Findings

Highlights of findings

Agencies reported spending $7.3 million less. Agencies that experienced the largest cost reductions cited centralisation and process improvements as contributing factors as well as the removal of costs reported in error in the previous reporting period.
Agencies reported efficiency gains since 2009/10. Agencies continue to benchmark well against international comparators for efficiency, but there is an opportunity to make $10.7 million in gross savings each year if agencies reduced spending on the Finance function as a percentage of organisational running costs (ORC) to their cohort median.[20]
Agencies reported increases in Finance function maturity since FY 2009/10, but there is still room for improvement. The mean Finance MPI score of 62 percent has increased from the previous year, and it is similar to the UKAA cohort mean score of 63 percent.[21] However, it remains the lowest mean MPI score of all the A&S functions for NZ agencies for the past two years.
Finance professionals want to expand the effectiveness indicators. Treasury will support Finance practitioners to make improvements to effectiveness measures by expanding the effectiveness metric set and revising the Finance MPI.

[20]The 31 agencies (full NZ cohort) that participated in this exercise have, for the purposes of comparison, been categorised into three cohorts - 'small agency cohort' refers to agencies with <500 FTEs and/or ORC of <$95 million; 'medium-sized agency cohort' refers to agencies with 500 to 2,500 FTEs and/or ORC of $95 million to $300 million; and 'large agency cohort' refers to agencies with >2,500 FTEs and/or ORC of >$300 million.
[21]Management Practice Indicators (MPI) are adopted from the UK Audit Agencies A&S service performance measurement methodology. Within that methodology, the MPI score assesses "the extent to which...[a] function achieves a set of key management practices which will provide an indication of whether it is a well-run, modernised and mature function. Details are found in Appendix 4.

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