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AUDITING IN THE PUBLIC INTEREST NEWSLETTER, WINTER 2002 A Year of Many HIGHS  Wayne Cameron, Auditor-General As we draw the 2001-02 financial year to a close, it’s not surprising for one to reflect on the achievements, and disappointments, of the year. Of highlights, there were many: • highest volume of reports tabled in Parliament ever; • successful development and issue of model financial statements for local government and water authorities, and active involvement in the preparation of model financial statements for TAFE institutes and the health sector; • substantial interim audit work completed for the 2001-02 financial year; • very positive results from our staff climate survey; • successful upgrade of our IT and data communications platform; • completion of an official history of the Office to commemorate 150 years of operations; and • the receipt of a Gold Award for our 2000-01 Annual Report. The disappointments were few: • delay caused by external parties to an upgrade of our practice management system; and • the delayed passage of amendments to the audit legislation which would have led to further strengthening of the functioning of the Office in the future. The steady improvement in public sector reporting practice has much to commend it, but unless continuous pressure is applied, particularly in the areas of performance reporting, strategic/long-term planning, and improved risk management/governance practices, any small gain in timely and transparent reporting could be undermined through absence of sufficient attention to the longer-term. These key areas will continue to remain the focus of specific attention by my Office over the next year or so. J.W. Cameron 150 years of
The year 2001 marked the 150th anniversary of the appointment of the first Victorian Auditor-General (Charles Hotson Ebden) in July 1851. To recognise this important occasion, we commissioned the preparation of an official history of our Office. We engaged historian, Dr Peter Yule, to carry out the task of recording our history. The product of his work is a superbly structured analysis of the personalities and the key events that have influenced the functioning of the Office since its inception. It is fascinating reading for anyone interested in the development of public accountability in Victoria. The launch of Peter Yule’s book titled In The Public Interest took place in Queens Hall at Parliament House on 27 May 2002. The book was officially launched by the Hon. Bruce Chamberlain MLC, President of the Legislative Council. A large gathering, including Members of Parliament, the Treasurer, officials from public sector agencies, representatives of academia and professional bodies, and current and retired staff from the Office attended the launch. We were very pleased to have with us on the day 3 former Victorian Auditors-General, Brian Waldron, Richard Humphry and Ches Baragwanath, and a former Australian Auditor-General, John Taylor. Our Office’s corporate motto is “Auditing in the Public Interest”. This motto complements the special statutory status of Independent Officer of Parliament that is accorded the position of Auditor-General in Victoria. The direct nexus between the Auditor-General and Parliament reinforces the principle that an Auditor-General has the primary responsibility of serving the interests of Parliament which can only be achieved through auditing in the public interest. It was, therefore, so fitting that we could celebrate our 150 year anniversary within the very setting of Parliament itself, and that the title of Peter Yule’s book reflected this precious connection with Parliament.  The President of the Legislative Council, the Hon. Bruce Chamberlain MLC, officially launched the Office’s 150th anniversary history book in Queens Hall, Parliament House. In the foreword to the book, the Auditor-General stated that those staff currently serving in the Office and those who will take their place in the future, face the ongoing challenge of continually building on the efforts of all those who have served before them and who forged for the Office a reputation, both nationally and internationally, as a respected and competent public sector auditing body. He went on to say that readers of the next history of the Office, whenever that may occur, will surely wish to see that this challenge has been successfully met. Orders for Peter Yule’s book can be placed with Information Victoria, 356 Collins Street, Melbourne Vic. 3000 Tel:1300 366 356 Reports tabled in Parliament Our Autumn 2002 parliamentary reporting program saw the tabling of 5 performance audit reports and our June 2002 Report on Public Sector Agencies. The reports are available on our website at www.audit.vic.gov.au Copies of reports may be purchased from the Office, or from the Information Victoria Bookshop located at 356 Collins Street, Melbourne. International students in Victorian universities, April 2002 This audit assessed whether international student programs at Melbourne, Monash and RMIT Universities have impacted on Victorian students’ access to university and on academic standards, have been of financial benefit, and whether these programs have been adequately regulated and monitored.  Significant intangible benefits are derived from mixing of The audit found that universities have been very responsive to Commonwealth funding arrangements. While direct displacement of domestic HECS students is regulated against, the relative proportion of marginally-funded domestic HECS students has reduced and the proportion of full fee-paying international and domestic students have increased. International students have been of financial benefit to universities and the Victorian economy. There remains a high level of current demand for domestic HECS places in Victoria. The audit recommended action to address English language issues among international and domestic students, to strengthen student assessment practices, and to provide greater support to academic staff. The report was well received by the universities and the Department of Education and Training. To quote Monash University, "Monash University welcomes the findings of this performance audit, which is constructive and helpful. The independent findings affirm the many benefits of international education, acknowledge the strengths of our universities and make suggestions for further improvement of certain aspects of higher education in Victoria". Investment attraction and facilitation in Victoria, May 2002 The audit examined the extent and effectiveness of direct financial assistance to companies investing in Victoria as well as the facilitation of these investments. In particular, the net benefits to Victoria and the adequacy of criteria, measures, transparency and reporting arrangements for this financial assistance and facilitation were examined. The audit also followed-up key recommendations of the Auditor-General’s 1995 report, Promoting industry development: Assistance by government. The extent of local government involvement in investment attraction and facilitation services was included in the audit also.  Food industries: a sector given priority for The audit found the criteria, processes and contractual arrangements for investment assistance were sound. However, insufficient monitoring and public disclosure of investment outcomes were highlighted, with recommendations for more systematic monitoring of, and greater transparency in, reporting the benefits of the Government's investment attraction and facilitation services. The Department of Innovation, Industry and Regional Development, and selected local governments, broadly accepted the recommendations of the report. Nurse work force planning, May 2002 The audit assessed the effectiveness of nurse work force planning centrally (by the Department of Human Services) and in hospitals. The audit also reviewed the effectiveness of recruitment and retention strategies, and the linkages existing between key stakeholders associated with nurse supply and demand.  RMIT Bachelor of Nursing students on clinical placement. The audit concluded that the Nurse Recruitment and Retention Strategy had been successful, but that the shortage of nurses will be an ongoing issue. Work force planning at central and hospital level needs more attention, as do the linkages with nurse education providers. The Department accepted the report’s findings and recommendations, and has signalled its intention to address the major issues highlighted by the audit. Management of roads by local government, June 2002 The audit followed recent studies that had identified problems with the management of infrastructure assets by local government. The audit concluded that current local government practices do not meet accepted best appropriate road asset management practices or properly meet the long-term needs of the community. This deficiency has contributed to a substantial funding gap between the actual and required level of spending on infrastructure asset renewal and maintenance. Furthermore, unless asset management practices are improved, the community could ultimately be faced with undesirable consequences such as rate rises, unsafe road conditions and even loss of service.  Road upgrade – Delatite Shire Council. The findings and recommendations arising from the audit were generally accepted by the local government sector, although councils expressed a strong view that limited funding for road management is the major issue. Managing Victoria’s air quality, June 2002 The audit focused on the Environment Protection Authority’s activities in managing air quality in Victoria with particular attention to resource management practices, air quality monitoring activities, approach to controlling emissions from industry, motor vehicles and diffuse sources.  Motor vehicles make the single biggest contribution The audit concluded that Victoria’s air quality has improved over the past 30 years with emissions from major industry sources being effectively controlled. Emissions from motor vehicles and diffuse sources, which are more difficult to control, remain a challenge. The Authority agreed with the majority of audit’s recommendations, including the need to more explicitly plan and articulate the resourcing of its air monitoring capacity. Report on Public Sector Agencies, June 2002 This report, tabled in Parliament in June 2002, sets out the results of a number of special reviews and the results of financial statement audits for public sector agencies with balance dates other than 30 June 2001 (largely educational authorities). The audit results indicated that: • There is scope for improvement in the timeliness of completion of audited financial statements to enhance the accountability process, with 43 per cent (30 per cent in 1999-2000) of agencies meeting the 12 week legislative time frame; and • A total of 118 clear audit opinions were issued on the financial statements of public sector agencies with balance dates other than 30 June, with 13 qualified audit opinions issued, mainly relating to inappropriate accounting treatment for grants, and inappropriate recognition of a receivable from the Commonwealth Government for universities’ unfunded superannuation liabilities. At the date of preparation of the report, 23 audited financial statements had not been finalised. The report also included the results of a number of special reviews, including: • Operations of university subsidiary entities and joint ventures; • Case studies of selected associated entities and joint ventures of Victorian universities; and Notebook computers for teachers.  The report examined the program of • Latrobe Regional Hospital; • Visiting Medical Officers’ arrangements at rural public hospitals; and • Acute and Psychiatric Information Directions project. Infrastructure, including Local Government • Federation Square development; • City Link: Surplus land; • Council monitoring of business ventures and community support arrangements; • Municipal business units; and • Property management practices at Latrobe City Council. Innovation, Industry and Regional Development • National synchrotron facility. • Victims Referral and Assistance Service; • Victoria Police: “A New Century, A New Force” recruitment initiative; and • Registry of Births, Deaths and Marriages.  "A New Century. A New Force." television recruitment drive. Natural Resources and Environment • Victorian Forest Industry Structural Adjustment Package; • Survey information at Land Victoria; and • Land titles automation project.  Issues relating to the restructure of the • Advertising and marketing by government departments; and • National Gallery of Victoria redevelopment. • State Revenue Office: management of stamp duty collections. Timeliness of financial reporting The annual reporting and audit requirements for departments and other public sector agencies are set out in the Financial Management Act 1994 and the Audit Act 1994. Under section 45 of the Financial Management Act, each department and public body must submit its annual financial statements to the Auditor-General within 8 weeks of the end of the financial year. The Auditor-General is then required by the Audit Act 1994 to complete the audit of these financial statements within 4 weeks of their receipt. Accordingly, the legislative framework requires the audited financial statements of the public sector agency to be completed within 12 weeks of the end of the relevant financial year. Finally, within 4 months of the end of the financial year or the next sitting day after the end of the fourth month, the relevant Minister is required to table in each House of Parliament the annual report of each entity, including the audited financial statements. The table below illustrates the overall performance of public sector agencies with balance dates other than 30 June in meeting the statutory requirement associated with the completion of audited financial statements.  FURTHER INFORMATION Further information about any of the issues contained in this publication, or about the Victorian Auditor-General’s Office, may be obtained from: John Olesky Fax: (03) 8601 7010 |
