Property, plant and equipment

From our testing of property, plant and equipment, we found a small number of errors and a need for improved related controls, though we found no significant errors or non-compliance. The following is a summary of our findings:

The useful life of property, plant and equipment recorded in the asset registers of 4 agencies was inconsistent with the depreciation policies

We summarised the depreciation rates used for each category of asset in the fixed asset register and compared them to the agency’s depreciation policy. We found 559 assets at 4 of the agencies, that had useful lives or depreciation rates that were inconsistent with the rates in their deprecation policies.

Of these inconsistencies, we found 9 assets at 2 agencies were being depreciated at incorrect rates. At the Department of the Attorney General, 2 assets were over-depreciated by $113,863. At the Western Australian Land Authority, 7 assets were under-depreciated by $776,716.

For 550 assets, the useful life and depreciation rates set on acquisition were not in accordance with the agencies’ policies. Management advised that they considered their policies outdated, and that they intended to update them.

Purchasing card used to purchase an asset

At the Department of the Attorney General we identified that an asset worth $7,739 was purchased using a purchasing card. This is inconsistent with the Department’s Purchasing Card Policy which states that ‘The purchasing card must not be used to purchase assets, e.g. equipment to the value of $5,000 or more’. Purchasing assets on a purchasing card increases the risk that the asset may not be recorded, capitalised and depreciated in accordance with the Department’s policy. However, in this instance, we noted that the item was recorded in the asset register.

We were unable to use data analytics to perform our test for asset acquisitions approved outside delegation limits at the 6 agencies. This was because the agencies do not record information about the approver in their systems that would enable reliable data matching. These agencies either hold key information as manual records or do not record the information in a format that facilitates reliable data matching.

Accounting general journal entries

We found no errors or fraud when performing the abovementioned suite of tests for accounting general journal entries.

For our testing of whether journals were approved within delegated limits, we were only able to use data analytics at 2 of the 6 agencies. This was because only these 2 agencies approve journals electronically in the accounting system. The other 4 agencies do not hold this information in a format that enabled reliable data matching.

However, the results from our suite of audit tests provide further assurance that journal related fraud or errors are unlikely to have occurred at the selected agencies during the period covered by our audit.