According to a government report, a number of schools spent over 10% of their operations grants on audit fees, but the Education Ministry was already taking steps to reduce these costs.
In June, the Education Ministry reported to Education Minister Erica Stanford that Regulations Minister David Seymour had written to her in May, as the Regulations Ministry was investigating school audit fees.
The report stated that Seymour attributed the increasing school audit costs to outdated regulations. However, the paper said that this was inaccurate.
It said that the rise was caused by a combination of more complex audits due to changes in auditing standards, a shortage of auditors, and previously set limits on audit fees.
“The audit cost is not based on the number of transactions or size of an entity, but rather the assessed risk of material misstatement occurring. Often, there can be a greater risk of this in smaller entities where there are limited people involved in the process and where a strong internal control environment can be difficult to implement or mitigate identified risks,” the report said.
It said that the $25 million annual audit cost accounted for approximately 1% of the total funding for schools.
“At a system level, a significant level of assurance is provided for a low percentage cost.”
“In comparison, the audit fees of other government agencies are noted to be between 0.3% and 0.9% of total revenue based on 30 June 2024 financial statements. This indicates that schools, as a collective group, are not dissimilar to other crown or government agencies.”
It stated that 233 schools spent over 5% of their operations grants on audit fees, with six of those schools spending more than 10%.
441 schools spent under 1% on audit fees.
The report said the ministry had already begun reviewing the financial reporting requirements for schools.