Results of 2018 Audits: Universities

Tabled: 30 May 2019

Appendix D. Control issues risk ratings

Figure D1 shows the risk ratings applied to issues raised in management letters. It also details what they represent and the expected timeline for the issue to be resolved.

Figure D1
Risk definitions applied to issues reported in audit management letters

Rating

Definition

Management action required

High

The issue represents:

  • a material misstatement in the financial report which has occurred, or an issue which could potentially result in a modified audit opinion if not addressed as a matter of urgency by the entity, or
  • a control weakness which could cause or is causing a major disruption of the process or the entity's ability to achieve process objectives in relation to financial reporting and comply with relevant legislation.

Requires executive management to correct the misstatement in the financial report, or address the issue, as a matter of urgency to avoid a modified audit opinion.

Requires immediate management intervention with a detailed action plan to be implemented within one month.

Medium

The issue represents:

  • a misstatement in the financial report that is not material and has occurred, or that may occur, the impact of which has the possibility to be material, or
  • a control weakness which could have or is having a moderate adverse effect on the ability to achieve process objectives and comply with relevant legislation.

Requires management intervention with a detailed action plan implemented within three to six months.

Low

The issue represents:

  • a misstatement in the financial report that is likely to occur but is not expected to be material, or
  • a minor control weakness with minimal but reportable impact on the ability to achieve process objectives and comply with relevant legislation, or
  • an opportunity to improve an existing process or internal control.

Requires management intervention with a detailed action plan implemented within six to 12 months.

Source: VAGO.

Back to Top