The Office of the Auditor General exists to serve the public interest by providing Parliament with independent and impartial information regarding public sector accountability and performance. This Office reports directly to Parliament and ultimately the people of Western Australia.
Our desired outcome, ‘an informed Parliament on public sector accountability and performance’, is consistent with the government goal Financial and Economic Responsibility – Responsibly managing the State’s finances through the efficient and effective delivery of services, encouraging economic activity and reducing regulatory burdens on the private sector.
Key Effectiveness Performance Indicator
The key effectiveness performance indicator is:
The extent that the Office of the Auditor General is effective in informing Parliament about public sector accountability and performance is measured by the number of tabled reports compared to targets for each of the following categories of audit matter:
- Service delivery – reports tabled
- Economic development – reports tabled
- Social and environment – reports tabled
- Governance – reports tabled.
Table 20 shows our actual result for the preceding 4 years, and our performance against the 2016-17 target.
A crucial element of this key performance indicator is the establishment of a 3 year target for each category of report. The current target over 3 years encompasses the financial years 2015-16 to 2017-18. While the Office aims to meet its report targets, we are also concerned with the quality of our reports and will not sacrifice this requirement in order to achieve a quantitative measure.
Our topic selection process aims to provide Parliament with advice and assurance across all 4 categories of public sector activity. Our targets are one factor in our selection of topics. Other factors include the significance of identified issues and matters referred to us by Parliament. For this reason, our category targets may not always be met in any 1 year.
The increase in the number of governance reports compared to the target was due to a significant increase in the number of ministerial notifications under section 82 of the Financial Management Act. The reviews of these notifications take priority over planned reports and resulted in 7 reports for the year.
Key Efficiency Performance Indicators
The key efficiency performance indicators measure the overall efficiency in delivering the Office’s service ‘Public Sector Auditing’. The Office is responsible for undertaking the external audit of the Western Australian public sector. This is done through audits of controls, financial statements, key performance indicators, efficiency, effectiveness and reporting the results to Parliament.
Our key efficiency performance indicators are:
- total audit cost per million dollars of gross government expenditure
- attest (financial) audit cost per million dollars of gross government expenditure
- performance audit cost per million dollars of gross government expenditure
- average number of days taken after balance date to issue financial audit opinions
The gross government expenditure value incorporates total public sector expenditure together with expenditure by universities, superannuation boards and other entities we audit but whose expenditure is not reported within total public sector expenditure. The estimated actual total public sector expenditure from the Government Mid-Year Financial Projections Statement is used rather than actual total public sector expenditure as the actual results are not available at the time these key performance indicators are produced. The estimated total public sector expenditure is considered a reasonable estimate of actual total public sector expenditure.
The audit costs used to calculate the key efficiency indicators are extracted from the Office’s Financial Management Information System. The proportion of total cost assigned to financial and performance audits is based on recorded direct hours charged to audits and an activity based allocation of Office overhead.
The decrease in total audit cost per million dollars of gross government expenditure in 2016-17 compared to the prior year was mainly due to a 6.0% increase in gross government expenditure.
The decrease in total audit cost per million dollars of gross government expenditure in 2016-17 compared to the target was due to the Office’s expenditure being 4.6% lower than the budget estimate and a 2.7% increase in gross government expenditure compared to the budget.
The attest (financial) audit cost per million dollars of gross government expenditure in 2016-17 was lower than the prior year mainly due to the 6.0% increase in gross government expenditure.
The performance audit cost per million dollars of gross government expenditure is significantly lower than the target. The 2016-17 target for performance audit costs was based on an Office strategy of directing 30% of overall audit effort towards performance audits. The actual result was 27.0%. The desired strategy was not achieved due to fewer staffing resources being available for performance audits.
Section 64 of the Financial Management Act 2006 requires Ministers to table agency annual reports, including the audit opinion on the financial statements, controls and key performance indicators in Parliament within 90 days of the end of a financial year of an agency. Accordingly, the Office has adopted an efficiency indicator which measures the average number of days taken after balance date to issue financial audit opinions. Our target has been set with regard to this statutory requirement for all financial audits.
The favourable variance between 2016-17 actual and target is due to agencies preparing financial statements and key performance indicators in a more timely manner and efficiency improvements achieved in the audit process.