The Audit Office’s Quality and Innovation group supports the Audit Office by establishing and maintaining a system of quality control. They provide the Auditor-General with assurance that the Audit Office complies with Australian auditing standards – including relevant ethical requirements and, legal and regulatory requirements.
Quality and Innovation:
- provides technical support (including accounting, auditing and applicable ethical and legislative requirements) to the Audit Office
- drives innovation and improvement in our audits and reporting, focusing on technology and data
- facilitates early resolution of key audit issues impacting our auditees through a focused engagement strategy and strong partnering with audit teams
- maintains the Quality and Assurance Framework.
Quality and Innovation is seen as a leader in the profession, particularly in public sector accounting issues. Their input is sought by professional bodies, NSW Treasury and the Office of Local Government on a wide range of financial reporting matters, policy development and legislative proposals. Quality and Innovation also contributes to the Australasian Council of Auditors-General comments on new pronouncements.
Quality and Innovation produces a quarterly publication, ‘Professional Update’, available on our website. This provides commentary on emerging issues, activities of standard setters, NSW Treasury, the Office of Local Government and other central agencies, regulators and professional bodies.
Services to the public sector and the profession
The Audit Office aims to be recognised as a leader and expert in the auditing and accounting profession. We do this via presentations, submissions, contributions to external committees, and appearances before parliamentary committees.
We delivered 59 presentations to a variety of audiences in 2017–18, compared to 28 in 2016–17. Forty-four of these were to the public sector. This marked increase in presentations reflects the significant presence we had in the local government sector in 2017–18 with many of our staff presenting at conferences, workshops and roadshows across New South Wales. Presentation topics included the Auditor-General’s new mandate and financial reporting in local government, principles of governing in local government, risk management and fraud control (see appendix three and appendix four for further details).
Submissions to professional bodies
The Audit Office contributes to the collaborative efforts of Australian audit offices by helping develop responses to professional bodies on pronouncements exposed for comment. In 2017–18, Quality and Innovation prepared or contributed to 18 responses to standard setters by the Australasian Council of Auditors-General (ACAG) and audit offices (see appendix four for further details).
Influencing by educating, mentoring and advising
Our staff have, for many years, been involved in determining the content of course and training modules, leading training and focus sessions and marking examination papers for Chartered Accountants Australia and New Zealand, and CPA Australia (see appendix four).
The Audit Office provides formal mentoring to all our candidates working towards membership of a professional accounting body. Our mentors support and guide our candidates through the practical aspect of obtaining a professional accounting qualification, by helping them develop the knowledge and skills to become well trained, high calibre professionals.
The Audit Office interacts with Australian accounting and auditing bodies, participating in their committees, research groups and working parties (see appendix four). We help them better understand public sector issues. Our representatives attend roundtables hosted by Australian and international standard setters.
Influencing through the Australasian Council of Auditors-General
The Audit Office is an active participant in ACAG, established in 1993 to encourage sharing and cooperation between audit offices in Australasia.
In 2017–18, the Audit Office participated in and supported various ACAG sub-groups and working parties, including:
- Financial Reporting and Accounting Committee – provides ACAG with proactive strategic and technical advice on developments in financial reporting and accounting
- Audit Standards Committee – provides ACAG with advice on emerging issues that impact audit quality and developments in auditing and assurance standards
- Corporate Services Committee – an avenue for heads of corporate services to share, collaborate and leverage ideas and practices, including discussing and exchanging intelligence about the practical challenges and solutions for managing a corporate services function within an audit office
- Heads of Financial Audit Group – an avenue for heads of financial audit to share, collaborate and leverage ideas and practices, including discussing and exchanging intelligence about the practical challenges and solutions for managing a financial audit business
- Heads of Performance Audit Group – an avenue for heads of performance audit to share, collaborate and leverage ideas and practices including discussing and exchanging intelligence about the practical challenges and solutions for managing a performance audit business
- Information Systems Audit Group – a forum for exchanging knowledge and experiences in information systems audit and the use of technology as a support tool for auditors.
Local knowledge sharing
The heads of performance audit in all Australian States and Territories meet twice a year to share ideas on performance audit topics, methodologies and better practice. Through these meetings, and subsequent liaison between audit teams in the different jurisdictions, we have helped other offices develop new audits on topics that have proved useful to them. In turn, our performance audit program has benefited from topics successfully delivered elsewhere.
ARC Chair events
We also hold events for Audit and Risk Committee (ARC) Chairs who play an important role in the governance of the entities we audit. This year we hosted meetings of the ARC Chairs of the local government and university sectors.
At the NSW universities’ ARC Chairs meeting, we discussed issues raised in our Auditor-General’s report ‘Universities: 2016 Audits’ and ARC Chairs shared their own observations of the sector.
At the local government ARC Chairs meeting, we shared insights from our first financial audit Auditor-General’s report and three performance audit Auditor-General’s reports. The Independent Commission Against Corruption (ICAC) was invited to this meeting and presented findings from their investigation into the former Botany Bay Council. They also shared their views on the types of fraud and corruption that ARCs should be aware of and put in place strategies to prevent.
Feedback from participants on these events was extremely positive.
International knowledge sharing
In 2017–18, we assisted the Australian National Audit Office (ANAO) by helping to arrange four staff secondments from the Audit Board of the Republic of Indonesia, BPK Republic Indonesia (BPK). These secondments allowed the BPK’s staff to gain practical insights and on the job experience in applying a contemporary audit methodology and auditing financial statements prepared using accrual accounting. This activity was funded by the Australian Department of Foreign Affairs and Trade (DFAT).
We also worked closely with the Auditor-General’s Office in Papua New Guinea, with staff coming to the Audit Office on secondment. These secondees had the opportunity to work with our audit teams to improve their skills and knowledge in contemporary audit techniques and methodology.
We are currently working to extend this knowledge sharing through our ‘twinning’ relationship with the Solomon Islands Office of the Auditor General (SIOAG) funded by DFAT. This involves sharing our knowledge of public sector auditing with the SIOAG to help their staff develop audit skills and capabilities.
During the year, staff from our Financial Audit and Performance Audit branches travelled to SIOAG. Our Performance Audit staff shared their experience in planning performance audit work. Our Financial Audit staff coached SIOAG staff on how to:
- properly plan the audit
- apply the financial audit methodology
- use and document audit work in our common audit software solution (TeamMate).
The year ahead
In 2018–19, we will maintain our professional presence by:
- contributing through ACAG to the development of new standards by Australian standard setters
- continuing to liaise with NSW Treasury on the development and implementation of the government sector finance reforms, and development of public sector accounting policy (see our case studies for further details of this reform)
- continuing to liaise with the Office of Local Government, councils and our audit service providers on the Audit Office’s mandate, and development of local government sector accounting policy
- engaging with professional bodies about issues facing the profession, their focus areas, the public sector and the development of educational programs
- engaging with central agencies, standard setters, regulators and audit offices in other jurisdictions
- publishing ‘Professional Update’, the Audit Office’s quarterly technical update newsletter
- hosting industry events that allow us to better share insights from our audits.