- Title page
- Purpose of this guidance
- Who is this guidance for
- How to use this guidance
- Chapter 1: Relevant legislation
- Chapter 2: Functions and powers of the entity
- Chapter 3: Key relationships
- Chapter 4: Collective duties of the board and individual duties of board members
- Chapter 5: Role of the board chair
- Chapter 6: General responsibilities of members
- Chapter 7: Members' interests and conflicts: identification, disclosure and management
- Chapter 8: Disclosure of information
- Chapter 9: Gifts and hospitality
- Chapter 10: Board meeting procedures
- Chapter 11: Board committees
- Chapter 12: Delegations
- Chapter 13: Crown entities as employers
- Chapter 14: Subsidiaries
- Chapter 15: Planning and reporting
- Chapter 16: Board and member performance evaluation
- Chapter 17: Board appointments and reappointment
- Chapter 18: Remuneration and expenses for board members
- Chapter 19: Liability and protection from legal claims or proceedings
- Summary of minimum content for a governance manual by chapter
Chapter 15: Planning and reporting
PDF file of Chapter 15 (86.5k)
PDF file of full guidance (348k).
Key board responsibilities are strategic planning, monitoring and reporting publicly on the expected and actual performance of the entity: this enables Parliament and the public to hold entities accountable.
The Crown Entities Act 2004 (CE Act) sets out planning and reporting obligations of Crown entities, including the requirements for key accountability documents - the Statement of Intent and Annual Report. The expectation that boards are fully engaged in these areas is reflected by the requirement that these two accountability documents are signed by members of the board.
In 2008, the Auditor-General issued a discussion paper on the quality of performance reporting, in which he observes that "As well as their external accountability purpose, performance reports should reflect good management practice. Such practices involve clearly articulating strategy, linking strategy to operational and other business plans, monitoring the delivery of operational and business plans, and evaluating strategy effects and results"4.
Additional planning and reporting requirements may be specified in the entity's own legislation, and the impact of some of the provisions in this chapter will depend on the category of the entity.
Other planning and reporting processes such as letters of expectation are not set out in legislation but are established in practice. Communications between Ministers and entities that inform boards of the Responsible Minister's expectations for the future direction of the entity are also an important part of the planning process.
The range of planning instruments and vehicles make it advisable for each entity to consider setting up a process to record the actions and time frames for key planning and reporting decisions.
An enduring letter of expectations to Crown entities is issued periodically, with the most recent on 22 December 2008: see www.ssc.govt.nz/expectations-letter-crown-entities-dec08. It sets out the ongoing expectations that the Minister of Finance and the Minister of State Services have of all statutory Crown entities. These expectations include value for money, demonstrating performance, and engagement with Ministers and monitoring departments. An enduring letter remains 'in force' until it is replaced.
Ministers "participate in the process of setting and monitoring the entity's strategic direction and targets" (s. 27(1)(f), CE Act). Ministers' expectations for entities' strategic direction and their specific priorities for the planning period may be reflected in a letter of expectation from the Minister to the entity. It may also cover expectations of the entity's governance and performance and of the monitoring information to be provided.
The letter will usually be sent annually to the chair, before the board starts their strategic planning. It provides clarity about the expectations of the Minister.
The purpose of a Statement of Intent (SOI) is to promote the public accountability of a Crown entity (s. 138, CE Act) by:
- enabling the Crown to participate in the process of setting the Crown entity's medium-term intentions and undertakings;
- setting out for the House of Representatives those intentions and undertakings; and
- providing a base against which the Crown entity's actual performance can later be assessed.
Section 141 of the CE Act specifies what a SOI must contain. Ministers may participate in determining the content of the SoI (s. 145) which includes: agreeing with the Crown entity on any additional information to be incorporated; specifying the form in which any information must be presented; making comment on a draft SOI; and directing amendment in relation to some content of the SOI.
The SOI is prepared under the leadership of the board, signed off by the board, and tabled by the Minister in Parliament. The SOI flows out of the entity's strategic planning process and through it the board expresses its strategic thinking and future intentions. The SOI articulates the impacts, outcomes, or objectives that the entity seeks to achieve or contribute to. It includes qualitative and quantitative (financial and non-financial) measures and standards against which future performance will be assessed.
The SOI will reflect engagement with the Responsible Minister and the monitoring department through the planning process, and should incorporate government's sector and all-of-government priorities.
Advice on developing robust performance measures and preparing an SOI can be found at:
- Performance Measurement: Advice and examples on how to develop effective frameworks www.ssc.govt.nz/performance-measurement.
- The Auditor-General's observations on the quality of performance reporting (especially see Appendix II) www.oag.govt.nz/2008/performance-reporting.
- Forecast non-financial performance information reports: Guidance for entities www.oag.govt.nz/2009/forecast-non-financial-performance/.
- Planning and Managing for Results: Guidance for Crown Entities www.ssc.govt.nz/planning-for-results-crownentities.
- Preparing the Statement of Intent: Guidance and Requirements for Crown Entities www.ssc.govt.nz/guidance-crown-entities-soi.
Responsible Ministers may require a Crown entity to have an output agreement for all or any goods or services that the entity intends to supply that are paid for (in whole or in part) either by the Crown in accordance with an appropriation, by grants distributed under any legislation, or by levies, fees or charges set under legislation (s. 170, CE Act). The purpose of an output agreement is to assist the Minister and entity to clarify, align and manage their expectations and responsibilities for the funding and production of outputs, including the standards, terms and conditions under which the entity will deliver and be paid for the outputs.
An output agreement need not be legally enforceable as an agreement (s.170(4)) but it does create legally-enforceable duties on the entity's board members to ensure that the entity acts consistently with its objectives, functions, current SoI, and the current output agreement (ss. 49 and 92 CE Act).
Output agreements may also include accountability arrangements such as reporting requirements and how the relationships between the Minister, entity and monitoring department will be managed.
For small entities, the Minister and the entity may agree that the specification of output classes in the SOI is sufficient, and that a separate output agreement is not required. A Memorandum of Understanding (see below) may serve as an output agreement.
A Memorandum of Understanding is not described in legislation but, if used (for instance, where funding for the entity does not come from the Government), it is negotiated between the Responsible Minister and the board. These vary, but often they document the Minister's performance expectations of the entity, and accountability arrangements such as how the relationships between the Minister, entity and monitoring department will be managed.
The entity reports on its performance to Parliament in its annual report (ss. 150 - 157, CE Act). The annual report must provide the information to enable an informed assessment to be made of the entity's operations and performance for that financial year, including an assessment against the intentions, measures, and standards set out in the statement of intent. The statute sets out specific information that must be included, for instance the annual financial statements for the entity, a statement of service performance, any direction given to the entity by a Minister in writing, the total value of the remuneration paid to each member during the financial year (ss. 151 and 152, CE Act).
The board is informing stakeholders on how it is leading the performance of the entity, and how it is using public resources. The board will lead development of the annual report, including engagement as necessary with the Minister. The Annual Report must be in writing, be dated, and be signed on behalf of the board by two members.
The Auditor-General is the entity's auditor, but will generally appoint another auditor to act on his or her behalf. The auditor is required to audit the annual financial statements, statement of service performance, the annual report, and any other required or agreed information.
A Crown entity must provide its annual report to the Responsible Minister within 15 working days of receipt of the audit report: it is recommended that entities provide a near final draft to their monitoring department to enable the Minister to be briefed on key issues.
For assistance in developing an annual report, please refer to Preparing the Annual Report 2008: Guidance and Requirements for Crown Entities www.ssc.govt.nz/annual-report-guidance-crown-entities The Responsible Minister presents the entity's annual report to Parliament according to the timetable set out in this guidance.
4 The Auditor-General's observations on the quality of performance reporting, Office of the Auditor-General, June 2008.