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Annual Report 2016-2017

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From the Auditor General

I take pleasure in presenting my 11th annual report for the Office of the Auditor General.

Although my 10-year term as Auditor General concluded in June this year, I have been appointed by the Governor to remain in the role until a new Auditor General can be recruited.

The Western Australian public sector we audit is a body of many and diverse entities, with expenditure exceeding $51 billion, assets exceeding $221 billion and more than 135,700 people. Each year changes to legislation, structures, operations and systems challenge us and the 2016- 17 financial year was no different. My staff has responded as I expect – professionally, something I am very proud of.

Review of the Auditor General Act and access to information

This year marked a milestone for the OAG, with the Joint Standing Committee on Audit finalising its review of the operation and effectiveness of the Auditor General Act 2006. This review is a legislated requirement and was something which I was keenly anticipating.

The final report did not disappoint, providing a thorough and comprehensive review of the Office and the Act. The Committee made 24 recommendations, and concluded that the Auditor General effectively performed his duties and ‘the Office is a well-functioning audit office with no fundamental failings’.

The recommendations include strengthening the Act in a number of areas, particularly access to information. This is something I regard as a priority. A lack of authority under the current Act to access Cabinet and legal professional privilege documents continues to impact our audit program.

The ability to gather sufficient and appropriate evidence is a fundamental audit requirement and in worst case scenarios can prevent the issuing of an audit opinion. This is an important issue for my Office and I will continue to support the recommended changes through Parliament.

Record number of ministerial notifications

This year we received a record 51 ministerial notifications as a result of ministers withholding information from Parliament. Among these, for the first time, I had to consider whether Cabinet-in-confidence was reasonable justification for a Minister to withhold information (page 50). Cabinet confidentiality is particularly tricky as it is a long established principle of our system of government decision-making by protecting the deliberations and decisions of Cabinet.

While it is important that Cabinet information is kept in confidence, balancing that with the principles of public interest, transparency and parliamentary access to information is not easy. Many views were presented during deliberations and we found there was no science or statute to assist in determining what constitutes Cabinet-in-confidence. The overriding message to ministers and the agencies they represent is to consider each case on its merits, including if information is already publicly available and if providing redacted information to Parliament is appropriate.

New Parliament and public sector renewal

Following the state election, I was pleased to provide the incoming government and members with various briefings and information on our role and responsibilities, as well as recent and current audits. This was especially important with the large number of new members and parliamentary committees.

In late April 2017, the Premier announced the biggest restructuring of the public sector in decades with the reduction of government departments from 41 to 25. Although our composition is not directly affected by the renewal, the new structure will impact on the services we provide the public sector.

We are cognisant of the changes the agencies we work with are going through and are continuing to focus on potential controls issues as part of our audit program.

Expansion of mandate to include local government

The legislation to introduce the auditing of local government by the Auditor General was reintroduced in the new Parliament on 11 May 2017. The Local Government Amendment (Auditing) Bill 2017 has progressed quickly to its final stages and all signs point to a possible proclamation of the new Act in the coming months.

Under the proposed legislation OAG will commence performance auditing from proclamation, with financial auditing transitioning over 3 years.

While I have never sought or advocated for this responsibility, I am very comfortable with the content and intent of the Bill. The new mandate presents my Office with one of the biggest changes faced since our establishment in 1829. It will expand our audit responsibility by 80% to nearly 340 entities. We have started preparing and are confident that if, and when, the legislation passes we will be ready to work with local governments to meet their needs and those of Parliament.

Thank you

A number of professional relationships contribute to the success of my Office. I would like to thank 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 – the Public Sector Commissioner, the Western Australian Ombudsman, the Information Commissioner and the Commissioner of the Corruption and Crime Commission, I recognise and value the strong working relationship.

I also thank the Parliament of Western Australia and in particular, the past and current members of the Public Accounts Committee, the Estimates and Financial Operations Committee and the Joint Standing Committee on Audit for their continued support throughout the year.

I wish to acknowledge the hard work, professionalism and dedication of my staff. While the reports we table in Parliament are our most visible product, what is often not seen is the effort behind these. This is the thousands of conversations and consultations my staff have with agencies each year that have ongoing impact on agency performance and transparency. The quality work we undertake does make a difference and I am proud of our achievements over the last year.

Finally, I would like to acknowledge the 40-year contribution of Glen Clarke, Deputy Auditor General to the OAG. Glen started with the Office as a graduate and throughout his career had enormous influence on the OAG and the state government sector. I thank Glen for his wisdom and sage advice over our 10 years together. He will retire as our longest serving employee and I, and all the staff, wish him the best in his retirement.

COLIN MURPHY
AUDITOR GENERAL
8 August 2017

Page last updated: August 8, 2017

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