7 May 2008

AUDITOR GENERAL GIVES MOST UNIVERSITIES AND COLLEGES A PASS MARK BUT SAYS THEY CAN DO BETTER.

The Auditor General Mr Colin Murphy today tabled a report that included the results of his audits of universities, TAFE colleges and other audits completed since 19 November 2007.

In his report Mr Murphy stated that whilst all Universities and Colleges, except for Murdoch University received clear opinions, he was concerned about some aspects of agency operations.

Mr Murphy issued a qualified opinion on the financial statements of Murdoch University for its accounting treatment of research grants, the effect of which was to understate the retained surplus and overstate current liabilities by $10.2 million.

In his report he made particular mention of three issues. One related to the fact that the audit identified 50% more information security weaknesses than last year. This was of particular concern because information security is a fundamental necessity and yet simple and inexpensive solutions can address many of the identified weaknesses.

Mr Murphy also found that the internal review and reconciliation procedures that improve the quality and integrity of financial reporting needed upgrading in many universities and TAFE Colleges.

A third issue related to Curtin University’s failure to complete a fixed asset stock take for four years. Mr Murphy stated that this has created the risk that the fixed assets account balance in the financial statements may be inaccurate; that the insurance coverage of assets may be inappropriate and that there may be a lack of identification and action on lost or stolen assets. Curtin University has advised that appropriate procedures are now being implemented to enable accurate and timely rolling stocktakes. Mr Murphy has stated that this area will be a focus of his 2008 audit.

Mr Murphy also expressed his disappointment that two universities and three TAFE colleges failed to provide adequately prepared financial statements and supporting working papers by the agreed date and as a result the timeliness and cost of audits was affected.

AUDITOR GENERAL REVIEWS THE FUNDAMENTALS BY EXAMINING DAY-TO-DAY GOVERNANCE

The Auditor General Mr Colin Murphy tabled a report in Parliament today that included the results of three separate audits on some fundamental governance arrangements at a selection of government agencies.

In keeping with his Office’s mission, to serve the public interest by providing Parliament with independent and impartial information regarding public sector accountability and performance, each year Mr Murphy schedules the examination of some of the more fundamental aspects of day-to-day governance.

Risk management, delegation of authority and good recording keeping are the three key governance arrangements that Mr Murphy focused on this year. His examination involved a total of 18 agencies and found that whilst there was general compliance with requirements there was room for improvement in some areas:

• Risk Management is a critical aspect of day to day governance as it protects the general community from unnecessary cost and losses. Mr Murphy tested risk management practices across six agencies and found that whilst all agencies had risk management processes in place the degree of implementation and maturity varied. He called on agencies to continue to develop and implement risk management strategies and processes and to work to ensure that these become a part of their core business.
• Delegation of authority is critical to ensure that decisions can be made and bottlenecks avoided. However it is also critical that there are control mechanisms in place to ensure that only appropriately skilled and qualified staff are authorised to exercise powers. In this study Mr Murphy tested delegations at five agencies for important operational processes and found that all five had established delegation frameworks in place to authorise financial expenditure and performance of core operational activities.
• Good record keeping makes for informed and consistent decision making, saves time in locating documents and protects the interests of the government and agency as well as the rights of employees, contractors, clients and citizens. In this examination Mr Murphy tested records management practice and procedures at seven agencies. He found that whilst all agencies had approved plans and current policies their training programs were inconsistently implemented and their disaster management plans did not adequately protect their records management systems. As a result of this examination Mr Murphy has asked all agencies to work to improve their compliance with the requirements of the State Records Act 2000.

Ends/

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