Financial Audit Seminar Thursday,14 April 2011 pot

Financial Audit Seminar Thursday,14 April 2011 Introduction Malcolm Prentice Acting Director, Financial Audits Key Findings from the 2009-10 Financial Audit Program Tim Larnach Senior Audit Manager This is trial version www.adultpdf.com Session Outline Key Findings in 2009-10: Quality of Reporting – – Financial Statements Statements of Performance Audit Findings – – – Status of Previously Reported Audit Findings Computer Information Systems Performance Measures Quality of Reporting Financial Statements 78 audit reports issued No qualified audit reports Overall quality has improved (statements rated satisfactory or better increased from 70% in 2008-09 to 83% in 2009-10) Most common deficiencies: – – – misstatement of current or prior year figures; lack of clear and concise explanatory information; and irrelevant and/or untailored model disclosures Quality of Reporting - continued Statements of Performance 30 reports of factual findings issued reports of factual findings were issued with negative findings due to: – – systems not being able to accurately record results (six performance measures); and supporting documents for results were not being maintained (one performance measure) This is trial version www.adultpdf.com Quality of Reporting - continued Statements of Performance - continued Overall quality has improved (statements of performance rated satisfactory or better increased from 64% in 2008-09 to 74% in 2009-10) Most common deficiencies: – – – errors in calculation of actual results and variance from planned targets; insufficient explanations of measures and how they were measured; and lack of clear and concise reasons for material variances Audit Findings Status of Previously Reported Audit Findings Agencies resolved 201 (75%) of previously reported audit findings A significant percentage of findings (25%) remain either unresolved or partially resolved Progress in addressing previously reported weaknesses in major revenue applications remains slow Audit Findings - continued Computer Information Systems Environmental controls were generally satisfactory except over reviews of administrative user access and audit logs Application controls for some systems required further improvement, including: – – – – reviews of user access; backup and recovery procedures; reviews of audit logs; and change management procedures This is trial version www.adultpdf.com Audit Findings - continued Performance Measures Performance measures for many agencies need further improvement Measures tended to be more meaningful and useful when: – – measures and targets were clearly defined in budgets or statements of intent; and measurement of actual results were clearly explained (particularly where significant judgements or estimates are applied) Questions? Impact of Clarity Auditing Standards Ajay Sharma Senior Manager, Technical & Quality Assurance This is trial version www.adultpdf.com Introduction Objective – make agencies aware of the significant changes Application – reporting periods commencing on or after January 2010 (i.e to 31 December 2010 and 30 June 2011 audits) Audit Close Report Purpose Communicate significant findings with Those Charged with Governance (TCWG) Objective Promote a two-way communication between the auditor and TCWG Develop a constructive working relationship Timing Prior to the issue of the audit report Audit Close Report - continued What is in this report? Auditor’s views on: Qualitative aspects of the agency’s accounting practices Significant difficulties encountered during the audit Written representations being requested Significant risk areas identified in the audit strategy document This is trial version www.adultpdf.com Modified Audit Reports Special Purpose Financial Statements – – – Statements prepared for a specific user group Tailored to meet their needs Need to disclose the basis for preparation at note Audit report – – Include an ‘Emphasis of matter’ paragraph (not a qualification) to alert the users of the basis for preparation Special Purpose Audit Report.doc Audit Strategy Includes Agency’s reporting responsibilities Office is required to seek acknowledgement of these responsibilities Need to sign and provide it back to the Office Example - Audit Strategy Template.doc Questions? This is trial version www.adultpdf.com Qualitative Financial Statement Disclosures Jordan Langford-Smith Senior Audit Manager Session Outline Define qualitative financial statement disclosures Explain qualitative disclosures which often need improvement: – – – – financial instruments; significant accounting policies; accounting judgements and estimates; and impact of changes in accounting standards Qualitative Disclosures Non-numeric information Used to: – – explain quantitative information; or provide additional information Examples include: – – – – summary of significant accounting policies; contingent liabilities; risk management for financial instruments; and impact of changes in accounting standards This is trial version www.adultpdf.com Financial Instruments AASB 7: ‘Financial Instrument Disclosures’ paragraph 33 requires disclosure of: – – – the exposures to each type of risk and how they arise; the objectives, policies and processes for managing the risk; and changes to the risk, or the processes to manage the risk from the prior year Financial Instruments - continued Common errors include: – – – – discussion of risk management policies for financial instruments that an agency does not have; insufficient explanation of how key risks are managed; not discussing risk management policies for all financial instruments; and discussion of risk management policies for items that are not financial instruments Significant Accounting Policies AASB 101: ‘Presentation of Financial Statements’ paragraph 10(e) Common errors include: – – – accounting policies for balances that are not included in the financial statements; accounting policies which not reflect the actual accounting treatment; and the inclusion of statements which are not accounting policies This is trial version www.adultpdf.com Accounting Judgements and Estimates Paragraphs 122 and 125 of AASB 101 requires an entity to disclose information regarding the key judgements and estimates used in preparing the financial statements Common errors include: – – – omission of key judgements and estimates; insufficient information regarding the judgement or estimate being made; and inadequate disclosures regarding discount rates used Impact of Changes to Accounting Standards Paragraph 30 of AASB 108: ‘Accounting Policies, Changes in Accounting Estimates and Errors’ ACT Accounting Policy ‘Treatment of AASB Standards issued which are not yet effective’ Common errors include: – – not tailoring the disclosure; and not disclosing what the impact of the change is Questions? This is trial version www.adultpdf.com Other Key Issues for 2010-11 David O’Toole Acting Audit Manager Other Key Issues for 2010-11 Client assistance schedule – – – No longer included in the audit strategy document To be provided to agencies at or after the planning meeting A standard template will also be available on our website www.audit.act.gov.au Analytical reviews – – Template document will be provided to agencies A standard template will also be available on our website www.audit.act.gov.au Review of draft annual reports – Draft annual reports to be provided to the Audit Office prior to publication where possible Other Key Issues for 2010-11 - continued Audit Management Report – Draft audit management reports to be formally sent to Chief Executives for comment Chief Finance Officer requested to attend key meetings (e.g planning and exit meetings) – Communication of significant audit matters This is trial version www.adultpdf.com Other Key Issues for 2010-11 - continued Appropriate accommodation for audit staff – Work space, access to telephone and network connection in agency premises Agencies to confirm audit requirements of grant acquittals – Communicating the need for separate audits for Commonwealth funding Shared W drive – Providing audit work papers and large reports electronically IDEA software Audit fees Questions? 2010-11 Model Financial Statements and New Accounting Policy Anita Hargreaves Acting Director, Accounting Branch Department of Treasury This is trial version www.adultpdf.com 2010-11 Model Financial Statements How to Read the Models New Accounting Policy Events After Balance Date How to Read the Models www.treasury.act.gov.au/accounting What’s new Addendum to Models Customise your financial statements New Accounting Policy Provision for Make Good What is make good This is trial version www.adultpdf.com Events After Balance Date Note 45 – Events After Balance Date Contacts Brenden Taylor – Acting Manager ext 76141 Jason Klose – Senior Manager ext 70246 Questions? This is trial version www.adultpdf.com Whole-of-Government Reporting Requirements in 2010-11 Melissa Tetley Senior Manager Budget Coordination and Reporting Branch Department of Treasury Questions? Conclusion This is trial version www.adultpdf.com ... – – Financial Statements Statements of Performance Audit Findings – – – Status of Previously Reported Audit Findings Computer Information Systems Performance Measures Quality of Reporting Financial. .. and 30 June 2011 audits) Audit Close Report Purpose Communicate significant findings with Those Charged with Governance (TCWG) Objective Promote a two-way communication between the auditor and... the audit Written representations being requested Significant risk areas identified in the audit strategy document This is trial version www.adultpdf.com Modified Audit Reports Special Purpose Financial