28 November 2007
AUDITOR GENERAL FINDS MIXED RESULTS IN HIS
ANNUAL AUDIT OF AGENCY ACCOUNTS
The Auditor General Mr Colin Murphy tabled his Audit Results Report in
Parliament today. The report included the results of his 2006-07 Audits
of Agency Financial Accounts by Ministerial Portfolio and his opinion
on Ministerial Notifications together with his Performance Examination
of the Administration of Natural Resource Management Grants.
In his report Mr Murphy stated that his office had been 99% successful
in completing the audits of agency financial statements and performance
indicators by the target date of 27 September 2007.
In total 172 audit opinions were issued with 168 of these relating to
the 2006-07 financial year. Four Agencies received a qualified opinion
including the Department of Treasury and Finance, Department for Planning
and Infrastructure, the Western Australian Alcohol and Drug Authority
and the Eastern Goldfield Transport Board.
In terms of Management Issues 58 of the 135 agencies audited on controls
had significant and/or moderate financial management control weaknesses
brought to their attention. Additionally 37 of the 45 agencies that were
subject to information system (IS) audits were made aware of significant
and/or moderate information control weaknesses. Security weaknesses remain
the biggest concern, making up over 60 per cent of the total findings.
What is most notable is that 11 agencies had IS control weaknesses that
were also identified in last year’s audit and more than 1/3 of the
2006-07 findings had been carried forward from 2005-06. This situation
highlights the ongoing concern that agencies often do not understand or
place sufficient importance on the vulnerabilities and threats to our
systems.
Mr Murphy has stated in his report that many of the control weaknesses
could be corrected without expensive technology or specialist resources.
He says that “information security can be achieved through the appropriate
implementation of basic processes, procedures and policies. Those agencies
which have good controls invariably have senior management that understand
and are committed to information security.”
In terms of Better Practice only 27% or 40 agencies displayed better
practice in managing their financial reporting. Twenty agencies are acknowledged
for their ongoing appearance on the list. The WA Industrial Relations
Commission, Disability Services Commission, Fremantle Port Authority,
Water Corporation, the Insurance Commission of WA and the South West Development
Commission are highlighted as having consistently achieved better practice
status for five consecutive years.
Contrasting this, based on the Auditor General’s assessment of
quality and timeliness of financial statements and general good financial
practice 61 Agencies (41%) were rated as poor. Mr Murphy says that this
disappointing result is because “too many agencies continue to provide
financial statements, performance indicators and supporting working papers
for audit that are of poor quality and / or are untimely.”
In terms of timeliness 99% of opinions were issued for 30 June reporting
agencies by 27 September. One notable exception was the opinion on the
Department of Education and Training’s financial statements and
performance indicators which was issued three weeks after the tabling
deadline.
The second part of Mr Murphy’s report dealt with his opinions on
Ministerial Notifications. A Minister may decide not to provide Parliament
with certain requested information concerning any conduct or operation
of an agency. Usually this is part of a response to a parliamentary question.
Section 82 of the FM Act requires the Minister to give written notice
of this decision to Parliament and the Auditor General. Additionally section
24(2) (c) of the AG Act requires the Auditor General to provide an opinion
on the reasonableness and appropriateness of a Minister’s decision
not to provide information to Parliament.
In the period 1 February to 19 November 2007, 42 ministerial notifications
were received relating to 41 parliamentary questions asked of Ministers
in the Legislative Assembly and one in the Legislative Council. In each
case Mr Murphy has found that the Minister’s decision not to provide
the requested information to Parliament was reasonable and therefore appropriate.
The third part of Mr Murphy’s report detailed his Performance Examination
of the Administration of Natural Resource Management Funding in Western
Australia. Since March 2003 nearly $382 million has been invested into
Natural Resource Management (NRM) Projects under two bilateral agreements
between the State and Commonwealth governments. Approximately 60 per cent
of the funds are distributed through six regionally based NRM groups.
The rest is managed directly by the State. NRM projects are funded in
accordance with strategies and plans approved by a joint Commonwealth
and State Government steering committee. Funded projects can range from
revegetation to reduce salinity in streams to gathering technical data
to assist in planning. At 30 June 2007 approximately 187 projects were
underway.
The Auditor General last looked into this area in 2004. At that time
he reported that the governance arrangements needed to be strengthened
prior to the significant increase in funding that would flow from approval
of the NRM strategies and investment plans. This year’s examination
has sought to establish whether appropriate governance arrangements now
exist and to review the progress in implementing the bilateral agreements.
Mr Murphy found that the NRM groups his office examined are providing
a community leadership role by identifying priorities and coordinating
projects and funding. They have also established satisfactory governance
arrangements to manage the large public NRM investment in their regions.
He says that it is now timely to review the program logic of the strategies
and investment plans and to review the targets and planned activities
to ensure they are still relevant, achievable and cost effective. At the
time of his examination he was unable to determine whether the $382 million
spent since March 2003 is achieving objectives or represents value for
money because the monitoring, evaluation and reporting frameworks needed
for such assessments have only recently been developed and are still being
implemented.
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