Quality and accuracy

Because of the COVID-19 pandemic, financial management staff faced greater challenges this year to maintain financial operations to a standard that would enable reliable and timely financial reporting. (Refer to the section on Impact of COVID-19 on audited entities, page 26.)

Under these circumstances, and given simultaneous significant changes to accounting standards, it was pleasing that financial statements prepared for audit were generally of satisfactory quality. In our view this was mainly because this year, more entities’ financial statements were reviewed by their audit committee before being released for audit. Having established quality control practices which include review of the financial statements by an audit committee, will greatly enhance the standard of financial report preparation.  

Although the vast majority of financial statements and KPIs were of a satisfactory standard, the audits of 9 entities could not be completed within the 90 day Financial Management Act 2006 tabling timeframe, because of a variety of problems experienced by the entities.

Timeliness 

Sixty-five percent of the entities were ‘audit ready’ within 20 days of their financial year end. Although this was lower than recent years, it still represents a sound achievement, given the challenges that the COVID-19 environment posed for financial management of many entities approaching year end.

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 (commencing on page 57) while Figure 14 summarises timeliness over the last 11 years.

Source: OAG

Figure 14: Percentage of entities ‘audit ready’ within 3 time brackets for last 11 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 15). Our definition of small is entities with total expenditure below $41 million.

We congratulate the entities we rated as the top achievers for 2019-20.

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.

Source: OAG

Table 15: Top 20 best practice entities in 2 expenditure categories for 2019-20