Tertiary education institutions: Focus for 2010 audit
This paper outlines our focus for the audits of tertiary education institutions (TEIs) for the year ending 31 December 2010. The paper also provides a short summary of some of the key risks identified in the 2009 financial year audits and how they will affect the next audit round.
Black and White paper, issue 5 (September 2010)
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Matters of interest to the Auditor-General
In August 2010, the Auditor-General provided a briefing to all auditors of TEIs to help establish the scope and direction of the audits of TEIs for the year ending 31 December 2010.
There are three matters featured in the briefing that we particularly want to draw to your attention:
- There will be an audit focus on governance and management of TEI groups, which includes a significant number of subsidiary entities throughout the tertiary education sector. We have been asked to look at, and report to the Auditor-General about the oversight and management of any subsidiaries, including their business need, their financial viability, and the way in which they are governed.
- The new investment plans that are currently being agreed with the Tertiary Education Commission for the period 2011 to 2013 will affect future funding. It is important that your appointed auditor understands how your TEI’s future funding will be affected in the context of the TEI’s overall plans, and considers any risks to the TEI including its ongoing viability.
- The new investment plan coincides with changes that will affect TEIs’ reporting of service performance information from 2011. The Auditor-General has asked us to review TEIs’ readiness, including the appropriateness of systems and controls, for the reporting of service performance information in 2011.
Preparing for the 2010 audits
TEI audits will be under way soon, and the matters raised by the Auditor-General will be addressed through the audit process. In the meantime, if you have any questions about the 2010 audit, please contact your appointed auditor in the first instance.
Previously identified risks remain a focus In addition to the matters outlined above, we had identified some risk areas for the sector going into the 2009 audit round.
Our audits showed that the following areas are still challenging for the sector and remain an audit focus:
- asset management; and
- procurement practices.
Poor asset management and procurement practices, and failure to address financial viability concerns could potentially damage a TEI’s reputation. This in turn could adversely affect the TEI’s ability to draw students and retain high calibre academic staff.
Asset management
TEIs own and manage a significant capital asset base. How TEIs manage these assets has previously been identified as a risk area for the sector. Some entities have made progress in their asset management practices. However, a considerable number of TEIs are still performing poorly in this area.
Procurement practices
Procurement practices continue to be a concern for most entities in the sector. A small number of entities are proactively looking to improve their practices but further improvement is needed for the whole sector.
Where you can get more information
- If you have any specific queries about your audit, please contact your appointed auditor.
- The publication Asset management for public entities: Learning from local government examples is available on our website – www.auditnz.govt.nz. Themes and case studies from this publication are applicable to the tertiary sector.
- The good practice guide Procurement guidance for public entities is available on the OAG website – www.oag.govt.nz.
Tertiary education institutions: Focus for 2010 audit
