The Auditor-General responded on 5 May 2021 to correspondence from Senator Gerard Rennick dated 22 March 2021, requesting that the Auditor-General put in place the practice of annually auditing Australia's gold reserves.

Auditor-General's response

5 May 2021

Senator Gerard Rennick
Senator for Queensland

By email:

Dear Senator Rennick

Annual audit of Australia’s gold reserves

I am writing in response to your letter of 22 March 2021, in which you requested that the ANAO annually audit Australia’s gold reserves by sighting 100 per cent of Australia’s gold and matching it to the gold bar serial numbers held by the Reserve Bank of Australia (RBA).

As outlined in our response to Question on Notice number 0181 from Budget Estimates 2020–21, the ANAO performs an annual financial statements audit of the RBA and each annual audit includes procedures over the RBA’s gold holdings. Australia’s gold holdings are held at the Bank of England (BoE). The audit procedures undertaken include: obtaining assurance from the BoE annually on the RBA’s gold holdings with the BoE; auditing the transactions undertaken in any year that impact the gold balance; and reviewing the cyclical stocktake work undertaken by RBA’s internal audit function over the gold holdings. Your letter refers to Australian Auditing standard ASA 501 Audit Evidence—Specific Considerations for Inventory and Segment Information. This standard is not applicable to the ANAO’s audit of the RBA’s gold holdings as these holdings are not considered to be inventory.

The ANAO’s financial statements audit is conducted in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. As part of our annual financial statements audit procedures, the ANAO Auditing Standards require identifying and assessing risks of material misstatements on all the financial statements line items (including the Gold Reserves). Our audit procedures are adapted, where necessary, to address all identified risks to ensure appropriate audit evidence is obtained to provide assurance. In this context, the audit procedures undertaken on the RBA’s gold holdings are considered appropriate and to meet the requirements of these standards.

Thank you for raising the issue with me. I can assure you that the ANAO will continue to annually review its audit procedures for the RBA to ensure that it undertakes appropriate audit work, in accordance with ANAO Auditing Standards, on the RBA’s annual financial statements, including its gold holdings.

Yours sincerely

Grant Hehir

Correspondence from Senator Gerard Rennick

Correspondence from Senator Gerard Rennick about gold reserves. You can find a transcript of this correspondence on this page.

Transcript of letter from Senator Gerard Rennick

Grant Hehir
Auditor-General for Australia
GPO Box 707

22 March 2021

Dear Mr Hehir

I write regarding Australia's gold reserves held with the Bank of England. I believe the lack of controls and accountability surrounding their storage and use is a cause for concern.

I recently received answers to my Budget Senate Estimates Questions on Notice (October 2020), to the Reserve Bank of Australia, and found that an audit of Australia's gold reserves has only been conducted twice in over twenty years. In addition, when audited, only between 7-9 per cent of Australia's gold reserves were physically sighted.

Considering the importance of gold reserves for the stability of our currency, a proper stock take of Australia's reserves should take place on a regular basis. Australia's gold reserves are currently worth in the region of $6 billion. It is simply unacceptable for such infrequent audits to occur.

Therefore, I write to request that as the head of the nation's independent auditing authority, you put in place the practice of annually auditing Australia's gold reserves. This would involve sighting 100 per cent of Australia's gold and matching it to the gold bar serial numbers held by the Reserve Bank of Australia. Currently the RBA has complete control over how they use our gold and they should be held accountable for this, especially with the practice of gold lending currently in place.

Conducting an annual audit would also bring the Reserve Bank of Australia into line with the Australian Auditing Standard ASA 501, which states that a physical inventory count should take place once a year when practicable.

I hope you will consider my request, as gold reserves are an important asset for our country and I believe that the right steps should be taken to ensure their safe storage and use as an asset of the Australian people.

Kind regards

Gerard Rennick
LNP Senator for Queensland