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Preparing the Annual Report - Guidance and Requirements for Crown Entities

1 Process and production of the annual report

1.1  Roles and responsibilities

Statutory requirement - Section 150(1) of the CEA:

  1. A Crown entity must—
    1. as soon as practicable after the end of each financial year, prepare and report on the affairs of the Crown entity; and
    2. provide the report to its responsible Minister no later than 15 working days after receiving the audit report provided under section 156.
  2. However, in the case of a Crown entity group,—
    1. the parent Crown entity must prepare an annual report on the affairs of the Crown entity group; and
    2. no other member of the Crown entity group needs to prepare an annual report.

1.1.1  Responsibility of the Crown entity board

Statutory requirement: Section 151(3) of the CEA:

  1. An annual report must be in writing, be dated, and be signed on behalf of the board by 2 members, or, in the case of a corporation sole, by the sole member.

Under section 150 of the CEA, the obligation to prepare an annual report is on the Crown entity, which in practice means the board. The expectation that boards are involved in the annual report process is reflected by the requirement that the annual report is signed and dated by two of the Crown entity’s board members (or by the member of a corporation sole). This requirement can be met by having the board members sign and date a simple statement to the effect that they are pleased to present the annual report of the Crown entity, though normally the statement would also provide an overview of the Crown entity’s achievements and challenges during the financial year.

Statutory requirement: section 155(d) of the CEA:

The statement of responsibility must—...

  1. be dated and signed on behalf of the board by 2 members, or, in the case of a corporation sole, by the sole member.

Two board members must sign the statement of responsibility, which is an explicit and detailed statement of the board's responsibility for the annual financial statements and the statement of service performance (non-financial performance).

The board's collective duties

Statutory requirement: Section 50 of the CEA:

The board of a statutory entity must ensure that the statutory entity performs its functions-

  1. efficiently and effectively; and
  2. in a manner consistent with the spirit of service to the public; and
  3. in collaboration with other public entities (within the meaning of that term in the Public Audit Act 2001) where practicable.

Statutory requirement: Section 51 of the CEA:

The board of a statutory entity must ensure that the entity operates in a financially responsible manner and, for this purpose, that it

  1. prudently manages its assets and liabilities; and
  2. endeavours to ensure –
    1. its long term financial viability; and
    2. that it acts as a successful going concern

Two of a board's collective duties are that the Crown entity's functions must be performed efficiently, effectively and consistently with the spirit of service and that the Crown entity must operate in a financially responsible manner. The annual report is one way a board can demonstrate how it is meeting these collective duties.

1.1.2  Responsibility of the Auditor-General

Statutory requirement: section 156(2) of the CEA:

The Auditor-General must—

  1. audit the statements referred to in subsection [156] (1)(a); and
  2. provide an audit report on them to the Crown entity within 4 months after the end of each financial year.

The Auditor-General must audit all Crown entities. The Auditor-General will appoint auditors to undertake this function on her behalf. The auditor’s role is to audit the financial statements and statement of service performance of the Crown entity as well as any other material they have agreed or are required to audit. The auditor, on behalf of the Auditor-General, must then provide an independent audit report on them by the end of October each year for inclusion in the annual report. Recently established or disestablished Crown entities or Crown entities which have had functions transferred may have slightly varying requirements (refer to section 2.9).

While the auditor is required to attest only to the audited information, the auditor has a responsibility to consider whether other information in the annual report (that they do not audit) is consistent with the audited information. Therefore, the auditor may raise questions on other matters in the annual report.

1.1.3  Responsibility of the Minister

Statutory requirement: section 150(3) of the CEA:

A responsible Minister (or another Minister where the annual report is being presented in a single document and another Minister is responsible for presenting that document) of a Crown entity must present the entity's annual report to the House of Representatives...

The Crown entity's responsible Minister must present the annual report to the House. This reflects the Minister's own accountability to Parliament.

Where an annual report is being presented in a single document that contains other report(s) or set(s) of information, and another Minister is responsible for presenting the accompanying report(s) or set(s) of information then the other Minister may assume responsibility for presenting the annual report to the house.

1.1.4  Role of the monitoring department

Statutory requirement: section 27A of the CEA:

The role of the monitor is, in relation to the monitored statutory entity,—

  1. to assist the responsible Minister to carry out his or her role (which is described in section 27); and
  2. to perform or exercise any or all of the following functions, duties, or powers:
    1. administering appropriations:
    2. administering legislation:
    3. tendering advice to Ministers:
    4. any other functions, duties, or powers in this Act or another Act that may, or must, be performed or exercised by the monitor

The monitoring department provides advice to the responsible Minister, as required, on key aspects of a Crown entity's performance. If requested by the Crown entity, the monitoring department may assist the Crown entity in the production of the annual report. It can be useful for the Crown entity to advise the monitoring department as soon as possible of any issues arising from the annual report and to provide the monitoring department with a near-final copy of the annual report, so that the responsible Minister can be briefed on key issues in the report before it is presented to the House.

Crown entities should seek assistance from the monitoring department, in the first instance. Monitoring departments will consult with central agencies, in particular Treasury, as required before providing feedback.

1.1.5  Role of central agencies

Treasury's role is to provide advice on the legislative requirements as set out in Part 4 of the CEA. Part 4 includes the annual report, and its companion accountability document, the statement of intent. Through its circulars, Treasury provides guidance and information on accounting policies for external financial reporting.

The State Services Commission's role is to provide advice on the legislative requirements as set out in Parts 1-3 of the CEA. These parts of the CEA include some areas that are required to be reported on in the annual report eg, actions invalid under section 19 of the CEA but valid under section 20, the remuneration of board members (s 47) and where permission to act despite being interested in a matter is given to a board member (s 68).

1.1.6  Role of the Office of the Clerk (Bills Office)

The Bills Office manages the process for presenting annual reports to the House. The requirements for printing and presenting of annual reports, which covers requirements such as size, number of copies and delivery requirements are outlined in the 19 June 2013 Office of the Clerk circular “Presentation of Papers to the House”.[6] Any questions on the presentation of reports should be directed to the Bills Office.

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