tim loughnan sector director education - victoria auditor-general’s office

1

Victorian Auditor-General’s Office (VAGO) recently released reports which contain potential

learnings for Universities

Tim LoughnanSector Director Education - Victoria Auditor-General’s

Office

14 – 17 May 2013 ▌ AURIMS / ANZUIAG conference

2Accountability framework


Agencies

ExecutiveGovernment

Parliament

The public

Auditor-General

Independent officer of Parliament

3Independence of the Auditor-General

• ‘Independent officer of Parliament’ – Constitution Act 1975 s 94B

• The Auditor-General: ‘has complete discretion in the performance or exercise of his or her functions or powers and, in particular, is not subject to direction from anyone’

• This can only be changed by a referendum

• Independence is the cornerstone of audit

VAGO needs to ‘sit outside’ normal public sector processes and operational policies.


4Financial and performance audit reports

Financial audit– ‘how much’• An annual financial audit has two aims:

issue an opinion on whether financial reports are fairly stated (consistent with section 9 of the Audit Act 1994)

consider whether there has been wastage of public resources or lack of probity or financial prudence in the management or application of public resources (consistent with section 3A(2) of the Audit Act 1994)

• Report on the State’s Annual Financial Report and results of audits by sector.

• Out of the 8 tertiary education institutes (Universities) in victoria, 4 are done in house (VAGO) and 4 by external providers from private sector.


5Financial and performance audit reports

Performance audit – ‘how well’• Determine whether an organisation or government program

is achieving its objectives and operating economically, efficiently and effectively in compliance with relevant legislations.

• Each performance audit results in a separate report to Parliament after it has been completed.

• Wide powers of access and examination.• All performance audits are primarily conducted by VAGO

staff, with limited involvement by external specialists.


6Reviewed recent performance and financial statement audits

1. Collections Management in Cultural Agencies, October 2012.

2. Fraud Prevention Strategies in Local Government, June 2012

3. Management of Trust Funds in the Justice Portfolio, May 2012

4. Personal Expense Reimbursement, Travel Expenses and Corporate Credit Cards, May 2012

5. Government Advertising and Communications, February 2012

6. Procurement Practices in the Health Sector, October 2011

7. Business Planning for Major Capital Works and Recurrent Services in Local Government, September

2011

8. Victorian Life Sciences Computation Initiative, June 2011

9. Business Continuity Management in Local Government, September 2010


71. Collections Management in Cultural Agencies - October 2012.

Objective:

The audit examined whether state collections of natural history, scientific, historical, artistic and cultural significance are adequately managed, including whether the agencies holding key collections have adequate collection management policies, systems and practices and can demonstrate performance against relevant statutory obligations.


81. Collections Management in Cultural Agencies - October 2012. (Contd.)

Key Recommendations which contain potential learnings for Universities. • more rigorously advocating for the necessary resources to increase collection storage

capacity • more assertively facilitating collaboration between collection custodians. • improving the rigour and scope of performance measurement and benchmarking• actively coordinating a plan to address legacy data issues.• expedite finalisation of strategies to guide digitisation activity• track and report the total investment of staff and other resources into digitisation activity

and the level of access to online collection material.• gather comprehensive condition information to better inform the allocation of conservation

resources• implement active collection stocktake programs• purposefully review collections for deaccessioning opportunities.• give greater priority to addressing gaps in the policies and procedures guiding collection

management activities.


92. Fraud Prevention Strategies in Local Government, June 2012

Objective:

The objective of this audit was to determine the effectiveness of fraud preventionstrategies.

The audit assessed whether the councils have :

• effective fraud control framework, which is integrated with organisation-wide risk management strategy

• appropriate, well understood and current fraud control plans, which address major risks.

• established effective fraud controls

• adequate internal systems, training and reporting processes to support effective implementation and monitoring of fraud control plans

• regular test, monitoring and report on the effectiveness of the fraud control plan and associated practices

• review the outcomes of testing and using the insights gained to inform continuous improvement in fraud prevention and to update fraud control plans to ensure their ongoing appropriateness.


102. Fraud Prevention Strategies in Local Government, June 2012. (Contd.)

Key Recommendations which contain potential learnings for Universities. • develop and maintain an up-to-date fraud control plan clearly documenting their fraud prevention, detection and response

initiatives and responsibilities

• conduct thorough, periodic fraud risk assessments to assure all major fraud risk exposures are identified and effectively manage.

• provide induction and periodic fraud awareness training to all staff, to assure they understand their fraud control responsibilities

• systematically monitor and report on the effectiveness of fraud control strategies

• establish arrangements that assure effective ongoing scrutiny by executive management, internal audit and audit committees, of the effectiveness of the fraud control framework

• establish effective pre-employment screening processes that provide sufficient assurance over the integrity, identity and credentials of all staff

• make sure accounts payable systems have effective preventative and/or compensating controls that adequately mitigate the risk of fraudulent purchases and/or payments

• maintain accurate and an up-to-date asset registers that are regularly reviewed to mitigate the misuse and/or misappropriation of assets

• systematically review the operation and effectiveness of all internal control systems to assure they adequately prevent, deter and detect major frauds.


113. Management of Trust Funds in the Justice Portfolio - May 2012

Objective:

The audit objective was to assess whether Victorian Property Fund (VPF) and Public Purpose Fund (PPF) are managed effectively, efficiently and in compliance with legislative requirements.

• This audit focused on the governance and performance of VPF and PPF. • The audit examined the roles of Department of Justice, Legal Services Board and Department of

Treasury and Finance (DTF) in monitoring the management of the funds.


123. Management of Trust Funds in the Justice Portfolio - May 2012 (Contd.)

Key Recommendations which contain potential learnings for Universities. Strengthen oversight arrangements by:• improving the frequency and rigour of supervision of, and capacity to make investment decisions • reviewing external adviser arrangements - systematically validate the integrity of information used to

make decisions, including information received from internal and external advisers, to avoid making costly errors due to inaccurate information.

• planning for contingencies where investment risks cannot be fully mitigated• developing and annually reviewing a strategic framework that provides the basis for efficient investment• more actively monitor the fees claimed to manage funds to confirm that rates remain consistent with

rates available in the wider market for fund management services• strengthen readiness to respond to serious financial risks by undertaking contingency planning• actively monitor performance against targets for timely response.


134. Personal Expense Reimbursement, Travel Expenses and Corporate Credit Cards - May 2012

Objective:

The audit examined how well agencies had applied, and DTF had administered and overseen, the legislated principles and rules for effectively and efficiently managing expenses by:

• controlling expenditure so that funds are used for legitimate business expenses in accordance with the Financial Management Compliance Framework's rules

• taking account of the costs, benefits and risks of options when deciding how to purchase and pay for goods and services

• realising the potential savings from using State Purchase Contracts, the whole-of-government, discounted arrangements, where these are mandatory for departments.


144. Personal Expense Reimbursement, Travel Expenses and Corporate Credit Cards - May 2012 (Contd.)

Key Recommendations which contain potential learnings for Universities.• Review and increase the level of scrutiny and control applied to transactions by:

making greater use of in-built card limits running regular, automated tests to detect control breaches and better target detailed reviews including reviews of personal expenses in their forward internal audit programs

• Review and, where required, strengthen how rules are documented and communicated so that staff have a comprehensive understanding of their obligations

• Meet the mandatory requirements for reporting unauthorised purchasing card use and thefts and losses.

• Evaluate the effectiveness of hospitality guidelines by: confirming Budget Divisions have adequately reflected the framework in their local procedures and guidelines assessing the impact on hospitality expenditure and controls, and the level of satisfaction with the way this type of

expenditure is controlled.

• Comprehensively analyse how they purchase and pay for goods and services, and identify improvements based on the costs, benefits and risks

• Report and address expenditure occurring outside of mandated Purchase Contracts.• Require an annual report of the scale of contract leakage and the reasons why this happens from

Budget Divisions.


155. Government Advertising and Communications - February 2012

Objective:

The audit examined whether government advertising and communications activities for the period July 2006 to December 2010 complied with relevant guidelines, directions and policy documents.

The audit assessed:• whether there are appropriate levels of accountability in government advertising and communications expenditure

and processes

• whether selected advertising and communications campaigns comply with relevant laws, policies and guidelines

• how the 2009 Victorian Government Advertising and Communications Guidelines compares with current better practice.


165. Government Advertising and Communications - February 2012 (Contd.)

Key Recommendations which contain potential learnings for Universities.• make total advertising and communications expenditure readily available• develop and annually revise a whole-of-University communications strategy.• require an acquittal of campaign expenditure against approved budgets• educate applicable parties on relevant guidelines, and monitor compliance• improve management of the Media Agency services contract(s).• introduce rigorous business operations processes to enable consistent and accurate reporting of

advertising and communications expenditure• publish details and costs of advertising campaigns and sponsorships provided and received• comply with all relevant advertising and communications policies and guidelines.• revise Advertising and Communications Guidelines in line with current better practice


176. Procurement Practices in the Health Sector - October 2011

Objective:

This audit examined whether procurement practices in the public health sector deliver best value, and are conducted with probity and transparency.

The audit examined: • clinical and non-clinical procurement and • reviewed the implementation of past recommendations from this office and the Ombudsman.


186. Procurement Practices in the Health Sector - October 2011 (Contd.)

Findings relevant to the sector:• Procurement policies and practices in the four public hospitals audited are variable, with

instances of poor practice and insufficient transparency.


196. Procurement Practices in the Health Sector - October 2011 (Contd.)

Key Recommendations which contain potential learnings for Universities.

• Revise procurement strategies, policies, activities and monitoring to demonstrate consistently robust

and transparent procurement practices.


207. Business Planning for Major Capital Works and Recurrent Services in Local Government - September 2011

Objective:

The objective of this audit was to determine the effectiveness of council businessplanning and budgeting for major capital works and recurrent services.

Audit assessed whether they:• had effectively integrated business planning and budgeting practices to address community needs• sufficiently considered the long-term financial sustainability of proposed investments in major capital works and

recurrent services• produced accurate and reliable budgets and forecasts.


217. Business Planning for Major Capital Works and Recurrent Services in Local Government - September 2011 (Contd.)

Key Recommendations which contain potential learnings for Universities.• consult with, and engage, their stakeholders on their ability and willingness to pay for

desired services and assets when developing their initial plans• better integrate planning and budgeting practices to support sound decision-making• develop strategic and supporting Divisional business plans for all major services, with

measurable objectives clearly aligned to the University’s plan.• review asset management frameworks to assure their asset policies, strategies and plans

are up-to-date, cover all major asset classes, and adequately inform future investment decisions.

• develop business cases for proposed investments in major capital works to demonstrate they are soundly based and that they support the achievement of the University’s objectives

• rigorously analyse service need, value-for-money, cost, and financial sustainability against defined standards consistent with the Best Value Principles to inform investments in recurrent services.


228. Victorian Life Sciences Computation Initiative, June 2011

Objective:This audit’s objective was to assess whether the VLSCI has been effectively planned, procured and managed.


238. Victorian Life Sciences Computation Initiative - June 2011 (Contd.)

Key Recommendations which contain potential learnings for Universities.

Universities should:• adequately document all significant activities and major decisions• demonstrate compliance with relevant government procurement and project management policies,

procedures and guidelines.


249. Business Continuity Management in Local Government - September 2010

Objective:The objective of the audit was to determine the effectiveness of business continuitymanagement by local councils.

Specifically, the audit assessed whether councils:• have a sound business continuity plan in place• regularly test and report on the effectiveness of their business continuity plan and management

practices• use outcomes from testing to continuously improve their business continuity practices.


259. Business Continuity Management in Local Government - September 2010 (Contd.)

Key Recommendations which contain potential learnings for Universities.• Establish clear objectives and standards for business continuity management.• Provide enough guidance on the procedures needed to develop a rigorous business continuity plan • Systematically monitor and report on the effectiveness of business continuity management framework.• Risk management practices to identify and consider the full range of specific business continuity risks• Thoroughly evaluate the impact of disruption risks on critical business functions.• Identify the minimum resources and response times needed to assure operational continuity through an

effective business impact assessment.• Improve the structure, format and content of the business continuity plans to provide greater clarity on

roles and responsibilities for emergencies, more specificity on continuity and recovery responses, and better integration with other University disaster recovery and emergency plans.

• Regularly testing business continuity plans to assure they are up-to-date and effective• Providing training for staff with business continuity responsibilities, to make sure they are able to

effectively discharge their responsibilities.


26Questions?


27More information

All our tabled audits and information on upcoming audits is available at www.audit.vic.gov.au

Level 24, 35 Collins Street MelbourneVictoria 3000

Australia +61 3 8601 7000


http://www.audit.vic.gov.au/

tim loughnan sector director education - victoria auditor-general’s office

Documents

audit act

performance audit results

cornerstone of audit

muchan annual financial

performance audits

local government

recent performance

financial reports