The Australian National Audit Office (ANAO) has released an interim report on the risks posed by financial statements, governance arrangements and internal controls in Commonwealth entities and how they might impact on official audits.
For its Interim Report on Key Financial Controls of Major Entities, the ANAO examined 26 entities, including all Departments and a number of other major organisations.
The report explains how the entities’ internal control frameworks were critical to the execution of efficient and effective audits.
“Deficiencies identified during audits, that pose either a significant or moderate risk to an entity’s ability to prepare financial statements free from material misstatement, are reported,” the ANAO said.
“This report is the first in a series and focuses on the results of the interim audits, including an assessment of entities’ key internal controls, supporting the 2018-19 financial statements audits.”
The ANAO said the interim audit phase included an assessment of the effectiveness of each entity’s internal controls as they related to the risk of misstatement in the financial statements.
“At the completion of our interim audits we noted that key elements of internal control were operating effectively for 19 entities,” the ANAO said.
“A total of 70 findings were reported to the entities…comprising of one significant, 12 moderate and 57 minor findings.”
The ANAO noted that this was an increase of one significant finding and a reduction of 30 minor findings compared to the 2017-18 interim audit results.
It said 56 per cent of findings related to the management of information technology controls.
“The continued level of findings indicates that entities need to focus on processes to monitor IT controls.”
It said the frameworks also underpinned an entity’s capacity to transparently discharge its duties and obligations under the Public Governance, Performance and Accountability (PGPA) Act 2013.
The ANAO’s interim report can be accessed online at this PS News link and printed as a 200-page report at this link.
