External audits and reviews
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The Auditor-General Act establishes the position of the Independent Auditor, who may conduct a performance audit of the ANAO at any time. The ANAO is also committed to increasing external oversight and scrutiny over the ANAO Quality Framework, including external reviews of the quality framework and completed audits, as considered appropriate.
Australian Securities & Investments Commission (ASIC) Audit Inspection Report of the ANAO – June 2018
The ANAO maintains an ongoing focus on its quality framework as a core business investment. A sound quality framework supports delivery of high-quality audit work and enables the Auditor-General to have confidence in the opinions and conclusions in reports prepared for the Parliament. The ANAO is committed to increasing external oversight and scrutiny over the ANAO Quality Framework.
The ANAO considered a number of options for external parties to perform reviews of the quality framework and quality assurance reviews of financial statements audit files. The Australian Securities and Investments Commission (ASIC) was engaged to conduct the review based on their experience in reviewing audit files and quality frameworks of private sector audit firms. The ANAO determined that the value of the review would be enhanced by the feedback and good practice recommendations that ASIC could provide from this experience.
ASIC is a Commonwealth entity and are audited by the ANAO. ASIC and the ANAO determined that the threats to independence created by that relationship were mitigated by the following safeguards:
- The reviews were undertaken by staff in ASIC’s Financial Reporting & Audit team who have no involvement in financial reporting by ASIC.
- These staff reported to the Auditor-General in relation to the reviews, not the Commissioners of ASIC.
- The ASIC Senior Executive Leader overseeing the review does not provide accounting advice to the Commission.
The ANAO determined that Corporate Commonwealth entities were the most appropriate population for ASIC to select from for the file reviews as the areas of audit focus are similar to private sector audits reviewed by ASIC under their mandate.
ASIC provided the Auditor-General with a report on the results of their review of:
- key areas of focus in two audits of financial reports for the year ended 30 June 2017; and
- aspects of the ANAO’s quality control processes and quality assurance framework relating to audits of financial reports.
ASIC identified findings within the audit files reviewed and assessed them using their own rating categories used in the file reviews of private firm audits. The ANAO has considered the findings and assured itself that there is no material misstatement and is satisfied that the conclusions in the audit reports are appropriate in the circumstances. The audit teams will address ASIC’s identified findings in the conduct of the 2017–18 financial statements audits. The findings have also been shared to all financial statements audit staff to ensure that all teams can implement improvements in audit documentation and application of ANAO financial statements audit methodology.
ASIC did not identify any areas where the design of the quality framework did not satisfy the requirements of ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements (ASQC 1) within the scope of their review. ASIC made two good practice recommendations in relation to the ANAO’s policies to address key requirements of ASQC 1 and the program of internal quality reviews. The ANAO is considering these good practice recommendations by:
- reviewing guidance on the application of the concept of public interest entities in the ANAO;
- considering whether audits of public interest entities should be considered as high risk and therefore subject to a second reviewer; and
- considering incorporating reviewing and challenging audit judgements in ANAO internal quality assurance reviews.
The ANAO intends to continue to engage ASIC on an annual basis to perform reviews of both the quality framework and selected financial statements audit files.
The ANAO and the New Zealand Office of the Auditor General have a long standing arrangement to conduct reciprocal performance audit peer-reviews annually, on a rotating basis. The scope of the review is not a comprehensive examination of the ANAO’s performance audit practices. Instead, this arrangement seeks to strengthen performance auditing, through the provision of constructive feedback and sharing of better practices. The peer review methodology includes examining two published audit reports against agreed criteria, drawing on information from related planning documents, audit working papers and discussion with ANAO staff. Download the most recent peer review: New Zealand Office of Auditor-General Quality Assurance Review Report September 2016 (PDF).
Section 41 of the Auditor-General Act 1997 establishes the position of the Independent Auditor. Under section 45(1) of the Act, the Independent Auditor may at any time conduct a performance audit of the ANAO. The Independent Auditor is appointed by the Governor-General on the recommendation of the Minister with the approval of the Joint Committee of Public Accounts and Audit (JCPAA). The Act requires a vacancy in the position of Independent Auditor to be filled as soon as practicable, with a term of at least three but not more than five years.
In performing or exercising their functions or powers, the Independent Auditor must have regard to the audit priorities of the Parliament for audits of the Audit Office, as determined by the Joint Committee of Public Accounts and Audit under paragraph 8(1)(n) of the Public Accounts and Audit Committee Act 1951.
The current Independent Auditor is Mr Peter van Dongen.
The most recent Independent Auditor report, Review of Cyber Security, was tabled in Parliament on 4 December 2017.
Listed below are performance audits conducted by the Independent Auditor since April 2000.
- Review of Cyber Security (December 2017)
- Review of Communication Processes (December 2015) — The ANAO published a response and an updated response to the recommendations and current status, and the JCPAA Inquiry into Independent Auditor Report Review of ANAO Communications published the committee findings.
- Quality Control Around Financial Statements Audits (June 2013)
- IT Capability and Resourcing (June 2012)
- Planning and Scoping of Performance Audits by the Australian National Audit Office (June 2011)
- ANAO IT Performance Review (May 2010)
- ANAO Human Resource Management Performance Audit (December 2008)
- Report by the Independent Auditor of the Australian National Audit Office on the Results of a Performance Audit of “Value for Money” Provided by the ANAO (June 2004)
- Report on Results of a Performance Audit of Contract Management Arrangements within the ANAO (December 2002)
- Report on Results of a Performance Audit of the ANAO Audit Management Processes (October 2001)
- Report on Results of a Performance Audit of the Planning and Resource Allocation Processes (December 2000)
- Report on Results of a Performance Audit of the Strategic Planning Framework (April 2000)