Annual Report 2017/18 - ero.govt.nz · Annual Report 2017/18 Te Pūrongo ā-Tau 2017/18 E.39...

Annual Report 2017/18 Te Pūrongo ā-Tau 2017/18

E.39 AR(2017/18)

September 2018

Presented to the House of Representatives pursuant to section 44 of the Public Finance Act 1989

Education Review Office | Annual Report 2017/18

Published 2018

© Crown copyright

ISSN 2463-7513 (Print)

ISSN 2463-7521 (Online)

Table of contentsKi tā te Toihau Arotake Tirohanga | Chief Review Officer’s Overview..................................4

ERO purpose and functions ........................................................................................................................................... 8ERO’s purpose 8ERO’s core functions 8

What ERO aims to achieve ............................................................................................................................................10Evaluation of early learning services 12Evaluations of schools and other education service providers 14Our national evaluation programme: informing system improvement 18Contributing to success for Māori 20ERO’s Pacific Strategy 21

Enhancing ERO’s internal capability and capacity ............................................................................... 22Review of ERO’s operating model 22Strengthening our professional practice capability 23Building a positive workplace culture 24

Financial Statements and Service Performance ......................................................................................26Statement of Responsibility 26Independent Auditor’s Report 27Service Performance for the year ended 30 June 2018 31Statement of Comprehensive Revenue and Expense for the year ended 30 June 2018 41Statement of Changes in Equity for the year ended 30 June 2018 42Statement of Financial Position as at 30 June 2018 43Statement of Cash Flows for the year ended 30 June 2018 44Statement of Contingent Liabilities and Contingent Assets as at 30 June 2018 45Statement of Commitments as at 30 June 2018 45Statement of Accounting Policies for the year ended 30 June 2018 46Notes to the Financial Statements for the year ended 30 June 2018 54Appropriation Statements 64

Ki tā te Toihau Arotake Tirohanga Chief Review Officer’s Overview

Ko te kaupapa e kōkiri ana i ngā mahi a Te Tari Arotake Mātauranga, ko te mōtika o ia tamaiti me ia taiohi o Aotearoa kia whai wāhi atu ki te mātauranga whai kounga. Ko te tūāpapa o te mātauranga whai kounga ko te hiranga o te taiao whakaako me te taiao ako e noho ai ko te ākonga me ngā putanga ākonga ki te pūtake tonu o te kaupapa.

The driving force behind the Education Review Office | Te Tari Arotake Mātauranga (ERO) is the right of every child and young person in New Zealand to enjoy a high quality education. A quality education is underpinned by excellent teaching, and learning environments which place the learner and learner outcomes at the centre.

ERO drives quality in our education system through its cycle of institutional reviews focused on effectiveness and improvement, and its national research and evaluation programme. Independent monitoring by ERO is critical to the integrity of the education system.

Successful kōhanga reo, kura, schools and early learning services are committed to continuous and deliberate improvement and use evidence to identify their direction and make decisions. They effectively use evaluation to ensure what they do makes a positive difference for all learners.

E kōkiri ana Te Tari Arotake Mātauranga i te kounga i roto i tō tātou rāngai mātauranga mā ngā arotakenga auau kua whakaritea, ā, e arotahi ana ki te whai huatanga me te whakapaitanga ake, tae atu ki tana hōtaka rangahau, hōtaka aromātai ā-motu. He mea hira te aroturuki motuhake a Te Tari Arotake Mātauranga ki te pono o te rāngai mātauranga.

Ko ngā kōhanga reo, ngā kura Māori, ngā kura auraki, me ngā ratonga mātauranga kōhungahunga e eke angitu ana, e noho pūmau ana hoki ki te āta whakapai tonu i ia te wā, mā te whakamahi i ngā whakaaturanga hei tautuhi i tō rātou aronga, ā, hei hāpai anō hoki i ā rātou whakataunga. He tōtika te whakamahi a aua ratonga i te aromātai kia mātua mōhio ka puta he hua ki ngā ākonga katoa.

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This year, ERO has completed an extensive institutional evaluation programme. ERO Review Officers have worked in over 1,291 kōhanga reo and early learning services, and 739 kura and schools. ERO finds the majority of these ‘well placed’.

ERO’s Teaching Strategies that Work has been a successful series published through the national research and evaluation programme. Case studies identify what successful schools do to achieve great outcomes for learners across a range of curriculum areas.

ERO’s national evaluation Newly Graduated Teachers: Preparation and Confidence to Teach identifies the challenges faced on the pathway into teaching as well as the key characteristics of high performing systems. Such systems attract high calibre candidates into teacher education programmes, and place an emphasis on quality induction, mentoring and coaching, and the ongoing development and adaption of practice through a teacher’s career.

ERO is continuing to improve what it is doing to promote improvement in our system.

The revision of our quality review framework for early learning services (ELS) responds to the broad changes in the sector, new research insights, and the recent changes to the Early Childhood Curriculum, Te Whāriki (2017). Key concerns include the rapid growth in the sector occurring at the cost of quality, and insufficient focus by ELS on improving quality of provision beyond meeting minimum performance expectations.

ERO has modified its school reporting approach based on feedback from the sector. Our reports now provide a strengths-based assessment of where a school is at and next steps for improvement. The sector has received these changes positively, and have told us our reviews add value to the improvement journey of many New Zealand schools.

I tēnei tau i tutuki i Te Tari Arotake Mātauranga tētahi hōtaka aromātai matawhānui i ngā ratonga mātauranga. Kua mahi ngā Kaiarotake a Te Tari Arotake Mātauranga i roto i ngā kōhanga reo me ngā ratonga mātauranga kōhungahunga neke atu i te 1291, me ngā kura Māori, ngā kura auraki hoki e 734. Ki tā Te Tari Arotake Mātauranga whakataunga, ‘he pai te tūnga’ o te nuinga o ēnei.

He tino kohinga rangahau te Teaching Strategies that Work a Te Tari Arotake Mātauranga i whakaputaina mā te hōtaka rangahau, hōtaka aromātai ā-motu. E tautuhi ana ngā mātai take i tēnā e mahia ana e ngā kura angitu kia eke i a rātou ngā putanga tino hira mō ngā ākonga puta noa i te whānuitanga o ngā wāhanga marautanga.

Ko te aromātai ā-motu a Te Tari Arotake Mātauranga i arotahi ai ki ngā kaiako hou, ā, i tautuhi i ngā uauatanga ka pā mai i te ara ki te whakaako, tae atu ki ngā āhuatanga matua o ngā pūnaha mahi tiketike. Ka tino whāia aua momo pūnaha e ngā kaitono pūmanawa nui ki ngā kaupapa mātauranga kaiako, ā, ka aro nui ki te whakangungu, te arataki me te hāpai e whai kounga ana, tae atu ki te whanaketanga haere tonu me te urutaunga o ngā whakaritenga puta noa i te huarahi umanga a te kaiako.

Kei te whakapakari tonu Te Tari Arotake Mātauranga i āna mahi ki te whakatairanga i ngā whakapaitanga ki tō tātou rāngai.

Ko te whakahoutanga ake o tā mātou angamahi arotake whai kounga mō ngā ratonga mātauranga kōhungahunga, e whai pānga ana ki ngā panoni whānui i te rāngai, ngā tirohanga rangahau hou, tae atu hoki ki ngā whakarerekētanga o nā noa nei ki te marautanga mātauranga kōhungahunga a Te Whāriki (2017). Ko ngā māharahara nui, ko te pā tōraro o te tipu tere o te rāngai ki te kounga, me te kore i tino aro ake a ngā ratonga mātauranga kōhungahunga ki te hiki ake i te kounga o te whakarato ki tua atu o te ū ki ngā tūmanako whakatutukitanga iti rawa noa iho.

Kua whakarerekēhia e Te Tari Arotake Mātauranga tana aronga ki ngā pūrongo ā-kura, nā ngā whakahokinga kōrero i te rāngai mātauranga. Ka whakarato ā mātou pūrongo i te aromatawai o ngā āhuatanga whai kaha o te kura, me ngā whakaritenga ka whai ake ki te whakapai tonu. I rata te rāngai mātauranga ki ēnei whakarerekētanga, me te kī mai anō i whai kiko ā mātou arotake ki te huarahi e whāia ana e ngā kura maha o Aotearoa ki te whakapai tonu.

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Annual Report 2017/18

The development of new frameworks for primary and secondary schools that evaluate the quality of te reo Māori teaching in the English medium space is progressing. I am excited that, in time, we will have established the necessary framework to support ongoing growth and improvement in the teaching of te reo Māori.

We are also piloting a new approach to a group of poorly performing schools who have been unable to sustain improvement over successive years. Many of these schools are located in communities facing multiple and significant challenges. Learners in such schools do not receive the education to which they are entitled and have been poorly served by the system. The pilot provided a concerted multi-agency approach and sharpened the focus on those conditions that most immediately improve outcomes for learners. Early indications from the pilot are positive.

Looking ahead, ERO’s review and evaluation programme will continue to focus on the biggest challenges facing our education system – persistent disparities in learner outcomes, and the system’s failure to deliver equity in outcomes for sizeable groups of children and young people.

Improving outcomes for Māori learners remains critical. Our system needs to ensure Māori learners succeed as Māori, and that our system delivers our obligations as Treaty partners, supporting Māori social, cultural and economic aspirations.

At risk learners are often identified early in their schooling but the system is not successful in disrupting their often low achievement. Learners with complex needs are often poorly supported within a highly devolved network of provision.

Kei te anga whakamua te whanaketanga o ngā angamahi hou mō ngā kura tuatahi me ngā kura tuarua e aromatawai ana i te angitu o te whakaako i te reo Māori i ngā kura auraki. E hiamo ana ahau, ā tōna wā, ka whakatūhia e mātou te angamahi e tika ana hei tautoko i te haere tonutanga o te tipu me te whakapai ake i te whakaako i te reo Māori.

Kei te whakamātau hoki mātou i tētahi aronga hou ki tētahi kohinga o ngā kura kāhore e tino eke ana i roto i te āhua o ngā mahi, ā, kāhore e taea hoki e rātou ngā whakapaitanga te āta whakapūmau i roto ngā tau. Ko te nuinga o aua kura kei roto i ngā hapori e pēhia ana e ngā uauatanga maha, nui hoki. Kāhore ngā ākonga i roto i aua kura e whiwhi ana i te mātauranga e āhei ana rātou, ā, kāhore rātou i poipoia e te rāngai. Ko tēnei kaupapa whakamātau he aronga ngātahi mā ngā ratonga maha, ā, kua whakahāngai ake i te titiro ki te whakapakari ake i ngā āhuatanga ka whakapai wawe i ngā putanga mō ngā ākonga. E tohu ana ngā whakaaturanga tōmua o te whakamātau i te whai huatanga o te aronga nei.

E anga whakamua ana te titiro, ka arotahi tonu te hōtaka arotake, hōtaka aromātai a Te Tari Arotake Mātauranga ki ngā wero nui rawa kei mua i tō tātou rāngai mātauranga – ko ngā rerekētanga mau tonu i roto i ngā putanga ākonga, me te ngoikore o te rāngai ki te hāpai i te mana taurite ki ngā putanga mō ngā rōpū matarahi rawa o ngā tamariki me ngā taiohi.

He mea tino nui te whakapai ake i ngā putanga mō ngā ākonga Māori. Me mātua whakarite tō tātou rāngai kia eke angitu ngā ākonga Māori mā te tū tonu hei uri Māori, ka mutu ka ū hoki ki ō tātou herenga i te rāngai hei patui nō te Tiriti, e tautoko ana i ngā tūmanako pāpori, ahurea, ōhanga hoki o te Māori.

He maha ngā wā e tāutuhia wawetia ana ngā ākonga e karawheta ana ki te ako, engari kāhore te pūnaha mātauranga e whai hua ana ki te āta hāpai ake kia eke kē rātou ki te huarahi ako e tika ana mō rātou. He maha ngā wā he ngoikore rawa te tautoko i ngā ākonga whai matea matatini i roto mai i tētahi kōtuinga ratonga kua mimiti rawa.

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At a national level, New Zealand’s decline in performance in key areas of the curriculum continues to be highlighted through a number of international and national studies. There is an urgent need to respond as a system to arrest these downward trajectories. A particular area for attention is in the senior primary school years where a falloff in the pace of learning between years 4 and 8 across a number of curriculum areas has been identified.

We also need to ensure that our teaching profession reflects the rich diversity of New Zealand’s population, and is able to work with learners from the many and varied cultural, linguistic and ethnic backgrounds that constitute our communities, along with learners who enter and progress through the system with diverse learning needs.

I want to thank all the staff of ERO for their efforts and commitment to making a positive difference for children this financial year. I also want to acknowledge the many kaiako, kaiāwhina, kaimahi, teachers, educators and school board members who work tirelessly every day to make a positive difference for our system, and to the lives of children and young people.

I te taumata ā-motu, kei te whakaaraarahia tonu te ngoikore haere o Aotearoa i roto i ngā wāhanga matua o te marautanga, mā ngā rangahau maha ā-ao, ā-motu hoki. Me kōhukihuki te urupare hei rāngai ki te whakakore i aua rerenga e heke iho ana. Ko tētahi wāhi ake hei tirotiro ko tō ngā ākonga tuākana o ngā kura tuatahi, i kitea ai te hekenga o te tere o te ako i waenga i ngā tau 4 me te tau 8 puta noa i ngā wāhanga maha o te marautanga.

Me mātua whakarite anō tātou e whakaata ana tā tātou umanga whakaako i te tino kanorautanga o te taupori o Aotearoa, ka mutu ka taea te mahi tahi me ngā ākonga mai i te tini me te whānui o ngā ahurea, ngā reo, me ngā mātāwaka o ō tātou hapori, tae atu ki ngā ākonga e mau ana i ngā tino matea ako.

Tēnei te mihi atu ki ngā kaimahi katoa o Te Tari Arotake Mātauranga mō ā rātou mahi me tō rātou pūmau kia puta ai he hua mō ngā tamariki i tēnei tau pūtea. Ka mihi h oki ki ngā tini kaiako, kaiāwhina, kaimahi, kaiwhakaako me ngā kaitiaki i ngā poari e whakapau kaha ana i ia rā e puta ai he hua mō tō tātou rāngai mātauranga, me te ao o ngā tamariki me ngā taiohi.

Nicholas Pole Te Manahautū me te Toihau Arotake | Chief Executive and Chief Review OfficerMahuru 2018 | September 2018

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ERO purpose and functions

ERO’s purpose

The Education Review Office Te Tari Arotake Mātauranga (ERO) is at the forefront of promoting equity and driving improvement in our education system through its institutional reviews, and its national research and evaluation programme.

ERO aims to ensure that New Zealanders can have confidence in our kōhanga reo, early learning services, kura and schools, and to lift performance in those areas and of those providers that need it most. Independent and objective monitoring by ERO is critical to the integrity of the education system.

ERO’s core functions

ERO is the New Zealand government’s external education evaluation agency.

It was established as a government department in October 1989 under the State Sector Act 1988. The Chief Executive of ERO is the Chief Review Officer.

Under Part 28 of the Education Act 1989, ERO is required to review the performance of pre-tertiary education providers in relation to the educational services they provide.

Review Officers are statutory officers designated under the Act. They exercise powers of entry, investigation and reporting.

Government policy settings, resourcing changes, Ministerial reviews and ERO’s strategic leadership and development have all influenced the department’s development and approach to external evaluation.

In summary, ERO’s core functions in 2017/18 included:

� national evaluations – on system-level issues including sector performance, policy implementation and pre-tertiary educational practice

� education evaluations – scheduled external evaluation reviews carried out with schools and early learning services to complement and strengthen their own internal evaluation processes

� new school assurance reviews – carried out to provide assurance to new school boards and their communities that the school has undertaken suitable administration processes and curriculum preparation

� private school reviews – carried out under section 35I and Part 28 of the Education Act 1989 and focusing on how well the school meets the criteria for registration

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� home-schooling reviews – reviews of programmes for students exempt from enrolment at a registered school, undertaken in the context of section 21 and Part 28 of the Education Act 1989 and usually at the request of the Ministry of Education

� special reviews – carried out where a matter needs to be reviewed and reported outside regular reviews

� Communities of Learning reports – as part of the government’s Investing in Educational Success Initiative –tailored reports for each Community of Learning, bespoke reports for schools receiving the Principal Recruitment Allowance, and national reports on trends and issues

� teacher practising certificates audit – from 1 July 2015, contracted by the Education Council of Aotearoa New Zealand (the Education Council) to undertake an audit of appraisals for the endorsement of teacher practising certificates.

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What ERO aims to achieveERO’s purpose is to ensure our evaluation insights are a catalyst for change so that every child achieves success as a life-long learner.

New Zealanders can have confidence in our education system

We deliver high quality evaluations that contribute to New Zealanders having confidence in the New Zealand education system. ERO reviews inform parents, whānau and stakeholders about the quality of education provision in their communities. Through our institution evaluations we ensure that schools and early learning services remain accountable to their communities, parents, staff and learners.

Quality education for all learners

We challenge early learning services, kōhanga reo, schools and kura to ensure they provide quality education for all learners. We want every classroom and early learning service, kōhanga reo, school and kura to be a great place to learn.

Our engagement with stewards, leaders and teachers is a vital aspect of this aim. We believe that high quality education is underpinned by excellent teaching, and the creation of conditions for learning which place the learner at the centre of all activity.

Equity and excellence in outcomes

To increase New Zealand’s levels of social, cultural and economic wellbeing our education system needs to be relevant and reach all children and young people.

In our evaluations we are committed to providing evidence and informed judgments to reduce disparities in learner opportunities and outcomes. Through our work we build evaluation expertise and encourage more effective use of assessment to inform deliberate teaching strategies. In our school reviews we continue to focus on those learners who are at risk of poor outcomes and whose learning needs to be accelerated.

An improvement- oriented system

ERO identifies what works, establishes indicators for success, and uses its evidence to influence change in practice: for individual providers, in separate parts of the system, as well as the system as a whole.

We aim to influence the sustainability of provider performance and drive a continuous improvement culture across the system. We do this through

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championing the effective use of evaluation, inquiry and knowledge-building for improvement, innovation and investment in our schools and early learning services. We see evaluation as a learning process, building knowledge at local, community and system level.

Through our institutional and Community of Learning evaluations, we strive to generate the conditions that enable improvement.

This work is complemented through the sharing of evidence and development of insight into effective practice.

Strong and effective policy settings

Critical to a high performing education system is ensuring that our policy settings are fit for purpose future-focused, and support innovation and adaptation. Equally important is placing a spotlight on those areas in the system that are failing to support improved outcomes for learners.

Through our national evaluation studies, we identify areas where

our system may need to be strengthened, what is working

well and what is not.

Over time, ERO has established a large body of evidence. Working alongside other education agencies, ERO supports policy debate and provides advice on many important education issues.

Māori success as Māori

ERO is committed to honouring the Treaty of Waitangi as the founding document of Aotearoa New Zealand and the agreement that underpins relationships between Māori and the Crown. ERO aims to uphold the principles of partnership, protection and participation by promoting success for Māori learners, and ensuring our system delivers on the educational aspirations of parents and whānau for their children. Core to this is ensuring that Māori learners succeed as Māori, confident in their language, culture and identity.

Internal capability and capacity

ERO’s focus on internal capacity and capacity building is critical to our effectiveness as an organisation. We focus our attention on the following five areas:

� enhancing our frameworks, methodologies and tools

� developing new skills and making best use of our capabilities

� exploiting technology to deliver greatest impact

� building strong, enduring partnerships and networks

� using our information for better insights.

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Evaluation of early learning services

What we doERO’s early childhood evaluation methodology, He Pou Tātaki – How ERO reviews early learning services, focuses attention on the quality and effectiveness of services’ internal systems, and on the capacity of the service to promote positive learning outcomes for all children.

In every evaluation we aim to engage in a meaningful review process, make sound judgements about performance, and influence improvement.

ERO judges service quality on the following basis:

� very well placed – the next ERO review will be in four years

� well placed – the next ERO review will be in three years

� requires further development – the next ERO review will be within two years

� not well placed – the service requires further action by the Ministry of Education.

ERO uses a national moderation panel to assess consistency in our work against internal standards, procedural and quality assurance guidelines.

During 2017/18, we also placed increasing emphasis on the adoption by early learning services of the recently refreshed Te Whāriki (2017).

Our approach in Māori medium settingsEvaluations in Māori medium education including kōhanga reo and puna reo, are led by a dedicated Māori immersion review team (Te Uepū ā-Motu). The team has specific skill in te reo and deep understanding of tikanga Māori, Matauranga Māori and immersion education. They operate within a te ao Māori framework and have knowledge and expertise in education and evaluation.

ERO employs distinct external evaluation approaches which have been developed in partnership with these services and their communities.

What we achieved in 2017/18 ➜ 1,291 early learning service (ELS)

evaluations, achieving prescribed targets

➜ worked with 28% of the 4,620 licenced ELS

➜ involving 57,774 licenced places ➜ 508,000 people accessed ERO’s

online school and ELS reports ➜ 99% of ERO’s reviews complied with

our internal quality standards ➜ 90% of respondents from the

early learning sector told us ERO’s evaluation contributed positively to their decisions about how to improve learner outcomes

➜ ERO met all the timeliness standards for ELS reporting

➜ Published Awareness and confidence to work with Te Whāriki (2017).

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4000300020001000

Very well placed

Well placed

Requires further development

Not well placed

First time review

0

13%

75%

4%

1%

7%

Going forwardDuring the year, ERO has worked towards a new quality framework (linked with Te Whāriki (2017) ) to reflect the systems’ priority focus on quality learning outcomes, and drive a stronger emphasis on sustainability and ongoing improvement. Specifically, we are looking to:

� increase our focus on new services, and services not well placed or requiring further development

� improve organisational conditions, accountability and promote equity and excellence for children’s learning

� influence, intervene and ensure greater support for improvement for those services that are struggling.

We are looking to provide greater clarity and transparency in our ELS reports, and in the improvements we expect from each of the services we evaluate.

Among large employers and umbrella organisations operating multiple early learning services, we will promote internal quality assurance and self-review.

Early Learning Status at the end of 2017/18

What we found from our reviews in 2017/18

➜ 87% of ELS were found to be well placed or very well placed

➜ about 170 services were identified to be of concern, of which 30 were referred to the Ministry of Education for further action

➜ 84% of ELS that required further development based on their previous review had improved performance sufficiently to be defined as well placed.

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Evaluations of schools and other education service providers

What we doERO’s approach to external evaluation of schools is designed to build each schools’ internal evaluation capability and encourage it to establish a cycle of ongoing improvement. Our approach leverages our School Evaluation Indicators: Effective practice for improvement and learner success (July, 2016).

ERO evaluates how each school’s programmes, processes and teaching promote positive outcomes for learners, and how effectively the school focuses on improvement and accelerated student achievement.

The differentiated review cycle for schools includes:

� The 1-2 year return: those schools where ERO’s longitudinal review processes are supporting them to develop their capacity and strategies to focus on and improve student achievement

� The 3 year return: those schools that are developing the effective organisational conditions for student engagement, progress and achievement

� The 4-5 year return: those schools that demonstrate the organisational conditions to sustain student engagement, progress and achievement.

ERO’s approach aims to ensure we add value for education providers through our engagement. To this end, and based on feedback from the sector, we further modified our school reporting approach from Term 4, 2017.

This change aimed to provide greater clarity about ERO’s judgements and in the evaluation advice that we provide to schools about options for consideration going forward.

Our approach in Māori medium settingsAs described earlier, evaluations in Māori medium settings are led by a dedicated Māori immersion review team (Te Uepū ā-Motu). In the case of kura and wharekura our methodologies reflect the distinctive philosophies and approaches in Te Aho Matua Kura Kaupapa Māori, and Ngā Kura-ā-Iwi. These approaches have been developed with these respective groups and are considered world leading in indigenous education.

http://www.ero.govt.nz/publications/school-evaluation-indicators/



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What we achieved in 2017/18 ➜ 739 schools, kura and independent

hostel evaluations ➜ Worked with 30% of schools and kura ➜ 10 home-schooling reviews ➜ 14 private school reviews ➜ assurance of 4,013 practicing teacher

certificates ➜ 29 reports for Communities of Learning

(to support the Investing in Educational Success Initiative)

➜ 82% of respondents to our school surveys told us ERO’s evaluation contributed positively to their decisions about how to improve learner outcomes

➜ 83% of respondents told us their ERO evaluation provided an opportunity to identify and confirm more effective practice

➜ ERO met all its timeliness targets for school reporting.

What we found from our reviews in 2017/18

➜ 11% of schools reviewed were placed on a 4-5 year return

➜ 10% were placed on a 1-2 year return ➜ 65% of schools previously judged as

requiring improvement (i.e. on a 1-2 return cycle), were moved to a 3 year return cycle

➜ 8% of schools on a 3 year review cycle moved to the 4-5 year return, 8% to a 1-2 return cycle

➜ of all schools: » 96% of all learners are in a school

that ERO judges to be sound » 21% are currently on a 4-5 return.

These schools enrol 35% of all learners

» 7% of schools need improvement and require additional support.

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ERO evaluation return time movements in 2017/18

Total evaluations completed 734*Next review 1-2 year review 10% 3 year return 78% 4-5 year return 11% Other 1%

1-2 year reviews completed 78Next review cycle 1-2 year review 35% 3 year return 65%

3 year evaluations completed 555Next review cycle 1-2 year review 8% 3 year return 83% 4-5 year return 8% Other 1%

4-5 year evaluations completed 84Next review cycle 1-2 year review 1% 3 year return 52% 4-5 year return 47%

Other (new schools, special reviews, etc) 17

* Does not include 5 special reviews of independent school hostels

School review status at the end of the 2017/18 yearERO review status at July 2018

(all state and state-integrated schools)

Total evaluations completed

All students by school status (proportion of students)

Next review

2,428 schools

774,849 students

Other 1%

1-2 year review

7%

3 year return

71%

4-5 year return

21%

Other 1%

1-2 year review

4%

3 year return 60%

4-5 year return

35%

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Going forwardSince early 2017, ERO and the Ministry of Education have been developing and piloting new approaches of more targeted support for schools experiencing significant difficulties. This is to ensure that persistent poor performance is addressed quickly.

Over the past 18 months, ERO has developed a pilot School Turnaround project. The aim is to provide more frequent and ongoing evaluation support, involving real-time feedback aimed at more rapid improvement for schools where ERO’s longitudinal reviews process has not yet resulted in sufficient improvement.

These schools have often experienced persistent difficulties and have continued to perform poorly over the longer term.

The diagnostic approach used in this pilot places a much sharper focus on the nature of the intervention required to immediately improve what is happening for students.

We have worked with each school and the Ministry to prioritise the support and intervention needed to establish a positive improvement trajectory. The development of a systematic and sequenced recovery plan is designed to ensure commitment and accountability from all stakeholders, and generate a greater sense of urgency for improvement and more equitable learner outcomes.

As opposed to placing a heavy emphasis on governance-based solutions, we have an intensive curriculum, assessment and teaching emphasis aimed at directly improving student outcomes. In most cases, this requires a simultaneous focus on curriculum design and instructional capability, as well as school leadership and management.

At the end of the pilot’s first year, we are beginning to see a significant turnaround in the effectiveness of school management practices. Each school will continue to be supported to further develop, target, embed and sustain new practices to improve educational and wellbeing outcomes for students.

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Our national evaluation programme: informing system improvement

Helping to lift system performanceERO’s national evaluation programme is intended to promote debate and influence improvement in the education system. This work is designed to provide topical, timely, and practical recommendations for policy makers, education agencies, education providers and practitioners.

ERO’s national evaluation studies have consistently identified the key features of high performing institutions, and what is required in a high performing education system.

In addition to providing an insight into system settings, our evaluation studies also serve to identify what works for schools and early learning services and showcase effective practice in teaching and learning.

Over recent years, ERO has developed a critical role in the generation and dissemination of knowledge about best practice and what works to improve education outcomes for learners.

What we know about what works The importance of ERO’s national education evaluation programme in system improvement has been recognised by Ministerial reviews and the education sector. National education evaluations

identify systemic issues, influence policy design and implementation, and promote improvement in the effectiveness of education provision and outcomes for learners.

ERO’s best practice series identifies and describes contexts and practices where educators are improving equity and excellence in outcomes for learners.

Improvement in Action | Te Ahu Whakamua, a series of film clips, which we released in July 2017, illustrates how effective schools improve. It is intended to support schools in their internal evaluation and improvement efforts. The videos capture the perspectives and voices of children and young people, parents, teachers and leaders and showcase schools that are making a significant difference for their learners.

The aim of these resources is to engage teachers and school leaders in reflecting on approaches and practice in their own context to drive further improvement.

Our Teaching approaches and strategies that work series, also released in 2017-18, provides practical advice for primary school leaders and classroom teachers on strategies and approaches which improve practice and increase a school’s effectiveness. To date, this series has included studies into mathematics, reading, and parent partnerships.

http://www.ero.govt.nz/videos/


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ERO supporting system reformDuring 2017/18, we also made major contributions to the government’s work programme including:

� school curriculum, progress and achievement work programme

� work on bullying prevention

� NCEA review

� review of Tomorrow’s Schools

� education workforce strategy

� te reo Māori work programme

� review of home-based early childhood education

� early childhood strategy.

What we achieved in 2017/18 ➜ 14 national evaluation studies ➜ 3 contracted national evaluations ➜ 94% of principals surveyed found

our national evaluation reports informative and useful for planning improvements

➜ well over half the individual hits on the website were to access our reports on improving practice

➜ our work on: » Newly graduated teachers » Teacher appraisal » Assessment » Language diversity in Auckland » The curriculum in the senior

secondary school » RTLB services » Modern learning environments » Year 9 Plus

➜ produced resources supporting the improvement of teaching practice including the following:

» Improvement in Action | Te Ahu Whakamua

» our Teaching approaches and strategies that work series

» work on the senior secondary curriculum, assessment report, along with a series of case studies.



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Contributing to success for Māori

ERO’s strategy for Māori successERO has established an approach, He Taura Here Tangata, initiated to ensure that ERO’s Māori strategy and implementation plan influences the work of ERO as an organisation, and as it works with services, schools, and across government.

It is expected that this strategy will effectively capture the current and future environment as we focus on equitable outcomes and Māori achieving success as Māori.

The intention of this work is to: � support the organisation to contribute to government strategies that focus on addressing system inequities for Māori

� recognise the unique relationship between whānau, hapū, iwi, Māori and the Crown

� acknowledge and respect te reo Māori as a national taonga.

ERO’s work with Māori medium services As described above, through our specialist Te Uepū ā-Motu team, ERO has established methodologies and indicators for use within specific Māori medium settings. Each of these approaches has been co-constructed, recognising the uniqueness of the education provision, the value placed on learner outcomes, and the contribution of whānau, hapū and iwi. These evaluation methodologies enact marae protocol of encounter and the value of korero kanohi ki te kanohi.

ERO has established a strong external evaluation reputation in Māori medium education provision. The co-constructed indicators and methodologies reflect expectations about the place of te reo Māori, and the contribution whānau, hapū and iwi make towards supporting the education of their children and young people.

Developing draft te reo Māori indicators for English medium settingsIn 2017/18, ERO began the development of te reo Māori indicators and an evaluation approach for use in English medium settings where te reo Māori is the language of instruction. Although in the early stages of development, this work will be pivotal in supporting Maihi Karauna, the Crown’s strategy for Māori Language revitalisation 2018-2023. Maihi Karauna focuses on the protection and revitalisation of te reo Māori.

What we achieved in 2017/18 ➜ 147 reviews of kōhanga reo ➜ 24 reviews of kura kaupapa Māori ➜ released Hauhaketia ngā taonga

tuku iho kia puāwai ai, a good practice report profiling effective practice in kōhanga reo.

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ERO’s Pacific Strategy

ERO continues to strive for educational success for all Pacific learners through high quality evaluation practices.

Over the last year, ERO focused on two strands in contribution to improving outcomes for Pacific learner: Building the sector’s capacity to effectively evaluate and promote Pacific success and strengthening ERO’s organisational capacity to promote Pacific success.

ERO is committed to increasing the involvement of Pacific parents and whānau in supporting their children’s learning. This will improve outcomes for all Pacific learners and, in particular, those at risk of not achieving their potential.

Through 2017/18, we worked to refresh ERO’s Pacific Strategy with a view to release in late 2018.

Evaluation of Tokelau education provision In early 2018, an ERO team travelled to Tokelau to evaluate the quality of education provision. It was also to follow-up on the recommendations made as part of a previous ERO review in 2014.

A progress report was released in September 2018 and showed significant improvement in the provision of education for students in years 1-8.

Most notable was the quality of teaching and learning, and the use of curriculum plans and data to drive improvement in more responsive teaching. Improvement in the facilities and resourcing of the schools was also marked.

The report noted that there is still significant room for improvement in years 9-13, but also notes the commitment to achieving that improvement.

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Enhancing ERO’s internal capability and capacity

Review of ERO’s operating model

In December 2017, ERO undertook a review of its operating model with a view to determining the best way to improve:

� the value we add for schools and early learning services

� the quality and timeliness of our reporting and consistency of our work

� the effectiveness of our evaluation process in the long term

� our ability to be agile in the way we operate

� our responsiveness to our stakeholders and contribution to their confidence in the system.

The review included substantial consultation with ERO staff. The final decision was released and announced in July 2018 and included:

� a new unit with a focus on ERO’s methodology and professional practice

� creation of an insights programme to better target ERO evaluations

� a move to dedicated managers of teams to improve both quality and consistency

� a programme to modernise ERO systems and processes

� an enhanced national approach to scheduling reviews and management of review and improvement services

� more use of national teams for complex specialist reviews.

These changes will be implemented in the 2018/19 year and be managed within ERO’s baseline.

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Strengthening our professional practice capability

High quality education evaluation is ERO’s lifeblood.

Shifts in the scope and complexity of ERO’s functions have changed the nature of our evaluations and reviews, and created increasing demands in terms of the knowledge and expertise required to be effective.

We are continuing to develop highly skilled evaluators, fully equipped for the contemporary challenges of our work. This means our education evaluators have the right mix of knowledge and adaptive skills, work in a supportive professional environment, and have access to modern tools and resources.

Key objectives for the year have been to continue to:

� evaluate and improve our professional practice so that our engagement with trustees, leaders, managers, and teachers across the system reflects the evidence about what works

� further develop our corporate capability and infrastructure to support our evaluation work

� develop the capability to share our knowledge and make our data more readily accessible.

ERO’s Professional Practice Strategy provides the framework for a multi-faceted approach to developing leadership and evaluation practice in the field.

During 2017/18 we have continued to consolidate the infrastructure to support this strategy, and established a national Professional Practice Leadership Team.

New induction guidelines for ERO staff have been trialled and published. We have also published Principles of Practice

for High Quality External Education Evaluation in Aotearoa New Zealand. This publication completes a suite designed to support high quality evaluation practice.

The launch of the Improvement in Action videos also provides ERO evaluators resources to illustrate the School Evaluation Indicators and effective practice.

Drawing on national and international expertise, we have introduced nation Evaluation Institutes to enable evaluators to examine aspects of evaluation practice in depth.

The first group of evaluators to participate in ERO’s internal Inquiry and Research initiative have completed their projects.

A group of evaluators has successfully completed post graduate evaluation qualifications through the University of Melbourne.

ERO’s Leadership StrategyERO has begun a refresh of its Leadership Strategy to support the operating model changes.

The purpose of this strategy is to help ERO develop its leadership capability and to achieve the agency’s strategic priorities as a high performing organisation contributing to a high performing education system.

The strategy will enhance ERO’s approach to the leadership of teams and the strengths of our staff to provide high quality education evaluation. The strategy will clarify expected behaviours of leaders and feature a range of tools and resources to support leadership development, including an organisational approach to coaching leaders.

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Enhancing our corporate capability and infrastructureERO continues to develop its corporate capability and infrastructure. Over the past twelve months it has entered arrangements to improve in Disaster Recovery through an arrangement with the Ministry of Education, implementation of control point for information management, introduction of Skype for business,

completed a digital transfer of our records to Archives NZ, and modernised of our phones to enhance remote working. Work is well advanced on the planning for implementation of Office 365 and the upgrading of our finance and project platform as part of the modernisation programme.

ERO has completed its New Zealand Business Number programme work.

Building a positive workplace culture

ERO is committed to ensuring effective support and engagement for diversity and an effective partnership with its people. The Te Uepū hui (for all staff with Māori descent) and Fono Pasifika forum (for all staff with Pacific descent) are examples of ERO’s commitment to equal employment opportunities, and ensuring that staff have an environment where they feel safe, that their voices can be heard, and that they have influence in strategy formation affecting their communities and ERO’s strategic direction.

In late 2017, ERO ran an engagement survey with its staff, using the Ask your Team model. That survey showed that there is a high connection to ERO’s whakataukī and our strategic direction.

Staff are proud of the beneficial impact the organisation has and enjoy working for ERO. The majority also agreed that ERO has a good reputation for providing quality advice and services to Ministers.

Many areas of operational process gained favourable scores. However, there was room for improvement with aspects of ERO culture, performance development, staff empowerment and project management.

A plan was developed with input from staff and includes:

� developing an ERO leadership framework

� reviewing the Individual Development and Performance Management (IDPM) process

� identifying, developing and promulgating a charter describing behaviour expectations for all ERO staff

� reviewing ERO processes and ERO policies in relation to the management of intimidating behaviour

� more strongly supporting wellbeing and health and safety in ERO

� embarking on a programme of work to support diversity.

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Diversity and inclusionIn line with the State Services Commission Equal Employment Opportunities Policy, ERO strives to:

� treat people fairly and with respect, ensuring equality of access to opportunities (equality)

� understand, appreciate and realise the benefits of individual differences (diversity).

ERO remains committed to equality and diversity in all aspects of its business.

The Chief Executives have committed to a shared vision for diversity and inclusion throughout the State Sector. The initial priorities are:

� addressing the gender pay gap

� improving the use of data and measurement

� increasing workplace flexibility.

ERO had a gender pay gap of 10.4% (public service average 12.2%) as at 30 June 2018.

The analysis of the gap shows that it is because of the high levels of women staff in business support roles.

As an organisation we are committed to addressing this gap.

Relationship with the Public Service AssociationERO and the PSA continue to meet regularly at a national and local level as a part of a Working Relationship Agreement.

The Collective Employment Agreement expires in June 2019 and it is expected that negotiations will commence earlier in the year.

ERO’s footprintIn 2017/18 ERO refitted its Corporate Office to permanently house the Wellington regional staff who were displaced from their offices as a result of the November 2016 Kaikoura earthquake.

The open plan fit out allowed ERO to further reduce the amount of space leased and to adopt lighting options that consume less energy.

ERO is increasing the numbers of hybrid vehicles within the fleet, and introduced Skype for business over the past 12 months to reduce air travel and cost overheads.

Financial Statements and Service Performance

Statement of Responsibility

I am responsible, as Chief Executive of the Education Review Office (ERO), for:

� the preparation of ERO’s financial statements, and statements of expenses and capital expenditure, and for the judgements expressed in them;

� having in place a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting;

� ensuring that end-of-year performance information on each appropriation administered by ERO is provided in accordance with section 19A to 19C of the Public Finance Act 1989 included in this annual report; and

� the accuracy of any end-of-year performance information prepared by ERO included in this annual report.

In my opinion:

� the financial statements fairly reflect the financial position of ERO as at 30 June 2018 and its operations for the year ended on that date; and

� the forecast financial statements fairly reflect the forecast financial position of ERO as at 30 June 2019 and its operations for the year ending on that date.

Nicholas Pole Chief Executive28 September 2018

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Independent Auditor’s Report

To the readers of Education Review Office’s annual report for the year ended 30 June 2018

The Auditor-General is the auditor of Education Review Office (the Department). The Auditor-General has appointed me, Jacques Coetzee, using the staff and resources of Audit New Zealand, to carry out, on his behalf, the audit of:

� the financial statements of the Department on pages 41 to 63 ,that comprise the statement of financial position, statement of commitments, statement of contingent liabilities and contingent assets as at 30 June 2018, the statement of comprehensive revenue and expense, statement of changes in equity, and statement of cash flows for the year ended on that date and the notes to the financial statements that include statement of accounting policies and other explanatory information;

� the performance information prepared by the Department for the year ended 30 June 2018 on pages 31 to 40 and

� the statements of expenses and capital expenditure of the Department for the year ended 30 June 2018 on pages 64 to 65.

OpinionIn our opinion:

� the financial statements of the Department on pages 41 to 63:

present fairly, in all material respects: » its financial position as at 30 June 2018;

and » its financial performance and cash flows

for the year ended on that date; and

comply with generally accepted accounting practice in New Zealand in accordance with Public Benefit Entity Standards Reduced Disclosure Regime.

� the performance information of the Department on pages 31 to 40:

presents fairly, in all material respects, for the year ended 30 June 2018: » what has been achieved with the

appropriation; and » the actual expenses or capital

expenditure incurred compared with the appropriated or forecast expenses or capital expenditure; and

complies with generally accepted accounting practice in New Zealand.

� the statements of expenses and capital expenditure of the Department on page on pages 64 to 65 are presented fairly, in all material respects, in accordance with the requirements of section 45A of the Public Finance Act 1989.

Our audit was completed on 28 September 2018. This is the date at which our opinion is expressed.

The basis for our opinion is explained below. In addition, we outline the responsibilities of the Chief Executive and our responsibilities relating to the information to be audited, we comment on other information, and we explain our independence.

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Basis for our opinionWe carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the Professional and Ethical Standards and the International Standards on Auditing (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Responsibilities of the auditor section of our report.

We have fulfilled our responsibilities in accordance with the Auditor-General’s Auditing Standards.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of the Chief Executive for the information to be auditedThe Chief Executive is responsible on behalf of the Department for preparing:

� financial statements that present fairly the Department’s financial position, financial performance, and its cash flows, and that comply with generally accepted accounting practice in New Zealand.

� performance information that presents fairly what has been achieved with each appropriation, the expenditure incurred as compared with expenditure expected to be incurred, and that complies with generally accepted accounting practice in New Zealand.

� statements of expenses and capital expenditure of the Department, that are presented fairly, in accordance with the requirements of the Public Finance Act 1989.

The Chief Executive is responsible for such internal control as is determined is necessary to enable the preparation of the information to be audited that is free from material misstatement, whether due to fraud or error.

In preparing the information to be audited, the Chief Executive is responsible on behalf of the Department for assessing the Department’s ability to continue as a going concern. The Chief Executive is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to merge or to terminate the activities of the Department, or there is no realistic alternative but to do so.

The Chief Executive’s responsibilities arise from the Public Finance Act 1989.

Responsibilities of the auditor for the information to be auditedOur objectives are to obtain reasonable assurance about whether the information we audited, as a whole, is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit carried out in accordance with the Auditor-General’s Auditing Standards will always detect a material misstatement when it exists. Misstatements are differences or omissions of amounts or disclosures, and can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of readers, taken on the basis of the information we audited.

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For the budget information reported in the information we audited, our procedures were limited to checking that the information agreed to the Department’s Estimates of Appropriation 2017/18 and Supplementary Estimates of Appropriation 2017/18 for Vote Education Review Office.

We did not evaluate the security and controls over the electronic publication of the information we audited.

As part of an audit in accordance with the Auditor-General’s Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. Also:

� We identify and assess the risks of material misstatement of the information we audited, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

� We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control.

� We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Chief Executive.

� We evaluate the appropriateness of the reported performance information within the Department’s framework for reporting its performance.

� We conclude on the appropriateness of the use of the going concern basis of accounting by the Chief Executive and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Department’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the information we audited or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Department to cease to continue as a going concern.

� We evaluate the overall presentation, structure and content of the information we audited, including the disclosures, and whether the information we audited represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Chief Executive regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Our responsibilities arise from the Public Audit Act 2001.

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Other informationThe Chief Executive is responsible for the other information. The other information comprises the information included on pages 4 to 26, but does not include the information we audited, and our auditor’s report thereon.

Our opinion on the information we audited does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

Our responsibility is to read the other information. In doing so, we consider whether the other information is materially inconsistent with the information we audited or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

IndependenceWe are independent of the Department in accordance with the independence requirements of the Auditor-General’s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board.

Other than in our capacity as auditor, we have no relationship with, or interests, in the Department.

Jacques Coetzee Audit New Zealand On behalf of the Auditor-General Wellington, New Zealand

30


Service Performance for the year ended 30 June 2018

The following service performance information outlines, for each output class, the actual performance measured against quality, quantity, timeliness specifications and cost. The results for the year ended 30 June 2018 are reported against the forecast information contained in the Estimates of Appropriation 2017/18 and of those as amended by the Supplementary Estimates. Explanations of major variations from the Estimates of Appropriation 2017/18 are included.

Quality of Education: Evaluations and Services (Multi-Category Expenses)The single overarching purpose of this appropriation is to provide evaluation (institutional and system-wide) on the quality of education provided by early childhood learning services, schools and other education service providers.

This appropriation is intended to achieve improvements in learner outcomes by using evaluation to influence and inform schools and early childhood learning services and influence the development and implementation of education policy and practices, while assuring the Government and communities of the quality of education provided.

Performance against appropriationERO used the following performance measures for Quality of Education: Evaluations and Services for the year ended 30 June 2018.

Actual 2016/17

Quality of Education: Education and Services Note

Actual 2017/18

Forecast Standard

2017/18

1,965 Total number of evaluations of service providers and national evaluations

2,068 >1,850

89% % of education service providers that indicate ERO’s evaluations are making a contribution to their decisions about how to improve learner outcomes

1 83% >80%

90% Key audiences report that ERO’s national evaluations are informative and useful for identifying or planning improvement within the system or its component parts

1, 2 94% >80%

74 Level of public satisfactions (Kiwis Count score out of 100)

3 65 >70

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Note 1: We have used paper-based and online surveys to measure this performance.

Note 2: For 2016/17, staff and managers of early childhood learning services were surveyed about five reports. In 2017/18 we surveyed school principals about nine different national evaluation reports using paper-based and online surveys. A relatively small number of principals participated and 94% of the time a positive response was received.

Note 3: This measure is from the Kiwis Count survey carried out by the SSC. It assesses the level of public satisfaction with ERO’s school and early childhood learning service evaluation reports. The change in level of public satisfaction is due to a wider breadth of audience surveyed in 2016 by SSC compared to a smaller sample size used for 2017.

Output class: Quality of Education: Evaluations and Services (Multi-Category Expenses) – Early Childhood Learning ServicesThis class of outputs involves reporting on the performance of early childhood learning services. Education reviews in the early childhood learning sector focus on:

� how services are contributing to children’s learning and development

� whether or not services are providing a safe environment that promotes children’s safety and wellbeing

� national evaluation topics.

Review reports inform the Crown, the governing bodies of services, their staff and parents about the quality of education and management practices.

Quantity, quality and timelinessERO estimated and provided the following numbers of Quality of Education: Evaluations and Services – Early Childhood Learning Services for the year ended 30 June 2018:

Actual 2016/17 Reviews of Early Childhood Learning Services

Actual 2017/18

Forecast Standard

2017/18

1,217 Number of Education Reviews – Early Childhood Learning Services

1,291 1,200-1,460

96%QualityERO uses a moderation panel to assess levels of compliance with approved standard procedures for a sample of early childhood learning service evaluations

99% 90-100%

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Actual Timeliness

2016/17 %

Reviews of Early Childhood Learning Services – Timeliness of Unconfirmed Reports

Actual Timeliness

2017/18 %

Forecast Timeliness

Standard 2017/18

%

Education Reviews – Early Childhood Learning Services unconfirmed report sent within:

74 20 working days 89 8090 25 working days 97 9098 35 working days 99 98

Unconfirmed (near final) reports are sent to early childhood learning services for comment on any issues of fact or matters relating to findings. The timeliness criteria require 80% of near-final reports to be sent within 20 working days of the end of the last week on site, 90% of near final reports within 25 working days, and 98% of near-final reports within 35 working days.

ERO met all the timeliness criteria for early childhood learning services for all three categories. 2016/17 was atypical due to the impact of the November 2016 earthquake, which required us to permanently vacate one of the damaged premises.

Revenue and expensesThe cost of services for Quality of Education: Evaluations and Services – Early Childhood Learning Services for the year ended 30 June 2018 was:

Actual 2016/17

$000

Reviews of Early Childhood Learning Services – Revenue and Expenses

Actual 2017/18

$000

Unaudited Budget 2017/18 Main Estimates

$000

Unaudited Budget 2017/18

Supp. Estimates $000

Revenue9,307 Revenue Crown 9,589 9,962 9,590

19 Other Revenue 188 17 235 9,326 Total Revenue 9,777 9,979 9,825 9,157 Total Expenses 9,710 9,979 9,825

There are no major variances against budget for this output class.

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Performance against appropriationERO used the following performance measures for Quality of Education: Evaluations and Services – Early Childhood Learning Services for the year ended 30 June 2018.

Actual 2016/17

%Education Reviews of Early Childhood Learning Services – Performance Note

Actual 2017/18

%

Forecast Standard

2017/18 %

83% % of early childhood learning service providers that indicate ERO's evaluations are making a contribution to their decisions about how to improve learner outcomes

4 90% 80%

89% % of early childhood learning services evaluated previously within the 2 year review cycle moving to the 3 year review cycle

5 84% 60%-65%


Note 5: More information about the cycle of reviews is described in the section ERO’s Evaluation of early childhood learning services.

Output class: Quality of Education: Evaluations and Services (Multi-Category expenses) – Schools and Other Education Service ProvidersThis class of outputs involves reporting on the performance of schools and other education service providers (excluding early childhood learning services).

These reviews include: � education reviews of state schools – primary and secondary

� homeschooling reviews

� private school reviews.

Education reviews address the following areas: � student learning – engagement, progress and achievement as a central focus

� compliance issues

� national evaluation topics.

Homeschooling reviews are reviews of programmes for students granted exemption from attendance at school. They are carried out at the request of the Ministry of Education.

Private school reviews are carried out in order to meet the statutory requirement to review registered private schools under section 35I and Part 28 of the Education Act 1989.

Review reports inform the Crown, the governing bodies of schools, their staff and parents about the quality of education and management practices.

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Quantity, quality and timelinessERO estimated and provided the following numbers of Quality of Education: Evaluations and Services – Schools and Other Education Service Providers for the year ended 30 June 2018:

Actual 2016/17

Education Reviews of Schools and Other Education Service Providers Note

Actual 2017/18

Forecast Standard

2017/18

700 Education Reviews of State Schools 739 650-8409 Homeschooling Reviews 6 10 Up to 35

24 Private School Reviews 14 Up to 25

Quality99% ERO uses a moderation panel to assess

levels of compliance with approved standard procedures for a sample of schools and other education service providers evaluations

97% 90%-100%

73 Number of Communities of Learning reports 7 29 Up to 100

Quality100% Communities of Learning reports are

consistent with approved presentational standards and agreed terms of reference

100% 100%

Note 6: Homeschooling reviews are carried out at the request of the Ministry. ERO met these demands and supplied the requested reviews to the Ministry.

Note 7: The number of reports is dependent on the number of Communities of Learning as advised by the Ministry.

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Actual Timeliness

2016/17 %

Education Reviews of Schools and Other Education Service Providers – Timeliness of Unconfirmed Reports

Actual Timeliness

2017/18 %

Forecast Timeliness

Standard 2017/18

%

Education Reviews of State Schools unconfirmed report sent within:

56 20 working days 81 8077 25 working days 94 9092 35 working days 99 98

Homeschooling Reviews unconfirmed report sent within:

78 20 working days 100 8078 25 working days 100 90

100 35 working days 100 98

Private School Reviews unconfirmed report sent within:

79 20 working days 93 8096 25 working days 100 90

100 35 working days 100 98

Unconfirmed (near final) reports are sent to schools for comment on any issues of fact or matters relating to findings. The timeliness criteria require 80% of near-final reports to be sent within 20 working days of the end of the last week on site, 90% of near-final reports within 25 working days, and 98% of near-final reports within 35 working days.

ERO met the timeliness criteria for schools for all three categories. 2016/17 was atypical due to the impact of the November 2016 earthquake, which required us to permanently vacate one of the damaged premises. ERO also carefully embedded the new approach to accelerating student achievement in primary schools, intermediate schools and area schools with additional moderation in 2016/17.

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Revenue and expensesThe cost of services for Quality of Education: Evaluations and Services – Schools and Other Education Service Providers for the year ended 30 June 2018 was:

Actual 2016/17

$000

Education Reviews of Schools and Other Education Service Providers – Revenue and Expenses

Actual 2017/18

$000


$000




36 Other Revenue 462 37 384 14,883 Total Revenue 15,834 15,037 15,756 14,720 Total Expenses 15,247 15,037 15,756

There are no major variances against budget for this output class.

Performance against appropriationERO monitors the following measures for Quality of Education: Evaluations and Services – Schools and Other Education Service Providers for the year ended 30 June 2018.

Actual 2016/17

%Education Reviews of Schools and Other Education Service Providers – Performance Note

Actual 2017/18

%

Forecast Standard

2017/18 %

86% % of schools that indicate that ERO's evaluations are making a contribution to their decisions about how to improve learner outcomes

8 82% 80%

78% % of schools evaluated previously on the 1-2 year review cycle moving to the 3 year review cycle

9 65% 60-65%

7% % of schools evaluated previously on the 3 year review cycle moving to the 4-5 year review cycle

9 8% 12-15%


Note 9: More information about the cycle of reviews is described in the section Evaluation of schools and other service providers.

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Output class: Quality of Education: Evaluations and Services (Multi-Category expenses) – National Evaluations and Other ServicesThis class of outputs comprises:

� education evaluation reports

� policy services

� ministerial services

� contractual services.

Every year, ERO reports on matters such as delivery of the curriculum, governance and management structures, student achievement, delivery of teaching services and barriers to learning across a number of institutions. These education evaluations may also include case studies of good practice.

Education evaluation reports tend to follow specific themes. A theme may arise out of the Government’s education initiatives or may surface as an issue of strategic importance identified by ERO in its reviews of schools and early childhood learning services.

ERO is not primarily a provider of policy advice. From its regular presence in schools and early childhood learning services it is, however, in a position to make a useful contribution to assist the policy agencies. This service contributes to the Government’s policy priorities for schools and early childhood education service providers.

Ministerial services also include advice to the Minister on the implementation of recommendations arising from institutional evaluations and evaluation reports, or any other matter on which the Minister seeks additional information or feedback.

Contractual services include one-off reviews of institutions (or certain aspects of them), and analyses of particular matters under specific terms of reference agreed with ERO. Contractual reviews are conducted on a fee-for-service basis.

Policy services, ministerial and contractual services are subject to external demand factors making these activities difficult to forecast. No assessments of performance have been reported for these services as these activities only account for less than 10% of ERO’s total appropriation and, therefore, are not deemed to be material.

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Quantity, quality and timelinessERO estimated and provided the following numbers of Quality of Education: Evaluations and Services – National Evaluations and Other Services for the year ended 30 June 2018:

Actual 2016/17

% National Evaluations and Other Services Note

Actual 2017/18

%

Forecast Standard

2017/18 %

15 Number of education evaluation reports and other publications

14 Up to 20

Quality100% National evaluations are consistent with

approved plans and procedures100% 100%

N/A Policy services are consistent with approved presentational standards

100% 100%

N/A Ministerial services are consistent with statutory and or formal parliamentary requirements

100% 100%

N/A Ministerial services are consistent with formal Ministerial requirements

100% 100%

Revenue and expensesThe cost of services for National Evaluations and Other Services for the year ended 30 June 2018 was:

Actual 2016/17

$000National Evaluations and Other Services

Actual 2017/18

$000


$000




752 Other Revenue 1,156 781 1,710 3,654 Total Revenue 4,080 3,704 4,633

4,000 Total Expenses 4,537 3,704 4,633

Other revenue received for contractual services was $375,000 above budget due to higher levels of activity than anticipated. Total expenses were also above budget due mainly to an increase in expenditure associated with contractual services for which ERO received revenue.

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Capital expenditure (Permanent Legislative Authority)DescriptionAssets are purchased according to a planned assets replacement programme to maintain and upgrade capability essential to the operation of ERO. The major areas of capital investment for ERO are office accommodation, motor vehicles and computer equipment. ERO is not a capital intensive department.

Actual 2016/17

Capital Expenditure – Performance

Actual 2017/18


Main Estimates


Supp. Estimates

28% Expenditure is in accordance with ERO's capital expenditure plan

73% 75%-100% 75%-100%

Capital expenditure was below budget in 2017/18 due mainly to the timing of motor vehicles and computer equipment purchases carried forward into 2018/19. Capital expenditure was below budget in 2016/17 due to the timing of two building fit-outs carried forward into 2017/18.

40


Statement of Comprehensive Revenue and Expense for the year ended 30 June 2018

Actual 2016/17

$000Comprehensive Revenue and Expense Note

Actual 2017/18

$000


$000

Unaudited Forecast 2018/19

$000


824 Other Revenue 1 1,809 835 865

27,880 Total Revenue 29,694 28,720 29,027

Expenses20,197 Personnel 2 21,233 21,530 21,562

6,515 Other Expenses 3 7,197 5,962 6,152 891 Depreciation and Amortisation 5,6 854 1,002 1,089 243 Capital Charge 4 225 226 224

27,846 Total Expenses 29,509 28,720 29,027

34 Surplus 185 0 0

0 Other Comprehensive Revenue and Expense

0 0 0

34 Total Comprehensive Revenue and Expense

185 0 0

Explanations of major variances against the original 2017/18 budget are provided in Note 14 to the Financial Statements.

The Statement of Accounting Polices and the Notes to the Financial Statements form part of these Financial Statements.

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Statement of Changes in Equity for the year ended 30 June 2018

Actual 2016/17

$000 Statement of Changes in Equity

Actual 2017/18

$000


$000


$000

3,746 Balance at 1 July 3,746 4,021 3,746 34 Total Comprehensive Revenue and Expense 185 0 0

Owner Transactions(34) Repayment of Surplus to the Crown (185) 0 0

3,746 Balance at 30 June 3,746 4,021 3,746



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Statement of Financial Position as at 30 June 2018

Actual 30 June

2017 $000 Statement of Financial Position Note

Actual 30 June

2018 $000

Unaudited Budget

2018 $000

Unaudited Forecast

2019 $000

AssetsCurrent Assets

5,402 Cash 3,768 4,290 2,662 90 Receivables 7 855 55 45 185 Prepayments 114 93 98

5,677 Total Current Assets 4,737 4,438 2,805

Non-Current Assets2,080 Property, Plant and Equipment 5 3,974 3,163 4,024

737 Intangibles 6 494 840 1,231

2,817 Total Non-Current Assets 4,468 4,003 5,255

8,494 Total Assets 9,205 8,441 8,060

LiabilitiesCurrent Liabilities

1,504 Payables and Deferred Revenue 8 2,099 1,325 1,325 146 Provisions 9 106 126 238 34 Repayment of Surplus to the Crown 185 0 0

1,837 Employee Entitlements 10 1,782 1,855 1,902

3,521 Total Current Liabilities 4,172 3,306 3,465

Non-Current Liabilities574 Provisions 9 775 543 355 653 Employee Entitlements 10 512 571 494

1,227 Total Non-Current Liabilities 1,287 1,114 849

4,748 Total Liabilities 5,459 4,420 4,314

Equity3,746 Taxpayers’ Funds 3,746 4,021 3,746

3,746 Total Equity 3,746 4,021 3,746

8,494 Total Liabilities and Equity 9,205 8,441 8,060



43


Statement of Cash Flows for the year ended 30 June 2018

Actual 2016/17

$000 Statement of Cash Flows

Actual 2017/18

$000


$000


$000

Cash Flows from Operating ActivitiesCash provided from:

27,056 Crown 27,885 27,885 28,162 957 Other 671 835 875

Cash applied to:(20,317) Personnel (21,439) (21,780) (21,435)

(6,521) Suppliers (6,224) (6,191) (6,398)(243) Capital Charge (225) (226) (224)

932 Net Cash Inflow from Operating Activities 668 523 980

Cash Flows from Investing ActivitiesCash provided from

0 Sale of Property, Plant and Equipment 23 67 135 Cash applied to:

(241) Purchase of Property, Plant and Equipment (2,284) (480) (750)(294) Purchase of Intangible Assets (7) (350) (350)

(535) Net Cash Outflow from Investing Activities (2,268) (763) (965)

Cash Flows from Investing ActivitiesCash applied to:

(9) Repayment of Surplus to the Crown (34) (15) (40)

(9) Net Cash Outflow from Financing Activities (34) (15) (40)

388 Net Increase/(Decrease) in Cash (1,634) (255) (25)

5,014 Cash at Start of the Year 5,402 4,545 2,687

5,402 Cash at the End of the Year 3,768 4,290 2,662



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Statement of Contingent Liabilities and Contingent Assets as at 30 June 2018

ERO has no contingent liabilities and assets (30 June 2017: nil).

Statement of Commitments as at 30 June 2018

Actual 30 June 2017

$000 Statement of Commitments

Actual 30 June 2018

$000

Capital Commitments198 Leasehold improvements 0

198 Total Capital Commitments 0

Non-Cancellable Operating Lease Commitments1,126 Not later than one year 1,346 3,233 Later than one year and not later than five years 4,570 1,892 Later than five years 2,882

6,251 Total Non-Cancellable Operating Lease Commitments 8,798

6,449 Total Commitments 8,798

ERO leases all of its office premises in New Zealand, which have a non-cancellable leasing period of up to nine years. The non-cancellable leases have varying terms, an escalation clause and renewal rights. There are no restrictions placed on ERO by any of its leasing arrangements. The amounts disclosed above as future commitments are based on the current rental rates.


45


Statement of Accounting Policies for the year ended 30 June 2018

Reporting entityERO is a government department as defined by section 2 of the Public Finance Act 1989 (PFA) and is domiciled and operates in New Zealand. The primary objective of ERO is to provide goods or services for the community or social benefit rather than making a financial return. Accordingly, ERO has designated itself as a public benefit entity (PBE) for financial reporting purposes.

The financial statements of ERO are for the year ended 30 June 2018 and were approved for issue by the Chief Executive on 28 September 2018.

Basis of preparationThe financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period.

Statement of complianceThe financial statements of ERO have been prepared in accordance with the requirements of the PFA, which include the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP) and Treasury Instructions.

The financial statements have been prepared in accordance with Tier 2 PBE accounting standards with reduced disclosure concessions. ERO meets the criteria of Tier 2 reporting as its expenditure in the last two financial years is below $30 million and is not publicly accountable.

These financial statements comply with PBE accounting standards.

Presentation currency and roundingThe financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000).

Summary of significant accounting policiesThe following are the accounting policies, which may have a material effect on the measurement of the financial position of ERO and the results of its operations.

RevenueRevenue from the Crown is measured based on ERO’s funding entitlement for the reporting period. The funding entitlement is established by Parliament when it passes the appropriation acts for the financial year. The amount of revenue recognised takes into account any amendments to appropriations approved in the Appropriation (Supplementary Estimates) Act for the year.

There are no conditions attached to the funding from the Crown. However, ERO can incur expenses only within the scope and limits of its appropriations. The fair value of Revenue Crown has been determined to be equivalent to the funding entitlement.

ERO also derives revenue from the provision of services to third parties, rent and insurance recoveries. Services provided to third parties on commercial terms are exchange transactions. Revenue from these services is recognised at the time of completion of the service or in accordance with the terms of specific contracts and is reported in the financial period to which it

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relates. Rental revenue under an operating sublease is recognised as revenue on a straight-line basis over the lease term. Insurance revenue is recognised when the right to receive payment is established with ERO’s insurers.

Capital chargeThe capital charge is recognised as an expense in the financial year to which the charge relates.

Operating leasesAn operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.

Lease incentives received are recognised in the surplus or deficit as a reduction of rental expense over the lease term.

CashCash includes cash on hand and funds on deposit with banks. ERO is only permitted to expend its cash and cash equivalents within the scope and limits of its appropriations.

ReceivablesShort-term receivables are recorded at their face value, less any provision for impairment.

A receivable is considered impaired when there is evidence that ERO will not be able to collect the amount due. The amount of the impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected.

Financial instrumentsERO is party to financial instruments entered into in the course of its normal operations. These include cash, receivables and payables. All financial instruments are measured at fair value and are recognised in the Statement of Financial Position. All associated revenue and expenses are credited to or charged against the Statement of Comprehensive Revenue and Expense.

Property, plant and equipmentProperty, plant, and equipment consists of leasehold improvements, furniture and office equipment, computer hardware and motor vehicles.

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.

The initial cost of property, plant and equipment includes the purchase consideration and those costs that are directly attributable to bringing the asset into the location and condition necessary for its intended purpose. Subsequent expenditure that extends or expands the asset’s service potential and that can be measured reliably is capitalised.

Capitalisation thresholds applied for individual assets or group of assets are set out as follows:

Capitalisation Thresholds $

Computer Hardware 1,500Motor Vehicles 15,000Office Equipment 1,500Furniture and Fittings 1,500Leasehold Improvements 1,500

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AdditionsThe cost of an item of property, plant, and equipment is recognised as an asset if it is probable that future economic benefits or service potential associated with the item will flow to ERO and the cost of the item can be measured reliably.

In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.

DisposalsGains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the surplus or deficit.

DepreciationDepreciation is charged on property, plant and equipment on a straight-line basis over their estimated useful lives, which will write off the cost of the assets to their estimated residual value.

The estimated useful life, residual values and associated depreciation rates applied to each class of property, plant and equipment are as follows:

Depreciation of Property, Plant and Equipment

Estimated Useful Life

(Years)Depreciation

Rates (%)Residual

Values (%)

Computer Hardware 4 25 –Motor Vehicles 4-5 20-25 25Office Equipment 5 20 –Furniture and Fittings 10 10 –

Leasehold Improvements Up to 10 Up to 10 –

The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year end.

48


Intangible assetsIntangible assets with finite lives are stated at cost less amortisation and any impairment losses.

Acquired intangible assets are initially recorded at cost. The cost of an internally generated intangible asset represents expenditure incurred in the development phase of the asset only. The development phase occurs after the following can be demonstrated: technical feasibility; ability to complete the asset; intention and ability to sell or use; and when the development expenditure can be reliably measured.

Where an intangible asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.

Capitalisation thresholds applied for individual assets or group of intangible assets are set out as follows:

Capitalisation Thresholds $

Computer Software 1,500

Review Procedures 20,000

AmortisationAmortisation is charged on intangible assets on a straight-line basis over their estimated useful lives. The estimated useful lives and associated amortisation rates applied to these assets are as follows:

Amortisation of Intangibles

Estimated Useful Life

(Years)Amortisation

Rates (%)

Computer Software

4 25

Review Procedures

5 20

Impairment of property, plant and equipment and intangible assetsERO does not hold any cash-generating assets. Assets are considered cash-generating where their primary objective is to generate a commercial return.

Non cash-generating assetsIntangible assets subsequently measured at cost that have an indefinite useful life or are not yet available for use, are not subject to amortisation and are tested annually for impairment.

Property, plant, and equipment and intangible assets held at cost that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable service amount. The recoverable service amount is the higher of an asset’s fair value less costs to sell and value in use.

Value in use is the present value of the asset’s remaining service potential. Value in use is determined using an approach based on either a depreciated replacement cost approach, restoration cost approach, or a service units approach. The most appropriate approach used to measure value in use depends on the nature of the impairment and availability of information.

If an asset’s carrying amount exceeds its recoverable service amount, the asset is regarded as impaired and the carrying amount is written down to the recoverable service amount. The total impairment loss is recognised in the surplus or deficit.

The reversal of an impairment loss is recognised in the surplus or deficit.

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The type of assets used by ERO does not give rise to adjustments for impairment. ERO’s assets will either be written off due to physical damage or obsolescence or are repaired.

PayablesShort-term payables are recorded at their fair value.

Employee entitlementsProvision is made in respect of ERO’s liability for accrued salary, annual leave, special leave, sick leave, retirement leave and long service leave. All associated expenses are charged against the Statement of Comprehensive Revenue and Expense.

Short-term employee entitlementsEmployee entitlements that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, long service leave and retirement gratuities expected to be settled within 12 months, and sick leave.

A liability for sick leave is recognised to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that it will be used by staff to cover those future absences.

A liability and an expense are recognised for bonuses where ERO has a contractual obligation or where there is a past practice that has created a constructive obligation and a reliable estimate of the obligation can be made.

Long-term employee entitlementsEmployee entitlements that are due to be settled beyond 12 months after the end of the reporting period in which the employee renders the related service, such as long service leave and retirement gratuities, are calculated on an actuarial basis. The calculations are based on:

� likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement, and contractual entitlements information; and

� the present value of the estimated future cash flows.

Presentation of employee entitlementsSick leave, annual leave, vested long service leave, non-vested long service leave and retirement gratuities expected to be settled within 12 months of balance date are classified as a current liability. All other employee entitlements are classified as a non-current liability.

Superannuation schemes – defined contribution schemesObligations for contributions to the State Sector Retirement Savings Scheme, KiwiSaver and the Government Superannuation Fund are accounted for as defined contribution schemes and are recognised as an expense in the surplus or deficit as incurred.

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ProvisionsERO recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either constructive or legal) as a result of past events. It is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount or timing of the obligation.

Provisions are measured at the present value of the expenditures expected to settle the obligations.

Reinstatement of premisesERO has some reinstatement obligations at the expiry of the lease term to make good any damage caused to the premises and to remove any fixtures or fittings installed by ERO. In many cases, ERO has the option to renew these leases, which affects the timing of the expected cash outflows to make good the premises. The provision is measured at the expected cost to settle the obligation.

EquityEquity is the Crown’s investment in ERO and is measured as the difference between total assets and total liabilities.

CommitmentsCommitments are future expenses and liabilities to be incurred on contracts that have been entered into at balance date. Information on non-cancellable capital and lease commitments are reported in the statement of commitments.

Cancellable capital commitments that have penalty or exit costs explicit in the agreement on exercising that option to cancel are reported in the statement

of commitments at the lower of the remaining contractual commitment and the value of those penalty or exit costs (i.e. the minimum future payments).

Goods and services tax (GST)All items in the financial statements and appropriation statements are stated exclusive of GST, except for receivables and payables, which are stated on a GST-inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the statement of financial position.

The net GST paid to or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

Income taxERO, as a government department, is exempt from the payment of income tax. Accordingly, no provision for income tax has been provided.

Cost allocationDirect costs are costs incurred by output delivery management units.

Direct costs are attributed to the three classes of outputs based on time spent on each class from ERO’s time recording system. For the year ended 30 June 2018, 74% of total output costs were direct costs (30 June 2017: 76%).

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Indirect costs are the costs of corporate management and support services that cannot be identified with a specific output in an economically feasible manner. Indirect costs are allocated to output-delivery management units (excluding Policy Services and Ministerial Services) through the most appropriate cost driver as a proxy for consumption. Indirect costs amounted to 26% of total output costs for the year ended 30 June 2018 (30 June 2017: 24%).

The cost of education evaluation reports includes a transfer of time from institutional reporting activities. This transfer represents time spent by review officers in institutions collecting overview information.

The costs of policy services and ministerial services are based on the estimated hours at the average charge-out rate.

There have been no changes in cost allocation policies from the previous reporting period.

Critical accounting estimates and assumptionsIn preparing these financial statements, ERO has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are provision for reinstatement, retirement leave and long service leave.

Notes 9 and 10 provide an analysis of the exposure in relation to estimates and uncertainties surrounding reinstatement obligations of leased premises, retirement leave and long service leave liabilities.

Budget and forecast figuresThe 2018 budget figures are for the year ended 30 June 2018 and were published in the 2016/17 annual report. They are consistent with ERO’s best estimate financial forecast information submitted to the Treasury for the Budget Economic and Fiscal Update (BEFU) for the year ending 2017/18.

The 2019 forecast figures are for the year ending 30 June 2019, which are consistent with the best estimate financial forecast information submitted to Treasury for the BEFU for the year ending 2018/19.

The forecast financial statements have been prepared as required by the PFA to communicate forecast financial information for accountability purposes.

The budget and forecast figures are unaudited and have been prepared using the accounting policies adopted in preparing these financial statements.

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The 30 June 2019 forecast figures have been prepared in accordance with PBE FRS 42 Prospective Financial Statements.

The forecast financial statements were approved for issue by the Chief Executive on 4 April 2018. The Chief Executive is responsible for the forecast financial statements, including the appropriateness of the assumptions underlying them and all other required disclosures.

While ERO regularly updates its forecasts, updated forecast financial statements for the year ending 30 June 2018 will not be published.

Significant assumptions used in preparing the forecast financialsThe forecast figures contained in these financial statements reflect the Office’s purpose and activities and are based on a number of assumptions on what may occur during the 2018/19 year. The forecast figures have been compiled on the basis of existing government policies and Ministerial expectations at the time the Main Estimates were finalised.

The main assumptions, which were adopted as at 4 April 2018, were as follows:

� ERO’s activities will remain substantially the same as for the previous year

� personnel costs are based on 216 full time equivalents

� operating costs are based on historical experience adjusted for any known expected increase or decrease in expenditure items

� estimated year-end information for 2017/18 is used as the opening position for the 2018/19 forecasts.

The actual financial results achieved for 30 June 2018 are likely to vary from the forecast information presented, and the variations may be material.

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Notes to the Financial Statements for the year ended 30 June 2018

1. Other revenue

Actual 2016/17

$000 Other Revenue note

Actual 2017/18

$000

748 Sale of services 1,096

59 Rental revenue from sub-leases 62 0 Revenue from insurance 64817 Other 3

824 Total Other Revenue 1,809

2. Personnel costs

Actual 2016/17

$000 Personnel Costs note

Actual 2017/18

$000

19,383 Salaries and wages 20,329

723 Employer contribution to superannuation schemes 710 77 Increase in employee entitlements 135 14 Other 59

20,197 Total Personnel Costs 21,233

Salaries and wages are recognised as an expense as employees provide services.

Employer contributions to defined contribution plans include contributions to the State Sector Retirement Savings Scheme, KiwiSaver, the Individual Retirement Plan and the Government Superannuation Fund.

54


3. Other expenses

Actual 2016/17

$000 Other expenses note

Actual 2017/18

$000


$000

1,308 Leasing and Rental Costs 1,599 1,663 525 Consultancy 699 454

2,098 Domestic Travel 2,188 1,713 54 International Travel 103 45 61 Fees paid to Auditors for Financial Statements Audit 62 60

2,469 Other 2,546 2,027

6,515 Total Operating Costs 7,197 5,962

4. Capital chargeERO pays a capital charge to the Crown based on its equity as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2018 was 6% (30 June 2017: 6%).

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5. Property, plant and equipmentMovements for each class of property, plant, and equipment are as follows:

Property, Plant and Equipment note

Computer Hardware

$000

Motor Vehicles

$000

Office Equipment

$000

Furniture & Fittings

$000

Leasehold Improvements

$000

P, P & E Total $000

30 June 2017Cost 948 1,824 313 280 2,255 5,620 Accumulated Depreciation

(669) (1,040) (303) (76) (1,452) (3,540)

Balance at 30 June 2017

279 784 10 204 803 2,080

30 June 2017Balance at 1 July 2017

279 784 10 204 803 2,080

Additions 76 25 186 488 1,767 2,542 Disposals – Costs (124) (51) (106) (32) (1,178) (1,491)Disposals – Accumulated Depreciation

124 33 105 31 1,154 1,447

Depreciation (113) (208) (19) (44) (220) (604)


242 583 176 647 2,326 3,974

30 June 2018Cost 900 1,798 393 736 2,844 6,671 Accumulated Depreciation

(658) (1,215) (217) (89) (518) (2,697)


242 583 176 647 2,326 3,974

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6. IntangiblesMovements for each class of intangible asset are as follows:

Intangibles note

Computer Software

$000

Review Procedures

$000

Intangibles Total $000

30 June 2017Cost 1,318 1,384 2,702 Accumulated Amortisation (1,263) (702) (1,965)

Balance at 30 June 2017 55 682 737

30 June 2017Balance at 1 July 2017 55 682 737 Additions 7 0 7 Amortisation (26) (224) (250)

Balance at 30 June 2018 36 458 494

30 June 2018Cost 1,325 1,384 2,709 Accumulated Amortisation (1,289) (926) (2,215)

Balance at 30 June 2018 36 458 494

There are no restrictions over the title of ERO’s intangible assets, nor any intangible assets pledged as security for liabilities.

7. ReceivablesThe carrying value of receivables approximates their fair value as they are normally issued with duration of not more than three months.

Actual 30 June 2017

$000 Receivables note

Actual 30 June 2018

$000

90 Receivables from contractual services 207

0 Receivables from insurance 648

90 Total Receivables 855

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8. Payables and deferred revenue

Actual 30 June 2017

$000 Payables and deferred revenue note

Actual 30 June 2018

$000

413 Creditors 518

355 Accrued Expenses 1,146 530 Income in Advance for Contractual Services 157

1,298 Payables and deferred revenue under exchange transactions 1,821

206 Tax Payables – GST, FBT and PAYE 278

206 Payables and deferred revenue under non-exchange transactions 278

1,504 Total payables and deferred revenue 2,099

The carrying value of creditors and other payables approximate their fair value as they are normally settled within three months.

9. ProvisionsLeasing incentivesLeasing incentives received as an inducement to enter into an operating lease are recognised evenly over the term of the lease as a reduction in the rental expense.

Reinstatement provisionERO has entered into leases on its premises in Auckland, Christchurch, Hamilton, Napier, Whanganui, Wellington and Dunedin. As part of the lease agreements, ERO has some reinstatement obligations at the termination of the leases.

58


Actual 30 June 2017

$000 Provisions note

Actual 30 June 2018

$000

Current Portion 75 Leasing Incentives 106 71 Reinstatement 0

146 Total Current Portion at end of year 106

Non-Current Portion300 Leasing Incentives 443 274 Reinstatement 332

574 Total Non-Current Portion at end of year 775

720 Total Provisions at end of year 881

Leasing Incentives

246 Balance at Start of Year 375

204 Additional Provision during the Year 280

(75) Provision used during the Year (106)

375 Total Leasing Incentives Provision at end of year 549

Reinstatement535 Balance at Start of Year 345

0 Additional Provision during the Year 7 (190) Unused Provision reversed during the Year 0

0 Provision used during the Year (20)

345 Total Reinstatement Provision at end of year 332

720 Total Provisions at end of year 881

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10. Employee entitlements

Actual 30 June 2017

$000 Employee entitlements note

Actual 30 June 2018

$000

Current Liabilities

1,251 Annual Leave, Special Leave and Sick Leave 1,335

300 Retirement Leave and Long Service Leave 290

286 Accrued Salaries 157

1,837 Total Current Portion 1,782

Non-Current Liabilities653 Retirement Leave and Long Service Leave 512

653 Total Non-Current Portion 512

2,490 Total Employee entitlements at end of year 2,294

The present value of retirement leave and long service leave obligations depend on factors that are determined on an actuarial basis using several assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will affect the carrying amount of the liability.

Expected future payments are discounted using discount rates derived from the yield curve of New Zealand government bonds. The discount rates used have maturities that match, as closely as possible, the estimated future cash outflows. The discount rates and salary inflation factor used are those advised by the Treasury.

If the risk-free discount rates were to differ by 1% from ERO’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $26,837 higher/lower.

If the salary inflation factor were to differ by 1% from ERO’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $26,837 higher/lower.

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11. Related partiesERO is a wholly owned entity of the Crown.

Related party disclosures have not been made for transactions with related parties that are within a normal supplier or client/recipient relationship on terms and condition no more or less favourable than those that it is reasonable to expect ERO would have adopted in dealing with the party at arm’s length in the same circumstances. Further, transactions with other government agencies (for example, government departments and Crown entities) are not disclosed as related party transactions when they are consistent with the normal operating arrangements between government agencies and undertaken on the normal terms and conditions for such transactions.

Related party transactions required to be disclosedERO has no related party transactions required to be disclosed. Any related party transactions have been entered into on an arm’s length basis by ERO.

Key management personnel compensationKey management personnel include the Chief Executive and seven members of the Executive Leadership Team.

Actual 2016/17 Key management personnel compensation

Actual 2017/18

1,726 Remuneration ($000s) 1,799

8 Full-time Equivalent Staff 8

The Minister of Education does not have responsibility for planning, directing and controlling the activities of ERO. The Minister’s remuneration and other benefits have therefore been excluded from the above disclosure.

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12. Financial instrumentsThe carrying amounts of financial assets and financial liabilities in each of the financial instrument categories are as follows:

Actual 30 June 2017

$000 Financial instruments note

Actual 30 June 2018

$000

Loans and Receivables

5,402 Cash 3,768

90 Receivables 855

5,492 Total Loans and Receivables 4,623

768 Financial liabilities measured at amortised cost Payables (excluding Income in advance) 1,664

13. Events after balance dateAfter balance date a consultation process exploring a more effective organisational design was announced and completed. The new design reorganises ERO into four groups – Review and Improvement Services, Evaluation and Review – Māori, Methodology and Practice, and Evaluation and Policy. They are supported by a Corporate Services group. The implementation of the new organisation design is expected to be December 2018. ERO has not recognised a liability for costs associated with implementing the new organisation design as at 30 June 2018.

There have been no other significant events after balance date.

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14. Explanation of major variances against budget

Variances against budget note

Actual 2017/18

$000


$000

Variance to Budget

2017/18 $000

Statement of Comprehensive Income and ExpenseOther Expenses 7,197 5,962 1,235

Statement of Financial PositionCash 3,768 4,290 (522)Property, Plant and Equipment 4,468 4,003 465 Statement of Cash Flows Purchase of Assets 2,291 830 1,461

The major variances to budget were as follows:

� Other Expenses was $1,235,000 above budget due mainly to an increase in expenditure associated with contractual services for which ERO received revenue.

� Cash was $522,000 below budget due mainly to the timing of an insurance proceed for one of our premises damaged from the November 2016 earthquake.

� Purchase of property, plant and equipment was $1,461,000 above budget due to the timing of ERO’s fit out to its Wellington and Hamilton premises.

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Appropriation Statements

The following statements report information about the expenses and capital incurred against each appropriation administered by ERO for the year ended 30 June 2018.

Statement of Budgeted and Actual Expenses and Capital Expenditure incurred against Appropriations for the year ended 30 June 2018

Expenditure after remeasure-ments 2016/17 $000

Vote Education Review Office Statement of Budgeted and Actual Expenses and Capital Expenditure incurred against Appropriations

Expenditure before

remeasure- ments

2017/18 $000

Remeasure-ments

2017/18 $000

Expenditure after remeasure-

ments 2017/18

$000

Approved Appro-

priation 2017/18

$000

Vote Education Review OfficeMulti-Category AppropriationQuality of Education: Evaluations and Services

9,145 Early Childhood Learning Services

9,710 6 9,716 9,825

14,706 Schools and Other Education Service Providers

15,247 6 15,253 15,756

3,995 National Evaluations and Other Services

4,537 3 4,540 4,633

27,846 Total Quality of Education: Evaluations and Services

29,494 15 29,509 30,214

Permanent Legislative Authority (PLA)

535 Capital Expenditure – PLA

2,549 0 2,549 3,506

28,381 Total Annual and Permanent Appropriations

32,043 15 32,058 33,720

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The appropriation figures are those presented in the Estimates of Appropriations for the Government of New Zealand for the year ended 30 June 2018, as amended by the Supplementary Estimates.

The Capital Expenditure-Permanent Legislative Authority appropriation is limited to the purchase or development of assets by and for the use of ERO, as authorised by section 24(1) of the Public Finance Act 1989. No amount is appropriated for Capital Expenditure-Permanent Legislative Authority.

Statement of Expenses and Capital Expenditure incurred without Appropriation or Other Authority, or in excess of an Existing Appropriation or Other Authority for the year ended 30 June 2018ERO has not incurred expenses in excess of or without appropriation by Parliament (30 June 2017: nil).

Statement of Departmental Capital Injections without, or in excess of, Authority for the year ended 30 June 2018ERO has not received any capital injections during the year, or in excess of, authority (30 June 2017: nil).

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Annual Report 2017/18 - ero.govt.nz · Annual Report 2017/18 Te Pūrongo ā-Tau 2017/18 E.39...

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