Chapter 16 - Audit and assurance services in the public sector. After studying this chapter you should be able to: explain the different levels of government in Australia and their main responsibilities; explain the concept of accountability; outline the different bases of accounting used in the public sector; explain public sector audit requirements; describe the nature of performance auditing; and describe the nature of regularity audits. | CHAPTER 16 AUDIT AND ASSURANCE SERVICES IN THE PUBLIC SECTOR AUSTRALIAN SYSTEM OF GOVERNMENT Three tiers: Federal State Local (municipal councils) ACCOUNTABILITY Parliament approves use of various resources. The management of public sector entities is entrusted with public resources on a stewardship basis. Reports are prepared showing use of resources. Public sector auditors provide assurance on reports. CYCLE OF ACCOUNTABILITY GOVERNMENT ACCOUNTING Australian accounting standards apply to public sector entities. Government departments that are reporting entities are required to prepare general purpose financial reports on an accrual basis. STRUCTURE OF PUBLIC SECTOR AUDITING PROFESSION Commonwealth Auditor-General, through Australian National Audit Office (ANAO), is responsible for audit of Commonwealth government departments, statutory authorities and government corporations. Each State and Territory has an Auditor-General who has similar responsibilities at the State and Territory level. AUDIT MANDATE Auditor-General’s comprehensive audit mandate involves: Performance auditing; and Regularity auditing: Financial report auditing Compliance auditing AUDITING STANDARDS IN THE PUBLIC SECTOR Audits should be performed in accordance with Australian auditing standards. Standards should be applied to the extent that they are not inconsistent with or unnecessary to public sector audit mandate. REPORTING DUTIES Audit report should state whether financial report: Is prepared in accordance with Finance Minister’s orders; and Gives a true and fair view. Requirements are virtually identical to Corporations Act requirements. ADDITIONAL REPORTING MATTERS Administrative operations Significant breaches of legislation Public money not correctly accounted for Accounting and other records not properly maintained Propriety and probity of transactions Recommendations to improve administrative process Economy, efficiency and effectiveness of . | CHAPTER 16 AUDIT AND ASSURANCE SERVICES IN THE PUBLIC SECTOR AUSTRALIAN SYSTEM OF GOVERNMENT Three tiers: Federal State Local (municipal councils) ACCOUNTABILITY Parliament approves use of various resources. The management of public sector entities is entrusted with public resources on a stewardship basis. Reports are prepared showing use of resources. Public sector auditors provide assurance on reports. CYCLE OF ACCOUNTABILITY GOVERNMENT ACCOUNTING Australian accounting standards apply to public sector entities. Government departments that are reporting entities are required to prepare general purpose financial reports on an accrual basis. STRUCTURE OF PUBLIC SECTOR AUDITING PROFESSION Commonwealth Auditor-General, through Australian National Audit Office (ANAO), is responsible for audit of Commonwealth government departments, statutory authorities and government corporations. Each State and Territory has an Auditor-General who has similar responsibilities at the
