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Victorian Coat of Arms

Annual Plan 2016–17

The Victorian Auditor-General's Annual Plan 2016–17 was prepared pursuant to the requirements of section 7A of the Audit Act 1994, and tabled in the Victorian Parliament on 8 June 2016.

1. Our products and services

1.1 Introduction

The Auditor-General is required to prepare and table an annual plan before 30 June that describes the proposed work program (Figure 1) for the coming financial year (section 7A of the Audit Act 1994). This provides Parliament, the public sector and the community with an opportunity to assess our goals, understand our priorities, and scrutinise our proposed work program for 2016–17 and 2017–18.

1.2 Role of the Auditor-General

The role of the Auditor-General is to provide independent assurance to Parliament and the Victorian community on the financial integrity and performance of the state. We do this primarily by undertaking financial audits and performance audits of public sector entities. The entities themselves are accountable to Parliament for their use of public resources and the powers conferred on them by Parliament.

1.3 Guiding legislation

The principal pieces of legislation governing and guiding the Auditor-General and the Victorian Auditor-General's Office (VAGO) are:

Under the Audit Act 1994, the Auditor-General has the power to audit departments, public bodies, councils and other entities controlled by the state or a public body.

The key responsibilities of the Auditor-General as established by legislation are:

In addition, to increase the impact of our audits, the Auditor-General conducts other audit and accountability activities that relate to his/her primary responsibilities.

1.3.1 The need for legislative change

The Audit Act 1994 (the Act) is now seriously out of date and, after more than 20 years, is failing to keep pace with contemporary trends in public service delivery. While extensive reforms to the Act recommended in a 2010 Parliamentary inquiry have yet to occur, VAGO welcomes the Victorian Government's decision to undertake a broad review of the Act in 2016.

The recently passed Integrity and Accountability Legislation Amendment (A Stronger System) Act 2016 delivers on urgent reforms sought by VAGO, such as follow-the-dollar powers—the capacity for performance audits to call for information from bodies providing government services under contract. The audit program on page 2 identifies five audits that may utilise any new follow-the-dollar powers provided to the Auditor-General.

Further changes are needed to bring the Act up to date with the contemporary public sector, preserve the independence of Parliament's auditor, and improve transparency and accountability to the Victorian community. More information on VAGO's priorities for reform is available on our website at www.audit.vic.gov.au.

1.4 Our funding, outputs and targets

The resources allocated to VAGO each year to deliver our products and services are determined through Victoria's annual budget process. Under the State Budget framework, our resourcing is based on two output groups:

Performance measures for these VAGO outputs are published each year in the State Budget Papers and are reproduced in Figures 2 and 3. We will report on achievement of these targets in our annual report.

More information on the planned outputs of our performance, financial and information system audit functions is included in Parts 3, 4 and 5 of this annual plan.

1.5 Communication of findings

As part of supporting VAGO's core audit functions, we have a stakeholder engagement framework that aims to share the results of our audit findings and to encourage agencies to act on audit recommendations.

We engage with stakeholders through a range of mechanisms including briefings and presentations to Members of Parliament, integrity bodies and audited agencies. We communicate findings of audits through presentations, meetings and one-on-one briefings to stakeholders, and also through the provision of media releases, submissions to inquiries and reviews, lectures, articles and occasional papers. We also provide information on our website
(www.audit.vic.gov.au)—including reports, short videos and other summaries.

1.6 Accountability and reporting publications

The Audit Act 1994 includes accountability and reporting requirements for VAGO—specifically, that VAGO table an annual plan (see section 1.1) and an annual report in Parliament.

The annual report contains VAGO's financial statements and a report of operations. The financial statements are required to be audited by an independent auditor who is appointed by the Public Accounts and Estimates Committee. The report of operations and financial statements need to comply with reporting requirements of the Audit Act 1994, the Financial Management Act 1994, the Financial Reporting Directions and Standing Directions of the Minister for Finance and applicable Australian Accounting Standards. The annual report includes an acquittal of our output performance measures established in the State Budget Papers. It also includes an appendix of Key Audit Themes—a summary of the most frequent and significant audit findings, which offer opportunities for agencies to learn from the experience of others.

Figure 2: Output 1—Parliamentary reports and services

Performance measure

Unit of
measure

2016–17 target

2015–16 expected outcome

2015–16 target

2014–15 actual

Quantity

Auditor-General's reports

number

36

36

36

36

Quality

Average score of audit reports by external/peer assessors

per cent

80

80

80

86

Overall level of external satisfaction
with audit reports and services—Parliamentarians

per cent

85

85

85

81

Timeliness

Inquiries from Members of Parliament and the public responded to within 28 days

per cent

95

95

95

98

Reports completed on time

per cent

90

90

90

97

Cost

Total output cost (a)

$ million

16.9

15.9

16.7

16.1

(a) The higher 2016–17 target reflects indexation.

Source: 2016–17 Budget Papers.

Figure 3: Output 2—Audit reports on financial statements

Performance measure

Unit of
measure

2016–17 target

2015–16 expected outcome

2015–16 target

2014–15 actual

Quantity

Audit opinions issued on nonfinancial performance indicators

number

110

110

110

108

Audit opinions issued on the financial statements of agencies

number

547

547

547

547

Quality

External/peer reviews finding no material departures from professional and regulatory standards

per cent

100

100

100

86

Timeliness

Audit opinions issued within statutory deadlines

per cent

98

98

98

99

Management letters issued to agencies within established time frames (a)

per cent

90

90

90

91

Cost

Total output cost (b)

$ million

25.7

24.7

24.1

22.9

(a) Management letters are issued to audited agencies on matters arising from audits, including observations about the quality of internal controls in place, accounting issues and compliance with applicable laws and standards.

(b) The higher 2016–17 target reflects indexation and increased employee costs.

Source: 2016–17 Budget Papers.

1.6.1 Other publications

In addition to VAGO's stakeholder engagement, we occasionally produce publications including better practice guidance, information pieces and occasional papers and contributory articles in books and journals.

Through our audit work, we collect information, knowledge and experience that has relevance beyond solely acquitting our legislative responsibilities. While we have strict secrecy provisions around audit evidence, there is some information that we are able to share which can be used by external stakeholders to help inform their own activities.

Better practice guidance

From time to time, the Auditor-General publishes better practice guidance in relation to an aspect of public sector activity where we have found systemic problems with performance or accountability.

Information pieces

VAGO publishes occasional information pieces on areas of high public interest to maximise the value to the community from the information we collect. This is achieved with consideration to secrecy provisions under the legislation and adds transparency to complex areas of public sector activity.

Articles and publications on results of audits

In order to drive action on audit findings and to share lessons from our audits, we occasionally publish papers or contribute articles to books and journals, based on our reports to Parliament.

1.6.2 Strengthening Victoria's accountability framework

VAGO has a unique perspective on the regulatory and policy framework governing the accountability of the Victorian public sector. We draw on our experience, expertise and research to contribute to the development of audit and accountability policy in the Victorian public sector, including reforms to legislation, regulation and standards. This takes the form of submissions to relevant Parliamentary or government inquiries, meetings with entities, and comments on exposure drafts. These activities help to increase the impact of our audits, as they ensure that the audit function remains robust and relevant to the Victorian community.

In 2016–17, VAGO will:

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