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Audit office letter raises possible contempt of parliament

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The Australian Audit Office's unprecedented criticism of information provided to Parliament by a statutory authority is a matter of great concern.

Its letter to the Presiding Officers of the Federal Parliament (copy attached) makes five separate criticisms of Aboriginal Development Commission explanatory notes sent to parliamentarians.

These notes, issued under the authority of the relevant Minister, provide the raw material for questioning of Ministers and public servants who appear before the Estimates Committees of the Senate. The Estimates Committee

hearings, which begin in two weeks time, are the best opportunity Senators have to subject the government and its bureaucracy to detailed questioning on policy and administration.

Senators must be able to rely on the accuracy of the material provided by departments and authorities.

At the coming Estimates Committees, Liberal and National Senators will closely question the Minister and officials about the issues raised by the Audit Office.

Depending on what is revealed, we retain the option of asking the President of the Senate to refer this matter to the Committee of Privileges for investigation as a possible contempt of the Senate.

CANBERRA 8 September 1989 Contact: Keith Kessell (062) 77 3170


Please quote


7 September 1989

The Honourable the President Parliament House CANBERRA ACT 2600


Medibank House. GPO Box 707

Woden Canberra, ACT 2601

Telephone (062) 83 4777 Facsimile (062) 851223

of the Senate

Dear Mr President

It is not the usual practice of the Australian Audit Office to comment on Explanatory Notes that Departments provide for the Parliament in support of the Budget or Additional Estimates each year, but I should draw your

attention to certain aspects of the 'Explanatory Notes 1989-90 Aboriginal Affairs' (Budget Related Paper No. 7.6B) that concern the Aboriginal Development Commission (ADC).

Attached is a copy of the relevant part of ADC's Explanatory Notes. It concerns the Special Audit Report tabled in the Parliament on 9 March 1989. ADC's comments contain significant errors and misleading

statements. These are detailed below.

page 133

ADC says that the Minister for Aboriginal Affairs requested the Auditor-General to conduct an efficiency audit of ADC's systems etc, and that the Auditor-General agreed.

That is incorrect. The special audit was an audit of accounts and records and conducted under provisions of the Audit Act different from those concerning efficiency audits. At Senate Estimates Committee E on

14 April 1989, ADC acknowledged under questioning from Senator Short that it knew as early as 20 January 1989 that the audit was not an efficiency audit. (Hansard p.E161) Yet the ADC persists in providing this and other incorrect information to the Parliament.


ADC gays that AAO significantly widened the scope of its audit.

That is incorrect. In accordance with normal auditing practice, the scope of the audit was not restricted at the start of the audit, and AAO made it clear to ADC in November 1988 that the audit would not be confined to Canberra or to projects mentioned in Senate Estimates Committee E in October 1988. Documentary evidence

supporting the AAO position was provided to Senate Estimates Committee E and was tabled in 'Estimates Committee E - Additional Information Received - Volume III - May 1989' pp 568,569,594 and 595.

page 134

ADC says that the recommendations contained in the Special Audit Report had generally already been implemented.

That is incorrect. Later work by AAO and by ADC's internal auditors, Price Waterhouse, indicates that the defects in ADC's administration identified in the special audit had not been corrected. Nor had

recommendations been implemented; for example, the recommendations at paragraph 2.10.11 of the Special Audit Report.

ADC says that the internal auditors produced 2 reports in April 1989 which found that ADC's procedures were adequate.

That is incorrect. The internal auditors' report dated 3 April 1989 states clearly that ADC's procedures are still unsatisfactory. For example, after examining fresh projects, the report says:

'The results of our review of these projects showed that a number of the procedures set out in the new ELPM [Enterprise and Land Procedures Manual] have not yet been satisfactorily

implemented.' (page 4)

'We have found no evidence that such checklists [recommended in the Manual] have been completed on a regular basis.' (page 6)

In relation to projects examined by AAO in the special audit the Price Waterhouse report says:

'It should be noted that the controls and procedures prescribed by the ELPM [Manual] issued


in November 1988, if they were properly implemented, address most of the issues raised by the AAO report.' (page 16)

'Our work shows that in many cases problems identified by the AAO report are still unresolved and further follow up action by the ADC is required.' (page 16)

It should also be noted that the Price Waterhouse review was quite different from the Special Audit review. As Price Waterhouse themselves said in a letter dated 28 April 1989 when providing the AAO with an opinion as to the comparison ' ... . the purpose of the reviews are so different that no direct correlation can or should be made.'

page 135

ADC says that the Audit costs are met from revenue not from Appropriation.

This conflicts with ADC's Explanatory Notes 1988-89 (March 1989) prepared for Parliament in support of the additional estimates 1988-89. On the basis of that document, the Parliament appropriated an additional

$7.6 million for ADC of which $100 000 was said to be for payment to AAO for special audit fees (Explanatory Notes p.51). It is a matter of concern that ADC has still not paid the audit fees for which it received assistance by the Additional Estimates in 1988-89.

I have sent a letter in the same terms as this letter to the Hon. the Speaker of the House of Representatives.

Yours sincerely

First Assistant Auditor-General