There is no doubt that we are in a period of extensive public sector reform. Machinery of Government (MoG) changes have touched many entities, and with that comes increased risk around governance and controls as people, systems and responsibilities move, merge and evolve.
This report summarises the results of our annual audits of 146 state government entities for the year ended 30 June 2018.
As a result of the MoG changes, the audit effort of my Office increased to evaluate the controls and key performance indicators of the new entities and to verify the transfer of asset and liability account balances.
State entities are adapting quite well. While fewer entities were audit-ready within 20 days of year end (63% compared to 70% last year), the vast majority received clear audit opinions and just 6 received a qualified opinion, down from 9 last year. The number of findings reported in our management letters to entities also declined.
Consistent with my predecessor’s view, I strongly believe that ultimately we need to reduce the financial reporting burden on small entities without compromising their accountability.
Since my appointment as Auditor General, I have examined the approaches adopted for financial reporting in the Western Australian public sector. I have identified aspects of financial reporting that are very time consuming for report preparers and auditors. This level of reporting does not appear to provide any additional value to Parliament and other users for decision making purposes. To enable the sector to draw on the knowledge of my Office, I have asked my technical and financial audit teams to identify areas where reporting could be more efficient at an entity level:
- without compromising accountability
- while remaining compliant with Australian Accounting Standards, which is vital at a whole-of-government level.
I anticipate my Office’s findings may contribute to the Department of Treasury’s work in potentially streamlining the ongoing financial reporting requirements of state government entities.
My audit reports, including this one, provide insight to good practice and common issues. I encourage audit committees and management to capitalise on the work of my Office – as audits conducted at another entity can alert your internal audit to potential issues you should be considering in your own entity. In doing so, risks that have not yet been addressed will be addressed more efficiently and new opportunities will be identified to stimulate continuous improvement and informed decision making for your organisation.
I wish to thank my staff and the staff in the audited entities who contributed to the audit process.