Annual Plan 2018–19

Tabled: 6 June 2018

About our annual plan

The Victorian Auditor-General's Office provides independent assurance to Parliament and the Victorian community on the financial integrity and performance of the state.
Under the Audit Act 1994, we are required to prepare and table an annual plan before 30 June each year that describes our proposed work program for the coming financial year.

To provide assurance to the Parliament of Victoria and the Victorian community, the Victorian Auditor-General's Office conducts performance audits and financial audits. Our audits help the Parliament hold government to account and help the public sector to improve its performance.

A performance audit assesses whether agencies are meeting their aims effectively, using their resources economically and efficiently, and complying with relevant legislation. It provides assurance about activities that are performed well or represent better practice, and also identifies opportunities for further improvement.

A financial audit is an audit of the financial statements of an agency. It provides assurance that the financial statements present fairly the financial position, cashflows and results of operations for the year.

Both performance audits and financial audits integrate and support each other. Our financial audits are our early warning systems—intelligence obtained from our regular annual contact with agencies feeds into our performance audit program. In turn, our public reporting on the results of financial audits responds to and is shaped by our annual planning efforts.

The budgeted cost of delivering our proposed program is included in Appendix A.

Performance audits

Our performance audit work program operates on a three-year planning cycle. This provides Parliament, the public sector and the Victorian community with better foresight of our short- to medium-term goals and priorities.

Our annual planning process has three substantive components:

  • understanding the environmental context
  • deciding potential areas for audit focus
  • communicating these plans to relevant stakeholders and incorporating their feedback where appropriate.

Understanding the environmental context

We consult with stakeholders and review publicly available information to inform our understanding of public sector programs and initiatives. We focus on risks, challenges and emerging issues which may influence the achievement of objectives. Our understanding of the environmental context assists us to identify potential areas of audit interest.

Diagram illustrating who VAGO consults with

Deciding which areas to audit

To maximise our value and accountability to Parliament, the public sector and the community, we focus our limited resources on areas where we can have most impact.

In deciding the areas to audit, we use a rigorous approach to identify and prioritise potential performance audit topics. Our assessment process helps us to develop a work program that balances predictability and responsiveness.

Our forward program also supports our strategic objectives. It is important that we explore our full mandate of economy, efficiency, effectiveness and compliance audits. This will increase our relevance by delivering credible and authoritative reports about the things that matter and that will make a difference.

We have sought to rebalance our performance audit program in 2018–19, with targeted reviews that focus on efficiency. We have tended to focus on outcome effectiveness in recent years and, in doing so, are not realising the opportunities that present themselves by focusing on cost-effectiveness.

To address this, we have added several efficiency audits to the audit program in 2018–19, including:

  • Efficiency and economy of Victoria's public hospitals (2019–20)
  • Delivering local government services (2018–19, 2019–20 and 2020–21)
  • TAFE admission and enrolment processes (2018–19).

We have also introduced a longer-term perspective to our audit program, by taking a thematic approach to a number of audit topic areas. This will allow us to analyse audit results through time to identify what works, assess the adequacy of early planning and work to set up initiatives for success, and use longitudinal, linked datasets to examine causal relationships. Examples of time‑series audits added to the 2018–19 work program include:

  • Melbourne Metro Tunnel Project (2018–19 and 2020–21)
  • Ravenhall Prison: Rehabilitating and reintegrating prisoners—Part 1 (2019–20).

It is important that we also sufficiently consider matters of good housekeeping and financial regularity that underpin service delivery. Audits in this year's plan that focus on these issues include:

  • Fraud and corruption control (2018–19, 2019–20 and 2020–21)
  • Police management of property and exhibits (2018–19)
  • School compliance with Victoria's Child Safe Standards (2018–19).

Assessment steps

To ensure consistency in the selection process, we assess each potential audit topic against the following factors:

 

Baseline.PNG

Degree of correlation between the topic idea and statewide/ sector specific issues, number of stakeholders affected, and extent of performance gaps between desired standards and actual results

  Significance.PNG

Consideration of the topic’s financial materiality, as well as its economic, social and environmental impact

  Relevance.PNG

Relevance of the topic to Parliament, the current government, public sector agencies and community groups

     
contribution.PNG

Our ability to provide unique insights and independent perspectives that add value to the audited agency

  priority.PNG

Consideration of time-critical developments relevant to the proposed audit as well as our priorities

  Balance.PNG

Balance of economy, efficiency, effectiveness and compliance audits both across our performance audit mandate, as well as across the various portfolios/ sectors of government

Consulting on our work program

Once we have considered, assessed and moderated each topic based on its merits, we consult with the Public Accounts and Estimates Committee (PAEC), departments and other proposed agencies. Our consultation is thorough and transparent, and provides the opportunity for considered feedback at multiple stages.

We consult in stages with comprehensive information:

  • Stage 1—consultation on proposed 2018–19 and 2019–20 audits (topic synopses) and potential 2020–21 audits
  • Stage 2—three-year proposed work program (audit specifications and topic synopses).

We thoroughly analyse all the feedback we receive to refine the focus of our audits, identify issues with proposed time lines and better understand the impact of current or proposed reforms on proposed audits. We refine and incorporate changes based on the feedback provided.

Follow-up audits

As part of our performance audit work program, we are also committed to conducting follow-up audits. Our follow-up audits aim to monitor agencies' progress in implementing actions from previous audits, as well as verifying that actions taken by agencies have effectively addressed our recommendations.

To select audits to follow-up, we undertake a comprehensive follow-up survey to assess agencies' actions on recommendations over a three-year period—for example, the 2018–19 survey will focus on outstanding recommendations for audits tabled in 2014–15, 2015–16 and 2016–17.

The issues identified in the initial audit, as well as the risk and materiality of the subject matter also inform the follow-up audit topics we select.

Finalising our work program

The table inside the front cover sets out the performance audits we intend to undertake over the next three years. This forecast provides us with more opportunities for early engagement with our stakeholders and allows audited agencies to prepare for scheduled audits well in advance.

We conduct our performance audits in accordance with relevant standards issued by the Australian Auditing and Assurance Standards Board. These standards cover planning, conduct, evidence, communication, reporting and other elements of performance audits. Additional information about how we deliver our performance audits can be found in Appendix B.

Financial audits

Our financial audit program delivers a range of assurance services for public sector agencies. These include:

  • audit opinions on financial reports and performance statements of public sector agencies
  • an opinion on the Annual Financial Report of the State of Victoria
  • a review report on the estimated financial statements of the State of Victoria
  • five reports to Parliament on the results of financial audits
  • a report to Parliament on the outcome and findings of our audit of the Annual Financial Report of the State of Victoria.

Public Accounts and Estimates Committee

The Audit Act 1994 requires us to seek comments on our draft annual plan from PAEC. We value PAEC's input and also seek its suggestions on potential areas of public sector activity that may benefit from audit scrutiny.

PAEC has provided useful input into our annual plan, including proposed audits for our future audit program and suggestions to improve the scope of particular upcoming audits.

Our legislation also requires us to publish in the annual plan any changes to the draft plan suggested by PAEC that the Auditor-General does not adopt. We are pleased to report that PAEC had no further suggestions in this planning cycle.

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