To round out 2019, below are some areas of focus for our public sector clients. These are drawn from our latest financial audit work and analysis across all entities.
These ‘action items’ as we like to call them are not formal recommendations, but audit committees and senior management can use them to perform a health check.
We've provided action points in three main areas for consideration: everyday controls, governance controls and financial statement processes.
1. Assess and strengthen ‘everyday’ internal controls
| Procurement approvals and conflicts of interest management |
- Regularly review the appropriateness of financial delegations, ensuring controls adequately prevent and detect individuals exceeding their approved delegation
- Communicate the importance of declaring conflicts of interest and how to recognise them, providing an appropriate means to report and record conflicts so they can be effectively managed
|
| Secure information systems |
- Keep databases, applications, and computer operating systems up to date
- Manage access by assigning the minimum access required, segregating conflicting duties, reviewing access regularly and monitoring activities of employees with privileged access
- Implement strong password controls
- Encrypt information
|
| Checking vendor and employee bank account detail changes |
- Treat all employee and supplier change requests cautiously, especially requests to change bank account details
- Ensure validation processes are in place and staff are aware of the requirements, especially during times of leave or acting arrangements
|
| Review reports and reconciliations |
- Payroll reports and reconciliations should be regularly reviewed to ensure payments made to employees are correct, and any fraud or error is promptly detected
|
| Explore use of real-time analysis to prevent and detect fraud |
- Explore controls monitoring solutions to bring in real-time data on key financial processes including grant programs, enabling the identification of exceptions that need to be managed, and make real-time decisions to address important issues or risks
|
2. Assess and strengthen governance
| Monitor outstanding audit recommendations |
- Audit committees should continue to regularly review the status of outstanding audit recommendations, ensuring management are taking appropriate corrective action to address the identified risks
|
| Assess major infrastructure governance and resourcing |
- Ensure governance arrangements support projects achieving their objectives
- Ongoing assessments of governance frameworks ensure risks are managed effectively, including those relating to timeliness, cost, quality, and scope during delivery
|
| Ensure robust governance of data transfers to new systems |
- Ensure robust governance processes to oversee the project, with an approved governance framework, a suitable project committee, a project plan, assurance processes and regular reporting
|
3. Improve financial reporting content and processes
| Deliver timely asset valuations and ensure assumptions are supported |
- Continue to allocate time and resources early in the financial year to complete asset valuation models, and ensure assumptions are appropriately supported
- Prioritise high-risk maintenance, particularly for hospital and health services
|
| Reflect impact of extreme weather and climate change in financial statements |
- Assess the impact of extreme weather events and climate change on the measurement of transactions and balances and financial statement disclosures
|
| Continue to improve processes and move forward financial statement approval |
- Continue to focus on resolving accounting issues prior to year end, and bringing forward audit committee engagement on early draft financial statements
|
Our reports to parliament contain more detail on these actions and QAO engagement leaders are available anytime to discuss how the actions can be applied to your entity.
The related reports:
Water: 2018–19 results of financial audits (Report 4: 2019–20)
Transport: 2018–19 results of financial audits (Report 5: 2019–20)
Energy: 2018–19 results of financial audits (Report 6: 2019–20)
Health: 2018–19 results of financial audits (Report 7: 2019–20)
Queensland state government entities: 2018–19 results of financial audits (Report 8: 2019–20)
