This report complements the interim phase report, and provides a summary of the final audit results of the audits of the financial statements of all Australian Government entities, including the Consolidated Financial Statements for the Australian Government.



1. The Auditor-General Act 1997 establishes the mandate for the Auditor General to undertake financial statement audits of all Australian Government entities including those of government agencies, statutory authorities and government business enterprises.

2. The preparation of audited financial statements in compliance with the Finance Minister's Orders[1] is a key element of the financial management and accountability regime applicable to Australian Government entities. It is generally accepted in both the private and public sectors that a good indicator of the effectiveness of an entity's financial management is the timely finalisation of its annual financial statements, accompanied by an unmodified audit opinion. Australian Government entities, in cooperation with the Australian National Audit Office (ANAO), devote considerable effort to achieving timeliness in financial reporting.

3. Financial statement audits are an independent examination of the financial accounting and reporting of public sector entities. The results of the examination are presented in an auditor's report, which expresses the auditor's opinion on whether the financial statements as a whole and the information contained therein fairly present each entity's financial position and the results of its operations and cash flows. The accounting treatments and disclosures reflected in the financial statements by the entity are assessed against relevant accounting standards and legislative reporting requirements.

4. In addition to undertaking financial statement audits, the ANAO tables two reports annually addressing the outcomes of the financial statement audits of public sector entities. The first of these, Audit Report No.50 2009–10 Interim Phase of the Audit of Financial Statements of Major General Government Sector Agencies for the Year Ending 30 June 2010, outlined the ANAO's assessment of audit findings relating to the internal controls of major agencies, including governance arrangements, information systems and control procedures. The findings summarised in that report are the results of the interim phase of the financial statement audits of major General Government Sector agencies.

5. This report complements the interim phase report referred to above, and provides a summary of the final audit results of the audits of the financial statements of all Australian Government entities, including the Consolidated Financial Statements for the Australian Government.

6. The audit findings in this report have been reported to the management of each entity, and to the responsible Minister(s).

Accounting and auditing framework developments

7. The Australian Accounting Standards Board (AASB) continued to develop its accounting standards during 2009-10. Among the changes made were a new format for the main statement of financial performance, enhanced disclosures for the fair value of financial instruments, and exempting public sector not-for-profit entities from the requirement to capitalise borrowing costs related to certain assets.

8. At the international level, work continues on new conceptual frameworks for financial reporting so as to provide a sound base for the development of future accounting standards.

9. Future developments in the public sector reporting framework in Australia include: the implementation of a differential reporting regime; relief from consolidated financial reporting for certain entities with a not-for-profit parent entity; the release of an exposure draft by the AASB to harmonise Australian and New Zealand accounting standards for the for-profit sector; and the review by the AASB of various accounting standards including AASB 1049 Whole of Government and General Government Sector Financial Reporting.

10. A major project of the International Auditing and Assurance Standards Board has been the enhancement of the quality and uniformity of International Auditing Standards (ISAs). Revised and redrafted ISAs in ‘clarity format' were released in 2009. The Australian Auditing and Assurance Standards Board subsequently issued revised standards to conform with the ISAs that are operative for audits of financial statements for reporting periods beginning on or after 1 January 2010.

11. The revisions to the Australian Auditing Standards have led to a significant increase in the number of mandatory requirements. Much of this increase represents the elevation of guidance material to the status of requirement. These developments will lead to some increase in audit costs, which is expected to be proportionately greater for smaller audits.

Summary of audit findings

12. The ANAO is responsible for the audit of the financial statements of all the Australian Government entities. For the 2009–10 financial year, the Auditor-General and senior staff delegated to issue audit opinions issued 255 audit opinions (unqualified opinions); no qualified audit opinions; and two reports containing Other Legal and Regulatory Requirements. This result is consistent with the trend over recent years that have seen the issue of unqualified auditors' reports for the large majority of entities.

Consolidated Financial Statements

13. The Consolidated Financial Statements (CFS) that present the consolidated whole-of-government financial results inclusive of all Australian Government controlled entities, as well as the general government sector (GGS) financial report was signed by the Minister for Finance and Deregulation on 29 November 2010.

14. In 2009–10, the CFS incorporates both the whole-of-government and GGS financial reports required by AASB 1049 Whole of Government and General Government Sector Financial Reporting.

15. As a AASB 1049-compliant GGS report was prepared for the first time in 2009–10, this is the first year that explanations of variances between the original budget and 2009–10 actuals have been included in an audited set of Australian Government financial statements. The CFS continues the prior year approach of incorporating aggregate disclosure of ministerial remuneration.

16. The auditor's report on the 2009–10 CFS was issued on 30 November 2010 and expressed the opinion that the statements give a true and fair view of the Australian Government's and the General Government Sector's financial position as at 30 June 2010 and their financial performance and cash flows for the year then ended.

Entity financial statements

17. There was a reduction in the number and significance of issues arising from the final phase of the 2009–10 financial statements audits of individual entities. The number of significant and moderate audit findings decreased from 69 in 2008–09 to 49 in 2009–10, a reduction of almost 30 per cent. This is consistent with the trend in relation to the results of our audits in recent years. Issues that are common across a number of entities that were identified in the final audit phase were in respect of: controls in entities' IT environments, such as user access and the segregation of duties; asset management processes including accounting for assets under construction, asset stock-takes and the integrity of asset registers; and business system processing controls. These issues are consistent with our audit findings in previous years.

18. Generally, our audits also found that entities have made good progress in addressing and resolving, where possible, issues identified during the interim audit phase.

19. The ANAO continues to include an assessment of compliance in relation to annual appropriations, special appropriations, annotated appropriations, special accounts and the investment of public moneys in its financial statement audits. Consistent with the results over the last three years, our 2009–10 audits found a high level of compliance in these areas.

Financial statement preparation

20. Consistent with previous years, the large majority of entities' financial statements were completed within three months of the end of the financial year. This reflects positively on the priority entities give to meeting their financial reporting responsibilities and on the financial stewardship of the public sector generally.

21. Nevertheless, a number of entities have continued to experience difficulty in meeting the deadlines for the submission of audit cleared financial information to the Department of Finance and Deregulation.

Future audit coverage

22. The ANAO will continue to work closely with entity audit committees and management with the aim of assisting entities to continue to meet their financial management responsibilities including addressing areas where improvements are warranted.


[1] The Finance Minister's Orders (FMOs) made by the Minister for Finance and Deregulation set out the requirements for the preparation of financial statements of reporting entities covered by the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997, with the exception of companies.

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