The Queensland Audit Office (QAO’s) financial statement maturity model helps entities identify strengths and improvement opportunities in their financial reporting processes. We have refreshed our model, which is based on better practice, so it’s easier for our clients to use. We published our new model with our recently tabled Local government 2023 report to parliament.
Our model prompts entities to assess themselves against a series of questions categorised into 4 components, being:
- month-end processes
- financial statement close processes
- skills of the finance team and the technology used in generating financial statements
- timely resolution of complex financial reporting matters.
Based on the answers, the model determines entities’ financial statement maturity across 4 levels: 1 – developing; 2 – established; 3 – integrated; and 4 – optimised.
Over the years, we have implemented the model across our financial audits of councils, departments, universities, government owned corporations, and most statutory bodies. We captured and applied feedback and improvement opportunities.
Refresh of the maturity model – what’s changed?
In our new model, we have:
- added more guidance on how to complete it
- refined the wording to help users understand specific questions
- added more detail of what higher levels of maturity look like
- linked to other relevant QAO resources, such as our reports to parliament, blogs, and better practice tools.
We have also added 6 new questions to capture further elements of good quality financial reporting. These relate to period-end journals, reconciliations, financial statement milestones, estimates, and external reporting.
In addition, the model now enables entities to determine their desired state of maturity beforehand and then to compare this to their actual maturity based on completing their self-assessment. Where there is a significant deviation between desired maturity and the maturity level based on completing the model, entities may want to take action to improve their processes.
Assessing the maturity of your financial statement preparation processes
We encourage all entities to self-assess their financial statement preparation processes using our updated maturity model. Entities set a desired level of maturity that is appropriate to their individual entity. This allows them to develop and implement action plans to improve the maturity of specific components, as well as their overall financial reporting processes.
Entities should revisit their self-assessment each year and consider their progress. Unless there have been significant changes to financial reporting processes, this is usually a simple exercise.
Where our audits identify significant issues in entities’ financial reporting processes, the entities should re-assess their maturity levels to identify where they need to implement corrective actions.
They should then report the result of their self-assessment and their progress on action plans to their audit committees or other relevant oversight body. QAO’s engagement leaders will continue to work with entities on their maturity assessments and help them gain the most benefit from the approach.
Resources
- QAO better practice guide: Financial statement preparation maturity model self-assessment tool.
Reports to parliament
- Local government 2023 (Report 8: 2023–24)
- Local government 2021 (Report 15: 2021–22)
- State entities 2022 (Report 11: 2022–23)
- State entities 2020 (Report 13: 2020–21)
- Education 2020 (Report 18: 2020–21)
- Education 2019 (Report 15: 2019–20).
Blog
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