Financial audit timeliness needs to improve
Under the Public Finance and Audit Act 1983, we are required to issue all financial audit opinions within ten weeks of receiving entities’ financial statements. Eighty-six per cent of our opinions were issued within ten weeks in 2016−17, a decline from 91 per cent. The earlier we give entities our audit opinions and management letters, the sooner they can make a decision around our recommendations.
The proportion of total opinions issued on or before 30 September for our 30 June entities (that is, all government entities except for government universities) reduced from 69 per cent in 2015–16 to 68 per cent in 2016–17.
While we issue interim management letters throughout the audit, we aim to issue our final management letters within six weeks of issuing our respective audit opinions. In 2016−17, we achieved 67 per cent, compared to last year’s 70 per cent. We continue to develop and implement strategies to improve the timeliness of our management letters.
We also continue to improve our own internal processes, as well as report our concerns about the quality and timeliness of financial reporting across the sector.
High quality and timely financial reporting is essential for the government to make informed decisions. We continued to support NSW Treasury’s early close program to improve the quality and timeliness of financial reporting through our active engagement with Chief Financial Officers and Audit and Risk Committee Chairs.
Performance audit timeliness decreases
This year our average time to complete performance audits increased to nearly 11 months from ten months. Five performance audits took longer than 12 months to complete. The remaining 12 performance audits were completed on average in 9.5 months.
The completion time for audits varies depending on the scope, number of entities involved, and subject matter complexity. Extended consultation time with some entities, and performance audit resourcing changes, also impact completion times.
This year, our performance audit branch delivered more reports than previous years while experiencing considerable resourcing challenges. Nine experienced branch members left to pursue other career opportunities. Five people joined the branch to fill new positions to support our expanded mandate to audit local government. In addition, four people joined the branch to fill existing vacancies, and two people were seconded from our financial audit branch. At the end of the financial year, four positions remained vacant.
Audit opinions within 10 weeks %
Management letters to clients within 6 weeks %
The year ahead
In 2017−18, we will focus on the timeliness of our audit output through innovation, collaboration and streamlined processes. This includes:
- working with NSW Government entities and central agencies to achieve improved quality and timeliness of financial and performance audit reports
- using stakeholder feedback to maintain effective relationships through our ‘Influencing for Impact’ strategic initiative
- improving our resource capacity by spreading the timing of audit work and partnering better with audit service providers external to the Audit Office
- our branches working together better to improve efficiency and enhance skills and knowledge transfer through our ‘Working Better, Working Together’ strategic initiative
- exploring opportunities to make greater use of technology to speed up and simplify reporting processes through our ‘Reporting Process’ strategic initiative.
For more information on our strategic initiatives see the year ahead.