ACT Audit Office makes public service better, says independent review

By Stephen Easton

Wednesday June 15, 2016

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The ACT Audit Office is doing an extremely good job of highlighting ways to make public administration more efficient and effective in the territory, according to a highly favourable report that was tabled in the legislative assembly last week.

Auditor-general Maxine Cooper and her staff are diligent, conscientious and “generally held in high regard by stakeholders” according to independent reviewer Des Pearson, a former Western Australian and Victorian auditor-general who has worked as a senior public servant in several jurisdictions.

The independent strategic review found the office “operating efficiently and effectively” within the bounds of its budget. It has taken on board the recommendations of previous reviews and built on them by commissioning targeted follow-ups.

Pearson saw “no material departures” from the relevant audit and accounting standards or instances of non-compliance with legislation, and found previous reviews feeding into successful continuous improvement activities. He confirms such rules are taken quite seriously:

“Reassuringly there are strong indications of a very responsible approach to compliance which is underpinned by the ACT Audit Office’s adoption of the values of integrity, professionalism and respect.”

The outstanding report card provides 20 recommendations to make the ACT’s public audit system even better. The biggest recurring theme for the Audit Office to consider is the suggestion that it improve the way it communicates, and work more closely with the agencies it audits. Three of Pearson’s prescriptions are purely legislative matters and several more will require co-ordination across the ACT public service.

Cooper’s small team achieves high productivity, in Pearson’s view, but he sees a growing “need to guard against the impost of public interest disclosure (PID) driven activity impinging on the primary audit function”. He proposes supplementary funding for any PID matters above a base level.

Pearson offers three recommendations to improve stakeholder engagement, including more training for Audit Office staff and more ongoing engagement with agencies, beginning with a new “familiarisation and induction plan” for chairs, chief executives and directors-general soon after their appointment.

The Audit Office has a strong relationship with its public sector stakeholders, the review found, but the recurring theme was that other agencies feel it could do a little more to communicate with the subjects of its performance audits. Pearson reports:

“While themes of concern were raised, most of those I interviewed indicated that in the scheme of things satisfactory resolution was achieved. However a number retained reservations as to how situations arose and whether it could have been avoided. In these situations it is very difficult to judge where responsibility should ultimately rest.”

The bulk of the recommendations relate to performance audits. The report suggests a trend in which most of these come in a rush towards the end of the financial year should be arrested as it “places inordinate strain” on the whole team and “limits opportunity for other activities including ongoing communication with auditees”.

Pearson suggests Cooper’s office alter its approach to deciding which entities to cover with the small number of performance audits it can afford to conduct, noting that “sensitive and very complex audits” make up a high proportion.

He recommends “more analytical approaches to topic selection” using “additional overt criteria” to produce a more balanced program, and puts forward “a more radical option” of telling agencies much further in advance of future performance audits and encouraging them to prepare for them. He explains:

“This could contribute to … facilitating more cost effective audits with more predictable outcomes. It also offers the prospect of achieving a better mutual understanding of the ACT Audit Office and auditees of the risks and complexities associated with program management and delivery.”

On financial audits, agencies told the review they hoped for more “open engagement” with the auditors, particularly around “new and revised accounting treatments”. Pearson feels there is scope for this to happen via the Audit Office’s professional services branch, without compromising the auditor-general’s independence.

In 2013, amendments to the legislation that backs up the Audit Office let it look at multiple entities, venture outside the public sector and collaborate with its interstate counterparts.

The review found the amended act “compares very favourably with better practice and recognises the contemporary public environment” — but also pointed out that the drafters forgot to specify a fixed term of appointment for the boss.

Speaker Vicki Dunne said “this dropped out inadvertently” in the reform process and acknowledges the principle that auditors-general should serve fixed terms longer than at least one parliamentary term, with salary and conditions also enshrined in law, to maintain their independence.

Pearson also suggested other tweaks to the interaction between Dunne’s and Cooper’s roles:

“… it would now be desirable to clarify the manner in which the Speaker is to be administratively supported in dealing with the ACT Auditor-General. Clear process arrangements for budgetary and other administrative arrangements should also be established, recognising the recent designation of the Auditor-General as an Officer of the Legislative Assembly.”

Cooper thanked Pearson for the review and said progress against its recommendations would be reported in her office’s next annual report in a media statement:

“We have already commenced implementing some recommendations and are giving priority for all that relate directly to the ACT Audit Office to be addressed quickly.”

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