Annual Report 2016-2017


Our approach

Our Approach

Our approach

Financial auditing

Financial auditing provides independent assurance to Parliament that the financial statements of agencies are presented in accordance with Treasurer’s Instructions, Australian Accounting Standards and other mandatory professional reporting requirements and:

  • are based on proper accounts
  • present fairly the operating results and cash flows for the period under review
  • show the financial position at the end of the financial reporting period.

The audit of most agencies also includes assurance that controls exercised by the agency are sufficient to provide reasonable assurance that the receipt, expenditure, and investment of money, the acquisition and disposal of property and the incurring of liabilities have been in accordance with legislative provisions.

Agencies that operate under the Financial Management Act 2006 (the majority of public sector agencies) receive 3 opinions from the Auditor General:

  • an opinion on the financial statements of the agency
  • an opinion regarding the controls in the agency
  • an opinion on the key performance indicators (KPIs) of the agency and whether they are fairly presented, relevant and appropriate.

These agencies are required under the Act to have their annual reports tabled within 90 days of financial year end.

Agencies operating under other legislation receive an opinion on their financial statements.

You will find an overview of the financial auditing work undertaken this year on page 48. Appendix 2 is a complete list of agencies subject to financial audit.

Our Financial Audit team also conduct AGBAs that focus on common business practices across the state government sector and provide agencies with information about areas of better practice as well as potential deficiencies and pitfalls.

Financial audit client surveys

Feedback from clients is an important source of information for us as it highlights areas where improvements are required. All clients who receive an audit opinion have the opportunity to participate in the annual financial audit client survey. The survey gauges how we are performing in the areas of audit process, audit reporting, audit value and overall performance.

A total of 121 out of 149 financial audit clients responded to our survey this year, a response rate of 81% which is the same as last year. The results were positive overall, as reflected in the high overall index of 81.3%. The results were particularly positive in relation to the value of the assurance clients obtain from the audit of their statutory financial statements (97%).

Other areas where we have improved our performance include our staff being responsive to client needs and audit opinions issued in timely manner.

The survey results also highlight areas where we can focus improvement: audit program undertaken in a timely manner and communicating audit findings and issues in management letters.

Table 10 - Financial audit survey results of key questions in 3 areas of focus

Performance auditing

We undertake performance audits to assess the efficiency and effectiveness of agency 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. We conduct performance audits under section 18 of the Auditor General Act 2006 and in accordance with Australian Auditing Standards.

We conduct 2 types of performance audits:

  • broad scope performance audits, which focus on the effectiveness and efficiency of larger programs, projects and services
  • narrow scope performance audits, which have a tighter focus and may assess internal agency controls, compliance with legislation, policy and good practice, and information systems.

We also conduct follow-up audits to assess actions taken by agencies in response to our recommendations and changes and improvements that result.

From page 50 you will find summary information on our reports tabled in 2016-17.

Performance audit client survey

Shortly after we table a performance report in Parliament, the agencies involved in that report are invited to complete a client survey. Like our financial audit client surveys, the surveys of our performance audit clients focus on our audit process, reporting, value and our overall performance.

The nature of audit work includes close scrutiny and possible criticism of agency performance, and we understand that this can influence the responses to the survey. Nevertheless, the surveys provide a valuable way for us to identify areas for improvement.

The survey response rate this year was 93%, with 41 of the 44 clients invited to participate providing a response. This is consistent with the response rate for last year. Overall, the 2016-17 results were positive and generally consistent with last years.

We use the results to inform where additional effort or training is required as part of our continuous improvement. It is pleasing to note this has resulted in more positive results in regard to:

  • communication with the client
  • professionalism of our auditors
  • helping the client improve their performance.

The results also help us identify areas where more effort is required such as in understanding the client organisation and its operating environment.

Table 11 - Performance audit survey results of key questions in 3 areas of focus

Aggregate performance index scores

For performance and financial audits, the survey analysis includes the calculation of aggregate performance indices across the 4 focus areas of audit process, audit reporting, audit value and our overall performance.

The aggregate index for an area is the average of the individual question indices for survey questions across that specific area. The index for a question is the average response for each question across all respondents.

The financial audit client survey results were favourable overall in 2016-17, with results remaining consistent with those achieved in 2015-16. The performance audit client survey saw an improvement in audit value, however the decreases from 2015-16 highlight the need for us to maintain our focus on continuous improvement activities.

Table 12 and 13 - Aggregate performance indices

Performance audit topic selection

Deciding what to audit is a key part of the Auditor General’s independence and is not subject to direction from Parliament or government. We have to exercise this independence responsibly, so we have processes in place to make sure our selection of topics is objective, robust and transparent.

Topic ideas are drawn from a range of sources including members of Parliament, parliamentary committees, agencies, the community and staff.

We assess and review potential topics against our criteria and KPIs. We seek to select a program that is balanced in its coverage, contains topics that matter to Parliament and the community, and that reflects how and where the state is spending taxpayer’s money.

Once established, we discuss our forward work program with PAC and EFOC. Once an audit has begun, we make its objective, focus and timeframes public on our website at

Figure 6 - Our topic selection framework

Opinions on ministerial notifications

Under the Financial Management and Auditor Generals Acts, the Auditor General is required to express an opinion as to whether it is reasonable and appropriate for a Minister not to provide information to Parliament. There are a significant number of ministerial notifications referred to the office, this year we received 51. While we manage our resources to accommodate this work, it is difficult to anticipate when and how many of these notifications will come to us and the scale of the work involved in the inquiries. This can affect our resourcing and delivery of other audit work.

Summaries of the ministerial notifications we tabled in Parliament in 2016-17 are available from page 50.

Table 14 - Ministerial notifications received in last 5 years

Quality framework

Quality is fundamentally important to everything we do. We have a framework that establishes and maintains quality over the audit work we perform. We have instilled this framework throughout our people, sending a strong message that audit quality is more than meeting professional standards.

Our framework includes a Quality Assurance Plan, which Executive approves on an annual basis. Our TAQ business unit is responsible for facilitating the plan and for reporting results to Executive, which oversees implementation of accepted recommendations.

We link this plan to our Strategic Plan and it plays a vital role in terms of internal control, risk management, corporate governance and compliance monitoring.

Our ongoing quality assurance activities include:

Inspection of engagement files – to ensure a quality audit is performed and continuous improvement opportunities and good practice are identified and shared.

Review of audit methodologies – to ensure that they continue to comply with the auditing standards.

Review of audit files of contract audit firms – to ensure the quality of contract audit firms who perform audit work on our behalf.

Review of published information of contract audit firms – to ensure we know the results of public information including quality assurance reviews performed by regulatory bodies and membership organisations.

Liaison with contract audit firms – to seek information about the firms on aspects of their business that may be topical or may represent a particular risk for the current year.

Engagement quality control reviews – to evaluate and report on the implementation of the engagement quality control process.

Independence – to evaluate and report on the implementation of the Conflict of Interest Policy.

External peer review program – to get an independent opinion as to the quality of the audits we perform. This may be from another audit office in Australia or from an independent reviewer.

Independent panel review of performance audit reports – to get an independent opinion as to the effectiveness of our performance audit reports.

Technical training is a critical part of the Quality Assurance Plan. We regularly deliver training sessions on what is audit quality, the importance of audit quality and the role and responsibility for audit quality.


We are often asked who audits the Auditor General… and the answer is, many people do! We are subject to various review processes, which we value as they provide us with assurance that our processes are effective, efficient and evolving.

Figure 7 - Reviews of OAG in 2016-17

Independent review of our reports

In February 2017, we engaged 3 independent reviewers to assess 5 of our performance reports against 7 criteria:

  • communication
  • objective, scope and approach
  • reporting
  • audit conclusions
  • audit recommendations
  • value for money
  • broader impact.

The 2017 results were highly favourable with some improvement opportunities identified – including more graphs and tables in our reports as well as photos and maps from our audit visits.

We arrange an independent review of our reports approximately every 2 years. The results of this latest review were very comparable to those results received in 2015 by a different panel of reviewers.

Internal audit

Our internal auditors (2020 Global) provided their 2016-17 report on 9 May 2017. This year, 6 key areas were audited (Table 15), which were developed in consultation with ARMC, ICT Committee and Executive.

Overall, the report concluded:

‘…in our opinion the practices reviewed are sound and the OAG has once again demonstrated a high level of focus in managing the control environment.

In our opinion, based on the functions/areas subject to review, the office’s control environment is of a good standard for the scope areas examined. There are some opportunities for improvement, albeit minor. Reflecting the number, nature and potential value of observations we assess an A rating.’

We have implemented 4 recommendations and we expect to have the remainder in place by end of August 2017. Executive did not support 1 recommendation.Table 15 - Summary of recommendations of 2016-17 internal audit

In addition, our internal audit plan captures the need to assess various aspects of our information technology and security. As a result 3 audits were undertaken in 2016 for our information technology activities.

Internal self-assessments

Many of the audits we conduct of other agencies also have relevance to ourselves, especially our AGBAs. For this reason, we self-assess our own internal processes and controls against the audit criteria used for these audits. We address any improvement opportunities coming out of these reviews as soon as practicable.

In 2016-17, our Business Services unit self-assessed our performance against the criteria used in the audits of:

Working with Parliament

Unlike public sector departments and agencies, we do not report to any government minister but report directly to Parliament. As our key client, we strive to keep Parliament informed on public sector accountability and performance and we have developed a number of initiatives to promote quality relationships with Parliament and parliamentary committees.

Parliamentary liaison program

Our parliamentary liaison program ensures that we provide Parliament with relevant and timely information, in keeping with our obligations under the Auditor General Act 2006. This benefits Parliament and us, and supports our mission to help improve public sector performance and accountability by reporting independently to Parliament.

This program includes:

  • briefings for new ministers, members of Parliament and parliamentary committees
  • regular meetings and briefings with parliamentary committees and key parliamentarians
  • briefing parliamentarians on our tabled reports
  • briefings to our parliamentary oversight committees on our proposed forward audit program and current audits
  • providing information to support inquiries by parliamentary committees.

We use the results of our members of Parliament survey, together with direct feedback throughout the year, to identify any potential initiatives or improvements that could further enhance our parliamentary liaison program.

Parliamentary inquiries

We have been involved in, or provided information to assist a number of parliamentary inquiries during 2016-17. This included the:

We have also provided information to assist the Inquiry into Government Programs and Projects, which was announced by the Premier in May and is being led by the former Under Treasurer John Langoulant AO.

Parliamentary requests for investigation

The Assessment of Progress to Improve Payment Security for Government Construction Subcontractors (page 55) was based on a request from EFOC to assess the implementation of recommendations from a 2013 Small Business Development Corporation report.

We are currently finalising a report into non-clinical services at Fiona Stanley Hospital, which is based on a request from the Education and Health Standing Committee.

Members of Parliament survey

An independent research company conducts surveys throughout the year for us. The results are very important in understanding how we are performing and how well we are meeting the needs and expectations of our clients. They also inform our ongoing quality assurance and continuous improvement efforts and are used to measure the effectiveness of a number of our Strategic Plan initiatives.

A survey of members of Parliament is used to monitor our performance in meeting our vision of serving the public interest by an informed Parliament. Through the survey, members can share their views in areas such as satisfaction with our services and the effectiveness and usefulness of our products.

We did not conduct a survey this year due to the state election and the large number of new members who would not have had any engagement with us in the previous year. We will next survey members in 2018. However, we have a number of avenues which allow members to engage with us and provide comments outside the survey process, including the briefing opportunities in our parliamentary liaison program.

Working with our peers

Australasian Council of Auditors-General

The Australasian Council of Auditors-General (ACAG) is an association established by Auditors General in 1993. It allows Auditors General to share information and business intelligence and supports the development of effective and efficient auditing methods and practices by members.

ACAG also enables Auditors General to express their collective opinions, where appropriate, on financial accounting and auditing standards and related issues such as exposure drafts issued by the Australian Accounting Standards Board and their international equivalents.

We also participate in ACAG’s subgroups, which provide mutual benefits and learning opportunities between audit offices.

  • Financial Reporting and Auditing Committee provides strategic and technical advice on developments in accounting, financial reporting and financial auditing.
  • Heads of Financial Audit Group provides a forum to exchange knowledge and experience in current financial audit developments and practice.
  • Heads of Performance Audit Group provides strategic advice and information to support the development of effective and efficient performance auditing practices.
  • Quality Assurance Panel develops and maintains ACAG’s capacity to perform quality assurance reviews when requested by Auditors General.

Auditing and Assurance Standards Board

The Auditor General is a member of the Auditing and Assurance Standards Board, which is an independent, statutory agency of the Australian Government, responsible for developing, issuing and maintaining Australian Auditing and Assurance Standards.

Integrity Coordinating Group

The OAG is a member of the Integrity Coordinating Group (ICG) an informal association of 5 independent integrity agencies. The purpose of the group is to use their combined voice to promote and strengthen integrity in Western Australian public bodies. Members include the independent officers of the Auditor General, the Western Australian Ombudsman, the Public Sector Commissioner, the Corruption and Crime Commissioner and the Information Commissioner.

The group meets several times each year to share information and collaborate where appropriate. Outputs of the ICG include guidance papers and seminars that promote the concept of integrity in government.

Working with our stakeholders

We receive information from many different sources that assists us to perform our functions. We treat this information with confidentially, applying best practice processes, as recommended by the Western Australian Ombudsman. We manage all feedback, suggestions and concerns in a way that demonstrates our values of integrity, quality and respect.

Our website includes information on how to contact us and provides an opportunity to submit feedback on current audits or suggest a future audit topic. Information received through these avenues may be examined under the Auditor General Act 2006, and can be considered as part of our topic selection process (page 38).

Referrals and enquiries

Referrals can be an early warning of issues relating to the performance, probity and compliance of the public sector. We record and review all referrals and enquiries to identify any trends and wider issues across government.

When considering the issues referred to us, our focus is on systemic weaknesses rather than a one-off issue affecting an individual. We assess relevant issues against our internal protocols and in an ethical and objective manner to determine if further investigation is warranted. This can potentially lead to an audit. If the issue is outside our mandate, we will assist individuals to redirect their issues to those who can best assist.

Where matters cross jurisdictional boundaries, such as the work of the Corruption and Crime Commission or the Public Sector Commission, we have processes in place to communicate with other integrity agencies to highlight potential issues, while maintaining confidentiality.

In 2016-17, we experienced a 36% decrease in the number of referrals and enquiries lodged with us. The number of referrals received from members of Parliament or parliamentary committees dropped by almost 50% and was the lowest it has been in the last 5 years. This may in part be due to the March 2017 state election caretaker period, the subsequent transition of new members into Parliament and the establishment of the new parliamentary committees.

Table 16 - 2016-17 referrals and enquiries

In 2016-17, the average number of days we took to respond was 2.3 working days, an improvement from 3.49 days last year. We responded to 96.1% of all referrals and enquiries within our working day target, which was an improvement on last year’s outcome of 93.3%.

Public interest disclosures

The OAG is an accountability agency to which people can make public interest disclosures (PID) under the Public Interest Disclosure Act 2003.

The Act establishes us as the appropriate authority to receive PIDs that relate to substantial unauthorised or irregular use of, or substantial mismanagement of, public resources.

In 2016-17, we assessed 6 matters, 2 of which met the PID criteria.

The Auditor General appoints key employees, including members of Executive, as PID officers. We deliver appropriate training for these employees so they can receive and manage PIDs effectively.


We define a complaint as any expression of dissatisfaction or concern made about OAG, its staff, external contractors, services, products or practices.

We received no complaints in 2016-17.





















Page last updated: August 8, 2017

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