- 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
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, Statement of Performance Expectations and Annual Report. The expectation that boards are fully engaged in these areas is reflected by the requirement that these accountability documents are signed by members of the board.
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.
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.
Enduring letter of expectations
An enduring letter of expectations to Crown entities is issued periodically, with the most recent on 26 July 2012: see www.ssc.govt.nz/expectations-letter-crown-entities-july12. 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.
Ministerial involvement in setting strategy and annual performance expectations
Ministers "participate in the process of setting the entity's strategic direction and performance expectations and monitoring the entity's performance..." (s. 27(1)(f), CE Act). Ministers' expectations for entities' strategic direction and their specific priorities for the planning period may be provided through meetings with the chair or board, and/ or in an annual letter of expectation from the Minister to the entity. Ideally, the letter will be sent to the chair, before the board starts their strategic review and planning in October.
Statements of Intent
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 strategic intentions and medium-term 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.
The 2013 amendments to the CE Act provide a stronger focus on strategic planning. The changes are:
- The SOI is solely about the strategic intentions of the entity.
- The content of an SOI must cover a minimum of four financial years.
- An SOI can last up to 3 years, but should be regularly reviewed and updated where circumstances require. (The 3-year period is measured from the date that the SOI was provided to the responsible Minister.)
- The responsible Minister can ask for a new SOI at any time.
- The Crown entity can provide a new SOI to the responsible Minister instead of providing an amendment to the final SOI.
- In certain circumstances, the responsible Minister can give a Crown entity an extension of time for, or waive the requirement to provide, an SOI.
- The Crown entity must publish the SOI (or any amendments) on its website once it is provided to the responsible Minister, unless the Minister has delayed publication during the pre-Budget period.
- There are a various options for when and how an SOI is presented to the House (after publishing). For example, a Crown entity's SOI can be presented with the annual report from the previous year (giving Parliament both a backward and forward looking performance story) or with other agencies' documents.
Section 141 of the CE Act specifies what a SOI must contain. An SOI must set out the strategic objectives that the Crown entity intends to achieve or contribute to (strategic intentions) and explain how the entity proposes to assess its performance.
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.
Advice on preparing a meaningful SOI can be found at:
- Performance Expectations - "What's Intended to Be Achieved" www.treasury.govt.nz/publications/guidance/planning/performanceexpectations-achieved.
- Performance Expectations - "How Performance Will Be Assessed www.treasury.govt.nz/publications/guidance/planning/performanceexpectations-assessed.
- CEA: Statement of Intent content www.treasury.govt.nz/publications/guidance/strategy.
Advice on when a new SOI will be provided to the Minister and the production timetable can be found at: CEA: Statement of Intent Timetables, www.treasury.govt.nz/publications/guidance/strategy/soi-timetables.
Statement of Performance Expectations (SPE)
The 2013 amendments to the CE Act provide for a Crown entity's statement of intent (SOI) to last up to 3 years. To give effect to this change, the information a Crown entity needs to provide to Parliament on an annual basis was removed from the SOI. This annual information is now in a document called a "statement of performance expectations" or an SPE. The information is:
- the statement of performance expectations (previously known as the statement of forecast service performance); and
- the annual forecast financial statements.
The purpose of an SPE is to:
- enable the responsible Minister to participate in setting the annual performance expectations of the Crown entity;
- enable Parliament to be informed of those expectations; and
- provide a base against which actual performance can be assessed.
Section 149E of the CE Act specifies the contents of an SPE. An SPE must include a concise explanation of what each reportable class of outputs is intended to achieve and explain how the performance of each reportable class of outputs will be assessed.
Ministers may participate in determining the content of the SPE (s. 149H) 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 SPE; and directing amendment in relation to some content of the SPE.
Advice on SPEs can be found at: CEA: Statement of Performance Expectations (SPE), www.treasury.govt.nz/publications/guidance/planning/appropriations/cea-spe.
Funding or other agreement
These types of agreements are not required by legislation. However, some Ministers and some Crown entities find them useful for documenting such things as how the relationships between the Minister, entity and monitoring department will be managed, when and how any Crown monies will be paid to the Crown entity, and when and how the Minister would like reporting from the Crown entity. They can be as simple as a letter or more formal like a memorandum of understanding.
The entity reports on its performance to Parliament in its annual report (ss. 150 - 157, CE Act). The annual report must include information to enable an informed assessment to be made of the entity's progress against its strategic intentions and statement of performance expectations. Other information that must be included in an annual report is the annual financial statements for the entity, 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
Guidance on preparing an annual report can be found at: Preparing the Annual Report: Guidance and Requirements for Crown Entities,