is to follow up to assess its effect at some point in the future.

So, there you have it. My interpretation of Stuart Kells’ seven deadly performance audit sins. They highlight what a tricky business auditing can be. When the above sins are avoided, then performance audits can bring many positives.

I am in a reflective mood as winter approaches.

Maybe it's my age (I am in my late 40's) or the end of summer, but it feels like it's time to sit down around a roaring fire and ponder for a while. Work is a big part of many people's lives and it got me thinking about the performance audit work that I do. Does it really make a difference? By difference, I mean "how does my work at the OAG help improve public services, and what mechanisms do we use to try to ensure that it does?"

Our primary objective in undertaking performance audits is to provide assurance to Parliament. So what does that mean?

Parliament funds our office to carry out performance audits. Therefore, our priority is to report back to Parliament on what we find. So how do we report back? And how does the reporting that we do help drive improvement in the public sector?

First, we produce a report that gets presented/tabled* in Parliament. It is then a public document.

The report is also circulated to all members of Parliament (MPs), including the Prime Minister, to the entities we have audited, and to other organisations and individuals who might have an interest in our work. Copies of the report are also available by request.

But the circulation and publication of our report doesn't stimulate improvement on its own. We are usually asked to present our findings at a select committee of MPs. They ask us questions about what we found and sometimes the entities we have audited are asked to present how they have responded to our recommendations. This in itself can help stimulate improvements in how the services we audited are delivered.

The very fact we are conducting an audit can also stimulate improvement. As we are working with an entity, we will come up with ideas and views on what needs to improve. If an entity is focused on continuous improvement, they often start implementing improvements before we have completed our audit.

Once our reports are completed and tabled in Parliament, we will normally produce a follow-up plan to check progress against our recommendations. Although we can't require entities to act on our recommendations, most do.

Finally, we produce a progress report that also goes to Parliament. The report outlines the progress that has been made on the recommendations from our performance audits. We might also do a separate follow-up audit if we think that there were significant areas for improvement that are important to New Zealanders. A recent example of this was our follow-up report on Effectiveness of arrangements to check the standard of rest home services.

The fact that an entity's performance is reported to Parliament, that we work closely with entities when we audit them, and that we follow up our recommendations usually leads to improvements. Most entities are interested in doing things better and delivering better services, so they are usually receptive to what we find.

As I sit back on the sofa, with the rain lashing down outside, I gaze into the fire. A log cracks in the grate as the flames intensify and I reflect on what have I seen that has actually improved – either directly or indirectly – as the result of our audits. But that's for another blog…

* In this context, "tabled" literally means what it says – the Speaker of the House actually lays the report on the table in the House of Representatives.

I've worked in performance audit for the past 12 years in the UK and here in New Zealand. In both countries, I have been behind the scenes, asked some really interesting questions of many people from all walks of life, and observed many things that few people get to see. It's the nature of our jobs – we need to really understand the ins and outs of organisations and the people inside them to assess just how they perform.

It got me thinking back over the past 12 years. Which were the most interesting audits?

Well, I once conducted a value-for-money inspection of the cemeteries and crematorium in a small district council in Kent, southern England.  The local council ran the service, which included the upkeep and maintenance of the cemetery. Some of the things we audited were:

• The health and safety of grave stones and monuments. Many monuments were put up in Victorian times (or older), so iron nails and pins might have rusted through and become dangerous. The previous year, a child had died after a monument toppled over.  Each grave stone or monument needed a record to show it had been x-rayed and, where necessary, made safe.
• We had to check arrangements for diversity. Many religions have specific requirements concerning the burial or cremation of their deceased.
• The UK is short on land for burial and many cemeteries have three bodies buried on top of each other at different levels in the ground. We needed to check record-keeping to ensure the council knew who was buried where.

I also remember having tea in the vicarage, with all of the local religious leaders talking about the quality of services they received from the council. It all felt very surreal at the time, but also kind of Vicar of Dibley-ish.

I undertook a waste management audit on the Isles of Scilly. These are a remote cluster of islands, 30 miles off Lands’ End in the Atlantic Ocean, with only around 2000 people living there. Domestic and commercial waste was building up on the island, causing a major environmental hazard. The incinerator on the island was old and not able to cope, and it was too expensive to send the waste off the islands by boat.

Imagine your beautiful islands becoming one big rubbish dump. We suggested the purchase of a crushing machine to crush bulky rubbish that could then be burned in the incinerator. The islanders couldn’t afford such a machine but our report influenced the UK government to purchase a German piece of machinery called a fragmentor. This made a huge difference to the environment and tourism on the islands. The council and local people were so pleased they named it Gary’s fragmentor – how many auditors can claim to have a piece of machinery named after them? What a result!

I also undertook a cultural and heritage services audit of Mendip district council. Glastonbury is located in the district, where they hold Western Europe’s largest music festival. I was asked to attend – wow, what an opportunity. I went behind the scenes and followed police and security. There had been huge crowd problems in the past, with the three-day event supposed to hold 100,000 people but estimates suggested around 250,000 might turn up. It was expected that many would illegally gain access. The festival was like a fortress, with high fences and barbed wire.

I also followed environmental health inspectors checking food outlets and crowd density numbers for health and safety purposes – imagine standing backstage while top bands are performing and, as they came off, saying "great show" and getting a high five or "thanks dude" from the likes of Elvis Costello, The Killers, and Keane.

Then comes my biggest dine-out beer-at-the-bar, moment. Chris Martin (lead singer of Coldplay) used to live in my home town of Exeter. I knew his dad – who sold caravans and was on the board of trustees at the school I went to. I saw Chris walking into the performers' lounge and I plucked up the courage to blurt out, "I know your dad, he sells caravans." Not the best line to come up with when you bump into one the world’s biggest music stars. He looked somewhat puzzled but came over, bought me a beer, and we had a 20 minute chat about caravans and auditing (I could tell he was impressed!). Next minute, he was headlining on the pyramid stage in front of 100,000 people – pure auditing legend.

More recently, one of my audit teams undertook an audit that focused on biosecurity incursions, including a fruit fly incursion in Auckland. I have watched fire fighters put out burning cars, gone out on a night patrol with the police, and met with Prince Charles' personal steward. All in the line of auditing duty.

Of course, I have also audited risk and financial and performance management systems, but I have had a lot of fun along the way, seen a lot of things many people wouldn't get to see, and travelled the length and breadth of the UK and New Zealand. I can almost hear the Louis Armstrong song, What a wonderful world, in my head.

The Good, The Bad and The Ugly

Just the thing as winter approaches to kick back on a rainy Saturday afternoon, rent this DVD, and relax with a cold beer. Well, it’s my idea of a couple of hours well spent, anyway.

So what does this have to do with performance audit?

Well, like a cheesy DJ on a local radio station, it’s a crude link to a question I often hear as a performance auditor:

• What do we find when we undertake performance audits?
• And is it always bad?

In short, the answer is no - it’s a real mixture.

Often, the stories we read in the papers or on news websites are all about public entities doing badly. We hear a lot of doom and gloom around public sector cuts, and how this project or that initiative has not worked. Our evening news is full of it. But actually, the public sector in New Zealand does a lot of good things, and these good things tend to get less coverage.

An example of this is our report into New Zealand’s Blood Service (NZBS). We looked at how they were managing the safety and supply of blood products. To cut a long story short – they do it well. Don’t take this kind of stuff for granted. If you are involved in an accident or need an operation that involves a transfusion, then this could literally mean life or death for you.

You can sleep easy in the knowledge that NZBS deals with donations safely, checks for diseases with donated blood, and stores and transports blood products really well. They also use stock control (blood has a limited shelf life) and storage effectively to make sure that blood products are located where they are needed. Very little donated blood is thrown away.

New Zealand Qualifications Authority: Assuring the consistency and quality of internal assessment for NCEA is another audit where we found that NZQA are effective in ensuring the consistency of internal assessments for NCEA for our children. They work well with schools to help ensure the quality and consistency of internal assessments set by teachers. This is hugely important in ensuring the qualifications gained at one school are the same level as those gained in another.

There have been some good initiatives shown in our report on realising benefits from six public sector technology projects. These included:

• The police’s 111 text deaf service ensuring the deaf community can better access police services.
• Customs processing air passengers more quickly between New Zealand and Australia using SmartGate electronic passport control.
• New Zealand Transport Agency ensuring real-time traffic information gets to the public by making it available through private companies.

The report focuses on how technology was used to deliver good outcomes, and again it highlights some of the things the public sector is doing well.

Even when we are reporting on poorer performance by public entities, there is usually something positive that we report on, and we certainly give the positive things we find the exposure they deserve.

I can, therefore, say that there are lots of things the public service does well and we have the evidence to back it up. We do report the good and the bad. I’m not quite so sure we report on what’s ugly!

Of all the bands from this time, the Doors' music has more longevity than most, still revered by some for the swirling music and powerfully dark lyrics. The Doors embodied the contradictions of the 1960s – promise and possibility, but also chaos and disorder.

The band's name – from a novel by Aldous Huxley – was in turn inspired by a line in William Blake's poem, the Marriage of Heaven and Hell. "If the doors of perception were cleansed everything would appear to man as it is."

As we explain in an earlier post, an audit checks that things appear as they are. In a sense, we're helping people move through the door of perception. But for an audit office, where is the end? Is the end of an audit found at the print button or do we need to move beyond our own door of perception and open ourselves up to a more proactive approach?

Collective lessons and observations

Following on from an earlier post, the ACAG conference heard from the 2012 VAGO Reflections report, which identified six persistent and recurring shortcomings in Victoria's public services. Collective analysis like this is useful in providing all agencies with an indication of the more generic risks they should be thinking about. It’s an example of another way to make the ripples spread further.

We've recently reported the collective observations from our 2012/13 work programme, which was themed around the question, Our future needs, is the public sector ready?

Using new technology

Another way is to harness new technology. The Wales Audit Office has created its good practice exchange, @GoodPracticeWAO. Its guiding principle is to act as a conduit for sharing knowledge and not reinventing the wheel. The good-practice exchange works in collaboration with other organisations and uses case studies, shared learning seminars, and online good practice guidance.

Being understood

However we spread our message, it needs to be easily understood by the people who're in a position to effect change. This means findings that are easy to read, accessible, and relevant to people.

INTOSAI has produced useful guidance for audit offices suggesting ways to increase audit impact. I've selected two that appealed to me.

Target audiences – Like audit offices elsewhere, the OAG provides professional, impartial, and independent support to the work of Parliament. But who else is or should be interested in what we do? Other public agencies, the media, and the general public. Beyond that, we have the ill-defined body of people known as opinion formers – academics, commentators, opinion leaders, and special interest groups.

INTOSAI recommends identifying all target audiences early in the audit process and engaging with them as the audit progresses. You then have a ready-made wider audience for your work and one that will raise its profile and indirectly promote it. Audit offices need to be long-sighted enough to recognise that the returns on investment in this kind of engagement may not appear until after the work is completed.

Be proactive and help the media understand – Parliamentarians, agencies, and the general public follow the media closely. So why not get the media to help transmit the audit message?

More than ever before, journalists are under pressure to produce more copy in less time. Nick Davis's book, Flat Earth News, provides a revealing insight into the modern journalist's trade.

Audit offices need to recognise that time to read audit reports is in short supply. So what can we do to help journalists understand our main messages accurately? One of INTOSAI's suggestions is the idea of a "media lock-up". This is a closed meeting where journalists have enough time to digest the report before their deadlines and ask the audit team questions.

However you increase impact, an audit is part of a wider process for providing assurance and  achieving beneficial change. Audit reports are not an end in themselves, but rather a key part of the process of making government transparent and accountable.

In my view, the hard work starts beyond the door – that's what keeps me coming to work in the morning (apart from the rock 'n' roll lifestyle of an auditor, that is).

Don’t get me wrong, I love what I do
Explaining it in a sentence or two
Is harder, you see
I don’t grow anything, make anything,
sell anything. What I do is for people
like them, and thee
But to make the party question go away
It’s easier to say
I’m a brain surgeon, me

I’m not really. And I’m obviously not a poet, either. My job title – if that’s what people are looking for – gives little away. I’m a performance auditor. Hmm – not much clearer there, then. It’s hard for my colleagues in financial audit, too – we had a go here at explaining what they get up to in their work.

OK, so admit it, you are mildly intrigued, even if that’s as mildly as the mildest thing on planet mild – so what’s a performance audit then? Well, a good definition is “an independent examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources”.

Try saying that between sips of your Central Otago Pinot Noir – I told you “brain surgeon” was easier.

Bear with me, there are some parallels. For example, it wouldn’t be much good if part of your brain told your right leg to move in one direction, while another part told the rest of you to carry on sitting where you are. Sometimes in our work we find a great plan at the centre of an entity, but communicating that plan to the rest of the organisation hasn’t been as good. It’s the equivalent of your brain sending off impulses to only one part of the body, and leaves you vulnerable and unco-ordinated. Unless all the extremities get the message, you won’t get to where you need to go, and that means you won’t do the things you need to.

In the entities we audit, it matters that they plan and carry out that planning well. The senior managers in those entities need to communicate the reasons for change to all of their staff, because it is those staff who make the biggest difference to the way people are served by the public sector.

We speak to hundreds of staff working on the front-line in public services every year. It’s one way we test if the corporate neurons are firing in the management system.  Of course, that’s not all there is to performance auditing, and it’s not all about processes and procedures, either.

So what’s my real answer to THAT question? I tell people I try to make a difference, and if they’re really interested, that starts a very different conversation…

For a deeper appreciation of this most ordinary of scenes, I recommend you read The Box by Mark Levinson. The book entertains with a riveting tale of how the shipping container – described as having all the romance of a tin can – completely changed the global economy and how we live.

Liverpool and New York, centres of maritime trade for centuries, saw their prosperity swept away when they were unable or unwilling to adapt. Others, such as Seattle, moved into the global premier league of ports. Ports were created where previously there were none, such as Felixstowe in the United Kingdom.

The movement of goods and people is the glue that holds the modern world together, so we ignore it at our peril. New Zealand’s transport sector is large and complex. It employs more than 80,000 people and accounts for more than 5% of our GDP.

The transport sector is essential to supporting economic activity and connecting society. It affects all New Zealanders every day. Strong links between road, rail, maritime, and aviation industries are vital to get people to and fro and move freight around the country and off-shore.

A brief look at the Office’s involvement shows that we audit seven central government transport entities, 78 local authorities, and a number of ports and airports. We also audit other entities that play important enabling roles in the transport sector.

Transport knows no boundaries, it’s cross-cutting. As you can see from the simple diagram below, it has multiple issues. We recognised this complexity by adhering to the management axiom that structure follows strategy, and formed a group to focus on the transport sector.

The group’s objective is to join up our work to make best use of what we know about transport. This helps to make sure that we focus on the right matters, at the right time, and using people with the right skills. It provides significant opportunities for internal knowledge-sharing approaches and capability building.

Our group’s members come from all parts of the Office – performance audit, parliamentary, local government, research and development, accounting policy, communications, financial audit, and assurance.

The group has published its first transport sector report, which sets out the audit results of transport-related entities and local authorities. There’s a list of all the Office’s transport-related reports on the Office’s website.

We continue to brief the relevant select committees, when appropriate, and send representatives to relevant sector events, for example, the NZ Infrastructure Summit earlier in 2014. The group has also prepared a transport sector scan to help shape our five-year work programme.

Our "business as usual" work includes completing the annual audits of transport-focused entities in the public sector, remaining aware of transport issues and risks, and looking at how we can reduce, manage, or otherwise address these through our work.

Some of the topics that are on our radar include:

• transport network resilience;
• the Christchurch rebuild and Auckland transport projects;
• infrastructure maintenance, upgrades, and asset management; and
• the potential of emerging technologies.

Do you think we have the right things in the list? Are there any transport topics that you think we should add?

Note: This was the last post that Tom Haslam wrote for us, before he returned to the United Kingdom. We will miss his blogging ability, and we wish him well.

There is so much we can be reminded of in our exchanges with overseas institutions, and so much we can offer. That’s part of why delegations are a familiar sight around our offices.

This visit reminded me of things that in our country, and, at a stretch, in our Western civilisation, we often take for granted.

The powers of the Auditor-General and our Office go back a long time. New Zealand’s first Auditor-General (Charles Knight, pictured) took office in 1846. You can follow the history of the Comptroller and Audit functions in the United Kingdom (under a Westminster or Parliamentary model) back to arrangements in the Royal household (if you’re really keen).

The successful work of our Auditor-General hinges on a system of Parliamentary scrutiny and Executive (that is, Government) accountability.  Such a system makes it possible for citizens to keep an eye on what the Government is doing on our behalf, through media or other means of communication. It helps to reinforce or highlight Parliament’s and/or the Government’s action (or, perhaps, lack of action).

Behind all of this are a myriad of conventions, processes, and regulations. For example, there are Parliament’s annual reviews of public entities, Parliament’s passing of Estimates and Appropriation bills, an apolitical public service, the State Services Commission’s appointment of Chief Executives… I suppose we can call the whole lot “checks and balances”.

Usually, when we talk about institutions we mean places we don’t like to go—police stations, hospitals, or courts. We are actually very fortunate to have inherited institutions built over a long period of time that are the envy of others—social ‘technology’ is arguably just as important as the advances in hard technology .

Visiting delegations can remind us of the importance of these institutions and not to take them for granted, but rather seek to continually improve them. As an Office, we’re always looking to improve ourselves and the public sector, to see what works elsewhere and what doesn’t – so we never take for granted the inherited institutions we have.

The Office has just published a report that takes a fresh look at how councils are managing their water and roading assets. Roads, water pipes, and wastewater treatment plants often last decades, but they are expensive to maintain, repair, and eventually replace.

Thankfully, our councils have a good reputation for how they manage their assets. The planning and decision-making about services, assets, and associated funding are mostly adequate for short- to medium-term planning purposes. But the Auditor-General’s latest report suggests there is a possible long-term issue looming that councils and others need to pay attention to.

Many of the country’s major infrastructure assets were built in “waves” between 1950 and 1986. Those infrastructure assets are ageing, and ageing concurrently. Asset failures, if they occur, could happen in several places at once.

How do you prevent asset failures? You carry out renewal work. You plan for how you’ll fund replacing those assets.

Since 2007, councils have consistently spent less than they budgeted for on capital expenditure, including renewals. And their long-term plans say they’re going to spend less on “reinvesting” in their assets.

The reasons why are not entirely clear yet. But the Auditor-General’s report, Water and roads: Funding and management challenges, says that if these patterns continue, by 2022 councils will have between $6 billion and $7 billion less than they need to keep their assets in working order.

That’s quite a gap, and then there are population changes to consider. Mostly, people are moving into urban centres and out of provincial areas. We also have an ageing population – and the provinces are getting older faster, because it’s younger people moving away. So where will the money come from to replace those ageing, expensive, but absolutely essential assets?

The Auditor-General’s report doesn’t have any “quick fix” answers – each council is going to have to take a hard look at the long-term picture, and figure it out. That’s going to take some work.

For many councils, the asset management, service delivery intentions, and funding mechanisms are disconnected. There’s work to do before some councils have enough sophistication in their systems to manage all this as well as they need to. Whether they can find and keep people with the skills they need is another question entirely.

There’s always hope, right?

When councils prepare their long-term plans for 2015 to 2025, they will have to include an “infrastructure strategy” that covers 30 years. If it’s done well, the strategy will identify the significant infrastructure issues, options, and implications for the council. It’s the perfect opportunity to look at what councils need to do to manage assets into the future.

To do those strategies well, every council will need superb information about their assets and need to consider a range of economic and demographic outlooks. To get uber-technical about it, they’ll need to align their revenue and financing policies, their choice of funding tools for asset management, and their service delivery intentions. Linking the infrastructure policy to the financial strategy is critical.

The Auditor-General’s office has been pointing out for years that assets need more managerial love and attention. “Asset management” isn’t nearly as sexy as a Lamborghini, so getting people to pay attention to the topic can be tricky. But we can’t and won’t stop trying – it’s too important not to.

And by the way, if you like space more than you like fast cars, $100 billion is apparently also enough money to fund the American space programme for five years.

I'm a performance auditor with a hearing loss who sometimes mishears words or phrases (apparently a friend's husband is a "biohazard").

Asking questions and listening to people is a big part of what we do. It's in our name: "audit" comes from the Latin meaning a "hearing".

When we meet people to hear about what they do or have experienced, or how decisions were made, sometimes we need to take more time – otherwise misunderstandings can arise. For example, taking a moment to check can be the difference between believing someone was stimulating rather than simulating debate. On a lighter note, recently a colleague rather excitedly told me about her new "poopie". Oversharing?! No, she’d actually said "puppy" (and he is adorable).

With Hearing Week in March, I recently shared with my colleagues some of the little things that help people to better hear what's being said and feel more included in what's going on:

• facing people when you talk to them can make a huge difference, along with keeping your mouth free from obstacles while talking (these include your hands, food, and any pens or pencils you like to nibble on);
• if you need someone's attention, say their name;
• it's easier to follow a conversation if one person is talking at a time (we learned this at pre-school but sometimes words just want to burst out – I am guilty of this myself);
• if asked to repeat something: shouting is rarely helpful, instead say it a little louder and a little slower (trust me, it's just as painful asking again as it is repeating it); and
• if you are in a noisy space, see if you can move to a quieter place.

In my job, to make sure I've heard others properly, I'm likely to tell them what I think I've heard, summarise at the end of a meeting, or send an email to confirm – this helps to avoid unnecessary confusion or misunderstandings.

Hopefully these tips will help us as auditors to listen and communicate as well as we can. We do care about what people have to say and want to make sure we've heard it correctly.

If you’d like to know more about Hearing Week (23-29 March 2015), or if things are sounding too quiet or distant, check out the National Foundation for the Deaf's website: www.nfd.org.nz

If you'd like to know more about what a performance auditor does, check out Pat’s earlier post: I’m a brain surgeon, me.

Robert was one of the 27 who made it back and lived to a ripe old age. From what we could find out about his life before and after the war, things turned out well. It didn’t go so well for others who made it back.

John Dudley never made it back – he died of the ‘flu’ early in 1919, when he was still enlisted. Because he was still enlisted, he got one of the five asterisks on our memorial plaque and is considered to have died for his country.

Robert McMillan, on the other hand, became very sick at the end of the war and was given a medical discharge in April 1920 and died two months later. He didn’t die “on active service” so no asterisk on the plaque for him. That still seems unfair to me.

Arthur Dalley, a prize-winner at school, ended up in jail and he died in his cell in 1937. Arnold Hore, another high achiever before the war, found it increasingly difficult to live on his salary during the Depression and the money was only resting in his account – honest! The courts saw it differently and he, too, ended up in jail.

The stories of all 32 men in our commemorative book are touching, in their own way. We’ve given copies of From auditor to soldier to the family members and relatives who got in touch with us and helped us fill out the stories of their men. From the feedback we’ve had, they’ve loved the book even more than we do.

(We printed just enough copies of the book for our offices, the families we could find, and our library. For everyone else, the men’s stories are on our website. We hope you enjoy them.)