Robertson GrantANNUAL REPORTING AND AUDIT TIME FRAMES EXTENSIONS LEGISLATION BILLFirst ReadingHon GRANT ROBERTSON (Minister of Finance): I present a legislative statement on the Annual Reporting and Audit Time Frames Extensions Legislation Bill.DEPUTY SPEAKER: That statement is published under the authority of the House and can be found on the Parliament website.Hon GRANT ROBERTSON: I move That the Annual Reporting and Audit Time Frames Extensions Legislation Bill be now read a first time.This is a relatively simple piece of legislation that the Auditor-General has asked to be passed through the House and Cabinet has considered his request and agreed to it. There are three main reasons behind the shortage of auditors that has led to this bill. The Auditor-General has advised us that the ability of auditors to do their audit work and meet statutory audit time frames and produce sufficiently robust audits is under pressure due to severe capacity constraints within the auditor profession. The three main factors involved are an ongoing shortage of auditors in New Zealand and Australia caused by increased demand for auditing expertise with more complex requirements. The current border settings have disrupted the traditional model of private audit firms bringing in offshore staff to assist with audit workloads limiting the additional resources that these firms can provide for public sector audits. There is also the issue of the turnover of Audit New Zealand staff and a constrained recruitment environment due to difficulties as already mentioned.This auditor shortage is more widespread than just Audit New Zealand and the public sector. Recently the Financial Markets Authority provided temporary relief to some businesses to give them additional time with certain regulatory reporting requirements if their reporting was delayed because of auditor capacity constraints across the private sector. Even in normal times there is a peak of resourcing for auditing in the public sector—the so-called audit season much like an apple or a kiwifruit season—and with the financial year for most public entities ending on 30 June there is high pressure on audit teams and organisations to complete public sector audits to time. With the shortage of auditors now the current time frames do put additional stress on staff and increase the likelihood of compromises in the processes and of reporting quality. The Auditor-General has advised us that there are currently 1000 vacancies in the audit profession in Australia and 200 vacancies in the New Zealand profession. So this is a shortage not just here in New Zealand but also in Australia and indeed around the world.The bill recognises and addresses these issues by providing extensions to the annual reporting and audit time frames so that the audits can be spread out over a slightly longer period ensuring a robust assurance and audit opinion to support continued public accountability.The amendments in this bill change the time frames in two Acts: the Crown Entities Act 2004 and the Local Government Act 2002. The Auditor-General informs me that these two Acts are pivotal to the scheduling of audits and that by providing extensions robust audits can be undertaken and legislative time frames met. The bill achieves this by extending the time lines for audits—or having an audit done—by a period of two months. The bill provides these extensions for a period of the next two financial years to reflect the need to address longer-term workforce supply issues. It is important to note the audits will still be done but there is a two-month extension provided for in the two Acts being amended. The type of provisions in this bill are technical but they are important. It is important that audits are done well and that robust assurance underpins and supports this fundamental aspect of public accountability and transparency. These provisions do need to be in place as soon as possible so that those entities who are being audited have certainty about when that will occur and to make sure that the auditors themselves can plan and sequence this work. The Auditor-General is proposing a sequencing which he has communicated to members of Parliament which includes putting at the start the financial statements of Government and related activities along with other larger entities such as large councils and that those audits will be done within the normal time frame and that other audits will take the two months that will be added by this legislation to be completed. These are minor amendments. They recognise a workforce shortage and I think the House should not delay itself too long in passing this legislation through.DEPUTY SPEAKER: The question is that the motion be agreed to.