Figure B1
Audit opinion issued for the 2017–18 AFR

As required by section 16A of the Audit Act 1994, we gave a draft copy of this report to the Treasurer of Victoria and asked for his submissions or comments.

As required by section 16(3) of the Audit Act 1994, we gave relevant extracts of this report to named agencies and asked for their submissions or comments.

We also provided a copy of the report to the Department of Premier and Cabinet.

We have considered their views when reaching our audit conclusions.

7.1 The sector

PNFCs provide goods and/or services to the community on a user-pays basis. These goods and services are non-financial in nature. At 30 June 2018, there were 72 PNFCs in Victoria.

In 2017–18, PNFCs generated $11.27 billion in revenue and incurred $11.32 billion of expenses. At 30 June 2018, PNFCs reported assets valued at $138.5 billion and liabilities of $41.3 billion.

Figure 7A
Financial information about PNFCs

6.1 Conclusion

PFCs continue to operate sustainably and are positioned well financially.

6.2 The sector

PFCs are public sector entities that deal with the financial aspects of the state, including insurance, lending and investment management. PFCs can accept deposits from other state entities and undertake borrowings on behalf of the state. There are six PFCs in Victoria.

5.1 Conclusion

The GGS continues to operate sustainably and is well positioned financially.

5.2 The sector

The GGS consists of 187 entities that provide goods and services to the community significantly below their production cost. In 2017–18, the GGS generated $64.6 billion in revenue and incurred $62.3 billion of expenses. At 30 June 2018, it reported assets valued at $264.3 billion and liabilities of $80.2 billion.

Figure 5A
Financial information about the GGS

Effective internal controls help entities reliably and cost-effectively meet their objectives. Good financial reporting controls are also a prerequisite for delivering sound, accurate and timely external financial reports.

In our annual financial audits, we consider the internal controls relevant to financial reporting and assess whether entities have managed the risk that their financial reports will not be complete and accurate. Poor internal controls make it more difficult for management to comply with relevant legislation, and increase the risk of fraud and errors.

3.1 Financial reporting processes

Good financial reporting preparation processes reduce the risk of untimely, inefficient, inaccurate or unreliable reporting.

2.1 Audit opinion for the year ended 30 June 2018

This year, we provided a clear audit opinion on the AFR. A clear audit opinion adds credibility to the financial statements by providing reasonable assurance that reported information is reliable and accurate, in keeping with the requirements of relevant accounting standards and applicable legislation. A copy is shown in Appendix B.

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:

The Treasurer tabled the 2017–18 Annual Financial Report of the State of Victoria (AFR) in Parliament on 20 September 2018. The AFR includes the financial statements of the State of Victoria (the state) and the general government sector (GGS).

This report provides Parliament with information about matters arising from our financial audit of the 2017–18 AFR. It also provides our assessment of the financial sustainability of the three sectors that make up the state at 30 June 2018—the GGS, public financial corporations (PFC) and public non‑financial corporations (PNFC).