Each year the Auditor General audits and provides opinions on, the annual financial statements and key performance indicators of public sector entities including government departments, statutory authorities, corporatised entities, universities and state training providers (TAFE colleges), and local governments. These audits provide assurance to Parliament that the financial statements and KPIs are based on proper accounts and fairly presented.
Focus area audits
We conduct these audits at a sample of entities as an extension of our annual financial audits, using more detailed testing than is required for forming our financial audit opinions. Our aim is to assess how well entities perform common business practices and related controls. The findings of these audits provide an insight to good practice, so all entities, including those not audited, can consider their own performance.
Performance audits assess the efficiency and effectiveness of entity activities, services and programs. These audits can also identify instances of waste, legislative non-compliance, examples of good practice and make practical recommendations for improvement. 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.
Information systems audits
These audits focus on the general computer controls of entities with significant computer environments to determine whether these effectively support the accuracy and integrity of financial statements and KPIs. We also undertake audits each year of a sample of important non-financial computer applications.
In December 2019, the State Government announced the OAG would receive additional funding to conduct targeted forensic audits. This involves using data analytics to identify anomalies and patterns in datasets that suggest wrongdoing. Our Forensic Audit team will conduct joint audits with our performance, financial and information system audit teams as well as targeted audits of public sector entity accounts and matters related to public money, public property and approvals.
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 and the Auditor General Act 2006 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.
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.
Public interest disclosures
Under the Public Interest Disclosure Act 2003, the Auditor General investigates disclosures made to the 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.
What we don’t do
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 entities 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.