Each year the Auditor General audits and provides opinions on, the annual financial statements and key performance indicators of just under 200 public sector organisations, including government departments, statutory authorities, corporatised entities, universities and state training providers (TAFE colleges). These audits provide assurance to Parliament that the financial statements and KPIs are based on proper accounts and fairly presented.
Across Government Benchmarking Audits
These audits build on our annual financial audits of all agencies. We conduct AGBAs at a sample of agencies across areas of common business practices. The findings of these audits provide an insight to good practice and the types of control weaknesses and exposures that can exist so that all agencies, including those not audited, can consider their own performance.
Performance Audits – broad scope
Each year we also conduct a number of large performance audits on a varied range of topics. These audits primarily focus on the effective management and operation of agency programs and activities. Topics are selected by the Auditor General following an exhaustive process which may also include requests for audits from Parliament, the government or the broader community.
Performance Audits – narrow scope
In addition to our large performance audits, the Auditor General also conducts narrow scope audits which tend to focus more narrowly on agency compliance with legislation, public sector policies and accepted good practice. These audits serve to highlight issues surrounding regulatory, financial and administrative processes within agencies. An exhaustive process is also used in the selection of these audits.
Information Systems Audits
Information Systems audits focus on the general computer controls of agencies with significant computer environments to determine whether these effectively support the accuracy and integrity of agency financial statements and KPIs. We also undertake audits each year of a sample of important non-financial computer applications.
Public Interest Disclosures
Under the Public Interest Disclosure Act 2003, the Auditor General investigates disclosures made to his Office that relate to substantial, unauthorised, irregular use or mismanagement of public resources. Results of such investigations if significant may lead to the Auditor General tabling a report in Parliament.
Opinions on Ministerial Notifications
Where a Minister decides not to provide certain information to Parliament concerning the conduct or operation of an agency (usually a decision taken in response to a parliamentary question), then certain requirements under the Financial Management Act 2006 (FM Act) and the Auditor General Act 2006 (AG Act) come into force. Essentially, the Minister is required to notify the Auditor General and the Auditor General is then required to form an opinion on the reasonableness and appropriateness of the Minister’s decision. The opinion is then reported to Parliament.
‘Follow the Dollar’ Audits
In delivering the different types of work listed above, we may use ‘follow the dollar’ powers provided by the Auditor General Act 2006. These powers allow us to evaluate the way in which government funds are spent by organisations tasked to do so, such as non-government organisations (NGOs) or partner organisations. Importantly, this ‘follow the dollar’ function allows for all government expenditure to be analysed, no matter who was awarded a grant, contract or tender.
The role and authority of the Auditor General is considerable. This is primarily provided by the Auditor General Act 2006 and the Financial Management Act 2006. But Auditors General operating under the Westminster system of government (dating back to the mid 1800s in WA) also operate in the context of established convention and accepted practice. Because these laws and conventions are not always well understood, expectation gaps can arise and people can be disappointed with decisions, judgements and reports of the Auditor General.
Don’t assess government policy
A common misunderstanding is that the Auditor General can criticise government policy. This is not the case. By convention, the Auditor General will not comment on or criticise government policy as this risks politicising the position and diminishing its perceived independence. However, what the Auditor General can do is assess whether government policy has been effectively implemented.
Don’t investigate fraud or other criminal matters
The Auditor General cannot investigate criminal matters. If such a matter is brought to our attention or we become aware of it through our work, then it is automatically passed to the police or the Corruption and Crime Commission.
Don’t investigate complaints relating to individuals
The Auditor General does not investigate administrative malpractice by government agencies that affect an individual. Such matters are the mandate of the Ombudsman. The Auditor General can however investigate administrative matters if they are systemic and significant in value or impact.
Regard for Australian Auditing standards
Our audits of agency financial statements are conducted in accordance with the Australian Accounting and Auditing Standards. These standards are ‘principles based’ in regard to use of judgement but are directive on some matters including the content of audit opinions. Our compliance with these standards may result in people being disappointed in our audit opinions if they believe that the opinion does not reflect weaknesses in agency accounts. The various national and international professional bodies recognise this expectation gap and are constantly researching ways to improve the usefulness of auditor’s reports. For our part, if we see that a serious matter cannot be reflected in our audit opinion then we may use a formal report to Parliament to highlight our concern.