OFFICE OF THE AUDITOR
GENERAL — LOCAL GOVERNMENT AUDITING REQUIREMENTS
1547. Hon COLIN TINCKNELL to the minister representing the
Treasurer:
I
refer to the changes that have been brought about by the enactment of the Local
Government Amendment (Auditing) Bill 2017, in particular the requirement
for the Office of the Auditor General to audit local councils. I also note that the OAG has reported in its 2018–19
annual report an estimated increase in workload of 80 per cent as there are
currently 148 local governments.
(1) How has this increase in
entities requiring audit by the OAG been factored into the department's
—
(a) budget; and
(b) human resources?
(2) Have there been any significant
findings from the 48 audits already done on local governments?
(3) What mechanisms exist to ensure
that local governments act on OAG audit recommendations?
Hon
STEPHEN DAWSON replied:
I thank the honourable member for
some notice of the question. The question before me refers to (1), (2) and (3),
but there is no part (a) or (b) so I will answer it accordingly.
(1) Budgets have provided annual appropriation funding
for the OAG's local government performance auditing function
starting at $1.01 million in 2017–18 and building to $2.06 million per
annum by 2020–21. Annual funding recovered via financial auditing fees
will grow to approximately $7 million per annum in 2021–22, by which
time the OAG's financial audit responsibilities will cover all 148
local government entities. In terms of human resource implications funded from
fees from local governments, the OAG took on nine additional financial audit
staff last year—including four additional graduates compared with previous years, two level 9 positions, two level 7
positions and a level 6 position—and a significant number of contract audit firms. The staffing mix depends
on the level of contracting in any one year and is therefore subject to
change. Appropriation funding has resulted in the OAG receiving funding for an
additional nine performance auditors and three support staff.
(2) Yes.
(3) Under section 7.12A of the Local Government Act
1995, all sampled entities are required to prepare an action plan
addressing significant matters relevant to their entity for submission to the
Minister for Local Government within three months of an OAG performance audit
report being tabled in Parliament. This action plan, which is also for
publication on the audited entity's website, should address the
recommendations as they are relevant to that entity, as indicated in the
report.
The OAG's financial audit
management letters, which are provided with the local government's
financial audit opinions to the CEO and mayor/president and forwarded to the
Minister for Local Government, often include
findings relating to financial, management and information systems controls
weaknesses. Each finding is assigned a rating—significant, moderate or
minor—and the possible implications for the entity's business
of failing to address the findings are explained. The OAG includes a recommendation
designed to help address the finding, and in reply the audited entity indicates
whether it agrees to implement the recommendation and provides the name of a responsible
officer and an agreed implementation deadline. The minister can request the OAG
to provide a copy of a management letter to the Department of Local Government,
Sport and Cultural Industries.
Parliamentary committees may ask
entities about matters raised in the OAG's financial and performance
audit reports, including actions taken in response to recommendations.