Introduction to the Victorian Auditor-General's Office - VAGO

Victorian Auditor-General’s Office
Introduction to the
Victorian Auditor-General’s Office
“Auditing in the Public Interest”
John Findlay
Assistant Auditor-General - Policy, Planning and Technical
28 February 2008
Auditing in the Public Interest 1

Overview
• Role of Victorian Auditor-General
• VAGO Annual Plan – planning our audit program
• Managing Performance Audit
• Managing Financial Audit
• Public Sector Financial Regulation
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Role of Auditor-General
• Auditing in the public interest since 1851.
• Constitutional safeguard to serve interests of Parliament.
• Our Purpose - Providing assurance to Parliament on the
accountability and performance of the Victorian public
sector
• A key link in the accountability process.
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Accountability framework
Executive
Executive
Government
Government
Agencies
Agencies
Parliament
Parliament
Electors
Electors
Auditor-General
Independent
Independent
Objective
Objective
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Role of Auditor-General - continued
• Constitution Act – ‘Independent officer of
Parliament’
• Arguably the most ‘independent’ powers for an
Auditor-General in Australia
• Accountable to Parliament via the PAEC
• Recommends appointment of Auditor-General
• Oversees performance audit of VAGO
• Recommendations on annual budget
• Consulted on annual plan and audit specifications
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Auditor-General’s mandate
Financial Audit
• Review financial statements 650+ agencies each year.
• Report on State’s Estimated Financial Statements &
Annual Financial Report
• Around half undertaken by external audit service
providers from private sector
Performance Audit
• Determine whether an authority is achieving objectives
& operating economically, efficiently and effectively
in compliance with all relevant Acts
• Not to question the merits of policy objectives
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Auditor-General: Governance
• Audit Act
• Strategic Plan
• Annual Plan
• Business Plans
• Resources – Auditor-General and Office
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Strategic Plan 2007-08
Objectives:
1. Authoritative and relevant reports and advice
2. Being highly regarded by Parliament
3. Fostering productive relationships with audit
clients
4. Being an employer of choice
5. Being innovative and cost effective
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Annual Plan
Annual Plan 2007-08
• Process for selection of areas of prospective audit
interest
• Selected performance audits for 2007-08 (broad
and limited reviews)
• Prospective areas of audit interest, 2008-09 to
2010-11
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Annual Plan
Concerns raised by
Members of Parliament,
government agencies or
the community
Results of current or
previous financial and
performance audits
Risk and Materiality
Progress account of the
Growing Victoria
Together measures
Analysis
Performance challenges
facing government and
impact on community,
environment or economy
Current or proposed action
by government or its
agencies to address
performance challenges
Emerging trends or factors
which may impact on
government or service
delivery
Consultation with PAEC,
as required by the Audit
Act 1994
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Managing performance audits
Performance audit mandate
• “Determine whether an authority is achieving objectives
& operating economically, efficiently and effectively
in compliance with all relevant Acts”
To do this we carry out ‘broad’ and ‘limited’ scope
performance audits.
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Managing performance audits
These reports are of interest to the community
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Managing performance audits
The stages of a performance audit
• Planning: specification, program and plan
• Conduct: research and refinement of issues
• Reporting: preliminary and final reports
• Post tabling: presentation of findings
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Managing performance audits
Managing the quality of audits
• Review processes and sign-offs during the audit
• Post audit reviews
Challenges for performance auditing
• Relevance and timeliness
• Striking the right balance with agencies
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Management of financial audits
Financial audit mandate, including audit of
performance indicators:
• 550 State and 101 local government bodies
• 520 with 30 June balance dates
• 130 with other balance dates (mainly 31 December)
• Composition by sector/industry
• Central government
• Water (PI)
• Health
• Education (PI)
• Local government (PI)
• Infrastructure (road, rail, ports)
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Management of financial audits
Financial audit planning
• Overall annual planning
• Risk assessment
engagement risk
audit risk
• Allocation of responsibilities
signing officer
engagement leader
audit manager
engagement quality control review officer (high risk only)
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Management of financial audits
Financial audit planning – continued
• Annual project level planning
• Update understanding of audit client
• Update risk assessment
“inherent” risk by financial statement component
“control” risk by system/process
• Update customised work programs
rotation of testing (controls)
rotation of emphasis (substantive)
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Management of financial audits
Financial audit assessment – Project level
• Internal assessment
• engagement quality control “hot” review
• quality assurance “cold” review
• External assessment
• annual client satisfaction survey
• tri-ennial performance audit
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Public Sector Financial Regulation
• Victoria’s system of government is based on the
Westminster model
• Parliament exercises ultimate authority/control over
public finances
• Administered by government departments, statutory
authorities and other commercially based entities
• Majority of public sector expenditure is:
• initially incurred by departments
• mainly funded by parliamentary appropriations
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Public Sector Financial Regulation
Victoria’s Legislative Financial Management
Framework
• Constitution Act 1975
• Financial Management Act 1994
• Annual Appropriation Acts
• Audit Act 1994
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Questions?
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More information
Victorian Auditor-General’s Office
www.audit.vic.gov.au
Email: ag@audit.vic.gov.au
Phone: +61 8 8601 7000
Post: Level 24/35 Collins Street
Melbourne Victoria 3000
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