Annual Plan 2019–20

Tabled: 27 June 2019

About our annual plan

Tangram

 

The role of the Auditor-General is to provide independent assurance to the Parliament of Victoria and the Victorian community on the financial integrity and performance of the state.

Under the Audit Act 1994, we must prepare and table an annual plan before 30 June each year that details our proposed work program for the coming financial year.


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

Performance audits assess whether government agencies, programs and services are meeting their objectives effectively, using resources economically and efficiently, and complying with legislation. They provide assurance about activities that are performed well or represent better practice and identify 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.

Performance audits and financial audits integrate with 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 in Appendix A.

Performance audits

From the Annual Plan 2017–18 onwards, we have adopted a rolling three-year planning cycle for our performance audit work program. This forecast horizon provides Parliament, the public sector and the Victorian community with foresight of our short to medium-term goals and priorities. It also provides us with opportunities to undertake early engagement with our stakeholders and allows audited agencies to make necessary preparations for scheduled audits well in advance.

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. Our understanding of the environment helps us generate potential areas of audit interest.

Our consultations include Parliamentarians, citizens and community groups, government agencies, and other key stakeholders. Their input helps us to understand the context of information we have gathered and assists in generating ideas for audit topics.

Our review of information can include research, statistical data, reports by other external sources and information we have previously gathered in the course of conducting our audits. We focus on risks, challenges and emerging issues which may influence the achievement of objectives.

Our work program includes consultation with Parliament and with community groups and academics, understanding context by talking with audited bodies, matters raised by members of the public, and review of publicly available information.

 

Deciding which areas to audit

When we decide which areas to audit, we anticipate and respond to current and emerging risks and challenges in the Victorian public sector. We use a multi-faceted approach to identify, assess and prioritise potential topic areas. Our planning process informs the development of a work program that balances predictability and responsiveness.

Our forward program also complements our strategic plan and objectives. It is important that we increase our relevance, by delivering credible and authoritative reports and advice about things that matter and will make a difference.

We will continue to focus in 2019–20 on maintaining a balanced audit program that covers our mandate—a mix of audits that examine whether public sector objectives are being achieved effectively, economically and efficiently, and in compliance with relevant legislation.

Assessment steps

Once the environmental scan is complete, we assess potential audit topics against the following criteria:

Baseline identification criteria

      Significance of the issue       Relevance to our key stakeholder groups

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

     

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

     

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

VAGO contribution       Priority and timing       Balance and coverage of the program

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

     

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

     

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), and with departments and other agencies proposed for inclusion in audits. Our consultation is thorough and transparent, and provides the opportunity for considered feedback throughout the planning process.

We thoroughly analyse all the feedback we receive to refine the focus of our audits, check factual accuracy, identify issues with proposed audit timing and to better understand the impact of current or proposed public sector reforms on audit topics. We acquit the written feedback we receive, explaining where we have made amendments based on provided information and why.

Follow-up audits

Our performance audit work program also includes a commitment to undertake follow-up audits. Our follow-up audits aim to monitor agency progress in implementing actions from previous audits, and also verify that actions taken by agencies have been effective in addressing our recommendations.

To contribute to our selection of audits to follow-up, we undertake a comprehensive annual Follow-up Survey. The survey requires agencies to self-attest to the actions they have taken on recommendations over a three-year period. Their responses are assessed by VAGO staff against criteria related to the adequacy, progress and timeliness of their actions. Our 2018–19 survey included all performance audits tabled in 2016–17 and those recommendations yet to be implemented from audits tabled in 2014–15 and 2015–16.

The issues identified in the initial audit, the risk and materiality of the subject matter, and feedback received through our ongoing engagement with key stakeholders 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.

Performance audits are conducted 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. This includes:

  • 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
  • three reports to Parliament on the results of 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 that we seek comments on our draft annual plan from PAEC and include any suggested changes not adopted. We value PAEC's input and seek its suggestions on potential areas of public sector service delivery that may benefit from audit scrutiny.

PAEC suggested four topics for new performance audits, including:

  • violence in Victorian prisons
  • passenger rail punctuality
  • Parks Victoria
  • efficiency and effectiveness in Victorian Government tax collection.

The Auditor-General has included a performance audit of the State Revenue Office in this Annual Plan in response to PAEC's suggested efficiency and effectiveness in Victorian Government tax collection topic. The Auditor-General has determined not to include the ‘violence in Victorian prisons’, ‘passenger rail punctuality’ and ‘Parks Victoria’ topics in this Annual Plan.

PAEC recommended we reinstate the Information sharing to address family violence audit that was included in our 2018-19 Annual Plan.

The Auditor-General has determined not to reinstate the Information sharing to address family violence audit at this time. We will continue to monitor risk in relation to the family violence information sharing scheme through our planned 2019–20 audit Managing Safety and Support Hubs audit and the legislated independent review of the Family Violence Information Sharing Scheme by Monash University.

Amendments to the Audit Act 1994

The Audit Amendment Bill 2018 was passed in Parliament on 28 May 2019 and will commence on 1 July 2019. 

The Bill was designed to restructure and modernise the current Audit Act 1994 to make it more accessible, effective and efficient.

The Bill modernised our information gathering and disclosure powers and clarifies our existing reporting obligations and powers. The Bill also gives the Auditor-General new powers to conduct assurance reviews and to report to Parliament on these reviews.

Assurance reviews are more targeted, time sensitive and smaller scaled compared to financial or performance audits. They are cost-effective and enable the Auditor-General to respond quickly and effectively to discrete and lower-risk issues brought to the Auditor-General's attention by other integrity offices, members of Parliament, or the community.

The Auditor-General has the discretion to determine when an assurance review is appropriate. They are intended to enable us to, for example, review specific operational matters, follow up on compliance with previous audit recommendations or referrals from other integrity bodies.

Assurance reviews are provided for under Australian Auditing and Assurance Standards and are available in all Australian jurisdictions, except for Queensland and South Australia.

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