Auditor-General’s Report on the Annual Financial Report of the State of Victoria: 2017–18

Tabled: 24 October 2018

1 Audit context

Each year we audit the AFR, which measures the financial position of the state at the end of the financial year, and how it performed during the year.

Section 16A of the Audit Act 1994 requires that we report to Parliament on our audit. This report satisfies our obligation.

1.1 Entities included in the AFR

The AFR combines the financial results of 265 state-controlled entities. These are classified into three sectors:

  • general government sector (GGS)
  • public financial corporations (PFC)
  • public non-financial corporations (PNFC).

Figure 1A
Categories of state-controlled entities

Figure 1A shows categories of state-controlled entities.

Source: VAGO.

We audit and provide an opinion on the financial statements of the 265 state‑controlled entities each year. Appendix C details the date and type of financial audit opinion we issued in 2017–18.

Significant state-controlled entities

The financial results of 33 state-controlled entities, listed in Appendix C, were significant to the financial performance and position of the state in 2017–18. Collectively, these entities accounted for most of the state's assets, liabilities, revenue and expenditure.

We focused our audit attention on the financial transactions and balances of these 33 entities when forming our opinion on the AFR.

1.2 Entities not in the AFR

The AFR reports only on state-controlled entities. Other entities that provide public services are excluded because the state does not control them for financial reporting purposes.

Figure 1B
Sectors not included in the AFR


Reason sector is not included in the AFR

Local government

Local government is a separate tier of government, with councils elected by, and accountable to, their ratepayers.


The Commonwealth is the main funder of universities, and the state directly appoints only a minority of university council members.

Denominational hospitals

Denominational hospitals are private providers of public health services and have their own governance arrangements.

State superannuation funds

The net assets of state superannuation funds are the property of the members. However, any shortfall in the net assets related to certain defined benefit scheme entitlements is an obligation of the state and is reported as a liability in the AFR.

Source: VAGO.

1.3 Results of the State of Victoria

In 2017–18, the state generated $72.9 billion of revenue and outlaid $72.9 billion in costs. In the same period, other economic flows—such as revaluations of financial assets and liabilities—totalled $2.1 billion.

At 30 June 2018, the state controlled assets worth $323.1 billion and owed suppliers and employees $135.2 billion. Figure 1C shows the type and value of state revenue, expenses, assets and liabilities in 2017–18.

Figure 1C
Revenue, expenses, assets and liabilities of the state, 2017–18

Figure 1C shows the revenue, expenses, assets and liabilities of the state, 2017–18

Source: VAGO.

1.4 Our audit

We apply Australian auditing standards to our audit of the AFR and provide an audit opinion on it in accordance with Section 9A of the Audit Act 1994. DTF pays for the audit.

The cost of preparing this report was $500 000, which is funded by Parliament.

1.5 Report structure

Figure 1D outlines the structure and contents of this report.

Figure 1D
Report structure




Results of audits

Discusses the financial audit opinion issued on the 2017−18 AFR, the timeliness and quality of the AFR, and key transactions that occurred during the year.


Better practice financial reporting

Discusses the maturity of the financial reporting processes at state-controlled entities.


Internal controls

Summarises the internal control issues observed during our audits of state-controlled entities.


Financial sustainability of the general government sector

Provides an analysis of the GGS's financial outcomes.

Assesses the 2017–18 financial outcomes of the GGS against targets included in the 2017–18 State Budget.

Discusses key risks to the financial sustainability of the sector.


Financial sustainability of public financial corporations

Assesses the 2017–18 financial outcomes of PFCs against key financial measures, and discusses key risks to the financial sustainability of these entities.


Financial sustainability of public non-financial corporations

Assesses the 2017–18 financial outcomes of the 19 water entities against key financial measures, and discusses key risks to the financial sustainability of these entities.

Note: We published our commentary on the 11 technical and further education institutes that have a 31 December year-end reporting date in our report Results of Audits 2017: Technical and Further Education Institutes (May 2018).
Source: VAGO.

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