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8 Reporting on Expected and Actual Performance (continued)

Annual Reporting

Annual reports are a key accountability document. Annual reports are used by select committees to scrutinise performance. Annual reports bring together financial and non-financial information. The reports provide a broad range of information to a diverse group of users, including staff, monitoring agents, the media, financial markets and academic researchers.

Each department, Crown entity, SOE and Schedule 4 organisations must produce an annual report containing audited financial statements. Financial statements are based on GAAP and audited by the C&AG.

Departmental annual financial statements for the year ended 30 June must be completed and forwarded to the C&AG by the end of August. By the end of September, the C&AG must issue an audit opinion.

Annual reports, including audited financial statements, are also required from Crown entities and SOEs. Crown entity reports must be audited within four months from the end of the financial year and then presented to Parliament. The reports of state owned enterprises must be audited and submitted within three months.

Government departments, and those Crown entities from which the Government purchases a significant quantity of goods and services, are required to include a statement of service performance with their financial statements. These statements report, through a set of appropriate and reliable performance measures, whether the organisation has met its service objectives for the year.

Parliament has also extended the requirements for performance reporting to ensure that it receives adequate information on non-departmental appropriations used to fund entities that are not already tabling statements of service performance in Parliament. Where an Appropriation Act states that the appropriation is subject to section 32A of the Public Finance Act, the Minister responsible for that appropriation is required to present a statement of service performance no more than three months after the end of the financial year. If a statement of service performance is inappropriate, a statement of results is required that compares intended and actual results.

Reporting under section 32A currently covers appropriations for output and other expenses over $5 million and capital expenditure over $15 million (Treasury Circular 2010/03 refers). Section 32A reporting is not, however, required if another entity is reporting on results achieved under the appropriation or if reporting would provide little useful information.[45]

Relationship between the Types of Appropriation in the Estimates and the Information Supporting the Estimates, Statements of Intent, and Annual Reports

Appendix C shows how the documents presented to the House prior to the start of the financial year relate to each other and to annual reports presented after the end of the financial year.

Financial Statements of the Government

The Government's financial statements are prepared for the Government as a whole. They combine detailed information from sub-entities, as well as items relating to the 'core' Crown.

Government reporting entity

Government financial statements are prepared for the consolidated government reporting entity as defined in section 27 of the Public Finance Act. This reporting entity includes: Ministers of the Crown; departments; Offices of Parliament; Schedule 4 organisations; SOEs; Crown entities; and The Reserve Bank of New Zealand.

The Government's financial statements are presented to the C&AG no later than two months after the end of the financial year, who must provide an audit report within 30 days. The financial statements are then presented to Parliament with the audit report.

The Government's year-end financial statements are prepared in accordance with GAAP and include (among other things) information on:

  • financial performance (operating statement)
  • comprehensive income
  • financial position (balance sheet)
  • cash flows
  • borrowings
  • analysis of expenses by functional classification
  • changes in net worth
  • unappropriated expenditure, expenses or liabilities
  • emergency expenditure
  • trust money held by the Crown
  • accounting policies
  • fiscal indicators
  • all agencies comprising the Government reporting entity.

Year-end statements are accompanied by a statement of responsibility signed by the Minister of Finance and the Secretary to the Treasury.

After presentation to Parliament, the Government's financial statements 'stand referred' to the FEC for examination. The FEC reports back to the House, where its report is debated in the Committee of the Whole House stage of the Appropriation (Financial Review) Bill. This Bill is a vehicle for the financial review debate in which the House considers FEC's report on the financial statements of the Government, the performance in the previous financial year, and the current operations of departments and Offices of Parliament and select committees' reviews of reports on non-departmental appropriations.

The Appropriation (Financial Review) Act also confirms limited changes to appropriations under sections 26A and 26B of the Public Finance Act, which validates expenses and capital expenditure in excess of (or without) appropriation, and validates breaches of projected net asset maxima.


Parliamentary scrutiny of forecasts, estimates of appropriation and performance reporting are key features of the financial management system. Some specific parliamentary controls are explained in Chapter Nine.


  • [45]Eg, some appropriations covering equity injections or additional depreciation expenses.
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