Annual Report 2018–19

Tabled: 29 August 2019

6 Performance statement

Performance Statement for the year ending 30 June 2019

Declaration by the Auditor-General and Executive Officer

In our opinion, the measures used and results reported in the accompanying Performance Statement of the Victorian Auditor-General's Office in respect of the 2018–19 financial year are presented fairly, and are consistent with the Standing Directions under the Financial Management Act 1994.

The Statement includes the 2018–19 performance indicators agreed with the Assistant Treasurer as set out in Budget Paper No. 3, actual and comparative results achieved for the financial year against targets where applicable, and explanations of any significant and/or material variance between the actual results and performance targets.

As at the date of signing, we are not aware of any circumstance which would render any particulars in the Performance Statement to be misleading or inaccurate.

We authorise the attached performance statement for issue on 23 August 2019.

Andrew Greaves Signature

Andrew Greaves
Auditor-General
Victorian Auditor-General's Office

Melbourne
23 August 2019

Rachel Davis  Signature

 

Rachel Davis
Executive Officer, Office of the Auditor-General
Victorian Auditor-General's Office

Melbourne
23 August 2019

Output group 1—parliamentary reports and services

Performance measures

Unit of measure

2017–18 actual

2018–19 target

2018–19 actual

2018–19 per cent variation

Result

Notes

Quantity

Average cost of parliamentary reports

($ thousand)

478

509

527.2

3.6

   

Quality

Percentage of performance audit recommendations accepted which are reported as implemented by audited agencies

(per cent)

81

80

78.4

-2.0

   

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

(per cent)

88

85

73.6

-13.4

 

3.1

Timeliness

Average duration taken to finalise responses to inquiries from Members of parliament

(days)

15

≤20

17

-

 

Average duration taken to produce performance audit parliamentary reports

(months)

10.5

≤9

10.1

12.2

 

3.2

Average duration taken to produce financial audit parliamentary reports after balance date

(months)

4.8

≤5

4.8

-

 

Cost

Total output cost

($ million)

15.5

16.2

16.0

-1.2

 

Output group 2—audit opinions on financial and performance statements

Performance measures

Unit of measure

2017–18 actual

2018–19 target

2018–19 actual

2018–19 per cent variation

Result

Notes

Quantity

Average cost of audit opinions issued on performance statements

($ thousand)

5.0

5.1

5.2

2.0

   

Average cost of audit opinions issued on the financial statements of agencies

($ thousand)

48.2

51

48.4

-5.1

3.3

Quality

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

(per cent)

59

100

90.0

-10.0

 

3.4

Proportion of agencies disclosing prior period material errors in financial statements

(per cent)

1

≤5

0.9

-

 

Timeliness

Audit opinions issued within statutory deadlines

(per cent)

98

98

98.3

0.3

 

Management letters to agencies issued within established time frames

(per cent)

81

90

93.7

4.1

 

Cost

Total output cost

($ million)

27.6

27.3

27.1

-0.7

 

Key: ✔ Target achieved or exceeded.

Notes to the Performance Statement

for the year ended 30 June 2019
1. Basis of preparation

The Victorian Auditor-General's Office must report annually on expected and actual performance as part of parliament's departmental performance statement in Budget Paper No. 3. This information is not audited.

While we are not required to include an audited departmental performance statement in our Annual Report, Financial Reporting Direction (FRD) 8D requires departments to annually provide a comparison of output targets and actual performance in their report of operations, and reasons for any significant or material variances.

In the absence of any broad mandatory performance reporting standards, we have prepared this performance statement in a format consistent with that used in Budget Paper No. 3, and in line with the Standing Directions under the Financial Management Act 1994, Performance Management Framework, and FRD 8D.

This performance statement includes the performance measures, targets and results of our two parliamentary output groups, with explanations of significant variations between targets and actual results. We deem significant as greater than a 5 per cent variance. We have not provided notes for variations within the materiality thresholds.

Where applicable the results in the performance statement have been prepared on bases consistent with those reported in the audited Financial Statements.

2. Output measures

The products and services we deliver are organised into two parliamentary output groups in Budget Paper No. 3. Output Group 1 covers parliamentary reports and services, and Output Group 2 covers audit opinions on financial and performance statements. We have performance measures and targets for quantity, quality, timeliness and cost, across both our output groups.

Measure

Dimension

Goal

Calculation

Output group 1—parliamentary reports and services

Average cost of parliamentary reports

Quantity

Tracks the cost efficiency of our products

Total lifecycle cost of parliamentary reports tabled during 2018–19 / Total number of parliamentary reports tabled during 2018–19 (excluding Annual Plan and Annual Report)

Percentage of performance audit recommendations accepted which are reported as implemented by audited agencies

Quality

Tracks VAGO's effectiveness and relevance across the public sector

Total number of accepted in-principle, partially and fully accepted performance audit recommendations issued two and three years prior / Total number of accepted performance audit recommendations issued two and three years prior

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

Quality

Tracks the overall level of external satisfaction with our reports and services of our key stakeholder

Total number of parliamentarians who stated they were satisfied or very satisfied / Total number of parliamentarians who responded to the question in the survey

Average duration taken to finalise responses to inquiries from members of parliament

Timeliness

Tracks the efficiency with which VAGO responds to inquiries from respective parliamentarians

Number of business days between the date the inquiry is received and the date the response is sent out

Average duration taken to produce performance audit parliamentary reports

Timeliness

Tracks the efficiency with which VAGO utilises resources to produce its reports

Total number of months between the initiation date and tabling date of all performance audit parliamentary reports tabled in 2018–19 / Total number of performance audit parliamentary reports tabled in 2018–19

Average duration taken to produce financial audit parliamentary reports after balance date

Timeliness

Total number of months between the balance sheet date of the sector and the tabling date of all financial audit parliamentary reports tabled in 2018–19 / Total number of financial audit parliamentary reports tabled in 2018–19

Total output cost

Cost

Tracks the cost efficiency of the whole of VAGO

Total expenditure allocated to the output group, net of recoup of salaries and expenses

Output group 2—audit opinions on financial and performance statements

Average cost of audit opinions issued on performance statements

Quantity

Tracks the cost efficiency of our products

Total lifecycle cost of audit opinions issued on performance statements during 2018–19 (actual or estimated) / Total number of audit opinions issued on performance statements during 2018–19

Average cost of audit opinions issued on the financial statements of agencies

Quantity

Total lifecycle cost of audit opinions issued on financial statements during 2018–19 / Total number of audit opinions issued on financial statements during 2018–19

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

Quality

Tracks the quality of our audit processes

Total number of financial audit engagement files subject to post audit quality reviews during 2018–19 that contain material departures from professional and regulatory standards / Total number of financial audit engagement files subjects to post audit quality reviews during 2018–19

Proportion of agencies disclosing prior period material errors in financial statements

Quality

Tracks the quality of our work outcomes

Total number of agencies disclosing a prior period material error during 2018–19 / Total number of agencies issued with an audit opinion during 2018–19

Audit opinions issued within statutory deadlines

Timeliness

Tracks the timeliness of our work

Total number of audit opinions issued within 28 days of the receipt of finalised financial statements in 2018–19 / Total number of audit opinions issued in 2018–19

Management letters to agencies issued within established timeframes

Timeliness

Tracks the timeliness of our work

Total number of finalised management letters issued to agencies within 28 days of the audit opinion being issued during 2018–19 / Total number of finalised management letters issued to agencies during 2018–19

Total output cost

Cost

Tracks the cost efficiency of the whole of VAGO

Total expenditure allocated to this output group net of recoup of salaries and expenses

3. Explanation of significant variances

3.1 We annually survey parliamentarians to find out how satisfied they are with our reports and services. This year 73.6 per cent of parliamentarians surveyed stated they were satisfied or very satisfied with our reports and services, compared to 88 per cent last year. The lower satisfaction rate reflects the increase in new members of parliament following the November 2018 election and their limited exposure to VAGO's products and services, meaning they had a neutral position on VAGO's reports and services. 86 per cent of returning members of parliament surveyed stated that they were satisfied or very satisfied with our reports and services.

3.2 The duration of our performance audit parliamentary reports is measured from the formal initiation of the audit to the tabling date. Overall, our performance audit parliamentary reports were delivered later than expected, with results improving from the prior year. Usual practice for VAGO is to table reports on parliamentary sitting days. However, the 2018 election and the change in the release date of the Victorian budget, with the unexpected break in April, resulted in reports being postponed. Challenges in accessing data and resourcing issues also contributed to the longer duration to produce performance audit parliamentary reports.

In comparison the state and territories ACAG benchmark average elapsed time for performance audits in 2017–18 (the latest available data) was 10.2 months.

3.3 The average cost of audit opinions issued on financial statements was $48 400, which is similar to our prior year result of $48 200. The lower than target result is partly due to efficiencies from greater use of data analytics, which allowed us to keep overall fees charged to agencies relatively unchanged from the prior year.

3.4 Data for this audit quality measure is obtained through quality reviews of a targeted selection of completed financial audits as part of our three-year review quality assurance coverage plan. The measure is intended to reflect our level of compliance with the requirements of the applicable Australian Auditing Standards, Australian Accounting Standards and Accounting Professional and Ethical Standards.

We did not meet our target: 10 per cent of our targeted sample of reviewed audit files were found to have some material departures from professional standards (i.e. one out of ten audit files reviewed). However, this is better than industry published rates and a significant improvement on the prior year result of 59 per cent.

Our findings do not necessarily mean there are material misstatements in the overall financial reports of these entities. Rather, in our view, in these cases we did not demonstrate a sufficient basis to form and issue these opinions. In addition, there was a very low rate of disclosure of prior period errors by agencies during 2018–19 indicating that material departures are not resulting in a high level of material misstatements.

Independent Auditor's Report

 

Independent Auditor's Report on our performance statement

 

Back to Top