- Most State government entities prepared satisfactory quality financial statements and KPIs for 2018-19, however some still need to improve their quality review processes.
- Seventy-two percent of State government entities were ready for their audit within 20 days of year end. Last year this result was 63%.
- We have acknowledged the top 40 ‘best practice’ entities across 2 categories for timeliness in their financial reporting, good financial controls and reporting practices.
Quality and accuracy
As reported on page 24, by 30 June 2019 10 of the 11 new MOG departments had amalgamated the financial management and reporting IT systems of their constituent entities. Statutory authorities that were named in the amalgamations still report on separate financial systems. This generally had an effect on the quality of their 2018-19 financial reporting.
Overall for all entities, the number of errors identified and corrected during the 2018-19 audit process was higher than the previous year. We again found that many entities continue to make key decisions about their financial reporting late in the financial year, or after year end, resulting in rushed transactions and adjustments, and consequent errors. This year, a few entities missed or just met the statutory 90 day deadline for tabling their annual reports due to valuation issues. In some entities a more robust quality review process needs to be implemented to ensure that their financial statements are complete and accurate, and the working papers adequately support the reported figures in their financial reports.
To ensure timely and accurate financial reports it is important that management in each reporting entity keeps proper accounts and records. Management should undertake various best practice initiatives throughout the financial year and after year end to improve the quality of their financial reporting.
At the beginning of the financial year, entities should confirm the accounting policies to be applied for the ensuing year.
Before year end, entities need to:
- prepare a project plan of human and financial resources, assign responsibilities for tasks and set time frames for financial reporting
- ensure that valuations are received timeously, providing management with adequate review time before inclusion in the financial statements
- identify and review changes to accounting standards and reporting requirements and confirm the approach to any changes with the auditors
- determine the form and content of their KPIs and obtain necessary approvals from Treasury
- prepare pro-forma financial reports, including all comparative information that can be reviewed by the auditors well in advance of the final audit visit.
After year end:
- analyse variations between actual and budget as well as previous year results to identify and correct omissions and/or errors
- ensure managers with sign-off responsibility for components of the financial report do so in line with the established timetable
- ensure the draft financial report has received an internal quality assurance review, preferably by internal audit or other suitably qualified professionals.
Timeliness
Seventy-two percent of the entities were ‘audit ready’ within 20 days of their financial year end. This result restores the trend of improved timeliness.
Being ready for audit as soon as possible after year end enables entities to release resources for other important financial management tasks, thereby improving the overall efficiency and financial management of the public sector.
The date when each entity was ‘audit ready’ is reported in Appendix 1 while Figure 13 summarises timeliness over the last 10 years.
Figure 13: Percentage of entities ‘audit ready’ within 3 time brackets for last 10 years
Best practice entities
Each year we rate entities on their financial reporting and financial controls and recognise the top 20 large and top 20 small ‘best practice’ entities (Table 13). Our definition of ‘small’ is entities with total expenditure below $41 million.
We congratulate the entities we rated as the top achievers for 2018-19.
Our assessment criteria include:
- clear opinion on financial statements, controls and KPIs
- the number and significance of control weaknesses raised in management letters
- audit ready early, ideally no later than 20 days after financial year end
- good quality financial statements and KPIs, supported by reliable working papers and submitted for audit within the agreed timeframe
- management resolution of accounting standards and presentation issues
- key staff available during the audit process.
Best practice top 20 large entities | Best practice top 20 small entities |
Commissioner of Main Roads
Construction Industry Long Service Leave Payments Board Department of Finance Department of Mines, Industry Regulation and Safety Department of Training and Workforce Development Department of Transport Department of Treasury Electricity Generation and Retail Corporation (Synergy) Electricity Networks Corporation (Western Power) Fremantle Port Authority Gold Corporation Government Employees Superannuation Board Insurance Commission of Western Australia Legal Aid Commission of Western Australia Lotteries Commission Mental Health Commission Mid West Ports Authority Water Corporation Western Australian Tourism Commission Western Australian Treasury Corporation |
Botanic Gardens and Parks Authority
Burswood Park Board, The Chemistry Centre (WA) Country Housing Authority Department of the Registrar, Western Australian Industrial Relations Commission Economic Regulation Authority Kimberley Ports Authority Metropolitan Cemeteries Board Minerals Research Institute of Western Australia Office of the Information Commissioner Parliamentary Commissioner for Administrative Investigations Parliamentary departments Perth Theatre Trust Public Sector Commission Rural Business Development Corporation Small Business Development Corporation Western Australian Electoral Commission Western Australian Meat Industry Authority WorkCover Western Australia Authority Zoological Parks Authority |
Table 13: Top 20 best practice entities in 2 expenditure categories for 2018-19