Maintaining performance integrity

The Leadership Team is supported by a set of governance committees focused on key areas of the Ministry's performance. The Audit Committee meets quarterly to provide independent advice on the Ministry's systems of internal controls and its risk management framework. The Value for Money Advisory Board provides direction and guidance on our Value for Money review.

Governance arrangements

The Leadership Team oversees the Ministry’s capability and capacity to deliver our strategic priorities. It receives monthly reports on a range of performance and risk issues. In 2009, three new governance committees focusing on Information Technology, Human Resources and Industrial Relations, and Finance and Assets Management were established. These governance committees comprise Deputy Chief Executives and report to the Leadership Team to ensure the key areas of the Ministry’s operations achieve focused scrutiny from top management.

Information Technology Governance Committee
The Ministry has a high degree of reliance on Information Technology. The Information Technology Governance Committee provides direction on, and controls, current and future significant IT projects. It provides an oversight of significant projects and ensures IT projects are driven by the Ministry’s business needs.

Human Resources and Industrial Relations Governance Committee
The purpose of the Human Resources and Industrial Relations Governance Committee is to take a whole-of-Ministry approach to human resources and industrial relations issues.

Finance and Assets Management Governance Committee
The Finance and Assets Management Governance Committee was established to monitor the management of both the operational and capital finances of the Ministry. This ensures the Ministry operates in a financially responsible manner, it uses its resources effectively and efficiently to achieve the Ministry’s business objectives, and its long-term financial position is safeguarded.

Audit Committee

Our Audit Committee independently advises the Chief Executive on the Ministry’s risk framework and internal controls (including legislative compliance), on its internal and external audit functions, financial and other external reporting and on its governance framework and process. The committee has the mandate to look across all our activities and it can report to the Chief Executive on any matter it sees fit to do so.

The committee meets four times a year and is chaired by one of three external members. Between them, the committee members have extensive experience in public and private sector financial and risk management, governance and the management of large projects, including information technology.

Value for Money Advisory Board

The Value for Money Advisory Board provides advice and support to the Chief Executive on the implementation of the Ministry’s Value for Money work programme and on opportunities to embed a culture of efficiency and value for money in our ongoing business-as-usual activities.

The Advisory Board meets formally five times a year and is chaired by one of the three external members.

Service performance

In 2009/2010, the Ministry continued to maintain a high level of performance in delivering its services to New Zealanders.

As at 30 June 2010, the Ministry applied a total of 91 performance measures to the full breadth of its services. Seventeen measures (nine per cent), exceeded the performance standard by more than five per cent, 69 measures (76 per cent) achieved the required standard, and the remaining five measures (five per cent) were below standard. Three measures were not met due to administrative errors, and the remaining two measures were not met due to the economic conditions, where exits off the unemployment benefits were not as high as anticipated.

Complying with our legal obligations

Complying with our legal obligations is the responsibility of every member of the Ministry’s staff. This year we implemented an overarching, centralised legislation compliance programme to monitor our compliance with all relevant legislation. This programme will assure us we comply with all our relevant legal obligations across the Ministry.

Our internal policies translate the law into practical guidelines for staff, tailored to the Ministry’s business needs. Our Legal Services team works with managers across the Ministry to ensure those policies properly reflect the law. This is backed up by a rolling programme to systematically check all policies against the underlying legal requirements. This has been enhanced over the last year by requiring business groups to complete legislation compliance checks using a software programme specifically designed for this purpose. Our Risk and Assurance team will independently check our compliance levels as part of the 2009/2010 Total Assurance Plan.

Legal Services works with business areas to ensure the staff are aware of our legal requirements and are able to identify legal risk. This complements the Ministry’s wider risk management approach.

Risk management in a changing environment

The Ministry’s Risk and Assurance function monitors the control environment to see how well it is working – it is vital our key internal controls continue to be effective, our risks are actively managed, and our business operations continue to operate efficiently and effectively.

Risk and Assurance, through its Total Assurance Plan, undertakes a range of planned and responsive activities to provide assurance the Ministry’s network of risk management activities, controls and governance is adequate and functioning effectively. The Total Assurance Plan includes planned audits across the Ministry’s core processes, a programme of regular stock takes across business areas, and responsive reviews when there are changes that may have an impact on the control environment.

The Ministry’s risk management approach provides confidence that the things we rely on to keep us safe are operating as they should be.

Security, Integrity and Business Continuity Advisory Committee

The Security, Integrity and Business Continuity Advisory Committee comprises members of the Leadership Team and General Managers. Its role is to provide a clear direction and management support and oversight of security, integrity and business continuity policies, standards and initiatives. The Committee oversees specific security, integrity and business continuity work programmes, such as the internal fraud, code of conduct and IT security policies.

Business Continuity
We know an emergency will affect the lives of New Zealanders. We aim to be as prepared for these situations as we can. Our dedicated emergency management team has two key responsibilities: first, to make sure the Ministry is prepared to respond to business disruptions and emergencies (such as earthquakes or pandemics); and secondly, when an event occurs, to help co-ordinate the Ministry’s response with our wider welfare responsibilities. All of our teams across the Ministry have been developing or reviewing their business continuity plans, so they can be prepared for any emergency situation.

Code of Conduct
The Ministry’s Code of Conduct covers the responsibilities of staff as public servants. It is a guide to the minimum standards of behaviour and practice expected from all the Ministry’s staff. Over the last year, we have made significant progress in developing a new Code of Conduct, with a rollout expected next year.

Responding to increased risks from the recession

Fraud risk profile
We asked the firm KPMG to look at changes to the Ministry’s risk profile for fraud. This was in response to changes in the external environment, such as the impact of the recession, and also in response to internal changes to our structures, processes, and systems. The Ministry wanted to confirm these changes had not resulted in a degradation of the overall control environment that could increase the chance of fraud occurring.

The review concluded that the control environment does not appear to have been weakened over the past 12 months, and that some of the change initiatives implemented have strengthened the Ministry’s control environment and made it less susceptible to fraud.

Staff security review
Recent events in New Zealand and internationally have highlighted the issue of our staff’s physical security. The Ministry has commissioned a review to assess the adequacy of operational security arrangements and practices for the protection of staff, to provide assurance they are adequate and fit for purpose.

Maintaining the integrity of our benefit system

Each year we handle around 93,000 client cases relating to error, abuse and fraud, and around 240,000 cases relating to the collection of overpayments from clients who are no longer receiving a benefit.

It is important New Zealanders have trust and confidence in how we deliver income support to people. We have a dedicated Integrity Services team made up of five units with 450 staff in 15 locations nationwide in the 2009/2010 year. Over the past year, we have:

• investigated more than 19,935 cases of potential benefit fraud
• reviewed and corrected entitlement for 74,030 cases identified through data matching with six other agencies
• been successful with 90 per cent of the benefit fraud cases we’ve prosecuted
• delivered a specialised integrity and fraud awareness resource to every member of staff to ensure they know what is required of them in maintaining the integrity of the Ministry and its payment systems
• implemented improvements to the way we manage fraud and compliance cases to further improve our effectiveness.

We separate balances owing arising from recoverable assistance, from debts arising from overpayments, and fraud. Recoverable assistance offers critical additional financial help to people in need and is an alternative to interest bearing debt. It helps people with their immediate and essential needs such as:

• outstanding power, gas, water costs
• bonds and rents
• fridges and washing machines
• school uniforms, car seats for children.

We know that debt from benefit overpayments has a negative impact on people, families, whänau and communities. Over the next year we will work to assure the integrity of the Ministry’s systems and processes and to minimise debt for people by:

• reducing fraud and abuse
• maximising the collection of debt and recoverable assistance
• driving staff integrity across the Ministry.

We will achieve this by:

• continuing to build on existing ways that have produced effective responses, such as:

  - using our knowledge base to identify and act on integrity risks
  - enhance our data match with Inland Revenue to improve the effectiveness of this match and minimise resulting overpayments through intervening earlier.

• developing and implementing initiatives from a new Overpayment Control Plan
• reviewing and enhancing the suite of Fraud Control Plans
• continuing a sustained focus on staffs awareness of integrity issues across the Ministry
• implementing a specialised IT system that will support fraud investigations, compliance reviews and prosecutions seamlessly
• improving our Collections performance through:
  - implementation of a new IT system which will increase productivity
  - improving business processes and tools
  - enhanced client service.

Strong leadership and governance combined with a culture of risk-smart behaviour and a commitment to maintaining the integrity of the benefit system mean we’re well placed to deliver on our commitments.

Ninety-four per cent of current beneficiaries are repaying their balances owed, 79 per cent of former beneficiaries are either repaying or have repaid their balances owed.