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Wednesday, 23 March 1994
Page: 2077


Senator MICHAEL BAUME (3.36 p.m.) —by leave—I move:

  That the Senate take note of the document.

The Auditor-General's report No. 32 is an important report on whether or not governmental agencies are ready for accrual reporting. This report was foreshadowed yesterday in the Auditor-General's report No. 27 on ministerial portfolios, which stated:

Many organisations will soon need to introduce accrual accounting systems, particularly as the level of audit qualifications indicates a widespread need for system development and improvement. In addition, the level of accounting skills in government departments needs to be addressed. The results of a recent ANAO survey indicate that the great majority of departments recognise the need to employ qualified staff in specialist accounting positions, but only 35% of these positions were filled by qualified accountants.

Only about a third of the accounting jobs in government are filled by accountants with any qualifications. This is an absurd situation. The Auditor-General was quite correct to say that this matter must be addressed, particularly when we are moving to a new form of reporting by governmental agencies—accrual accounting—which many of the professionals involved do not feel comfortable with, and will need to undergo a fair level of training.

  I want to dramatise the sorts of difficulties this inappropriate recruitment puts governmental bodies under. It may well explain why this government keeps making such a terrible mess of so many of its accounting procedures. It also may explain why the government wants to limit the capacity of the Auditor-General to examine so many things.

  The Auditor-General has been under non-stop attack by this government for continually pointing out the error of its ways, the mistakes it makes and the breaches of various governmental acts that are undertaken by departments. Often one wonders whether it is with the knowledge of the minister who could not care less, or whether it is a matter simply of gross incompetence, perhaps emerging from the fact that such a small proportion of accounting officers within the bureaucracy have formal accounting qualifications. This latest efficiency audit report—audit report No. 32—which has been tabled today, found:

. . . that many agencies:

.  have not been well prepared for accounting and reporting reforms to date, and

.  are not currently well prepared for the introduction of full accrual reporting.

The Auditor-General says:

.   agencies need to quickly address—

in view of the fact that students are in the gallery, I point out to them that there is a split infinitive there and I hope that they would rewrite that in its correct form—

the organisational staffing requirements flowing from management reforms generally and the move to full accrual reporting in particular. These requirements include the short and long term need for accounting specialist expertise, appropriately trained support staff and the managers who possess the necessary knowledge/understanding of the issues involved.

It is a matter of real concern that government accountants are apparently not qualified to cope not only with the situation at present but also with the need for significant change and reform in the methods of accounting and reporting that are now under way. The Auditor-General points out:

This lack of preparedness is illustrated by the following:

.   the proportion of specialist accounting positions filled by qualified staff was, in the ANAO's view, surprisingly low, especially in view of the fact that the majority of agencies themselves consider such qualifications desirable and most agencies reported no difficulties in filling such positions with qualified staff

.   only a small proportion of staff had experience in accrual accounting

.   only a few staff indicated that they had attended accrual accounting courses

.   despite a high demand for training, agencies overall did not report high levels of preparedness in terms of the staff training effort undertaken

.   a significant proportion of agencies reported that they had not taken action to recruit qualified staff

.   the use of FMIS reports was still limited primarily to monitoring expenditure against budget rather than assisting management in its wider accounting and financial responsibilities, and

.   a significant number of staff reported problems with job support mechanisms such as training, written guidelines, and accounting and financial management information systems.

It concludes:

The ANAO considers that the move to full accrual reporting will require significant changes to an agency's operations. Depending on the size of an agency, the changes are likely to necessitate revising the organisation structure and staff profile, providing adequate training and other support needs for staff and assessing the level of changes to be made to accountable reporting systems. There are indications that some agencies are not approaching the move to full accrual reporting with the importance it deserves. As a result there is a risk that problems faced due to a lack of preparation for earlier reporting reforms will occur again, and the potential benefits to be gained from full accrual reporting may not be realised.

I hope that this is one of those reports from the Auditor-General that this government takes seriously because, unfortunately, this government does not seem to put the level of significance on the Auditor-General's reports as the opposition does. We can see that from the way the government tried to belittle the Auditor-General's report into the sports rorts. That report revealed that everything we had been saying for four years was totally right and there had been in fact a monumental rip-off for political reasons of the public purse by politicians in government.

  The Auditor-General plays a vital role. This is a very important report. I hope the government will give it the attention that it clearly deserves so that we get the benefits of it. The report states that, under these new arrangements:

Differing levels of accounting skills are required by the following staff:

.   senior management, who will be required to use cash and accrual based information for both day-to-day and strategic decision making

.   program managers, who will be required to make financial decisions and prepare management reports taking into account cash and accrual information, and

.   accounting/finance staff, who will need to be able to prepare accrual-based financial statements and exercise professional skills and judgment on complex accounting issues.

We have to be convinced that all these people will in fact meet these requirements and develop these skills.

  Let us see how it has been going so far. I commend the table on page 26 which shows the proportion of specialist accounting positions filled with formally qualified staff. The table shows: 57 per cent of chief finance officers were formally qualified staff—I admit that that figure is better than average; 36.8 per cent of financial accountants in governmental agencies were financially qualified; only 36.3 per cent of management accountants had formal qualifications; only 21.4 per cent of cost accountants had formal accountancy qualifications; only 28.2 per cent of accounting advisers had formal qualifications; and only 24.6 per cent of Acc and FMIS specialists were formally qualified. There was one area where 100 per cent of staff were qualified, and that was in the area of graduate accountants. Obviously, one cannot be a graduate accountant unless one is a graduate. The average number of specialist positions in government agencies filled by staff who did not have formal qualifications totalled 35 per cent. The Auditor-General says:

Given that only 35% of specialist positions were filled by qualified staff at the time of the survey, a surprising result was that, for each type of position, a minority of agencies indicated difficulty in filling them with qualified staff.

That does strike me as extraordinary at a time when I would have thought plenty of people with these qualifications would be looking for jobs. The Auditor-General goes on:

In addition, a substantial proportion of staff (between 30% and 48%) had no educational qualifications or formal training relevant to the functions they performed. Numbers of clerical accounting staff with relevant training and/or educational qualifications were low in most of the accounting/finance functions covered by the survey, with less than 50% for all but one function.

  A significant proportion of professional and clerical accounting staff reported a need for training across a wide range of accounting and finance functions. Demand was greatest in areas associated with financial accounting and reporting, especially accrual accounting.

This matter is gone into at greater length in the report.

  I do not want to keep the Senate any longer except simply to point out that this is a matter of some significance as the government is moving more and more towards accrual reporting, as I believe it should. The question that the Auditor-General asks is: are agencies ready? Unfortunately, the answer seems to be that they are not as ready as they should be and that there is a lot of work to be done to ensure that accrual reporting will be a success. I hope the government knuckles down to recognising the need to take some fairly energetic action to fix up this matter that the Auditor-General once again, for the benefit of the parliament, has brought to our attention.

  Question resolved in the affirmative.