An interim report from the Australian National Audit Office (ANAO) on the key financial controls of 25 Commonwealth entities has found internal control to be operating effectively in 18 of them.
In its Interim Report on Key Financial Controls of Major Entities the ANAO said it was the first of two reports focused on the results of the interim audits including an assessment of entities’ key internal controls, supporting the 2021–22 financial statements audits.
It said the 25 entities examined included all Departments of State and a number of major Australian Government entities.
“Key to the ANAO’s audit process is an assessment of entities’ internal control frameworks as they apply to financial reporting,” the ANAO said.
“An effective internal control framework provides the ANAO with a level of assurance that entities are able to prepare financial statements that are free from material misstatement,” it said.
“At the completion of our interim audits, for the 25 entities included in this report, we noted that key elements of internal control are operating effectively for 18 entities.”
The Office said that for five entities the key elements of internal control were operating effectively to support the preparation of financial statements that were free from material misstatement.
It said for the remaining two entities that its findings reduced the level of confidence that could be placed on the key elements of internal control supporting the preparation of the financial statements.
“Analysis of 2020–21 annual reports identified improved compliance with the mandatory reporting requirements of the Public Governance, Performance and Accountability Act (PGPA) rule relating to the disclosure of audit committee members’ names; member qualifications, skills and experience; member attendance at meetings; and member remuneration,” it said.
“There has been a decrease in compliance relating to the disclosure of a direct address to the audit committee charter.”
The ANAO said a total of 62 findings were reported to the entities, comprising of one significant, 14 moderate, 45 minor findings and two legislative breaches.
It said this was a small overall increase in the number of findings reported and an increase in significant, moderate and legislative findings from the prior year interim phase.
“Fifty-eight per cent of total findings are in the IT control environment category, particularly the management of user terminations, logging and monitoring of privileged users, and password management.”
The ANAO’s Interim Report can be accessed at this PS News link and a 200-page printable version at this link.
