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Audit Act - Auditor-General - Audit reports - 1994-95 - No. 18 - Audit strategy 1994-95

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Audit Report No.18 1994-95

Audit Strategy 1994-95

National Audit O ffice


A u s t r a l i a n N a t i o n a l Λ u d t O f f i c e

The Auditor-General

Audit Report No.18 1994-95

Audit Strategy 1994-95

A u s t r a l i a n G o v e r n m e n t P u b l i s h i n g Se r vi c e C a n b e r r a

^Commonwealth of Australia 1995

ISSN 1036-7632

ISBN 0 644 35138 1

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no pan may be reproduced by any process without prior written permission from the Australian Government Publishing Service. Requests and inquiries concerning reproduction and rights should be addressed to tire Manager, Commonwealth Information Services, Australian Government Publishing Service, GPO Box 84, Canberra ACT 2601.

Produced by the Australian Government Publishing Service

Australian National Audit Office Canberra ACT 13 January 1995

Dear Mr President Dear Mr Speaker

In accordance with the authority contained in the Audit Act 1901, I today approved for transmittal to the Parliament my report Audit Strategy 1994-95.

I leave the Office of Auditor-General for Australia tonight. While the Parliament knows what the ANAO has done in the past (because our work is on the public record), it is appropriate, however, as the Parliament’s auditor, to advise Senators and Members of the work

that I have commissioned for the remainder of this financial year (i.e. of work in progress). I hereby do so.

I might add that the changes which the staff of the ANAO and I have introduced give the ANAO a chance to continue serving the Australian people and the Commonwealth Parliament well, well into the future.

The ANAO is able to produce audits of the highest standard because it comprises talented staff with an enormous level of commitment, dedication and goodwill. It has created valuable synergy from its close relationship with its private sector and academic colleagues. Its work is better focused and targeted towards improving public

administration as a result of its consultative processes with the Parliament, interest groups and agencies. I commend it to you.


Yours sincerely

^ . C. ·

J.C. Taylor Auditor-General

The Honourable the President of the Senate The Honourable the Speaker of the House of Representatives Parliament House

Canberra ACT


The Auditor-General is head of the Australian National Audit Office. He and the ANAO are independent of the Government. The ANAO assists the Auditor-General to carry out his duties under the Audit Act to undertake audits of performance and financial statements of Commonwealth public sector bodies and to provide independent reports and advice for the Parliament, the Government and the community. The aim is to improve Commonwealth public sector administration and accountability.

Auditor-General’s reports are available from Commonwealth Government Bookshops. Recent titles are shown at the back of this report. For further information please contact:

The Reports and Publications Officer Australian National Audit Office GPO Box 707 Canberra ACT 2601

phone (06) 203 7537 fax (06) 203 7777

Report on Financial Statement and Performance Audit Priorities to 30 June 1995


To achieve its mission the Australian National Audit Office has two business units: the Performance Audit Business Unit and the Financial Audit Business Unit.

Both Units have a business plan which sets their direction and addresses important issues such as audit strategies and business strategies and policies.

Financial Statement Auditing

The Auditor-General is responsible for the audit of financial statements prepared by Commonwealth departments, departmental commercial activities, statutory authorities and most Commonwealth owned or controlled companies.

At the high-risk end of our market - the Government Business Enterprises - the ANAO has implemented a program of project management. This draws upon the industry skills and commercial experience of the major firms as well as their international networks

to ensure our audits are at the leading edge.

For the low to medium-risk audits a program of benchmarking is in place. Under this program we benchmark a segment of our audits against the practices of private firms.

The financial statement audit product is in the form of an audit opinion on the financial statements of individual auditees. I lie financial statements are reported to the Parliament in agencies’ annual reports.

The ANAO intends to table a report in the Autumn sittings covering the results of audits of the financial statements for 1993-94 of Commonwealth entities.

Performance Auditing

The objective of performance auditing is to provide independent assurance and evaluation to the Parliament, the Executive, boards, management and to the community on the economy, efficiency and effectiveness of administration of Commonwealth public sector entities.

A performance audit is an independent, objective and systematic examination of the management of an organisation, program or function for the purpose of forming an opinion on its efficiency and effectiveness and suggesting ways in which it might be improved.

The product of a performance audit is a report to the Parliament. During the first half of this financial year I tabled fourteen performance audit reports. These are listed at Appendix 2.

Current audit priorities to 30 June 1995 are to table fifteen performance audit reports. These are listed at Appendix 1.

In addition to the above, there are six performance audits currently in progress which are planned to be reported to the Parliament during the 1995-96 financial year. These are listed at Appendix 3.

Before an audit is commenced, the ANAO generally undertakes what is termed a ‘preliminary study’ to identify issues and gather sufficient information to decide whether an audit is required. If a preliminary study does not lead to an audit the results of the study may still be reported to Parliament.

Some thirteen preliminary studies are in progress and these are also listed at Appendix 3.

13 January 1995 Canberra, ACT

J.C. Taylor Auditor-General


Appendix 1 Current performance audit priorities to 30 June 1995

Audits in progress to be reported in 1995 Autumn/Winter Parliamentary Sittings

Department of Human Services and Health - validation of nursing home funding Autumn

Special-purpose payments - follow-up audit Autumn

Australian Taxation Office - income matching Autumn

Insurance Superannuation Commission - prudential supervision Autumn

Department of Defence - defence contracting Autumn

Northern Land Council - follow-up audit Autumn

English as a Second Language - follow-up audit Autumn

Inoperatives in the Australian Public Service, and Studybank Autumn

Department of Defence - living-in accommodation Autumn

ANL - sale of ANL Autumn

Department of Employment, Education and Training - procurement of training Winter

Department of Employment, Education and Training - case management of the long-term unemployed Winter

Australian Hearing Services - provision of hearing services Winter

Department of Social Security - regional staffing Winter

Government information and advertising Winter


Appendix 2 Audits tabled from July 1994 to 13 January 1995

Audit Report No.l Project Audit Commonwealth Scientific and Industrial Research Organisation

- Follow-up of an Efficiency Audit of External Funds Generation

Audit Report No.2 Department of Defence Follow-up Audit Management of Army Training Areas Preliminary Study Acquisition of Additional F-111 Aircraft

Audit Report No.3 Project Audit Wool Tax Australian Taxation Office

Audit Report No.4 Project Audit Special Investigation into Casselden Place Building, Melbourne

Department of Administrative Services

Audit Report No.5 Follow-up Audits Department of Employment, Education and Training - New Enterprise Incentive Scheme (NEIS) - Protective Security - AUSTUDY

Audit Report No.6 Efficiency Audit Australian Taxation Office Information Technology Security

Audit Report No.7 Efficiency Audit Department of Industry, Science and Technology National Interest Export Finance and Insurance

Audit Report No.8 Aggregate Financial Statement prepared by the Minister for Finance year ended 30 June 1994

Audit Report No.9 Project Audit Is Australia ready to respond to a major oil spill? Australian Maritime Safety Authority

Audit Report No. 10 Efficiency Audit Cash Management in Commonwealth ' Government Departments

Audit Report No. 11 Project Audit ANL - Valuation Issues

Audit Report No. 12 Audit Reports on 1993-94 Financial Statements of Commonwealth Entities

Audit Report No. 13 Efficiency Audit Australian Defence Force Housing Assistance Department of Defence

Audit Report No. 14 Project Audit Department of Housing and Regional Development - Office of Local Government - Local Capital Works Program

Preliminary Study The Textiles, Clothing and Footwear Development Authority

Audit Report No. 15 Project Audit Department of Veterans’ Affairs - Follow-up of an Efficiency Audit on Compensation Pensions to Veterans

and War Widows

Audit Report No. 16 Follow-up Audit Accrual Reporting - Are Agencies Ready?

Audit Report N o.17 National Media Liaison Service A Loophole in Accountability?

Audit Report No. 18 Audit Strategy 1994-95

Other Titles

Annual Report of the Australian National Audit Office 1993-94


Appendix 3

Audits in progress to be reported during 1995-96

• COM CARE Case Management

• Privatisation CSL

• Privatisation Moomba

• Australian Fisheries Management Authority

• Product Safety

• Department of Human Services and Health - Therapeutic Goods

Preliminary Studies in progress

• Australian Customs Service - diesel fuel rebate scheme

• Australian Taxation Office - audit project management

• Department of Primary Industries and Energy - natural resources program

• Australian Taxation Office - modernisation

• Department of Defence - overseas travel

• Department of Defence - ANZAC ship contract amendment

• Department of Defence - energy management

• Department of Administrative Services - competitive neutrality

• Department of Administrative Services - IT environment

• Department of Veterans Affairs - corporate services HRM

• Department of Social Security - teleservice centres

• ATSIC Aboriginal health

• AIDAB - accountability of NGOs