1 Auditor-General’s mandate expanded to local government
In 2016–17, the Local Government Amendment (Governance and Planning) Act 2016 gave the Auditor-General the mandate to audit NSW local government. The mandate has been extended to NSW councils as part of the NSW Government’s broader local government reform agenda, which aims to create a modern system of local government with strong performing councils.
It is expected that this change will:
- support reforms aimed at strengthening governance and financial oversight in the sector
- provide greater consistency in the financial reporting and audit process
- improve financial management, fiscal responsibility and public accountability.
Since being given this new mandate, we have worked collaboratively with the sector and with accredited audit providers to ensure the arrangements we put in place are efficient and effective, and add value to our new clients and to the citizens of New South Wales.
‘This is a major reform that brings New South Wales into line with most other Australian jurisdictions and New Zealand, and that will provide greater consistency and certainty across the sector. It will also ensure that reliable financial information is available that can be used to assess councils’ performance and for benchmarking.’
Paul Toole, Minister for Local Government
2 Extending related party disclosures to the public sector
The extension of AASB 124 ‘Related Party Disclosures’ to the not-for-profit sector in the 2016–17 financial year is the most significant change to the financial reporting framework in recent times. Not-for profit agencies will collect, report and disclose related party transactions for the first time. The Audit Office will audit the completeness and accuracy of related party disclosures.
To help the NSW public sector prepare for application of the new standard, the Audit Office partnered with key stakeholders to create a better understanding of the requirements, and establish a robust process for collection and disclosure of information. Key partners included NSW Treasury, the Department of Premier and Cabinet, the Office of Local Government, the Australasian Council of Auditors-General, the Heads of Treasury Accounting and Reporting Advisory Committee and the Australian Accounting Standards Board.
To date, the Audit Office has:
- provided the Treasurer with practical examples of reportable Ministerial related party transactions and how they might be treated for disclosure purposes
- participated in discussions with key stakeholders across Australia to promote a common understanding of the requirements and their practical application
- helped central agencies understand the requirements, provide clarity about expectations, reduce unnecessary regulatory burden, and help with guidance on practical application issues
- provided feedback on Treasury and Office of Local Government’s guidance, templates and frequently asked questions
- advised on auditing requirements in relation to related party risks and financial statement disclosures.
3 Financial Management Transformation
In 2016–17, the Audit Office worked closely with NSW Treasury on detailed proposals for legislative and policy reform aimed at simplifying and modernising agency management, responsibility and accountability, financial reporting, governance and performance. The reforms are being implemented by Treasury’s Financial Management Transformation (FMT) team.
The Audit Office has provided comments to Treasury on key papers underpinning the reforms, been an active member of the consultation group and worked through some key proposals with the FMT team, the Crown Solicitor and the Parliamentary Counsel’s Office. The proposals aim to increase performance, accountability and transparency in the NSW public sector.
The Audit Office has provided feedback on the proposed Government Sector Finance Bill and is now working with Treasury on the content of what will become the Government Sector Audit Act 1983.