Back

Reforms Australia

The Joint Committee of Public Accounts, in its Report 296 captioned "THE AUDITOR-GENERAL: ALLY OF THE PEOPLE AND PARLIAMENT" had sug­gested far-reaching reforms. That Commit­tee commenced its inquiry in 1987 and the Report was tabled in the Parliament on the 6th April, 1989. The Australian Audit Office has been renamed as the Australian National Audit Office (ANAO), as recommended by that Committee.

2.    Its terms of reference were to investigate:

• whether the ANAO had kept pace with developments in regard to the public audit function in the States and Territories and in comparable countries, and
• whether current arrangements guaranteed the independence and resources necessary for the Australian Audit Office to fulfil its role as determined by the Audit Act 1901.

3.    The Committee answered these terms of reference with a conditional no to the first, and no to the second.

4.    It perceived the problems of the ANAO to be :

• a bare adequacy of resources for audits of financial statements and insufficient resources for efficiency audits
• one of the ANAO's most important auditees was at the same time the Government's principal adviser on the ANAO's resources, appear­ing to compromise the former's independence.

• loss of major auditees
• loss of experienced staff, and
• an image problem within the accounting profession.

5.    Importantly, the Committee noted that the reasons for their conclusions were outside the ANAO's control and that the ANAO's problems resulted from :

• Parliamentary complacency leading to a 'dulling of Parliament's capacity to perceive that the ANAO had difficulties
• the ambiguous relationship between the Auditor-General and the executive government which had led to both Parliamentary and governmental neglect
• the lack of mechanisms in place to permit Parliament to assume responsibility for the ANAO
• the ANAO giving a higher priority to the economy of its operations than to reappraising its contribution to government, and
• a lack of public awareness of the importance of auditing in Government.

6.    The Committee made a number of suggestions to solve the ANAO's problems, namely:

• reaffirmation of the necessity of the Auditor-General being free of political control
• a new Audit Act, believed necessary:

1. to clarify the relationship between the Auditor-General and the Parliament and to affirm the ANAO's service role to Parliament
2. to establish the ANAO as a statutory authority
3. to give the Auditor-General the authority to determine the terms and conditions of employment of staff, and
4. amongst other objectives, to indicate for which Commonwealth agencies he is the external auditor

• establishment of an Audit Committee of Parliament to enhance parliamentary involvement in the preparation of the ANAO's estimates and to pursue a general oversight role of the ANAO on Parliament's behalf
• a substantial increase in funding for efficiency audits, and
• encouragement of competition (other than in respect of mandate) between the ANAO and accounting firms, encompassing audit productivity, methodology and technology.

7.    The ANAO has indicated support for the endorsement of the Committee's recommendations and has implemented a number of the Committee's recommendations that were within its control, for example,

• the manner in which the Auditor- General reports to the Parliament, including more frequent reporting to the Parliament on the results of individual audits
• the use of contract auditors has been increased and a target has been established of the amount of work to be contracted in this area each year for the next three years
• advisory and consultative committees have been established comprising representatives of chartered firms and the professional bodies
• the ANAO proposal to conduct professional year training for graduates to become chartered accountants was approved by the Institute of Chartered Accountants in Australia and action has commenced on a full review of the selection of efficiency audit topics and planning processes in the ANAO and the guide­lines governing the conduct of efficiency audits is nearing completion.