Financial audit timeliness needs to improve
We are required to issue all financial audit opinions within ten weeks of receiving agencies’ financial statements. Ninety-one per cent of our opinions were issued within ten weeks in 2015−16, an improvement from 83 per cent. The earlier we give agencies our audit opinions and management letters, the sooner they can make a decision around our recommendations.
The proportion of total opinions issued on or before 30 September for our 30 June clients (that is, all government agencies except for government universities) improved from 64 per cent in 2014–15 to 69 per cent in 2015–16. This significant improvement from three years ago (43 per cent in 2012–13) could still be better.
While we issue interim management letters throughout the audit, we aim to issue our final management letters within six weeks of issuing our respective audit opinions. In 2015−16, we achieved 70 per cent, a significant increase from last year’s 56 per cent. We continue to develop and implement strategies to improve the timeliness of our management letters.
We also continue to improve our processes and report our concerns about the quality and timeliness of financial reporting across the sector. High quality and timely financial reporting is essential for the government to make informed decisions. We continued to support NSW Treasury's program to improve the quality and timeliness of financial reporting in response to our recommendations. Enhanced early close procedures and active engagement with Chief Financial Officers and Audit and Risk Committee Chairs have promoted the importance of accurate and timely financial information.
A significant strategy for improving quality is NSW Treasury’s requirement for agencies to perform early close procedures. We reviewed the outcomes of agency early close procedures and provided feedback before their year-end financial statements were submitted for audit, allowing them to address identified issues and correct errors.
In 2016−17, we will continue to focus on the timeliness of our audit output through innovation, collaboration and streamlined processes. This includes:
- working with clients and central agencies to achieve improved quality and timeliness of financial and performance audit reports
- using stakeholder feedback to maintain effective relationships through our ‘Influencing for Impact’ strategic initiative
- improving our resource capacity by spreading the timing of audit work and engaging more fully with providers of audit services
- our branches working together better to improve efficiency and enhance skills and knowledge transfer though our ‘Working Better, Working Together’ strategic initiative
- exploring opportunities to make greater use of technology to speed up and simplify reporting processes through our ‘Reporting Process’ strategic initiative.
(See here for further details on our strategic initiatives for 2016–17.)
Restructure temporarily impacted on performance audit timeliness
This year our average elapsed time for performance audits increased from nine to ten months.
The time to complete performance audits depends on the scope and number of agencies involved. It can also be affected by reasonable requests from agencies to delay an audit, or branch staffing and resourcing issues.
Two audits tabled this year took a relatively long time to complete due to a combination of agency requests for temporary suspension and branch resourcing issues. The branch issues stemmed largely from our 2014−15 restructure which resulted in a number of redundancies as well as substantial recruitment action. This impacted adversely on staff availability for a period of time.
The average duration of the remaining 14 audits tabled in 2015−16 was eight months. Most of these commenced after the 2014−15 restructure, and present a more accurate picture of timeliness under the new branch structure.