This report covers the second full year of my term as Auditor-General and marks a time of considerable challenge and achievement.
We have fully established our new local government mandate as an integral part of our business, released a new approach to setting our forward audit program, improved our parliamentary reporting, created an Office of the Auditor-General, and consolidated a new executive team. These adjustments aim to achieve our vision of providing the Parliament of New South Wales and the entities we audit with accurate, timely and relevant insights that inform and challenge government to improve outcomes for citizens.
First full year of local government audits
Following our appointment on 1 October 2016 as the auditor of NSW local government councils, we completed our first full year of audits of all NSW local council’s financial statements. We also released three performance audits of the local government sector. Importantly, we tabled our first whole-of-sector report on local government in April 2018 – a ground breaking report in that it presents, for the first time, a consistent view of financial performance across the NSW local government landscape.
I am particularly proud of these significant achievements. Adding to this, my staff have continued their considerable efforts of the previous year to build an understanding of, and relationships with, councils and the many organisations that make up the local government sector. Our partnership with the audit service providers we engage to conduct audits on our behalf has continued to mature and provide increasing value to the councils we audit, the communities they serve; and to parliament.
A new annual work plan
Throughout the year we worked with stakeholders to refine our approach to choosing audits for the coming year, leading to the publication in July 2018 of our 2018– 19 Annual Work Program. This audit work plan explains how we decide what to focus on, what we intend to cover in the next year and broad areas of audit for the following two years. It also gives parliament, the entities we audit and the broader community some certainty over future topics and the timing of our reports.
We plan to publish this annually and will continue to refine our approach, listen to feedback, and adapt to changing circumstances or requests for audits.
Improved reporting to parliament
During the year we introduced two new reports and standardised the look and feel of our regular reports to parliament.
The first of these new reports was dedicated to internal controls and governance. It was designed to help parliament understand broad issues affecting the public sector, and help agencies to compare their own performance against their peers. The report covered the findings and recommendations from our 2016–17 financial audits of the 39 largest agencies in the NSW public sector. These agencies are a large enough group to identify common issues and insights.
We also released a report on performance audit insights. In this report, we presented common findings and lessons from the past four years of performance audits and offered insights on elements of effective performance. We analysed the key findings and recommendations from 61 performance audits tabled in the Parliament of New South Wales between July 2014 and June 2018, spanning varied areas of government activity.
These two new reports supplement our regular reports on our financial and performance audits that were redesigned during the year to provide a more contemporary look and ease of read.
In combination, I hope the new reports and design will add clarity to our findings and lead to demonstrable improvements to public administration in New South Wales.
New structure and executive team
In late 2017, I created an Office of the Auditor-General to better support my deputy and I to manage workflow and engage more effectively with external stakeholders. The Office of the Auditor-General is separate from the operational audit and corporate service areas. In this way, it is able to provide assurance over the quality of the work we produce in addition to providing governance and technical functions.
The Director of the Office of the Auditor-General and the Executive Director Quality and Innovation attend all meetings of the Office Executive to challenge and offer alternative views to enrich discussions.
Quadrennial review of the Audit Office
Once in every parliament, the Legislative Assembly Public Accounts Committee undertakes a quadrennial review of the performance of my office. This review was undertaken at the end of 2017 and the outcomes were tabled in parliament in February 2018.
The review concluded that:
‘the Audit Office has demonstrated that the Auditor-General has in place methodology and tools to effectively, economically and efficiently deal with its core business and achieve compliance with the appropriate standards.’
This supports my view that the Audit Office is a very professional office that continues to provide valued audit services to parliament, the organisations we audit and the citizens of New South Wales.
The review went on the say that:
‘Without affecting our conclusion, we have made a number of recommendations to assist in further strengthening and improving the effectiveness and efficiency of the AONSW [Audit Office of New South Wales].’
- that a ‘follow the dollar’ mandate is required in order to restore the oversight that the Auditor-General has traditionally had over public spending
- the staged introduction of a mandate to provide assurance over performance measures, and that
- the Audit Office should conduct an independent review of the NSW Budget annually as a formal requirement.
These recommendations recognise contemporary approaches in public sector management, like commissioning, and would ensure greater accountability and transparency over the use of public resources.
In March 2018, we hosted IMPACT – the International Meeting for Performance Audit Critical Thinkers.
This biennial conference was held in Sydney and brought together performance auditors and public sector leaders from around Australasia and other nations for two days of thought-provoking discussion about the changing nature of government and the contribution performance auditors can make. We heard from leading international and Australian speakers on public sector management, transparency and accountability.
To host a conference of this scale and profile was a major undertaking for our office. The feedback we received from the conference was very positive and the professional connections made between our staff and those who travelled to Sydney will be lasting.
Challenging year for the staff of the Audit Office
This year more than ever I want to thank and recognise the dedication, professionalism and resilience of all staff in the Audit Office.
The impact our expanded local government mandate has had should not be underestimated, in addition to the many other challenges and achievements of this year. This is reflected in our People Matter survey results which are down on previous years. This will be a key area of focus for myself and my executive over the coming year to ensure the Audit Office remains a high performing organisation and a great place to work.