Annual Report 2020–21

Tabled: 5 October 2021

Foreword

This report covers the activities of VAGO for the period 1 July 2020 to 30 June 2021.

It is prepared in accordance with the Audit Act 1994 and the Financial Management Act 1994, and complies with the requirements of relevant Australian Accounting Standards and Interpretations, Standing Directions and Financial Reporting Directions. 

This report cost $35 000 to produce.

Foreword

Despite assumptions that the worst of the COVID-19 emergency had passed, we found ourselves continuing to operate in a highly challenging environment in 2020–21. 

COVID-19 has had a profound impact on our core business. The agencies we audit have grappled with challenges similar to our own: remote work, staff shortages and adjusted responsibilities. We have adapted, finding new ways to complete our audit functions under these extraordinary circumstances, but this has meant we have delivered some aspects of our work program later than in years past. 

I am proud of the way we responded to these challenges. Our people continue to support and encourage one another. The way they have remained committed to delivering our work is a daily reminder of how our values of respect and collaboration run deep within the VAGO culture.

We have ended the year with all employees working remotely, an arrangement that prevailed for much of 2020–21. Our people have overwhelmingly expressed their desire to continue to work more flexibly and we have committed to providing staff with the best future work practices possible. Our ‘better normal’ principles set out this commitment. These flexible work practices also support our goals for greater diversity and inclusion in our workplace. 

In June we launched our Reflect Reconciliation Action Plan, the first of four plans we intend to implement. It focuses on building our cultural awareness and respect for Aboriginal and Torres Strait Islander cultures. Reconciliation Australia has approved our plan and it is now available on their website. 

This year we also refreshed our panel of financial audit service providers, who help us complete our financial audits. We reduced the number of panel members from 25 to nine. This was a significant undertaking, but necessary to remain in step with industry standards and make sure our providers remain a strong cultural fit with VAGO. Our new panel members are focused on innovative auditing methods, data protection and security, and continuous improvement.

Andrew Greaves
Auditor-General

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1. About VAGO

VAGO provides assurance to Victoria's Parliament and community about the performance and accountability of the state's public sector. We achieve this by auditing and reviewing the finances and performance of state and local government entities.

1.1 Our role

VAGO helps to hold the Victorian Government accountable by conducting financial and performance audits and assurance reviews of public sector agencies, and reporting the results to Parliament.

We are part of Victoria’s integrity system. The office of 'Auditor-General' is independent; it is not controlled or directed by Parliament or the government.

VAGO is governed by the Constitution Act 1975 and the Audit Act 1994 (the Act).

Our legislation

The Constitution Act 1975 establishes the office of ‘Auditor-General’ and gives us complete discretion in how we perform the functions and powers of our role.

The Audit Act 1994 sets out the legal basis of our powers and the responsibilities of our role.

Financial auditing

In our financial audits we provide assurance that the information contained in public sector agencies’ financial and performance reports is reliable, relevant, presented fairly and according to Australian Accounting Standards and other relevant legislation.

Each year, we audit more than 580 agencies' financial reports and provide opinions on 110 performance statements. We audit agencies including government departments, statutory bodies, educational institutions, public health services, water corporations, insurers and local government councils.

Performance auditing

In our performance audits we assess the effectiveness, efficiency, economy and compliance of government agencies, programs and services. We have ‘follow the dollar’ powers, which allow us to audit community-sector and for-profit organisations contracted to provide government services. We can also audit how government grant recipients use their funds.

Limited assurance reviews

In our limited assurance reviews we focus on financial or operational performance. We rely primarily on an agency’s representations and the evidence it provides. However, we aim to have enough confidence in our conclusion for it to be meaningful. In assurance reviews we typically express our opinions in negative terms. We might say, for example, that nothing has come to our attention to indicate there is a problem.

Continuous improvement

Our unique position and access to information across the Victorian public sector enables us to identify common issues and provide useful insights for parliamentarians, the public and the agencies we audit.

We make recommendations to audited agencies on how to improve services and function more efficiently and effectively.

1.2 Our operating model

Annual report 20-21_FINAL_Operating.png

Source: VAGO.

1.3 Our governance arrangements

Our strategic management group (SMG) governs VAGO’s strategic direction and alignment to its vision, values and purpose. SMG is collectively responsible for:

  • setting and monitoring VAGO’s strategy
  • overseeing good governance and a positive organisational culture
  • VAGO’s performance from an outcomes and sustainability perspective
  • ensuring that VAGO has strong executive leadership.

SMG comprises the Auditor-General, Deputy Auditor General and the Assistant Auditors-General for performance and financial audit. Figure 1A shows SMG.

FIGURE 1A: VAGO's SMG members in 2020–21

Figure-1A

Source: VAGO.

1.4 Our values

Our values shape our work and culture and how we grow as an organisation. They are:

  • respect
  • innovation
  • collaboration
  • accountability.

In 2020–21, we continued to promote and embed these values through team building, volunteering opportunities and celebrating the outstanding efforts of our employees at recognition events.

We are now in the second phase of our Diversity and Inclusion Plan 2019–22, in which we focus on providing internal education and introducing staff to new practices.

1.5 Our strategic plan

The VAGO Strategic Plan 2017–2021 sets out our objectives, the directions we will take to achieve them and what success looks like. This is our final year of operating under this plan. Our four strategic objectives are to:

  • increase our relevance
  • grow our influence
  • invest in our people
  • lead by example.

We detail our progress against the plan throughout this report.

 

Increase our relevance

Increase our relevance

Grow our influence

Grow our influence

Invest in our people

Invest in our people

Lead by example

Lead by example

Our objectives

Be more relevant by delivering credible and authoritative reports and advice about things that matter and will make a difference

Be valued for our independence and more influential because of the unique perspectives we provide

Enable high performance by our people through a supportive culture, professional development and collaboration

Model exemplary performance in everything we do

Our directions

Modernise our auditing methods
Update how we audit to reflect new and emerging technology-enabled practices.

Explore our full mandate
Rebalance our audit programs to evenly cover efficiency and effectiveness, governance and compliance.

Take a longer term perspective
Analyse audit results through time to identify what works on complex and interconnecting issues.

Strengthen our engagement
Build more productive relationships based on mutual respect and understanding of our respective roles and organisational contexts.

Better leverage our access
Use our access to cross-government datasets to provide our clients with new insights they can use.

Increase accessibility to our work
Develop new interactive channels with our stakeholders and open up access.

Be clear about what we stand for
Demonstrate leadership and accountability in how we work and live our values and culture.

Invest in excellence
Support our people to harness new and emerging technologies by developing their technical, analytical and people management capabilities.

Get the mix right
Ensure our workforce composition builds our adaptability to position us to meet future business needs.

Simplify our business
Eliminate unnecessary internal red tape, and streamline and increase automation of core business processes.

Embrace new technology
Invest in cloud technology, implement the best software solutions to integrate our business systems, and share information to improve our practice.

Better intelligence to drive decisions
Develop a comprehensive portfolio of service, product and project performance measures.

What success looks like

Our audit program effort is targeted across efficiency, effectiveness, economy and compliance.

The benefits realised by the public sector show an increased return on investment from our audit work.

More of our performance audits originate from requests from Parliament, the public sector and the public.

Use of our reports and associated datasets in government service delivery and for parliamentary purposes has increased.

Employee engagement has increased.

We develop, attract, and retain the talent we need.

 

Workforce productivity has increased.

Our internal practices set the benchmark for public sector entities and other audit offices.

Our progress and highlights

Increase our relevance
Delivered a broad audit program 

Continued to embed data science techniques to enhance the insights we provide to our stakeholders

Developed new ways to undertake year-end processes and audit functions entirely remotely to counter the impact of coronavirus (COVID-19)

Conducted three assurance reviews, including our second review on agency responses to performance audit recommendations

Key achievements 
Agencies completed our recommendations 59 days faster than in 2019–20 

Delivered our financial audit program within expectations, entirely remotely and in challenging circumstances

Grow our influence
Continued to review suggestions from parliamentarians and the public as part of our annual planning process 

Embraced new ways to engage stakeholders, including briefing MPs remotely

Key achievements
99% of PA recommendations between 2015–16 and 2019–20 were accepted 

95.3% of chief financial officers (CFOs) indicated they value the assurance our financial audits provide

Increased participation in our virtual Audit Committee Chairs Forum and received positive feedback about its structure and flexible delivery 

Invest in our people
Continued to develop our Better Normal principles, with the aim of being an employer of choice that embraces flexible work practices

Adapted our professional learning and development program for the online environment

Introduced a suite of online health and wellness activities to help staff maintain mental and physical health while working at home

Refreshed our Audit Service Provider (ASP) panel to do financial audit work on our behalf and improve service quality and delivery

Key achievements
Improved employee engagement 11% 

95% of staff felt they had received adequate support during the workplace changes due to COVID-19 

Launched our Reflect Reconciliation Action Plan in June 2021

Launched our first quotation round with our new ASP panel 

Lead by example
Continued to improve our IT network, further securing our cybersecurity and maturing our use of Microsoft Teams

Developed and implemented a Protective Data Security Plan

Published our first parliamentary reports structured with new templates designed to improve readability and engagement

Rolled out eLearning modules on writing and reviewing to lift staff capability and confidence

Updated our website to increase access to our dashboards so they can be easily searched in one place

Key achievements
68% increase in website views 

100% end-user computing environments upgraded to Windows 10

Source: VAGO.

1.6 Our performance reporting

Every year, we report against a set of performance measures and targets that we agree on with the Assistant Treasurer.

VAGO’s performance measures and targets are set out in Budget Paper No. 3: Service Delivery (BP3). You can find this paper on the Victorian state Budget website.

We discuss our 2020–21 performance against these measures in the relevant sections in this report. We also include an independently audited performance statement in Chapter 6. We are not required to prepare this statement or have it audited, but we believe it is necessary to promote transparency and better public sector practice. It assures readers that our non-financial performance information is reliable—the same way the audit opinion on our financial statements provides assurance.

1.7 Our accountability mechanisms

We are accountable to the Victorian Parliament and all Victorians for how efficiently and effectively we perform our auditing services and how economically we use public resources.

The Act requires that an independent performance audit of our office be undertaken at least once every four years. The purpose of the audit is to determine whether the Auditor-General and VAGO are achieving their objectives effectively, economically and efficiently and in compliance with all relevant Acts.

External audits

Our 2019–20 external audit report, which was tabled in August 2020, is available on our website at www.audit.vic.gov.au/how-we-are-accountable

In 2019–20, the Public Accounts and Estimates Committee (PAEC) appointed Allen and Clark Consulting to conduct this audit. Overall, the audit report, which was tabled in Parliament on 4 August 2020, was positive. It concluded that:

The Auditor-General and VAGO are operating in compliance with all relevant Acts of Parliament. Moreover, the Auditor-General and VAGO are, in all material respects, operating effectively, economically and efficiently and achieving their objectives in compliance under the Act.

The audit made 31 recommendations. We accepted 24 recommendations in full, three in part, three in principle and did not accept one recommendation.

We monitor our progress in implementing these recommendations through periodic updates to our operational management group (OMG) and audit and risk committee (ARC). We update PAEC biannually.

We have completed 11 recommendations, with 13 in progress or partially complete. We will begin implementation of the remaining six recommendations in 2021–22.

Victorian Inspectorate oversight

The Victorian Inspectorate (VI) is a key oversight body in Victoria’s integrity system, with the power to scrutinise our activities. It can receive and assess complaints made about us and it can examine our use of our coercive powers. VI can also monitor our compliance with certain sections of the Act.

We have worked with VI to develop a self-reporting tool about the exercise of our coercive powers. We did not exercise these powers during the past financial year.

We understand that VI received three complaints about VAGO in 2020–21:

  • Two complaints were duplicate notifications/referrals that the VI combined as one complaint. This complaint remains open.
  • One complaint was dismissed as it was outside the VI's complaint jurisdiction under the Victorian Inspectorate Act 2011 and below the threshold of an assessable disclosure under the Public Interest Disclosures Act 2012.

VI made no recommendations to VAGO during the year.

Monitoring expenses

Find more information about our accountability mechanisms at www.audit.vic.gov.au/how-we-are-accountable

The Standing Directions 2018 Under the Financial Management Act 1994 require us to publish our Gifts, Benefits and Hospitality Policy and register on our website.

Our audit and risk committee monitors the Auditor-General’s expenses. To further enhance transparency and strengthen accountability, we also voluntarily publish this information on our website.

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2. Increasing our relevance

In 2020–21 we continued to increase our relevance by widening our audit program to explore our full mandate, modernising the way we work and analysing our performance to ensure our work continues to realise a return on investment for the Parliament and people of Victoria. 

Chapter 2 key facts

Source: VAGO.

2.1 Our performance audit program

To realise our goal of strengthening accountability and enhancing transparency across the public sector, we need to ensure our reports and advice are not just relevant, but also timely. The impacts of the COVID-19 pandemic limited our ability to control the timeliness of our reports in 2020–21, but we continued to increase our relevance by widening our audit program to cover our full mandate.

Planning our work

Our Annual Plan 2021–22 
is available to read or download at www.audit.
vic. gov.au/report/annual-plan-2021-22 

Our Annual Plan 2021–22, tabled in June, sets out our three-year performance audit program. It informs Parliament, the public sector and the Victorian community about our short and medium-term goals and priorities. It also helps us find opportunities to undertake early consultation with our stakeholders and allows agencies to prepare for audits well in advance.

We decide which areas to audit by anticipating and responding to current and emerging risks and challenges in the Victorian public sector. We use a multifaceted approach to identify, assess and prioritise potential topic areas. Our planning process informs the development of a work program that balances predictability and responsiveness.

When we developed the plan this year, we considered the challenges faced by the public sector to return to ‘business as usual’ while still responding to the impacts of COVID-19. In the year ahead, we will audit several areas that are important to Parliament and Victorians, including business continuity during COVID-19, ICT provisioning in schools, major infrastructure program delivery capability, and fraud control over local government grants.

Parliamentary reporting on performance audits 

This year we tabled 16 performance audit reports in Parliament, eight of which we carried over from our Annual Plan 2019–20. We tabled only eight of the 21 performance audits listed in our Annual Plan 2020–21. Of the 13 remaining audits, eight will table in 2021–22. 

Figure 2A provides an audit status overview of our 2020–21 performance audit program and Figure 2B lists the 2020–21 performance audits tabled by sector.

FIGURE 2A: Status of 2020–21 performance audit program 

2020–21 performance audits Number
Planned for delivery  21
Tabled in 2020–21  8
Tabled since 1 July 2021 2
In progress, to be tabled in 2021–22 6
Deferred  5

Source: VAGO.

FIGURE 2B: 2020–21 performance audits tabled by sector

FIGURE 2B: 2020–21 performance audits tabled by sector

Note: *Audit from our Annual Plan 2019–20.
Source: VAGO.

Adjusting due to COVID-19

We delayed or deferred eight of our planned 2020–21 audits because of the disruption to public sector agencies caused by COVID-19. We delayed some performance audits so agencies could engage and respond when the pressures of the pandemic had eased. We carefully considered all requests to delay or defer audits in the short to medium-term and have worked with agencies to reschedule our work program to support their COVID 19 response.

We deferred planned audits on clinical trials in public hospitals and supporting sexual and reproductive health due to the significant impact on the health sector in responding to COVID-19.

COVID-19 also saw us add, at PAEC's suggestion, two performance audits relating to COVID-19. Our audit on business continuity during the COVID-19 pandemic will determine whether the business continuity arrangements made by agencies enabled essential public services to continue during the pandemic. Our audit on the management of spending measures in response to COVID-19 will assess whether agencies’ spending, including spending through the Treasurer’s Advance, has been used for its stated purpose and complies with relevant laws and regulations. 

Other reasons for changes

For more information about how we our adjusted our audit program due to COVID-19, refer to our Annual Plan 2021–22 at www.audit.vic.gov.au/
report/annual-plan-2021-22
 

Due to staff resourcing challenges, we deferred the business continuity during COVID 19 audit to 2021–22, along with our audit on fraud control over local government grants. 

We also deferred our planned audit on supporting workers in transitioning industries to 2021–22 due to recent reforms announced by the Victorian Government, including the new Victorian Skills Authority and the Office of TAFE Coordination and Delivery within the Department of Education and Training. This will allow some time to implement the recent reforms before we undertake our audit.

2.2 Our financial audit program

The independent audit opinions we provide to agencies on their financial statements, and where applicable their performance statements, enhance the credibility and reliability of that information. They also allow agencies to publish an annual report, which they are required to do due to their accountability obligations.

100%

of audit opinion target met for performance statements of local councils, water agencies and TAFEs

Issuing audit opinions

In 2020–21 we issued 557 audit opinions on the financial reports of public sector agencies. This was below our target of more than 580. We dispensed seven opinions and seven were carried over while the remainder were ceased entities. We also issued 110 audit opinions on the performance statements of local councils, water agencies and TAFEs, meeting our target.

Parliamentary reporting on financial audits

Under the Act, we must report to Parliament the results of our audit of the state’s financial report, which is prepared by the Treasurer.

96%

of audit opinion target met for public sector agency financial reports

We also report separately on the results of our audits of local governments, universities and TAFEs, even though this is not mandatory. This year we also tabled a report on the results of state-controlled entity financial audits. Figure 2C lists the financial audit reports we tabled in 2020–21.

FIGURE 2C: reports tabled on the results of financial audits in 2020–21

Report Tabled
Auditor-General’s Report on the Annual Financial Report of the State of Victoria: 2019–20 Nov 20
Results of 2019–20 Audits: State-controlled Entities Mar 21
Results of 2019–20 Audits: Local Government  Mar 21
Results of 2020 Audits: Technical and Further Education Institutes Jun 21
Results of 2020 Audits: Universities  Jun 21

Source: VAGO.

Audits of health service public bodies

Due to changes to the Act, in July 2019 VAGO became the auditor of all public bodies under the Health Services Act 1988. This included 37 registered community health and aged care services.

The transition of these audits to our office involved dispensing with seven audits for the 2019–20 period. We did this to allow for the orderly transition of the auditor under the Corporations Act 2001. No audits have been dispensed for the period beginning 1 July 2021.

The following financial audits were dispensed for the period 2019–20:

  • Access Health and Community
  • Bentleigh Bayside Community Health Limited
  • Sandringham Ambulatory Care Centre Pty Ltd 
  • DPV Health Ltd
  • Link Health and Community Limited
  • Link Private Practice Pty Ltd
  • Merri Community Health Services Limited.

Audit procedure quality indicator

Less than 2% of agencies disclosed prior-period material errors in their financial statements. Our target was less than 5%

As auditors, it is critical that our work is reliable. We design our audit procedures to detect material errors and measure how we perform on this by assessing the number of financial statements we require corrections to take account of undetected errors from prior periods.

This year two per cent of agencies disclosed prior-period material errors in their financial statements. This within our target of less than five per cent.

A financial audit opinion can only provide reasonable, not absolute, assurance that there are no material errors in the information. 

Countering COVID-19 to deliver our financial audit program

COVID-19 made it difficult for some state government entities to meet their annual reporting requirements. It also put us at risk of not meeting audit timelines for the 30 June 2020 financial reporting period.

We addressed this by working with entities to develop an entirely remote approach to completing year-end processes and audit functions. Working towards a common goal helped us to finalise the 2020 reporting and auditing program. Even in the face of economic uncertainty, we still ensured the accountability and transparency of Victorian Government finances.

The government gave agencies more time to table their annual reports in Parliament. It also allowed us to deliver our audit program incrementally. We prioritised our audit of the Annual Financial Report of the State of Victoria for 2019–20 and material entities, slating non-material entities to occur after. As a result, we provided many of our non-material audit opinions later in 2020–21 than in other years. 

We also conducted two reviews and issued two review reports within the one audit cycle when the government tabled its 2020–21 State Budget in November 2020 and the 2021–22 State Budget in May 2021. 

Delaying the 2020 program saw us tabling our reports on results of our financial audits later than previous years.

These necessary delays caused us to begin our 2021 program audits later than usual. We aimed to be back on course by May 2021 (the interim phase of our audits) and to achieve this invested a lot of time in workforce planning. 

We will again prioritise material entity audits for the 2021 year-end to help ensure that the state can deliver its annual financial report for 2020–21. And once again, we will deliver our audit opinions subject to the limitations of government-imposed restrictions.

2.3 Our assurance review program

In 2020–21 we delivered three limited assurance reviews, including our first reviews, which focused on a discrete activity or single issue of significant public interest. 

We examined whether Department of Premier and Cabinet grants to the Migrant Workers Centre were misused for political campaigning activities and whether the processes to request and access Treasurer’s Advance payments to departments were in place and operating effectively. We also delivered our second annual assurance review on agency responses to performance audit recommendations. 

This year we established the strategic audit planning (SAP) team, creating a dedicated resource for conducting limited assurance reviews. SAP has investigated potential review topics and review conduct throughout the year. Figure 2D lists our 2020–21 assurance reviews.

FIGURE 2D: Assurance reviews tabled in 2020–21

Review Tabled
Accessing Emergency Funding to Meet Urgent Claims  Nov 20
Grants to the Migrant Workers Centre Feb 21
Responses to Performance Audit Recommendations: Annual Status Update Jun 21

Source: VAGO.

2.4 Delivering services efficiently

The average cost of our parliamentary reports in 2020–21 was $535 300. This is 13 per cent higher than the 2019–20 average ($473 400), but just 3.1 per cent over our 2020–21 target ($519 000). Figure 2E summarises the average cost of our reports by type.

FIGURE 2E: Average cost of parliamentary reports by type 2020–21 

Report type Average cost
Performance audits $718 200
Reports on the results of financial audit $187 200
Limited assurance review  $159 000

Source: VAGO.

This year our average time to complete performance audits (from initiation to tabling) was 12 months. This is two months more than last year and greater than our target of nine months. These delays were caused by: 

  • allowing agencies more time to respond to us due to COVID 19 
  • fewer available staff hours due to unforeseen additional leave because of COVID-19 as well as staff departures 
  • receiving critical evidence late in the audit process.

The average time to produce our parliamentary reports on results of our financial audits after the balance date in 2020–21 was 6.7 months. We did not meet our target of five months. 

We tabled five financial audit parliamentary reports during 2020–21. Of these, we tabled the Auditor-General’s Report on the Annual Financial Report of the State 2019–20 within our target of five months as required by the Act. The remaining four reports were all delayed due to COVID-19.

The public sector agencies we audit pay us for the financial audit work we do for them. The Act allows us to recover reasonable costs only, so it is important that we continuously monitor and benchmark our service costs.

The average cost of the audit opinions we issued on financial statements during 2020–21 was $50 700, which was slightly higher than our 2019–20 result of $50 200 but under our target of $51 000.

We also benchmark our average costs against other state and territory audit offices with similar mandates. The average cost of the audit opinions we issued for:

  • state government entities was $58 640, which is less than the state and territory average of $84 236
  • local government entities was $58 709, which is less than the state and territory average of $63 015.

Agencies have statutory timeframes in which to complete their annual financial statements and to table their annual reports. This means our work must be timely.

We issued audit opinions for 97.3 per cent of agencies within four weeks of receiving their finalised statements, down from 98.1 per cent in 2019–20.

We also issued 93.8 per cent of final management letters to agencies within four weeks of issuing the audit opinion. This exceeded our target of 90 per cent.

2.5 Modernising our audit methods

VAGO has long been committed to exploring and embracing new technologies to enhance our audit techniques. In 2020–21, we leveraged several types of technology to bolster our processes and productivity against the ongoing disruption and uncertainty caused by the COVID-19 pandemic.

Enhancing insights through data science 

VAGO’s dedicated data scientists analyse data and statistics to support our performance audit and assurance review programs. Examples of the invaluable contributions they made in 2020–21 are summarised below.

To enhance our audit …

our Data Science team …

Reducing the Harm Caused by Gambling

measured the effectiveness of counselling services to demonstrate to the agency how to better leverage data they were already collecting.

Systems and Support for Principal Performance

performed natural language analysis on principal performance agreements.

Sexual Harassment in Local Government

conducted a survey into sexual harassment in local government—the first of its kind in Victorian local government—and produced interactive visualisations of the results.

Accessibility of Tram Services

used geospatial techniques to merge datasets from multiple agencies and provided results and insights not previously available. This helped paint a picture of the lived experience of mobility impaired tram users.

Reducing Bushfire Risks

provided technical evaluation of the modelling used by the Department of Environment, Land, Water and Planning.

Victoria’s Homelessness Response

natural language thematic analysis of service provider case notes. 

Management of the Student Resource Package

in-depth analysis and critique of the data quality and methods used by the Department of Education and Training to calculate the Student Resource Package.

Empowering financial auditors with data analytics 

In financial audit, we used our in-house data analytics platform, Empower, to generate 55 regularly updated internal dashboards that cover 30 of our largest audit clients. 

These dashboards:

  • provide our auditors with source data 
  • assist with planning analytics  
  • assist with sampling  
  • enable auditors to run computer-assisted audit techniques over data
  • assist with more traditional substantive testing, such as fully recalculating material classes of revenue.

Embedding our new financial audit methodology 

We continued to refine our Engage, Plan, Implement and Conclude (EPIC) methodology, as well as developing training and guidance to support our auditors. In 2021–22 we will update EPIC to reflect recent revisions to Auditing Standard ASA 315 Identifying and Assessing the Risks of Material Misstatement and will integrate our methodology into replacement engagement file software in 2021–22.

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3. Growing our influence

In 2020–21 we continued to find better ways to engage our stakeholders. From remote parliamentary briefings and live-streamed forums to fact sheets and thought leadership, our commitment to overcoming the challenges of COVID-19 helped us maintain our high levels of stakeholder satisfaction.

Chapter 3 key facts

Source: VAGO.

3.1 Improving stakeholder engagement

Our primary stakeholders are parliamentarians, the public sector agencies we audit and the Victorian community. We also actively engage with our peers and the accounting and auditing professions.

Access fact sheets about 
our work and services on the corporate publications page of our website: www.audit.vic.gov.au/
corporate-publications 

We constantly seek better ways to engage our stakeholders. This year we published fact sheets to raise awareness about our work and services, for example:

  • About VAGO provides information about the Auditor-General and VAGO's work 
  • Our Assurance Services provides information about the nature and levels of assurance that we provide to Parliament and public sector agencies. 

Parliamentarians

In 2020–21 we began developing our Parliamentary Engagement Plan. The purpose of the plan is to ensure we clearly understand our relationship with members of Parliament and their needs and have a strategy to provide them with opportunities to increase input into, and receive insights from, our work.

Engaging with PAEC

Throughout the year we engaged with the PAEC on annual planning topic selection. It provided valuable feedback on our forward audit program and contributed ideas about potential areas of audit interest.

Adapting processes due to COVID-19

Many of the parliamentary processes we introduced in response to COVID-19 restrictions continue, including electronic tabling letters and supplying digital copies of our reports. Parliament still requires us to produce 25 hard copies of our reports.

We have continued to conduct remote briefing sessions on tabled reports during 2020–21. We run the briefings on day the report is tabled, providing parliamentarians and their staff with an overview of our audit findings and responding to their questions.

Responding to enquiries

We also responded to enquiries from parliamentarians throughout the year. On average, we took 12 days to finalise a response, successfully meeting our target of 20 days or fewer.

Improving information delivery

Our dashboard and data visualisation products, which allow easier analysis and deeper exploration than static tables of information, have received positive feedback.

Public sector forums and conferences

Our financial and performance audit staff regularly attend and present at forums and conferences for professionals across sectors. We attended the following in 2020–21:

  • Victorian Local Governance Association Connect webinars 
  • Early Learning Association Australia’s CEO Group events
  • Australia and New Zealand School of Government’s 2021 First Peoples Conference: Proud Partnerships in Place
  • FinPro conference presentation: VAGO—Emerging risks and audit challenges
  • FinPro question and answer panel sessions for members
  • FinPro regional meetings
  • Committee for Economic Development of Australia: State of the Nation event 
  • Chartered Accountants Australia and New Zealand (CA ANZ): Finance Business Tech Conference
  • Chartered Practising Accountants Australia (CPA Australia): Public Sector and Not-for-profit Committee events
  • CPA Australia: Virtual Congress 2021.
Presented audit findings to local government

We presented the findings of our audit Sexual Harassment in Local Government to:

  • councillors at Moreland City Council (audited council)
  • the Moreland City Council Audit and risk committee
  • councillors at Mornington Peninsula Shire Council (non-audited council)
  • the Australian Local Government Women's Association
Live-streamed Audit Committee Forum

We ran our third annual Audit Committee Forum as a live-streamed event, extending our invitation to all audit committee members. More than 230 attendees learnt about current sector-wide topics and areas of interest, including:

  • risk and innovation
  • delivering performance engagements
  • audit committee effectiveness (insights from our interactions across the Victorian public sector and financial audit services)
  • the current and emerging cyber threat landscape.

We received positive feedback from attendees. Many commented that the presentations were focused, succinct, engaging and highly relevant to the circumstances agencies faced because of the pandemic. They approved of the flexibility afforded by a virtual forum, particularly the attendees’ ability to revisit the information after the event. Of the attendees who completed our post-event survey: 

  • 96 per cent were satisfied with the date and time
  • 93 per cent were satisfied with the content presented
  • 76 per cent were satisfied with the opportunities to ask questions and provide feedback
  • 44 per cent attended the forum for the first time.

Professional and peer organisations

Throughout the year we engaged with our peers from other audit offices through the Australasian Council of Auditors-General (ACAG). We were involved in role-based subgroups focused on promoting and strengthening public sector auditing. Subgroups included:

  • Heads of Performance Audit
  • Heads of Financial Audit
  • Financial Reporting and Accounting Committee 
  • Auditing Standards Committee. 

Public Sector Perspectives, our FRA team’s thought leadership series, was started to help the Victorian public sector stay on top of topical financial reporting issues and emerging technical developments. Access the series on our website at www.audit.vic.
gov.au/public-sector-perspectives

Publishing thought leadership 

In 2020–21, our financial reporting advisory (FRA) team launched a new external thought leadership publication series ‘Public Sector Perspectives’. We started the project to help the Victorian public sector stay on top of topical financial reporting issues and emerging technical developments.

The first article, Improving Public Sector Financial Statements—Power of streamlining, published in April 2021, gave readers insights on how to enhance the effectiveness of their organisation’s financial report through streamlining. We shared the article with CFOs, financial controllers, finance managers and chairs of audit committees, and promoted the publication through our website and LinkedIn page.

Engaging the Australian Accounting Standards Board 

The FRA team also regularly engaged with the Australian Accounting Standards Board (AASB) to discuss how accounting standards are applied in the public sector. We attended staff liaison meetings, provided feedback on AASB consultation documents and participated in AASB project advisory panels (including the Fair Value project advisory panel and Conceptual Framework project advisory panel).

FRA also worked closely with the accounting policy team at the Department of Treasury and Finance on changes to financial reporting directions, model financial statements and other technical accounting matters. We liaised with professional accounting bodies (such as CPA Australia and CA ANZ) and various industry technical discussion groups.

Engaging the Australian Auditing and Assurance Standards Board

Our audit quality team engaged with the Australian Auditing and Assurance Standards Board (AuASB) to discuss auditing standards and potential implementation issues in the public sector. We gave feedback on various projects and exposure drafts released by AuASB via the ACAG and project advisory group network.

Consulting on systems assurance and IT

In 2021, our data analytics and systems assurance (DASA) team hosted two virtual meetings involving the heads of systems assurance/IT audit across ACAG offices.  The purpose of these meeting was to discuss how our different offices approached the revisions to ASA 315 Identifying and Assessing the Risks of Material Misstatement

A member of our DASA team participated in an AuASB-led project advisory group, a group that assists the AuASB’s Technical Group by drawing on our professional expertise and experience in developing guidance to support the use of technology by auditors in executing audits and to support auditors in auditing.

3.2 Listening to our stakeholders

We survey parliamentarians every year to understand how well we are serving them. Our 2020–21 survey told us that parliamentarians find our reports and services useful sources of information on public sector performance that help improve public sector administration and assist them in their roles.

Our overall satisfaction rating among parliamentarians was 87.5 per cent in 2020–21, compared to 90 per cent in 2019–20.

Parliamentarians reported being generally satisfied with the accessibility of our products and services, including our online offerings and briefings. Feedback on our performance more generally was also positive, highlighting the important role VAGO plays for parliament and the public. Figure 3A illustrates this feedback.

FIGURE 3A: Parliamentarian satisfaction survey data

FIGURE 3A: Parliamentarian satisfaction survey data

Source: VAGO.

Public sector agencies

We ask the agencies involved in our performance audits how they rate our processes, reporting and value. We aim for our average score across the year to be at least 75 per cent on each of these measures. 

Figure 3B shows our results for 2020–21 tabled audits. Scores across all dimensions have improved from 2019–20, with 78 per cent of performance audit clients satisfied with the overall performance audit process and reporting. 

FIGURE 3B: Performance audit survey results

FIGURE 3B: Performance audit survey results

Source: VAGO.

The results of our financial audit survey this year reflected a strong increase in overall satisfaction. This was a great result given 2020–21 was the first year we had delivered our entire program remotely. As with our performance audit surveys, we asked CFOs about our process, reporting and value. Figure 3C shows the highlights of our 2020–21 results. 

FIGURE 3C: Financial audit survey results

FIGURE 3C: Financial audit survey results

Source: VAGO.

3.3 Sourcing audit topics from stakeholders

We consult the agencies we audit and a wide range of Victorian stakeholders to develop our annual plan of audit topics. We want to ensure that our audit topics reflect issues of concern to parliamentarians and the public, so we aim to increase the number of our audits that originate from these sources. 

In 2020–21, we received 268 requests and comments from the public and elected officials. This was a 94 per cent increase on the 138 requests and comments received the previous year.

  • The correspondence comprised: 
  • 232 requests and comments from the general public 
  • 15 requests from parliamentarians 
  • 21 requests from the public sector. 

Some of our planned audits relate to issues raised in these referrals, including: 

  • government advertising 
  • supporting students with disabilities
  • fraud control over local government grants. 

3.4 Improving data access for better user insights

We increased our use of datasets and interactive dashboards in our 2020–21 audits and made them available to the general public on our website. Our dashboards allow users to download the underlying data. This increases the accessibility of our work and allows people to use our data in a way that is valuable to them. 

For example, our Sexual Harassment in Local Government performance audit included an online dashboard that allow users to compare the prevalence of sexual harassment by council type, the professional relationship between harasser and victim, the harassment type and the impacts of the harassment according to the survey respondents’ workplace role. 

For our assurance review Responses to Performance Audit Recommendations: Annual Status Update, we published an online tracker that allows users to find out how 117 agencies had responded to our performance audit recommendations across five years (2015–16 to 2020–21). It gives parliamentarians and the public insight into performance and enables agencies to compare themselves against others. 

Our most viewed dashboard in 2020–21 provided an overview of publicly available data on new and existing major projects disclosed in the Budget Paper No. 4: State Capital Program from 2014–15 to 2019–20. We published this dashboard as a precursor to our Major Projects Performance audit. Figure 3D shows a screenshot of the dashboard.

We also published dashboards on financial data for TAFE institutes, universities, and the local government sector, which showed their performance across the past five years.

FIGURE 3D: Dashboard for major projects performance

FIGURE 3D: Dashboard for major projects performance

Source: www.audit.vic.gov.au/dashboards/major-projects-performance.

3.5 Our impact in 2020–21

We continued to make an impact this year, despite the many challenges we faced because of the pandemic. 

Parliamentarians

Many of our performance audits have received attention in Victoria's Parliament:

  • In April 2021 we presented the findings of our 2019 Managing Registered Sex Offenders report to the Legal and Social Issues Committee's Inquiry into Management of Child Sex Offender Information. 
  • The Royal Commission into the Casino Operator and Licence referenced our Reducing the Harm Caused by Gambling audit to assist in understanding the social costs of gambling.
  • The Inquiry into the Increase in Victoria’s Road Toll referenced our 2020 Safety on Victoria’s Roads—Regional Road Barriers report in its discussion and recommendation that the Department of Transport improves its record keeping.
  • The Legal and Social Issues Committee’s parliamentary Inquiry into Homelessness in Victoria referenced our 2018 Managing Surplus Government Land report, which concluded while the ongoing use of land sale targets for government agencies have produced some positive outcomes, they have also driven agencies to ‘prioritise the sale of surplus land rather than considering whether another option would achieve best value, such as a commercial lease or retaining a site for community use’. 
  • The parliamentary Inquiry into Early Childhood Engagement of Culturally and Linguistically Diverse Communities made multiple references to the findings of our reports Effectively Planning for Population Growth (2017) and Access to Services for Refugees, Migrants and Asylum Seekers (2014) in its inquiry report. 
  • The Royal Commission into Victoria's Mental Health System tabled its final report in Parliament in March 2021. It makes multiple references to our 2019 audits Access to Mental Health Services and Child and Youth Mental Health.     

Agency responses to our performance audits

Agencies are getting faster at completing actions in response to our recommendations. The time taken to complete a recommendation after the audit tabled decreased by 59 days. We saw similar improvement across departments.

In our 2020–21 Responses to Performance Audit Recommendations: Annual Status Update report, we reviewed agencies’ progress on recommendations from performance audits published in 2018–19 and 2019–20, as well as any unresolved recommendations from earlier years. 

In the review we assessed whether agencies have effectively addressed our performance audit recommendations. It involved 102 agencies with 1 059 outstanding recommendations from 76 performance audits from 2015–16 to 2019–20, including two performance audits tabled in early 2020–21.

As agencies are not legally required to accept, complete or publicly report on our recommendations, we use our assurance review powers to provide greater transparency and accountability to the Victorian public and parliamentarians. 

Figure 3E shows a high-level status update of all recommendations included in our 2020–21 review. The number of accepted and implemented recommendations has increased from our last review.

FIGURE 3E: Status of all recommendations in 2020–21 review 

Metric Result
Assurance review survey response rate 100%
Audit recommendations accepted by agencies 99%
Audit recommendations reported as completed 63%
Days on average to complete a recommendation after the audit tabled 398 days

Source: VAGO.

Our work this year showed us that, overall, agencies are getting faster at completing actions in response to our recommendations. Compared with last year, the average time agencies took to complete a recommendation after the audit tabled decreased by 59 days. We saw similar improvement across departments.

In our 2020–21 review, departments reported an improvement from 52 months to complete a 2015–16 recommendation to eight months to complete a 2020–21 recommendation. Our analysis of between-year trends showed a dramatic improvement in 2018–19 from previous years, as the percentage of complete recommendations remained high (71 per cent), yet the time taken decreased by a median of 22 months. 

However, we found 72 unresolved recommendations more than three years old. These recommendations belong to 27 agencies across 28 audits. It is unclear to us whether these agencies have mitigated the risks relating to these recommendations by other means or if the risks remain unmanaged. 

We also used the results of the survey, combined with information from our 2019–20 review, to report to Parliament the percentage of accepted performance audit recommendations that audited agencies report as completed across a two year period. For recommendations made in 2017–18 and 2018–19, we achieved 70.1 per cent, which is lower than our target of 80 per cent. Reasons for this include COVID-19 delays, changes in legislation, state Budget-dependent actions and royal commission reports. However, 85 per cent of unresolved recommendations are due to be completed in the next financial year. 

Agency responses to financial audit recommendations

Our financial audits have made a measurable impact on internal controls this year. Part of our financial audit process is to issue management letters to agencies highlighting issues of internal control weakness and other matters we find and make recommendations to resolve them. Agencies respond to these letters with their intended actions. 

This year, we again found control issues relating to IT weaknesses. We uncovered several unresolved prior-year IT issues that need to be addressed as a priority.

Figure 3F shows the progress we have made on strengthening agencies’ internal controls over the last three years.

FIGURE 3F: Percentage of resolved issues from prior years*

FIGURE 3F: Percentage of resolved issues from prior years

Source: VAGO.

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4. Investing in our people

Despite the disruption and uncertainty that COVID-19 has brought to workplaces, we are pleased that in 2020–21 our employee engagement increased. We prioritised health and wellbeing, provided more training opportunities and redoubled our commitment to being an employer of choice.

Annual report 20-21_FINAL_key facts ch.4.png

Source: VAGO.

4.1 Who works at VAGO?

As of 30 June 2021, 54 per cent of our workforce were women. Women made up 90 per cent of our part-time workers (down from 100 per cent in 2019–20) and 44 per cent of our executives (up from 42 per cent in 2019–20).

Our gender pay gap is 4.5 per cent in favour of men.

Appendix A includes a profile of the VAGO workforce. It shows our employees by age, seniority and gender and whether they are part time or full time, on fixed term or ongoing contracts.

4.2 How we put our people first

This year we continued to prioritise the health and wellbeing of our staff.

Kept staff COVIDSafe

Throughout the year we updated the measures in our COVIDSafe Plan as government advice became available. The COVIDSafe Plan is designed to protect staff from COVID-19 when they are working away from home.

Started building a better normal

Better normal

To be an employer of choice we need to provide our staff with the most contemporary work practices possible. Work flexibility is central to achieving this objective. We have designed our better normal principles to guide this flexibility.

We have also focused on planning for the post-pandemic landscape by developing our ‘better normal’ principles to guide our future work practices. To be an employer of choice we need to provide our staff with the most contemporary work practices possible. Work flexibility is central to achieving this objective. We have designed the better normal principles to guide this flexibility.

We developed the principles through consultation with staff, giving them opportunities to provide anonymous feedback before they were finalised.

Our better normal principles are:

  • You can avail of world leading flexibility.
  • We will continue our new ways of working to support this flexibility.
  • We will focus on the quality, not quantity, of in-person interactions.
  • We will achieve an un-compromised work location to protect you.
  • We will protect our information.
  • We will remain compliant.
  • We will listen and adapt.

These principles complement our focus on diversity and inclusion, in particular to support primary carers and people with disabilities, who benefit the most from flexible work practices.

As part of our commitment to not compromise our workspaces, we have offered every staff member a best-practice workstation for their home office, including a sit stand desk, ergonomically certified chair, up to three screen monitors and other accessories and equipment. We anticipate the rollout of workstations to be completed in 2021.

Provided flexible training

We adapted our professional learning and development program content for virtual learning where possible, and staff have continued to use our online booking system. The introduction of facilitated virtual training to meet the restriction requirements of COVID-19 has ensured that training continued during this time. We also introduced a comprehensive suite of online health and wellness activities, such as virtual yoga and fitness classes and mindfulness and nutrition advice, to help maintain staff mental and physical health while working from home.

CoronaCare for staff in isolation

To support our existing employee assistance program, VAGO launched CoronaCare in September 2020. The isolation support service for employees includes check-ins to assess employee needs and provides support, coping strategies and social connection as well as follow-up employee assistance program support with a mental health or relevant expert.

Stayed social

Our social club remained extremely active, focusing on smaller group activities where people could interact outside their immediate work teams. Activities included online quizzes, hobby group discussions and gift sharing at Christmas. We held in-person events where possible, such as a dinner for the end of Ramadan and a working from home anniversary picnic.

Live-streamed interactions

Our fortnightly staff briefings and quarterly business unit forums are live streamed to ensure that our communication lines with staff remain open. We also meet virtually with our audit service providers (ASPs) on a quarterly basis across the financial year.

Offered special leave

We also provided special leave entitlement to staff who were directly or indirectly affected by COVID-19 due to school or childcare centre closures, restrictions on care arrangements, or the requirement to quarantine or self-isolate.

Celebrated values and recognition

We continued to embed our values within our organisation. In June 2021 we held our second annual Values and Recognition Celebration Week, with a theme of ‘Contribution’. The theme encompassed our contribution to others and to ourselves, focusing on our impacts and achievements. During the week, staff participated in various team building and social activities, culminating in our awards event with keynote speaker Stephanie Woollard OAM. Ms Woollard spoke about how her social enterprise in Nepal, Seven Women, had transformed the lives of local women through ‘trade, not aid’.

Refreshed our ASP panel

To help us deliver more than 560 annual financial audits for public sector organisations, we employ a panel of ASPs to perform audit work on our behalf.

In 2020–21 we refreshed this panel. This involved a thorough procurement process, guided by a specialist procurement consultant, probity advisor and an independent probity auditor. We evaluated all firms that applied in a fair and ethical manner in accordance with our evaluation and probity plans.

We refreshed our panel due to the rapid evolution of the audit industry and our clients’ focus on ensuring public sector auditing is not left behind. Our clients have told us they:

  • are unwilling to compromise on data protection and want to be certain that their data is stored in suitably mature environments
  • want us to increase our use of data analysis and machine learning to improve the efficiency of our financial audits, in addition to providing insights about their organisation to improve performance
  • expect us to keep pace with large global auditing firms, who are well advanced in delivering critical audit elements through multidisciplinary teams and centres of excellence.

Our earlier panel requirements and processes were no longer fit for purpose.

The objectives of our new panel are to:

  • access a consistent level of audit quality and value for money audit services
  • elevate our focus on data protection and governance and higher assurance about firm audit quality control through critical new qualification requirements
  • achieve continuous improvement towards best practice in financial audit services through innovative methods such as embedding and leveraging the use of data analytics and data automation
  • engage providers who demonstrate a strong cultural fit with VAGO
  • achieve process efficiency and effectiveness.

In conducting the refresh, we reduced the number of ASPs on our panel from 25 to nine. We began our first procurement round with the panel in 2021.

4.3 Improving our culture

To protect our workplace culture, we responded quickly to the COVID-19 pandemic. We implemented new practices, technology, equipment and other measures to support office-based staff working from home. Our senior leadership team also continued to prioritise employee experience throughout the year by making meaningful connections.

Recognised employees

We also formally recognised the efforts of employees who embody our values through our twice-yearly Values and Recognition Week. During these weeks we run team building exercises and social activities that culminate in values and recognition awards. These awards honour employees for their positive contributions.

Supported diversity and inclusion

We are now in phase two of our Diversity and Inclusion Plan 2019–22, which focuses on internal education and the introduction of new practices. To further progress this phase, we welcomed new members to our working group to champion the plan. This group met regularly to work through and implement the actions, including:

  • establishing training about unconscious bias and Aboriginal cultural awareness
  • reviewing our recruitment documents and existing e-learning compliance training modules to ensure our practices are free from unintended bias and are inclusive for a diverse range of people
  • developing a calendar of events for days of significance and various awareness days.

We also developed our Reflect Reconciliation Action Plan (RAP), discussed in Figure 4A.

FIGURE 4A: VAGO’s Reflect RAP

In June 2021 we proudly launched our inaugural Reflect RAP.

Developing our RAP was an important step for VAGO. It demonstrates our knowledge and respect for Aboriginal and Torres Strait Islander cultures and helps us ensure that cultural diversity, recognition and reconciliation are reflected in the way we perform our work each day. By developing and publishing our RAP, we demonstrated that we prioritise improving cultural competence and capacity at VAGO.

This is the first of four plans that we will implement over the next four years. Our Auditor-General Andrew Greaves is the executive sponsor of the RAP working group and we were privileged to receive the advice and support of three Aboriginal community members as we developed the work.

Our RAP is included on the Reconciliation Australia website. Access it by typing the following URL into your browser: www.reconciliation.org.au/ reconciliation-action-plans/who-has-a-rap/

Cover of our Reflect Reconciliation Action Plan

Source: VAGO.

2020 People Matter Survey

We received our 2020 People Matter Survey results in December 2020. The impacts of COVID-19 delayed the rollout of the standard survey. There was a shorter version focused on wellbeing released in October 2020.

Our survey results were positive. Our employee engagement score was 77 per cent, up from 66 per cent in 2019. Employee satisfaction also increased up to 67 per cent from 60 per cent the previous year.

Find our People Matter Survey results at www.audit.vic.gov.au/how-we-are-accountable

In 2020, fewer VAGO staff felt high to severe work-related stress (21 per cent, down from 25 per cent last year). The most improved indicators concerned psychosocial safety, which is how well workplace practices and processes support a climate for good psychological health. Ninety-five per cent of staff agreed they had received adequate support during the workplace changes due to COVID-19.

We published our People Matter Survey results on our website in December 2020.

People Matter Action Plan

Our People Matter Action Plan (PMAP) is a living document that articulates the actions we will take to enhance how we work. We envision that our plan will help us create a culture that brings everyone together around shared values and purpose and create a strong sense of connection for everyone.

The PMAP outlines key objectives and strategic initiatives and identifies five core pillars for change:

  • values-led leadership
  • effective change practices
  • creating a culture of safety
  • balancing work with life
  • celebrating success.

In 2020–21, we made significant progress in implementing our employee-led PMAP initiatives.

Values-led leadership

Our SMG, directors and managers continue to communicate regularly through various mechanisms to discuss wellbeing, workloads and seek feedback. This has been a priority of SMG during the COVID-19 pandemic, and we continue to discuss ways to enable managers to have regular and open conversations with staff.

Effective change practices

During our fortnightly staff briefings, senior managers provide updates on key projects impacting staff, including promoting our internal projects portfolio for employees to better understand current projects and change initiatives.

Our weekly OMG brief now includes a reminder for project owners to ensure the core business is a consideration in project design and timelines from the outset.

Creating a culture of safety

Following our performance audit Sexual Harassment in the Victorian Public Service, we launched our standalone sexual harassment policy and rolled out sexual harassment tools to help have preventative conversations in a safe and supported way. We discuss this in more detail in the next section.

We refreshed our appropriate behaviour training program, which all staff must now complete each year. To develop the content, we consulted with our diversity and inclusion working group and our Aboriginal cultural awareness training partners. This year we updated the content to include information about active bystander intervention and how to call out sexual harassment in the workplace.

Our weekly OMG briefing now includes a list of employees who have not completed mandatory training, such as the appropriate behaviour training program.

Balancing work with life

We continued to discuss ways to empower staff to have open conversations about workloads and other items relating to balancing work and life in the current climate. We encouraged staff to take special leave to assist with caring responsibilities due to COVID-19 lockdowns.

Celebrating success

We celebrated people, their hard work, commitment and successes through our internal communications channels, at business unit forums and regular all-staff meetings.

We clarified our approach to rewards, recognition and remuneration, including end of cycle ratings and their interaction with the enterprise bargaining agreement and our approach to recognising higher duties. We now provide details of employees undertaking higher duties in the weekly leadership briefs and fortnightly stand-ups as another method of recognition.

We improved our annual professional development plan training sessions to clarify how plans relate to progression and how we assess performance at the end of each year.

We also consistently used Microsoft Teams to collect anonymous questions from our employees prior to and during fortnightly stand-ups.

To provide further recruitment support to internal candidates, human resources launched a recruitment video to provide training and recruitment support options to employees.

Prevention of Sexual Harassment in the Workplace Policy

Sexual harassment, whether at work or in the community, is unacceptable. VAGO is committed to building and maintaining a culture that is free from discrimination, harassment and vilification.

Addressing sexual harassment is a key focus area of our PMAP and follows our November 2019 performance audit Sexual Harassment in the Victorian Public Service, which recommended that Victorian departments introduce a standalone sexual harassment policy incorporating better practice elements captured in the audit.

We often reflect on the findings of our audits to consider whether we would meet the same standards we hold the public service to. We have developed our Prevention of Sexual Harassment in the Workplace Policy to incorporate better practice elements from the Victorian Public Sector Commission’s model policy and the Victorian Equal Opportunity and Human Rights Commission’s guidelines to prevent and respond to workplace sexual harassment. The policy includes six minimum standards to promote compliance with the positive duty in the Equal Opportunity Act 2010 to take reasonable and proportionate measures to eliminate sexual harassment.

In addition to ensuring we meet the recommendations in our own performance audit, we have also worked with subject matter experts, such as the Victorian Equal Opportunity and Human Rights Commission, 1800RESPECT and the Victorian Centre Against Sexual Assault to further review focus group recommendations and explore best practice initiatives.

To support this, we also promoted a new interactive sexual harassment response tool which uses chat-bot technology to provide private online conversations to help users recognise sexual harassment at work, take action and access support and referral services. The tool is just one of several initiatives to emerge from the Victorian Equal Opportunity and Human Rights Commission’s innovative ‘Raise It!’ program.

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5. Leading by example 

We continued our network uplift, secured our cybersecurity network and introduced a protective data security plan. We published our first audit reports using more accessible and navigable layouts. We finalised our Quality Control Framework and provided training to all staff to ensure they understood its purpose.

Chapter 5 key facts

Source: VAGO.

5.1 Improving our IT security and systems

In 2020–21, our IT projects focused on improving cybersecurity and user experience.

Strengthening cybersecurity

In the first stage of our Microsoft Endpoint Manager deployment, we uplifted endpoint security, asset management and system and application updates for all Windows and mobile devices. Endpoint Manager is a unified mobile device management platform that enables staff to work productively and securely from anywhere, at any time, across devices.

We continued to ensure protection of public sector information as required by the Victorian Protective Data Security Standards. We complied with the Victorian Protective Data Security Framework by maintaining and actively managing security risks to our information assets, assessing:

  • information security
  • physical security
  • personnel security
  • IT risks.

We developed and implemented a Protective Data Security Plan, which we provided to the Office of the Victorian Information Commissioner.

We also strengthened our network access controls across both our wired and wireless networks. 

Our enterprise server rationalisation to Microsoft Azure virtual machines further improved the security, performance and availability of our IT systems and data and reduced our licensing, data centres maintenance and support costs.

Enhancing user experience

Our Empower server hardening provides assurance against the loss of availability, confidentiality and integrity of our Empower environment and data. Unlike the current Empower environment, which has not been configured to the Center for Internet Security’s standards, Empower server hardening provides hardened server images, multi-factor authentication for administration and Azure role-based access control to grant the appropriate access based on need and to remove it when it is no longer needed.

We also deployed Windows 10 version 1909, which upgraded our end-user computing environment and helped us maintain compliance and security.

We further leveraged our Microsoft investments by: 

  • using Microsoft Teams to provide a persistent location that promotes unification and transparency and enhances user awareness and collaboration
  • using Azure Information Protection to extend security labelling, classification, and protection capabilities to protect documents and emails to additional file types and platforms 
  • reconciling information across systems in our Microsoft 365 environment to be consistent and simplify access determined by business needs.

5.2 Improving our communications

Given that VAGO works in the public interest, we are passionate about continuously improving our products to ensure all users can access and understand our work.

User-friendly reports

In 2020–21, we published our first financial and performance audit reports using upgraded templates. The templates include chapter conclusions and summaries to make our reports easier for readers to skim and navigate. 

We also updated our website report template to ensure it has the same structure and branding as our print products. Aside from updating the visual style and layout of our print and web products, the new templates include report 'snapshots' to give the reader a general overview about:

  • the audit objective
  • why the audit is important
  • who we examined
  • what we examined
  • what we concluded. 

Audit video summaries

Our publishing team also reviewed and updated our video summaries. These short videos are primarily for the public. They give a snapshot of who and what we examined, what we concluded, essential background information, and our key findings and recommendations. 

The publishing team regularly engages with audit teams to ensure these videos accurately represent audits and maintain a high standard of visual representation, while condensing a major report to a video that goes for less than four minutes.

More tools for better writing

Behind the scenes, we launched a new online guide for writers, which covers VAGO’s communication style and editorial conventions. We also started rolling out a suite of e-learning modules on writing and reviewing, which are designed to lift the capability and confidence of all VAGO employees.

Greater engagement with our content

Our YouTube channel had 20 002 viewers in 2020–21 who collectively watched 943 hours of content, while our website had 388 061 page views. Figure 5A lists the audits that had the largest audience engagement over the year.

FIGURE 5A: Most viewed reports and videos of 2020–21

FIGURE 5A: Most viewed reports and videos of 2020–21

Source: VAGO.

Publishing dashboards to our website

We updated our website to enable users to view and search our data dashboards in the one place. It is now possible to view our five most recent dashboards in a separate section. We also made it easier to locate particular dashboards using a variety of filters. 

5.3 Our workforce productivity

We measure our workforce productivity as the total percentage of available paid staff hours that are charged to our output groups—audit opinions on financial and performance statements, parliamentary reports and parliamentary services.

Our productivity this year was 59.3 per cent, slightly lower that our 2019–20 result of 61 per cent, but in line with our target of 60 per cent. Staff can track their productivity and that of their team members via live business intelligence dashboards.

5.4 Refining our governance 

We continued to enhance and mature our governance and compliance systems. We met our obligations under the Financial Compliance Management Framework, the Victorian Government Risk Management Framework and the Victorian Protective Data Security Framework.

We also delivered several initiatives to support good governance and improve compliance across the organisation, as outlined below.

We delivered …

to ensure we …

a streamlined and revised risk management framework

comply with new requirements of the Victorian Government Risk Management Framework, effective 1 July 2021.

an updated business continuity plan 

incorporate lessons learnt during our COVID-19 response into changing the way we work.

a maturity assessment of our compliance management systems

create a comprehensive compliance management framework and centralised compliance monitoring function.

Managing complaints 

To promote transparency and a safe and inclusive work environment, we have processes designed to support staff and stakeholders who wish to raise concerns or complaints. We make sure that we manage and respond to those issues quickly and appropriately. 

In 2020–21 we consolidated the following policies into a single overarching complaints management policy:

  • complaints about the conduct of audits
  • complaints about VAGO activities other than audits
  • allegations of fraud, corruption or misconduct 
  • complaints about VAGO to integrity bodies.

A new consolidated complaints procedure supports policy implementation by setting out the requirements, responsibilities and steps we take to deal with complaints and allegations.

Our complaints management policy and procedure are publicly available on our website and make it easier for our staff and stakeholders to understand their protections and obligations when making complaints. Complaints can be submitted anonymously through our website or through direct communication with our audit teams. When we receive a complaint, we assess, investigate, respond to and remedy it to the best of our ability. We aim to resolve all complaints within 28 days. 

In 2020–21, we received two complaints. One was related to the conduct of an audit. We required additional time to complete our inquiries and closed the complaint in 43 days. The other complaint was an anonymous submission and concerned matters other than audits. We closed it within 28 days. 

Refreshing our Fraud and Corruption Control Plan

We also reviewed and refreshed our Fraud and Corruption Control Plan 2019–20. This involved updating our underpinning risk assessment, particularly as it is related to the new COVID-19 environment. As part of the plan, we delivered annual training for staff, strengthened controls for ASPs and vetting of staff, and improved our data protection controls. 

5.5 Strengthening quality assurance 

In 2020–21 we finalised our Quality Control Framework. The framework provides an overview of our quality control system, collating and linking our corresponding policies and procedures to the relevant requirements of Auditing Standard ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, and Other Assurance Engagements, the Accounting Professional and Ethical Standards Board’s APES 320 Quality Control for Firms and ASA 220 Quality Control for an Audit of a Financial Report and Other Historical Financial Information.

This gives us reasonable assurance that we are complying with AuASB standards, relevant ethical requirements and applicable legal and regulatory requirements, and that our reports are appropriate in the circumstances.

We discuss the results of our monitoring procedure and conclusion on the effectiveness in our current transparency report, which you can access at Transparency Report 2020–21 (audit.vic.gov.au) 

The framework also documents the agreed metrics (called audit quality indicators) and the procedures used to monitor our quality control system on an ongoing basis. We discuss the results of our monitoring procedure and conclusion on the effectiveness in our current transparency report.

Everyone at VAGO is required to read and understand the framework. We have provided a training program to all staff and incorporated it into our induction program to ensure all new staff have also been adequately trained in our framework.  

Our leadership team has agreed to early adopt AUASB’s recently released ASQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements, ASQM 2 Engagement Quality Reviews and the revised ASA 220. We are in the preliminary planning stage of developing a project team to review our quality control system and update our framework in line with the new requirements of these standards. 

Transparency report

In 2020–21 we produced our first annual transparency report. The report expands on, and is an adjunct to, our annual report. We produce it to help stakeholders understand how we support our auditors to perform high-quality audits.

Our transparency report outlines:

  • our approach to transparency reporting
  • our legal structure, governance and finances
  • our quality control system and how it aligns with Australian auditing and assurance standards
  • external reviews and audits of our organisation.

The transparency report exemplifies our desire to be fully transparent about our operations and is a key deliverable under our 'Lead by Example' pillar in our strategic plan. 

Strengthening accountability through transparent service performance 

As part of our wider strategy to reform and enhance the reporting of service performance by the public sector, we published to our website a service performance dashboard as part of our 2021 Measuring and Reporting on Service Delivery audit.

The dashboard allows users to compare departments’ performance against each other and drill down to examine performance trends for individual measures over time. Users can also download raw data on output performance measures and conduct their own analysis. 

We anticipate that this product will be invaluable to parliamentarians and PAEC during the Budget estimates process. We will also integrate it into our annual planning processes. 

We also publish our own VAGO dashboard on our annual report web page. This complements the audited performance statement in our annual report.

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6. Performance statement

Declaration in the performance statement

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 2020–21 financial year are presented fairly, and are consistent with the Standing Directions under the Financial Management Act 1994.

The statement includes the 2020–21 performance measures 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 25 August 2021.

Auditor-General and Acting Executive Officer signatures

Click the link below to download a PDF copy of the performance statement.

 

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Click here to download the performance statement

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7. Our financial management

Click the link below to download a PDF copy of Chapter 7. Our financial management.

 

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Click here to download a PDF copy of Chapter 7. Our financial management

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Appendix A. Workforce profile

Click the link below to download a PDF copy of our workforce profile.

 

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Click here to download Appendix A. Workforce profile

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Appendix B. Workplace health and safety

Click the link below to download a PDF copy of our workplace health and safety statement.

 

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Click here to download Appendix B. Workplace health and safety

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Appendix C. General executive information

Click the link below to download a PDF copy of our general executive information.

 

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Click here to download Appendix C. General executive information

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Appendix D. Audit and risk management

Click the link below to download a PDF copy of our audit and risk management statement.

 

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Click here to download Appendix D. Audit and risk management

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Appendix E. Policies and compliance

Click the link below to download a PDF copy of our policies and compliance statement.

 

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Click here to download Appendix E Policies and compliance

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Appendix F. Additional information available on request

Click the link below to download a PDF copy of Appendix F. Additional information available on request.

 

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Click here to download Appendix F. Additional information available on request

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Appendix G. Disclosure index

Click the link below to download a PDF copy of our disclosure index.

 

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Click here to download Appendix G. Disclosure index

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Appendix H. Acronyms and abbreviations

Acronyms  
AASB Australian Accounting Standards Board
ACAG Australasian Council of Auditors-General
ASP audit service provider
AuASB Australian Auditing and Assurance Standards Board
CA ANZ Chartered Accountants Australia and New Zealand
CFO chief financial officer
DASA data analytics and systems assurance
FRA financial reporting advisory
IT information technology
OMG operational management group
PAEC Public Accounts and Estimates Committee
PMAP People Matter Action Plan
RAP Reconciliation Action Plan
SAP strategic audit planning
SMG strategic management group
TAFE technical and further education
VAGO Victorian Auditor-General’s Office
VI Victorian Inspectorate
Abbreviations  
Audit Act Audit Act 1994
BP3 Budget Paper No. 3: Service Delivery
COVID-19 coronavirus
CPA Australia Chartered Practising Accountants Australia

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