report

Annual Report 2013-2014

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Our Office

Our Office

What we do

The purpose of the Office of the Auditor General is to support the Auditor General.

The Auditor General for Western Australia, Mr Colin Murphy, is a statutory officer with responsibility for auditing the state public sector. The Governor appoints the Auditor General for a non-renewable term of 10 years. Mr Murphy was appointed to the role of Auditor General in June 2007.

The Auditor General reports directly to Parliament and ultimately the people of Western Australia rather than to the government. This independence and freedom from pressure, influence or interference that may erode that independence is the cornerstone of public sector audit.

Subject to the Auditor General Act 2006 and other written laws, Mr Murphy has complete discretion in the performance of his functions.

Our values

In achieving our vision, mission and our purpose of serving the public interest, we are committed to our values of integrity, quality and people (see page 1).

Auditor General’s responsibilities

The Auditor General is responsible for:

– auditing the Annual Report on State Finances

– conducting audits of financial statements, controls and key performance indicators for departments, statutory authorities, tertiary institutions and corporatised public sector entities

– delivering audit certifications

– conducting across government benchmarking audits on common business practices

– conducting performance audits and compliance, controls and information system audits to ensure there are adequate controls within agencies; compliance with relevant legislation; and, most importantly, efficiency and effectiveness of agency operations or programs

– reporting the results of audits to Parliament in an objective, competent, insightful and timely manner.

The Office of the Auditor General’s corporate focus continues to be driven by the public sector environment in which we operate. Details of the financial statement audits undertaken in 2013-14 is provided on page 27.

Performance management framework

The Office of the Auditor General is a public sector department established to support the Auditor General. The Auditor General is an independent officer of Parliament, and as such reports directly to Parliament and ultimately the people of Western Australia, providing assurance about the efficient and effective delivery of services and the responsible management of the state’s finances.Table 1- Performance management framework p14

Enabling legislation

The Auditor General is appointed by the Governor under the Auditor General Act 2006. The Office of the Auditor General is established as a department of the public service under the Public Sector Management Act 1994.

As the Accountable Authority, the Auditor General must discharge responsibilities under the Financial Management Act 2006.

Key legislation affecting the Office

In performing its functions, the Office complies with the following relevant laws:

– Auditor General Act 2006

– Public Interest Disclosure Act 2003

– Corruption and Crime Commission Act 2003

– Public Sector Management Act 1994

– Salaries and Allowances Act 1975

– Disability Services Act 1993

– Equal Opportunity Act 1984

– Occupational Safety and Health Act 1984

– Workers’ Compensation and Injury Management Act 1981

– Electoral Act 1907

– Industrial Relations Act 1979

– Minimum Conditions of Employment Act 1993

– State Records Act 2000

– Financial Management Act 2006

– Electronic Transactions Act 2011 and 2003

– State Supply Commission Act 1991

– Corporations Act 2001

– Corporations (Western Australia) Act 1990

In performing its functions, the following laws have some impact on the Office of the Auditor General’s activities:

– Constitution Act 1889

– Constitution Act Amendment Act 1899

– Appropriation Acts

– Financial Agreement Act 1995

– Interpretation Act 1984

– Laws affecting agencies and activities subject to audit by the Auditor General.

Organisational structure p15

Senior Officers

Auditor General bio p16

Exec Bios- Glen Clarke and Jason Beeley p16

Exec Bios- Sadie Godfrey and Don Cunninghame p17

Exec Bios- Sandra Labuschagne and Michelle Shafizadeh p17

Our strategic direction

Strategic plan framework

Strategic Plan Framwork p18

Strategic planning

Strategic planning helps to ensure that we are all working toward the same goals and to assess and adjust the Office’s direction in response to a changing environment. Our five year strategic plan is a dynamic document that is visible within the Office and is used to set objectives and strategies, and to measure performance against realistic targets.

This plan helps us focus our energy and work towards shared goals. It guides who we are, what we do and why we do it, with a specific focus on the future and how we can shape it.

Our strategic plan is incorporated into all our business operations, including the operational plans of our Business Units, our Quality Assurance Plan (see page 30), Strategic Internal Audit Plan and Information and Communication Technology Strategic Plan.

Our Executive Management Group conducts two to three strategic planning meetings per year to track progress against our stated objectives. These meetings allow us to measure our performance, set goals for the next period and to assess and adjust our initiatives to ensure that we meet the overall strategic direction of the Office.

The meetings also include discussion on a mix of operational matters, emerging opportunities and issues or weaknesses. We review ourselves against the public sector, other jurisdictions and best practice to continually assess the way that we do things. Pages 120 to 123 show a summary of our strategic plan, which acts as a report card on our strategic progress to date.

In 2013 we introduced the concept of ‘critical focus items’ into our strategic plan framework. These are areas we identified as warranting our increased attention. These critical focus items will be reviewed and identified each year to ensure that our efforts continue to be where they need to be.

Critical focus items p19

The Office corporate governance framework

The Office corporate governance framework sits at the base of the strategic plan framework and outlines key governance documents that we use to outline how the Office plans, directs, controls and monitors key aspects of our business. The Executive Management Group reviews the currency of the documents at the strategic planning meetings. A number of these documents are referred to throughout this report.

Key result areas

Our key result areas (see pages 120 to 123) are the areas of our Office activities where we have clear accountabilities and outcomes against which we can regularly measure our performance. For all activitieswe undertake within these areas, serious consideration is given to our strategic themes to ensure that we meet our objectives, strategies, measures and targets.

Key result areas p19

Significant Issues for the Next Financial Year

Legislative review

Section 48 of the Auditor General Act 2006 requires the Joint Standing Committee on Audit to carry out a review of the operation and effectiveness of the Act and the performance of the Office of the Auditor General. The Committee’s terms of reference are:

– to inquire into the budget, organisational structure and resourcing needs of the Office of the Auditor General and any matters incidental thereto

– to conduct a review of the Auditor General Act 2006 pursuant to section 48 of that Act and inquire into any other matters incidental thereto.

The review is expected to occur in 2014-15 and will have the full support of the Office.

Audit certifications

The number of audit certifications is expected to grow further in 2014-15, mainly due to the increasing number of projects funded under the Royalties for Regions scheme. This will require additional audit effort. We expect an additional 40 certifications will require auditing taking the total number to 205.

Agency restructures

The restructure, amalgamation and creation of new agencies will challenge our financial audit capacity in 2014-15. Changes include the merger of Verve Energy and Synergy, the amalgamation of a number of regional port authorities and the creation of several new health agencies. We also anticipate that for the first time we will be required to audit activity levels under the activity based funding model of the National Health Reform Agreement.

Agency restructures can have a significant impact on audit costs. Auditors are required to assess the risk profile of the new agency and to evaluate the financial and management arrangements, the implementation of reporting controls and the transfer of balances between agencies.

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