The SAI New Zealand is established by an act of Parliament/Legislative body. Head of the SAI is appointed by Parliament and Head of State. The Auditor-General can be removed or suspended from office by the Head of State, on an address from Parliament for disability affecting the performance of duty, bankruptcy, neglect of duty or misconduct. There is no prescribed qualifications required for appointment of the head of the SAI. The head of SAI is appointed for a fixed tenure, for a term not exceeding seven years.
The various conditions of service of the Head of the SAI to secure independence are:
As an officer of Parliament, the Auditor-General is independent of the Executive. The Auditor-General does not have a relationship with the judiciary or other investigating agencies. The SAI has financial independence and the Parliament decides on the level of funding for the Auditor-General, who submits his annual budget through the Speaker to Parliament directly.
The Auditor-General has a duty to publish the auditing standards that he applies in the conduct of audits and inquiries. The Auditor-General must present an annual report to Parliament and the Parliament appoints an independent auditor to audit the Auditor-General each year.
The SAI's jurisdiction extends to the followings with no limitations on its jurisdiction:
The SAI has powers of requisitioning all records of the auditee departments/organisations to discharge its mandate - Section 24 of the Public Audit Act 2001. The SAI has powers to enforce or initiate enforcement action to secure access to needed records which are not produced - Section 25 - 29 of the the Public Audit Act 2001.
The SAI can seal, seize and search documents and other related items where it is considered necessary for its audit and inspection. The SAI has the power to seek testimonials of the persons concerned, Sections 25-26 of the Public Audit Act 2001. Further it can seek co-operation of persons other than agencies subject to audit and inspection - Sections 25-26 of the Public Audit Act 2001.The SAI does not have powers of instructing government investigating agencies to perform activities considered necessary. The SAI has powers to decide on claims of interested persons in connection with official actions, duties and behavior of persons subject to audit and inspection. In respect of local authorities (government) only, the Auditor-General has responsibility for administering the Local Authorities (Members Interests) Act 1968 - a statute to regulate contracting between members of local authorities and the authorities and to prevent members from participating in matters in which they have a financial interest. The SAI does not have the authority to dispense with, in whole or part, the audit of Federal, Provincial and local Governments accounts and other related matters.
The SAI has powers to take punitive action and/or impose surcharges. The Auditor-General can prosecute persons for breaches of the Local Authorities (Members' Interests) Act 1968. The Auditor-General lost the power to surcharge on 1 July 2001. SAI has powers to access the computer systems of the auditees and the power to download and use electronic data either in site or off site. It has power to review the development of computer systems by auditees and suggest controls. SAI has no role in the appointment of external auditors engaged by the auditees.
The SAI prescribes Financial, Compliance, Performance & EDP audit in its scope of audit. The power to perform these audits are mandated by the law governing the SAI. Section 15 of the Public Audit Act 2001 says that the AG must audit the "financial statements, accounts, and other information a public entity is required to have audited". Section 16 of the Act provides for a range of discretionary performance audit activities. Section 18 of the Act contains a broad inquiry power into " any matter concerning a public entities use of resources". There is no express power to do EDP audits, but it is implicit.
The SAI New Zealand conduct annual financial statement audits of public entities, special performance audits and other investigations and inquiries. As the Audit-General operates a contestable audit process, there is no one audit methodology followed for audits. Each audit firm providing auditing services to the Audit-General has its own risk-based methodology. SAI does not discharge judicial functions.
Annual financial audits - there are various reporting levels for communicating audit findings, including reports to management and to Ministers and Parliamentary Select Committees. Each year issues raised in previous audits are followed up and continue to be raised as appropriate. Special audits - reports are made to Parliament. A Parliamentary Select Committee considers all these reports.
The SAI is required to follow specific standards, practices and guidelines in conducting audit and reporting as per section 23 of the Public Audit Act 2001. The SAI can consult and/or collaborate with other countries/SAIs and international organisations on matters relating to audit e.g. Participating in ACAG, INTOSAI, ASOSAI, SPASAI, IFAC Public Sector Committee, Commonwealth Auditr-General's Global Working Group. SAI can engage consultants and/or obtain professional services. Under section 32-33 of the Public Audit Act 2001, the A-G has the power to appoint auditors. Audit New Zealand competes with private sector auditors for audit work. SAI can report on acts that infringe upon State economic interests like mass embezzlement of State assets, serious losses and wastes.
Where there is fraud, SAI asks the entity to refer the matter to the appropriate law enforcement agency or can refer directly if that does not happen. However SAI does not have the power to oversee the ultimate disposal of such cases. The SAI reports to Parliament, Ministers and Parliamentary Select Committees, reports to entities management. The SAI continue to raise the issue as appropriate until they are satisfied it has been resolved. The SAI report as and when it is considered necessary, there is no practice of interim report before the final report. The SAI has the power to share its audit reports with the public and media. Reports to Parliament and to local authorities become public when tabled. Audit reports are publicly available documents. The SAI has an advisory role but the Government is not required to consult the SAI before taking decision involving substantial consequences..
SAI is constituted as an audit office with monocratic status i.e. with an Auditor General or equivalent as head. The SAI is empowered to engage external auditors/agencies/consultants as required.
The SAI can expend resources budget independently - Public Finance Act 1989, sections 33, 40 and it has full independence in forming its workplan subject to consultation with Parliament. The Audit-General has the power to recruit staff and determine terms and conditions of service. Annual Financial Statement audit and the independent auditor has the power to exercise performance audit powers in the course of an annual financial audit of the Audit-General. The SAI is required to submit a report on its activities to the Parliament.