Under the Local Government Amendment (Auditing) Act 2017 (Amendment Act), proclaimed in October 2017, a staged transition has commenced for local government entities (LGs) annual financial audits to transition to the Auditor General as and when existing audit contracts between audit firms and LGs expire. The Office of the Auditor General (OAG) assumed responsibility for 46 audits from the 2017-18 financial year, with full take up of all financial audits by 2020-21. In 2017-18, OAG audit staff performed 3 of the 46 financial audits, with the others performed by contract audit firms on our behalf. Our oversight of these audits, coupled with in-house OAG audits, has provided our staff with valuable insight and understanding of the sector. From 2018-19, we will increase the number of audits performed using in-house audit teams. For almost all of the contracted audits, we retained the existing audit firm for 2017-18 to maintain some continuity of the audit team. However, to provide open and fair competition and to ensure value for money, for 2018-19 we have now re-tendered most of these audits. We are also committed to supporting local industry, and where possible and appropriate, we propose to use local financial auditing professionals in regional areas.
Local government entities audit program: 2017 onwards
Our local government maps show the local governments where we performed annual financial audits for 2017-18 (these are also listed at Appendix 1) and the transitioning schedule for other local governments over the next 3 years.
Local government entity annual financial reporting framework and timeline
Each LG is required to prepare an annual financial report that includes:
- a Statement of Financial Position, Statement of Comprehensive Income by Nature or Type, Statement of Comprehensive Income by Program, Statement of Changes in Equity and Statement of Cash Flows
- a Rate Setting Statement
- seven financial ratios required under section 50(1) of the Local Government (Financial Management) Regulations 1996 (LG Financial Management Regulations), to be reported in the Notes to the financial report.
Under section 6.4(3) of the Local Government Act 1995 (LG Act), a LG must submit its financial report for audit to the OAG by 30 September. Many of the 46 LGs we audited for 2017-18 submitted their financial reports for audit well in advance of this deadline. However, 10 submitted after 30 September 2018.
We completed 38 of the audits by 31 December 2018 as required by section 7.9 of the LG Act. A further 4 were completed after 31 December, and 4 are still being finalised, of which 3 were due to difficulties finalising asset balances.