Extending related party disclosures to the public sector
The most important change in the current reporting framework for application in the 2016–17 financial year is the extension of AASB 124 ‘Related Party Disclosures’ to the not-for-profit sector.
The Audit Office has been working with NSW Treasury, the Department of Premier and Cabinet, the Australasian Council of Auditors-General, the Heads of Treasury Accounting and Reporting Advisory Committee, and the Australian Accounting Standards Board to help the public sector prepare for the application of the standard.
- helped central agencies with understanding the requirements, sensitivities and application issues
- participated in discussions and teleconferences with key stakeholders in this jurisdiction and across Australia
- facilitated negotiations with central agencies (Treasury and the Department of Premier and Cabinet) with the aim of reducing the burden on agencies and ministers alike
- reviewed and commented on Treasury proposals at each stage of their development
- advised on the requirements of auditing standards and how these might be incorporated.
It is hoped that by the first reporting date under the new requirements a process for collecting, reporting and auditing related party transactions and disclosures is established. We plan to audit the completeness and accuracy of related party disclosures in the coming year.
A collaborative move to online bank confirmations
Confirmation.com is a new online confirmation service that is being adopted by Australian banks as the primary way for auditors to request and receive bank account confirmations. Until now, bank confirmations have been handled manually using paper-based systems.
We worked closely with the Victorian Auditor-General’s Office, the State’s bankers (Westpac) and Confirmation.com to achieve this new online confirmation service.
We were able to secure an ‘entity-wide confirmation’ selection for all Australian audit offices and their contract audit agents. This feature will allow audit offices to make a single confirmation request where an agency has several accounts with the same financial institution. This saves agencies from having to make multiple individual confirmation requests. The ‘entity-wide’ facility will save all audit offices and public sector agencies a great deal of time in the execution of this important annual audit step.
Confirmation.com’s Chairman, Tony Hallam, presented the new feature at the April 2016 meeting of the Australasian Council of Auditors-General’s Financial Reporting and Auditing Committee.
Re-writing the Public Finance and Audit Act
The rewrite of the Public Finance and Audit Act 1983 continues. The Audit Office has provided comment to Treasury on detailed proposals for legislative reform aimed at simplifying and modernising the State’s financial governance arrangements. It has also provided comments to Treasury on key policy papers that will underpin reforms in agency management, responsibility and accountability. The reforms are being implemented by NSW Treasury’s Financial Management Transformation (FMT) team.
We are continuing to comment on audit provisions currently within the Act. Certain matters are being progressed as part of the FMT proposals that we have provided comment on. These include:
- clarifying secrecy provisions to allow the Audit Office to communicate with audit and risk committees
- reducing the days that agencies have to respond to performance audits from 28 to 15 days
- requiring the Audit Office to publish agency responses to Auditors-General on financial audit reports tabled in parliament.