However, my recent report into how effectively the DLGSC regulates and supports the local government sector found the Department has much work to do to provide the desired centralised sector support function. This would be both financially beneficial and time efficient for all entities.
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This includes professional advice on preparing for changes in accounting standards and legislation. Our audits again highlighted the need for the Department of Local Government Sport and Cultural Industries (DLGSC) to provide centralised professional support to assist entities to fulfil their financial reporting requirements. With better informed and active audit committees, they will be equipped to quality review the financial report and assess the accountability and integrity of reporting and the operational activities of their entity. Our recent seminar for audit committee chairs was open to local government representatives and I am pleased many attended online. These omissions and exposures increase the risk of financial loss, error or fraud.Īs we conclude our third year of transition into the financial audits of LG entities, I am encouraged that entities are adapting to the audit processes of my Office and embracing the changes suggested during our audits. Some of these were unresolved from the previous year. Although most entities had satisfactory audit outcomes, it is concerning that we reported 101 material matters of non-compliance in the auditor’s report for 45 entities, and 890 significant or moderate weaknesses in financial management and information systems controls in our management letters. There is little room for complacency as a clear audit opinion is the minimum we should all expect. There may be further qualifications in the opinions yet to be issued. Of the 117 auditor’s reports issued to 31 May, 1 included a qualified opinion on the financial report (page 10). I have delayed tabling this report until almost 90% of the auditor’s reports have been issued. The number of LG entities recasting and submitting many versions of their financial statements (the highest being 27 versions) during the audit process is also disappointing as this results in significant additional work for both the LG entity and the auditor and delays the finalisation of the audit. This caused unprecedented delays in entities finalising their financial reports as almost half of them needed to be recast after they had been submitted. Furthermore, amendments to the Local Government (Financial Management) Regulations 1996, gazetted on 6 November 2020, were retrospectively applicable from 30 June 2020. The COVID-19 pandemic created resourcing pressures, while the new revenue accounting standards proved particularly difficult for many entities in the sector to adopt. 2020 was an extraordinary year for local government financial reporting. In addition to summarising the results of the audits for Parliament, I have taken the opportunity to provide further insight into our financial audits of the local government sector. We performed the 2019-20 audits for 132 of the State’s 148 local government entities (LG entities), of which we completed 117 audits by 31 May 2021. The 2019-20 financial year marked the third year of a 4-year transition of local government financial auditing to the Office of the Auditor General, following proclamation of the Local Government Amendment (Auditing) Act 2017.
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