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Only the Proposal and Executive Summary sections of this Cabinet paper are extracted below in HTML. If you require a full HTML version please contact [email protected] and cite DEV-21-SUB-0149 as a reference.
Cabinet Paper: DEV-21-SUB-0149: Legislative amendments to audit deadlines due to auditor shortages
- This paper seeks agreement to make legislative amendments to extend audit timeframes that apply to selected public sector annual reporting to recognise the impacts of a severe auditor shortage on the ability to obtain robust audit opinions.
- I am concerned about the effect a severe auditor shortage arising from the ongoing impacts of COVID-19 will have on public sector agencies’ financial and non-financial end-of-year reporting. The robustness of this reporting is important to the fundamental principles of government accountability and transparency. Retaining the current audit timeframes will create risks to the quality of reporting, cause significant workload stress to auditors, and may result in agencies or the Auditor-General breaching legislative requirements. These issues have been raised by the Auditor-General (letter attached).
- In response, I am seeking your agreement to urgent legislation to extend the audit timeframes in the Crown Entities Act 2004 (CEA). These provisions apply to Crown Entities, organisations listed on Schedule 4 of the Public Finance Act 1989, and companies listed on schedule 4A of the PFA. I propose these amendments provide a two-month extension to the audit timeframes. I propose that this change would apply for the audits relating to the 2020/21 and 2021/22 financial years. I propose that this change would only apply to those entities with financial years ending 30 June.
- In addition to the amendments sought to the CEA, I am also aware of the need for extensions to timeframes for annual reporting in the Local Government Act 2002, which are also impacted by the auditor shortage. I recommend that the Minister of Local Government be given delegated authority to approve a policy to either amend the Local Government Act 2002 to extend the reporting timeframes for local authorities and council-controlled organisations for the 2020/21 and 2021/22 financial years in the same Bill that amends the Crown Entities Act or, alternatively, to extend these timeframes by Order in Council under section 261 of the Local Government Act 2002.