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Citizens not only vote in a government, they have agencies working on their behalf to check that their taxes are spent wisely. Alison Brown FCA and John Ryan FCA see their role as public sector auditors as a vital component of a functioning democracy, maintaining trust in government and the public service.

“It’s an essential element of how democracy works and how people can have a level of trust in government reports, what they say they’re doing, whether they can see evidence,” says Brown, assistant auditor-general, financial audit, Audit Office of New South Wales. In 2000 Brown started working with the auditor-general at the Australian National Audit Office and joined the Audit Office of NSW in 2007.

“We feel that we are a trusted voice and that we can provide evidence that things are actually working as they say they are, or we can give an honest opinion that maybe they’re not or they could use some improvement.”

Ryan, New Zealand’s controller and auditor-general, sees his office as being one of the major checks and balances in the system, along with other institutions including the ombudsman and judiciary.

“It’s part of that intangible trust that our democracy operates on and it’s really important that the public – who can’t go and audit every organisation – have someone working on their behalf to have a look and give their opinion,” he says.

“Our reputation for quality work, our reputation for independence and our ability to do what [the office of] the auditor-general thinks is the most important piece of work is designed so that the public can trust our work.”

Who is keeping our public sector accountable?

Audit offices are independent of government and are free to select their own priorities for performance audits and other inquiries. They can only be directed not to undertake an audit through legislation.

In New South Wales, the independence of the auditor-general is bolstered by its legislated eight-year set term, which can’t be extended.

The Office of the Auditor-General New Zealand and the Audit Office of NSW both set out their annual work program plan for performance audits at the start of each year, which they share with parliament and publish on their websites.

Public sector audits are determined by each jurisdiction’s mandate and can be carried out on public service departments, publicly-owned corporations and bodies, local councils and universities. They incorporate an annual financial audit of an organisation, but that is only the beginning.

Both NSW and New Zealand have programs that cover the performance of government sector bodies, and the effectiveness and efficiency with which they deliver programs and services to citizens.

In New Zealand, the auditor-general audits the information an organisation provides on its performance to ensure it is free from material error and looks at the systems used to produce the information. Ryan says this aspect of the audit can be used by parliament and ultimately the public to hold agencies to account for their financial performance and that the taxpayer gets “bang for their buck”.

The auditor-general also carries out separate performance audits, which look at the effectiveness and efficiency of an agency’s work. And, finally, the auditor-general can also initiate inquiries when it has concerns about the use of public resources.

Public sector audit reports to parliament

The skills required by public sector auditors are similar to those needed for a private sector financial audit, but the main difference is the output.

The key product of the public sector audit is the report to parliament, says Brown. These reports explain in greater detail what’s behind the audits, where the auditor sees risks and gaps, and how performance can be improved in future.

The reports to parliament give auditor-generals a powerful voice. They will often circle back to issues and themes in subsequent audits to monitor agency progress in managing significant risks.

The NSW auditor-general has ‘follow-the-dollar’ powers, which allow it to look at the efficiency and effectiveness of how services are delivered to citizens when they are outsourced to the private sector or a non-government organisation. It used these powers to audit the child protection system, resulting in the Oversight of the Child Protection System and Safeguarding the Rights of Aboriginal Children in the Child Protection System audits published in June 2024.

“These audits have really focused attention on an area that desperately needed it. I feel that the recommendations have been accepted and action on our recommendations will make a difference to vulnerable children,” says Brown.

“I see my job really about helping to improve the trust and the performance of the public sector and... all aspects of performance, not just financial.”

Shining a light on risk

“I see my job really about helping to improve the trust and the performance of the public sector and, when you think about trust, you’ve got to think about all aspects of performance, not just financial,” says Ryan.

In 2023–2024, the auditor-general of New Zealand produced 3140 audit reports issued on public organisations’ financial statements and performance information, and 542 of its recommendations were implemented by large public organisations to improve systems and processes.

It recently carried out an audit on the procurement of NZ$24 million of public funding to youth counselling service I Am Hope, which it found was carried out without an open, transparent and competitive procurement process.

In a letter outlining the findings from the director-general of the Ministry of Health, Ryan notes that the government was carrying out an election promise to fund the I am Hope initiative Gumboot Friday, which put public officials in a difficult position.

“I also have concerns that this situation created challenges for public officials, and for transparency, value for money and accountability for public spending more generally,” he wrote.

How public sector auditors drive improvement

Brown also sees her role as helping to drive improvement in the NSW public sector. As in New Zealand, the NSW auditor-general also carries out performance audits.

Among NSW’s audits in progress are the performance on the Implementation of the Closing the Gap Agreement in NSW, the Land Titles Registry and the Northern Beaches Hospital, and three councils’ road asset management in local government.

“The audit of councils’ road asset management will look at how councils plan to manage these assets and the processes in place to deliver upon their plans. What we’re trying to do is focus on uplifting performance on a more permanent basis, just rather than looking at whether a council has filled in potholes,” Brown says of the audit. “Do you have a system and a process for achieving a result, and how effective are you in monitoring your progress on it and delivering results?”

Celebrating its bicentenary last year, the Audit Office of NSW carried out 498 financial statements in 2023–2024, and 16 performance audits and special reports.

“Sometimes our findings might be uncomfortable, so one of our Audit Office values is ‘courage, even when it’s uncomfortable’.”

Making tough calls

Public sector audits are careful not to comment on government policy. They are not concerned with why governments make decisions, but rather how the agencies charged with implementing government policy spend public money, and whether that money has been spent efficiently and effectively. However, the auditor-general’s reports to parliament can sometimes cause embarrassment for governments.

It’s why Ryan ensures the organisation’s work is robust.

“We will gather a lot of evidence and we talk to a lot of people. We will bring that together and really think about that internally. There’s pretty robust conversations inside the organisation when we need to apply complex judgements to questions,” he says.

The Audit Office of NSW takes the same evidence-based approach. “Sometimes our findings might be uncomfortable, so one of our audit office values is ‘courage, even when it’s uncomfortable’,” says Brown.

Ryan has worked in New Zealand, Australia and the UK and in state-owned and private companies. A period of self-employment was followed by some public sector roles, which led to his appointment as New Zealand auditor-general almost seven years ago.

“You need to have been in a few tight spots yourself through your career because, often, you’re judging people who have ended up in a difficult situation with performance or other issues, and sometimes you see that they’ve done everything they possibly could but it’s still turned out badly,” he says.

Reports can be damning. “You don’t do that lightly because there are people involved on the other side and your main purpose is to make sure that we learn from experiences,” says Ryan.