Annual Report 2014-2015


Auditor General’s Overview

Each year in this role brings new and interesting challenges, and 2014-15 was no exception. Our audit program covered a range of topics, each with unique challenges. In some cases, significant effort was required in obtaining access to information required for audit. The year also saw increasing numbers of enquiries and referrals from the public and members of Parliament (page 79), as well as an increase in the number of notices from Ministers where information requested by Parliament was not provided (page 29).

As the Office prepared for its first parliamentary review since the passage of our legislation, the Corruption and Crime Commission added to earlier recommendations that the Office should have a role in auditing local government.

Appropriately, the Office was not immune from the Government’s savings program. Late last year, in response to a deteriorating budget, Government announced a $2 billion savings package over four years, including a one per cent efficiency dividend on most general government agencies, cuts to non-essential procurement expenditure, a targeted voluntary redundancy scheme and further efficiencies in the government’s Asset Investment Program.

This has had a two-fold effect on my Office – firstly, I have where possible responded to the government’s efficiency drive in the operations of my Office. This affects my budget and resourcing decisions, and ultimately how we deliver an increasing audit program. The other effect is through the actions that agencies take to achieve efficiencies and basically, to deliver more with less. This requires increased audit scrutiny from my Office as potential gaps in systems and controls are exposed.

Parliamentary review of the Office and the Auditor General Act highly anticipated

I continue to rely on internal, external and peer reviews as valuable opportunities to track how the Office is progressing and to identify areas for improvement. We have an extensive program of these reviews as tlined on page 7

I was particularly pleased to welcome in May this year the reviewers appointed by the Joint Standing Committee on Audit (JSCA) to assess the performance of the Office (page 53). This review is prescribed in the Act, and I have been anticipating it for some time. The JSCA gave the reviewers comprehensive terms of reference and a reporting date of around late November. I look forward to receiving the final report and to implementing any improvement opportunities as quickly as possible.

Upon completion of the performance review of the Office, the JSCA has announced that it will then undertake a review of the operation and effectiveness of the Auditor General Act 2006. While the Act has served us well and in most regards still represents contemporary audit legislation, it does need improvement in some important areas. Notably, giving unequivocal access to Cabinet documents and documents protected by legal professional privilege (page 20).

Change of mandate to include local government audit a possibility

The government recently flagged the possibility of expanding the role of the Auditor General to conduct financial and performance audits of local governments. This has been raised a number of times since it was recommended by the Public Accounts Committee in 2006 and the Premier’s latest comments follow a recommendation made in a Corruption and Crime Commission report on Misconduct Risk in Local Government Procurement. As outlined on page 20, this would require a legislation change through Parliament and if it were to occur, it will require a significant review of our Office resourcing and delivery of our key audit products.

Delivering work that matters

I was pleased to have covered a wide range of topics in our audit program this year. The 20 reports I tabled in Parliament covered topics across our four key areas of governance, service delivery, social and environment and economic development (page 40). We also had good coverage of issues affecting metropolitan and regional areas. I was, however, disappointed to have not met our target of 25 reports in 2014-15 (page 23). Unexpected employee absences and some project overruns meant that a number of our planned reports did not make our 30 June cut off. Given that these reports are now well advanced, I do expect to table a high number of reports in 2015-16.

This year, we significantly increased our use of community surveys to inform our audit work, receiving just over 4 600 responses across four surveys (page 38). We also enhanced the ‘have your say’ function on our website to encourage community feedback on our upcoming audit work, which contributed to the increase in referrals and enquiries to our Office. All this information, together with our website download statistics (page 40), feed not only into our current audit work, but also influences our forward audit program.

One particular report this year demonstrated the importance of listening to what people want to know and delivering work that matters in a timely fashion. We reported Delivering Essential Services to Remote Aboriginal Communities at a time when the issue was of immense public interest with funding support for these communities being debated at a state and Commonwealth level. On tabling the report, we received our highest ever attendance at our Members of Parliament briefing (page 52) and received significant media coverage.

Positive client feedback

Our annual Members of Parliament survey showed overall satisfaction with our reports and services increased to 97 per cent (from 90 per cent in 2013-14), which is our highest rating in over 10 years (page 32). Our annual financial audit client surveys also showed high satisfaction rates, with 95 per cent saying they value the Office’s recommendations to improve the financial management and internal controls of their organisations (page 33).

Effectively responding to increasing audit expectations

This year we issued 190 Royalties for Regions certifications (page 27), which is a 167 per cent increase in just three years. We doubled the number of opinions on Ministerial notifications we delivered (page 29). We also handled 75 per cent more referrals and enquiries to our Office than last year (page 79), many of which were audit requests from Members of Parliament, public sector agencies and the general public.

As these three examples demonstrate, there is an ever-increasing expectation on our Office to deliver more reassurance across a wide range of public sector activity in a timely fashion. I am pleased to say we are rising to the challenge.

Increased audit scrutiny delivered within target

With agencies focusing on achieving savings in response to government’s efficiency drive, there is a real risk that they lose focus on the quality and security of their internal financial controls. This has required increased effort and complexity across our suite of audits.

This year we introduced a new efficiency indicator, which measures how long we take to issue our audit opinions to agencies (page 24). Thanks to the hard work and dedication of my financial audit and support teams, and the cooperation of agencies, we were able to achieve an average turnaround of just 67 days, which was three days fewer than our target of 70 days.

This is a fantastic result as agencies are keen to receive their opinion as soon as possible so they can meet their own parliamentary reporting requirements.

Referrals and enquiries feeding into our topic selection

Despite the significant increase in referrals and enquiries to our Office this year, we were still able to respond to 90 per cent of these within our target timeframes (page 79). Many of these resulted in ideas that fed into our audit topic selection process (page 36). Our recent selection process focused on topics around efficiency of government services and activity and a number of these will shortly feature in our forward audit program.

Managing our workforce to meet business requirements

We continue to take a strategic and considered approach to managing our workforce, though this year we were not able to meet the ambitious target set for reduced salary expenditure due to the level of resourcing required to meet the audit expectations on our Office. We understand the importance of constraining salary expenses. We will continue to identify savings by carefully considering each vacant position as it arises while ensuring that our recruitment satisfies business requirements.

Looking forward to 2015-16 and beyond

While the JSCA reviews will continue to be a focus in 2015-16, as will the possibility of taking on local government audit, a number of other important changes are also in train.

We have begun work on developing our new strategic plan, with our current plan ending in December 2015 (page 18). I was pleased to have recently hosted a strategic planning session with my employees to discuss our future direction, our desired outcomes, our vision and mission. This continues to be a robust process and I am confident we will develop a strategic plan that not only sets the future direction for our Office, but which will also have complete employee buy-in.

My efforts to find efficiencies in our work continues and one area we are focusing on is the strategic and efficient use of our information systems (page 65). We have already begun realising a number of reporting and data accuracy benefits by consolidating business information from different systems, and as this work continues in 2015-16 further efficiencies will be realised. We are also investigating options to deliver my audit opinions to agencies online, rather than by hard copy. Our ultimate aim is to save time and money for both ourselves and the agencies we audit.

Finally, a key consideration for next year and beyond is the changing demographics of our workforce with a considerable number of employees nearing retirement. This is an issue faced across the public sector. Our Workforce Development Plan anticipates this and includes a number of initiatives around attraction and retention and skilling up our workforce to become the next generation of leaders (page 55).


I wish to acknowledge the hard work and dedication of my employees. I am proud of our achievements in the last year and look forward to tackling the new challenges of 2015-16 and beyond.

There are a number of professional relationships that are paramount to the success of my Office. Thank you to my colleagues from the Australasian Council of Auditors-General for the valued information sharing, support and collaboration opportunities. Also to my colleagues from the other accountability agencies that make up the Integrity Coordinating Group. I also thank the Parliament of Western Australia, and in particular, the Public Accounts Committee, the Estimates and Financial Operations Committee and the Joint Standing Committee on Audit for their continued support.

Colin Murphy
Auditor General


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Page last updated: April 20, 2016

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