Annual report 2020–21

Our clients

Our clients are Queensland’s state and local government entities we audit and provide our insights for, and the Queensland Parliament as we provide it with independent assurance.

Our enabling legislation

The Auditor-General Act 2009 (the Act) governs the powers and functions of the Auditor-General. It provides the legal basis for QAO’s access to information, and the freedom to report the findings from our audits. The Act promotes the independence of the Auditor-General and our auditors.

It also requires us to table in parliament the standards by which we perform our audits—the Auditor-General Auditing Standards. 

Firstly, I wish to recognise the significant efforts our clients, my Queensland Audit Office (QAO) staff and our contracted audit service providers took this year following a period of considerable change. I am proud of what we all achieved. What strikes me about our people is our sense of togetherness. More than ever, we operated as one team—OneQAO—as opposed to discrete service arms.  

We continued to consider the impact of COVID-19 on the resilience and future shape of public services. Given the impact on entities tackling the crisis, we were realistic with our audit requirements, while continuing to assure Queenslanders on public service performance and accountability.

The pandemic meant that we changed how we conducted our audits for a period of time, particularly with our more remotely located clients. However, by working closely with them and leveraging our contemporary analytics and technology, we delivered 407 audit opinions on the reliability of all state public sector entity and local government financial statements.

I adjusted the approach of some of our performance audits and assurance activities to ensure their relevance and timeliness following the pandemic. I also paused tabling some of our nearly completed reports to parliament due to the timing of the state election in October 2020 and the capacity of entities to contribute. Regardless, we tabled 18 reports this year, containing 80 recommendations.

The Queensland state election presented a good opportunity for us to renew our focus on parliamentary engagement. We had a significant focus on improving our engagement with parliamentarians and received valuable feedback on our services and our reports to parliament.

Our future success as an organisation hinges on the quality of our relationships with our clients and colleagues. By August 2020, we resumed our in-person site visits to our clients, successfully reverting to business as usual for our 2021 audits. I travelled across the state to see many of our regional clients—as far west as Richmond, south to Goondiwindi, north to Cairns, and central to Longreach.

The work we do across Queensland continues to give us important insights into public sector and local government performance. We shared these insights in our day-to-day engagement with clients, in our reports to parliament, and in our resources such as our blog.

Audit quality is paramount and remains my focus. We voluntarily published our first annual Transparency Report 2019–20 on the internal practices we apply in our commitment to audit quality.

In the coming years, it is vital that we focus on the right audit topics and conduct them at the right time. In May 2021, we published our new Forward work plan 2021–24, which includes the strategic risks to public service delivery that QAO has identified and our expected audit activity in response. Like our clients, we will remain responsive and review this plan each year.

QAO’s 2020–21 financial statements were certified on 28 July 2021 and this annual report was ready for submission for tabling on 29 July 2021, practising my own recommendations on sharing financial performance information in a timely manner. Per the Financial Accountability Act 2009, I cannot table or publish QAO’s financial statements or annual report myself until after the annual report is tabled.

To provide the most effective assurance, it is vital that we preserve our independence. The 2017 strategic review of QAO concluded that QAO is valued, but our legislative framework is not appropriate. We have completed the recommendations made to us, except for three that require legislative changes and two that we will finalise soon. I am keen to see all the recommendations progress ahead of the 2023 review and will engage with parliament and our stakeholders on the matter. I also wish to highlight an important and relevant 2020 report by the Audit Office of New South Wales that found that the processes for how four of the state’s integrity agencies are funded presents independence threats.

This year is a particularly special year. I was delighted to be leading QAO during the office’s 160th anniversary on 27 September 2020. The ongoing sense of connection and loyalty that our current and former staff have with our organisation demonstrates the pride they have in the work that we do.

Over the next year, we will continue to deliver value from our services, share our insights widely, achieve quality in all our work, make optimum use of our data, and develop our workforce. Our work has never been more important, and it remains a tremendous privilege to be in service for Queensland.

The statutory position of Auditor-General has existed in Queensland since 1860. For 160 years, our people have made a significant contribution to the state. Below is a timeline containing some highlights.

In line with our OneQAO thinking, we worked together as one connected, cohesive, and engaged team that held relationship-building at the heart of our operations.

We continued to support our staff, and steadily build the capability we need to ensure our clients value our services.

Appreciating our diverse workforce

Our greatest asset will always be our people. Their skills and commitment are crucial to our ability to deliver our vision of better public services.

Our workforce comprises 181 full-time equivalents, who are a mix of auditors, specialists, and support team members. This year, 20 audit service providers were a part of our team and performed 44 per cent of our audits, supporting us across Queensland.

Over the years, QAO has shifted its profile of employees to become a more diverse organisation that recognises the unique experiences our people bring to our team. Many of our teammates come from non-English speaking backgrounds, at 29 per cent. Fifty-six per cent are women—including 36 per cent of directors and above, and a third of our Executive Management Group. One person identifies as having a disability, we represent a wide range of age demographics, and our staff bring broad work experiences and backgrounds to our team.

One of our staff members told us:

‘QAO is full of talented and supportive people with diverse experiences, and it is the people that makes it an ideal place to work. It is also incredibly refreshing to be a part of a workplace that is made up of so many different cultures, languages, and backgrounds.’—A. Prasad, Senior Manager, QAO.

Growing a positive culture and living our values

We believe that a positive culture is one that is strong on collaboration and innovation. This year, we continued to build a culture that buoys a high-performing and inclusive OneQAO team. As one of our teammates said:

QAO provides such a positive workplace culture. I always feel encouraged to speak up and am wholly supported to develop my professional career.’—K. Masiwel, Auditor, QAO.

Our values underpin all that we do and define how we work with our clients and each other. They help us be the best we can and make QAO an enjoyable place to work. Our culture also reflects the independence and objectivity of our role, which is embedded in the ethical and professional codes we apply to our staff. The values that we uphold are:

Human Rights Act 2019

We are committed to protecting and respecting human rights, eliminating discrimination, and promoting equality and diversity in our workforce.

In accordance with the Human Rights Act 2019, we actively promoted a positive and inclusive workplace where all people feel like they belong. We ensured our interactions with each other and our external stakeholders, including the public, exercised human rights and protected the dignity of others. We did not receive any human rights complaints.

Improving our engagement with our audit service providers

We have made a concerted effort to improve our engagement with our contracted audit service providers (ASPs) and how we communicate with them. In operating as OneQAO, we must ensure more consistent services for our clients, and there are opportunities to leverage and share our knowledge to increase our collective capability.

This year we started using some hybrid audit teams where we combined QAO staff (usually at the team leader level) with staff from local audit firms. This ensured greater cohesion of our audit services at the individual client level, and across all our clients. It also means we are tapping into the local contexts of our clients.

We aligned QAO senior directors with each ASP partner or an entire audit firm to simplify the touchpoints an ASP has with us. These QAO senior directors are our ASP relationship managers, providing an independent avenue for our colleagues to talk to us about what is working well and what could be improved.

Each year, we hold full day workshops with our ASPs in Brisbane and Cairns to provide technical advice, insights from our reports, demonstrations of new tools or systems, and the results of our client satisfaction surveys. This year we held an additional ‘check in’ with firms as we neared the end of the financial year, as a key point in the audit cycle.

Surveying our ASPs

We now capture feedback from our ASPs on our engagement via a new survey. The first survey ran in early 2021, with 56 of 109 surveyed ASPs participating.

Overall, ASPs were generally positive about their experience in working with QAO. Eighty-nine per cent felt that we worked collaboratively together and 98 per cent felt that their QAO contract manager conducted themselves professionally. We were particularly pleased to hear that 82 per cent felt satisfied with their ability to make a difference to the community through QAO jobs, but we are keen to increase this score.

Eighty-nine per cent said our processes for facilitating timely achievement of agreed milestones and issuing of audit opinions were timely. Eighty-nine per cent also agreed that QAO always tries to improve its performance.

There are areas, of course, for improvement that we will continue to focus on. Respondents were somewhat less positive in relation to the feedback that we give them, with only 55 per cent saying it is timely. There will always be opportunities to improve and innovate how we communicate with each other, and some respondents are also seeking additional training on sector-specific issues. We also need to improve our audit templates by making them easier to use, with only 61 per cent being happy with how to use them.

We look forward to delivering these improvements alongside our ASPs in the coming months. As one of our ASPs shared:

‘I find that I have a strong working relationship with the QAO and I am always keen to hear more insights and how we can add greater value.’ —QAO-contracted ASP (Orima survey, May 2021).

And another said:

‘We value QAO's feedback, input and support on our audit engagements and value the learning that arises from our relationship with the QAO team.’—QAO-contracted ASP (Orima survey, May 2021).

Developing great teams 

We invest in training our workforce to support excellence, providing an average of 79 hours of professional development per person for our auditors in 2020–21. We try to ensure that each individual has the right capabilities, and that, overall, we have a team with the right skills mix pertinent to our clients’ needs, and reflective of the changing work environment. The reputation of our office relies on the capability and proficiency of our people.

We deliver rigorous professional training to ensure we are adapting to new technologies and tools. This year, we developed a major training program for all staff on our new audit software and how it applies to our audit methodologies. We also encouraged our staff to keep learning through short courses.

We have been preparing key training and induction materials for our ASPs, covering the Auditor‑General Act 2009 and our responsibilities as authorised auditors.

New performance management approach

In early 2021, QAO introduced a new performance management tool, enabling us to give staff regular, real‑time feedback and identify growth opportunities. The new tool is streamlining our performance and development processes. It utilises cloud-based technology and a mobile app, which encourages positive performance management though day-to-day conversations.

At the heart of our training is helping our staff plan and progress their careers. As one of our auditors shared:

‘With each new client and audit visit over the past six years of my career, there has always been something new to learn and fantastic opportunities to further my development.’—B. Saw, Audit Manager, QAO.

Recruiting for the future

We are proud to be an organisation that recognises diverse and first-rate skills when building our workforce. 

The audit and assurance profession continues to face a major skills shortage, which was also impacted by COVID-19. This hugely competitive market presented us with some challenges when it came to our recruitment of new candidates and with retaining some of our staff. We experienced a 13 per cent separation rate due to natural attrition, with some staff undertaking roles in the private sector. QAO continues to benefit from an excellent reputation for professionalism, innovation, and competence, which makes our staff attractive to other businesses.  

In response, our targeted and proactive recruitment activities have been highlighting the unique value of a role with QAO where our meaningful work contributes to better public services, ultimately making a real difference to the lives of Queenslanders. We are promoting benefits such as experience across all aspects of government service delivery; the relationship-centric nature of our operations; and the opportunities for growth, security, and flexibility. We welcomed some great new candidates to our team and remain focused on upholding staff satisfaction.

This year, we recruited seven graduates into our graduate development program, attracting 653 applications. Our recruitment strategy included engaging potential candidates via universities and our industry partners, and attending a host of virtual and face-to-face events.

The standout with this year’s graduate group is the passion they have for our vision of better public services. As one of our graduates said:

‘QAO’s graduate program provides a great mix of support, experience and responsibility. Senior staff are approachable and help foster a support network across the organisation. I am encouraged to provide my own input on matters and take ownership of my work. As a result, I can see the impact of my work on our goal to provide better public services.’—N. Evans, Auditor, QAO.

And as another shared:

‘I found QAO’s graduate program through the Queensland Government graduate portal in my final year of university. I am glad I applied, as QAO has been the best place to start my career. Having been with QAO for over a year now, what I enjoy most about coming to work every day is the people. The culture at QAO is amazing. And if the work is very challenging, we receive support from our seniors and managers.’—P. Faasootauloa, Auditor, QAO.

Looking after our people and each other

QAO is committed to supporting our peoples’ health and wellbeing. In 2020–21, we delivered a series of information sessions on mental health to increase our awareness of such an important topic and to learn how we can support each other.

Our progressive use of flexible working arrangements continued to support staff so they can balance their working lives and other responsibilities as we meet our clients’ needs. We formalised our hybrid approach to working from our QAO, client, and home offices with a new policy and workplace health and safety requirements.

We also successfully implemented our flu vaccinations and supported staff participation in team sporting events, such as the 2021 Queensland Corporate Games. In June, we held our annual staff team building day. It included a workshop with staff to hear their feedback on changes at QAO over the prior six months, followed by a ‘mini Olympics’ event where we got out into the fresh air for some mental and physical challenges. It gave staff who do not connect as often the chance to get to know each other.  

Returning to the office after COVID-19

As COVID-19 restrictions eased in 2020, we prepared staff to return to our office headquarters in Brisbane City and to client sites. Our Return to office strategy effectively guided the transition. We ensured we protected our people by providing continued flexible working arrangements, where we kept the client at the centre of our decision making.  

We:

• launched an intranet microsite that housed return to office schedules, frequently asked questions, correspondence from the Executive Management Group, Queensland Health guidance and useful links
• effectively managed the safety and hygiene of workplaces, including social distancing, room capacity caps, records of attendance, and cleaning materials
• continued with our contingency planning should there be another outbreak or incident
• continued to use all our digital channels to communicate during events such as lockdowns.

Results from the 2020 Working for Queensland survey

The annual Working for Queensland survey tells us how engaged our employees feel, what their thoughts are on public service leadership, and how satisfied they are with their jobs. The last survey ran in August 2020, with results available after last year’s Annual report 2019–20 was tabled in parliament.

We had good staff participation in the 2020 survey, with 83 per cent responding. We scored 72 per cent for agency engagement, which is a measure of employee sentiment. This shows that a lot of our staff would recommend QAO to others, are proud to say they work here, and feel attached and inspired to do their jobs. This score for agency engagement is our equal highest, on par with what we achieved in the previous survey in 2019, and is 13 points above the Queensland public sector average. 

Job empowerment, my workgroup, and my manager’s support continued to be our strongest areas. They all increased from 2019 and achieved a higher average than other public service offices and the Queensland public sector. We believe these scores reflect the OneQAO approach—where we have a relationship‑focused culture for delivering our services as one organisation, and a people-focused culture for empowering our staff to work together and be the best in their fields.

Workload and health, and organisational fairness remain our key areas for improvement. Our workshops on mental health, more formalised flexible working arrangements, and new performance management system are some of the approaches we are implementing to address these concerns, with more to come.   

Checking in on our staff

In May 2021, we conducted an anonymous ‘pulse’ survey with our staff to explore some of the feedback from the Working for Queensland survey more deeply. In particular, the results around bullying, sexual harassment, and domestic and family violence (DFV). In the Working for Queensland survey, some staff responded as ‘unsure’ to the questions on these sensitive matters. It is important that we better understand their knowledge and feelings in this space so we can act accordingly.

We found that we need to make information on bullying, sexual harassment and DFV more visible and easier to find on our intranet. We were relieved to find that most of our staff do know what to do if someone tells them they are experiencing, or if they observe, bullying, sexual harassment, DFV, or mental illness. But we will continue our educational program, including providing specific examples for various scenarios.

We also received many fantastic suggestions on how we could improve our health and wellbeing, celebrate our diversity as an organisation, and continue to ensure an inclusive culture.

Next steps for QAO include further analysing the comments and suggestions from our staff to identify our actions, including around workload challenges, and provide greater support for our people.

QAO’s strategy centres on how we can contribute positive change to the lives of Queenslanders. Our leadership and governance groups guide us on this journey and are integral to achieving our objectives.

Strategic Plan 2020–2024

Our strategic planning framework

We revise our strategic plan annually, or as required, to ensure we address emerging risks and new opportunities.

Our strategic plan is informed by our operational and workforce planning, our risk management framework, and our forward work plan.

The service delivery statement provides budgeted financial and non-financial information for the financial year and establishes our performance targets.

Our organisational structure

We have been implementing staffing arrangements that support our cohesive way of working, harness innovation, and maximise the benefits of shared resourcing. Our structure also gives us the capacity to mentor our staff, which in turn further develops our capability. 

Executive leadership

QAO’s Executive Management Group leads the delivery of QAO’s strategy. It monitors high performance, drives change and innovation, and manages our core business operations.

Client service and audit quality are a priority for QAO, and we strive for the highest professional standards. We have several mechanisms in place to ensure our activities are effective, efficient and comply with quality requirements. Included is having assistant auditors-general to look after our relationships with our different types of clients and to oversee the quality of our service delivery.

• Brendan Worrall, Auditor-General
• Karen Johnson (Deputy Auditor-General when required)
• Patrick Flemming
• Poopalasingam Brahman
• Rachel Vagg
• Damon Olive.

Senior leadership

Senior Directors lead our client and audit engagement.

• Charles Strickland
• Darren Brown
• David Toma
• Irshaad Asim
• John Welsh
• Michelle Reardon
• Paul Christensen
• Robert Kilbride
• Vaughan Stemmett.

Our governance bodies

Executive Management Group (EMG)

This group includes all executive leaders. It determines strategy and budget, and regularly reviews QAO’s strategic and operating risks.

Audit and Risk Management Committee

The Audit and Risk Management Committee (ARMC) is an independent advisory committee to the Auditor-General, comprised of three external members who bring in expertise from the other industry environments they work in. Membership details are at Appendix A.

This year, the ARMC provided oversight of QAO’s risk, control and compliance frameworks, and fiscal responsibilities underpinning our corporate governance. It met four times in 2020–21.

Audit Quality Sub-Committee

QAO’s Audit Quality Sub-Committee is a sub-committee of the ARMC. It has three independent members and monitors if QAO’s audit activities comply with quality requirements.

This year, the sub-committee looked at QAO’s quality framework, the results of our quality assurance reviews, our refined rating system for how we rate audits, and how we can improve our processes. The committee met twice in 2020–21.

Quality Management Group

In December 2020, QAO set up the Quality Management Group (QMG). This group supports the Auditor-General in complying with professional and ethical requirements. QMG members monitor all aspects of QAO’s quality assurance framework. The group met three times in 2020–21.

Finance Management Group

In July 2020, the EMG established the Finance Management Group (FMG). This group supports the Auditor-General in complying with the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2019. The FMG also reviews QAO budgets, service delivery statement (SDS) measures and reporting, budget updates and annual financial statements. The FMG met twice in 2020–21.

Internal audit

Internal audit conducts independent and risk-based assurance activities over our operations, aiming to improve QAO’s operations. It works in accordance with an annual plan and its charter aligns with the International Standards for the Professional Practice of Internal Auditing.

QAO’s internal audit function is independent of our executive leadership group and our ARMC has oversight of the internal audit program and delivery. QAO engaged Protiviti to deliver its internal audit program. We finalised two internal audits in 2020–21, and a further two were also conducted this year with the final reports delivered in July 2021.

Managing risk in a time of change

We continued to identify, address, and implement controls to address any risks to QAO’s services and operations.

Our main focus this year was on cyber security, with COVID-19 increasing the risk for all organisations as malicious bodies sought to exploit the situation.

In response, QAO introduced enhanced digital security arrangements and delivered training for all staff on data protection. Our training included interactive ‘phishing campaigns’ to evaluate our baseline cyber capability, which we followed up with additional coaching. Our much more granular approach to cyber risk this year, as part of the improvements to our information security management system (ISMS), resulted in increased protection for our business.

Implementation of recommendations made in the strategic review of QAO

One of the key accountability measures in our legislation is a five-yearly independent strategic review of our organisation. The Governor in Council appoints independent reviewers who engage with us, our clients, and stakeholders to understand how well we are operating and fulfilling our mandate. The last Strategic Review of the Queensland Audit Office was in 2017 (tabled in parliament on 23 March 2017).

The 2017 review concluded that, overall, QAO is fundamentally sound and a valuable part of the Queensland public sector. We continue to support all 32 recommendations made by the review and have so far actioned 27 of them.  

Three of the remaining recommendations require legislative changes, and thus are outside of our control. Specifically, those relating to our independence. The review recommended that the Auditor‑General Act 2009 is amended to allow us more independence around employing staff. This includes allowing QAO to employ staff under its own legislation rather than the Public Service Act 2008, and to determine remuneration, and terms and conditions of employment. This would allow QAO to be more competitive when attracting suitably qualified staff.

The 2017 review also recommended that the Auditor-General become an independent Officer of Parliament and have more independence around the setting of client rates and fees for our services. It recommended that the Auditor-General Act 2009 is examined to identify any outdated provisions impacting on the efficiency and effectiveness of QAO, and that regular reviews are conducted to ensure it stays in line with developments in public sector auditing.

These recommendations must be actioned by the parliamentary Economics and Governance Committee. QAO last briefed the committee in March 2021, expressing the Auditor-General’s keenness for the recommendations to progress following a pause after COVID-19 and the October 2020 Queensland election.

One of the two outstanding recommendations relates to QAO’s development of a better practice resource for valuing public infrastructure. This has been pushed back pending advice from the Australian Accounting Standards Board (AASB) on the same topic, and we are reassessing our contribution as the AASB provides its guidance.

The last remaining recommendation relates to QAO’s implementation of audit analytics and associated costs and benefits. QAO’s analytics capability continues to deliver valued insights, reflecting contemporary audit approaches to effective audit work. We have prepared a scope for works for an independent review, which will assess the value of our data, how it is used, any associated risks, how our ASPs access information, and opportunities for the future. We expect this review will be completed in August 2021.

In 2020, the Australasian Council of Auditors-General (ACAG) commissioned a report into Auditor‑General independence. It assessed legislative frameworks against eight core independence principles that are essential for effective public sector auditing. While Queensland received a strong independence score in this report, our ranking fell from third to sixth out of 10 jurisdictions. This is mainly due to not having an oath of office or independence from executive control, and the 2019 changes to s.53 of the Auditor-General Act 2009 that enables sharing of protected information with the Treasurer or Queensland Treasury.

In October 2020, an audit by the Audit Office of New South Wales found that the state’s processes for funding four of New South Wales’s integrity agencies presents independence threats and does not sufficiently recognise that the roles and functions of integrity agencies are different to other agencies. Its report, The effectiveness of the financial arrangements and management practices in four integrity agencies, provides pertinent insights for audit offices in other jurisdictions. Similar constraints exist in Queensland, where the Financial Accountability Act 2009 requires that QAO’s annual report is tabled by the Premier. We encourage entities to improve their timely release of their audited financial statements, and it is something we must practise ourselves but cannot do so. This means we risk not giving the public up-to-date information. Providing QAO’s annual report directly to the Speaker for tabling, like reports to parliament, would better reflect our accountability.

We met our strategic objectives, and our performance was strong as we delivered valued audit and assurance services following a period of change. We delivered 18 reports to parliament, on average under budget but slightly later than expected due to external factors.

Our work centred on building our relationships with our clients and stakeholders and the quality of our deliverables.

We continued to operate as a responsible and financially sustainable public sector audit practice.

Delivering valued audit and assurance services

This year, we formed 407 audit opinions about the reliability of public sector and local government entities’ financial statements. Our audit service providers delivered 44 per cent of these opinions.

We continued to identify the risks that our audit clients were facing, design our audit work to respond to those risks, and report on matters of significance.

Many entities faced challenges in delivering on their financial reporting accountabilities. Unlike some states, Queensland did not receive an extension to its legislated deadlines for the signing of financial statements, meaning entities needed to complete their work to the same timelines as more ordinary years. Most were able to do so, enabling us to deliver timely audit and assurance services.

The COVID-19 pandemic meant that we changed how we conducted our audits, particularly with our more remote and regionally based clients. Our technology, our audit analytics capability, and importantly, our ability to transfer data securely, greatly assisted our clients and our workforce, including our ASPs.

One client told us:

‘QAO worked very well with the department under challenging circumstances brought about by the COVID-19 pandemic. They were flexible and responsive to the difficult circumstances and seemed to adapt well to working remotely. It was one of the smoothest end of year processes I have been involved with.’—Audit client (Orima survey, October 2020).

Another said:

‘In a very trying time when everyone was fumbling around trying to cope with working from home, the QAO made the process as pain free as it could possibly be.’—Audit client (Orima survey, October 2020).

COVID-19 also meant that QAO needed to make some decisions about the performance audits or assurance activities that were underway when the pandemic struck, including pausing, re-scoping, and, in some cases, delaying audits.

Some of the clients we were auditing at that time were frontline entities responding directly to the crisis, and most of our clients were transitioning to delivering their services remotely due to lockdowns. This impacted on when they could give us audit data and information, and when we could conduct key fieldwork such as site visits and interviews.

Regardless, we successfully assured parliament on the efficiency, effectiveness, economy, and legislative compliance of key aspects of public sector and local government performance.

We shared insights and recommendations for improvement on a wide range of topics that are important to Queensland. Just some of these topics included Regulating firearms (Report 8: 2020–21), Responding to complaints from people with impaired capacity (Reports 5 and 14: 2020–21), the Family support and child protection system (Report 1: 2020–21), Planning for sustainable health services (Report 16: 2020–21), and more.

We also introduced some new assurance work, which catered for various levels or depth of assurance, allowing us to share our insights more quickly.

In our report Queensland Government response to COVID-19 (Report 3: 2020–21), we shared key facts on the response measures and costs the state took following the pandemic. We aimed to quickly promote Queensland’s understanding around the various measures, and inform our future work plan by identifying other audit areas we need to focus on. As of 30 June 2021, this report had been viewed over 2,500 times.

In Delivering successful technology projects (Report 7: 2020–21), we shared important insights on information and communication technology (ICT) projects, given the significant investment in such projects by most entities. We effectively catered for a wide range of report readers—members of parliament, and ICT project managers with more expertise. For our parliamentarians and senior officers, we provided a high-level visual presentation (infographic) to help them easily and quickly understand the key issues. For our more technical readers, we included case studies that provided specific details on successful and unsuccessful ICT projects.

As of 30 June 2021, this report had been viewed over 4,000 times, with an average time on page of 03:42 minutes, indicating reader interest. It is QAO’s most read report for 2020–21 and our third most read report since 1 July 2015. We also shared our advice via a better practice guide, a series of blog posts, and at our client events.

In Effectiveness of audit committees in state government entities (Report 2: 2020–21), we provided insights on the current profile and practices of audit committees in the state public sector. We identified and shared the actions that can help lift committees’ performance and effectiveness. We also published a guide that provided key questions a committee should consider. As of 30 June 2021, this report had been viewed over 3,000 times. It is our third most viewed report for this financial year.

In our report Awarding of sports grants (Report 6: 2020–21), we shared key facts about sports grants in Queensland and how they were awarded between 1 July 2017 and 29 February 2020. There were sensitivities in our audit findings, requiring us to conduct careful and targeted engagement. A more strategic ministerial engagement approach led to new insights for QAO about minister and department interactions and resulted in significant change in governance process across the public sector. We have also used this information to inform our Forward work plan 2021–24. As of 30 June 2021, this report had been viewed nearly 3,000 times and is our fifth most read report for 2020–21.

Tabling 18 reports to parliament

We produce reports to parliament on the results of our audit work, insights, and recommendations for improvement. This year, we tabled 18 reports, and our success is without a doubt due to the commitment of our staff and the cooperation of our clients.

The website views of our reports to parliament have significantly increased over the past three years. We believe this reflects increased awareness of our role, interest in our audits, significance of our audit focus, how we are sharing our insights, and overall value of our services.

This year, a client told us:  

‘QAO identified important areas of focus that has risk management as a key area of attention. The advice provided by QAO added significant value.’—Audit client (Orima survey, October 2020).

The Queensland state election in October 2020, and the caretaker period preceding it, meant we needed to pause or delay tabling some of our nearly completed reports to parliament. Under the tabling protocols in the Auditor-General Auditing Standards, QAO generally does not send draft reports to clients for their comment, or table reports, during a caretaker period or estimates hearings.

Overall, all of this year’s reports were viewed nearly 35,000 times, comprising more than half of our total report views for the year. A list of our tabled reports for 2020–21 is at Appendix B.

Cost and timeliness of reports

We track the full life cycle cost of each of our reports to parliament and the time we take to produce them as a measure of efficiency of our work.

We do not deliver our audits and reports as separate services; however, our final deliverables vary in nature, so we report on cost and timeliness accordingly.

This year, we delivered our reports on the results of our financial audits at an average of $102,300 per report, which was $37,700 below our target of $140,000, and $22,300 below last year’s average cost of $124,600.

These cost efficiencies were due to our increasing efforts to prepare more concise reports that focus on the information needs of our clients and stakeholders.

The average cost of our reports on the results of our assurance and performance audits (which includes the audit work and the report) was $241,900—$153,100 under our target of $395,000, and $211,978 below last year’s average cost of $453,878.

The favourable cost result demonstrates the efficiencies achieved from our initiatives to ensure more concise, clear and well-messaged reports that better meet the needs of our clients and stakeholders.

We also measure how long it takes for us to prepare and table a report in parliament to ensure we are enabling our clients to act quickly on our recommendations.

We measure the timeliness of our financial audit reports from our clients’ year-end dates to the tabling date of the report in parliament. This year, the average time to deliver the reports was 7.4 months—longer than our target of six months and last year’s average of 5.3 months.

We measure the timeliness of the reports on our assurance and performance audits from formal initiation of the audit to the tabling date. We delivered our performance audit reports on average in 10.6 months—longer than our target of nine months, and slightly faster than last year’s result of 10.9 months.

Our reports took longer to finalise this year due to the impact of COVID-19, where we were cognisant of the ability of some clients to provide data and input into the report per originally planned timelines. Our timeliness was also impacted by our pause in reporting during the 2020 state election and estimates hearings. Our overall average time was impacted by the 20-month time frame for one of our reports, Family support and child protection system (Report 1: 2020–21). This audit was slowed down due to the complexity of the topic, and extended feedback periods for the clients.

Further detail on our performance, including the cost and timeliness of each report to parliament, is provided in our performance statement on pages 57–60.

Providing valuable insights and recommendations

We endeavour to provide recommendations for our clients that are timely, practicable and lead to better outcomes. This year, we made 80 recommendations, and suggested 15 actions, across all our reports to parliament. Some of the most common themes across our recommendations included:

• ensuring clarity around leadership roles and responsibilities for decision making
• providing better oversight of compliance activities
• developing sufficient performance indicators to enable effective measurement and reporting
• understanding the true cost of service delivery
• improving collaboration between entities and between people
• providing greater training for staff on new projects or systems
• improving contract management, regardless of the size and type of the contract
• improving internal controls, particularly around the security of information.

The number of recommendations we provided in our reports has remained consistent over the past three years, despite fluctuations in the number of reports we tabled (which is usually due to external factors, such as the timing of state elections or the complexity of audit topics):

• 2020–21, 18 reports, 80 recommendations
• 2019–20, 16 reports, 79 recommendations
• 2018–19, 21 reports, 81 recommendations.

We continued to consult thoroughly with our clients when drafting our recommendations to ensure they are of high quality and to encourage greater commitment to them. A client told us:

‘The suggestions for improvement from QAO show a good understanding of our organisation and the industry in which we operate.’—Audit client (Orima survey, October 2020).

A new way for tracking the implementation of QAO recommendations

This year, we developed a new approach for how we track entities’ progress in implementing Auditor‑General performance audit recommendations, starting with those we made in our reports to parliament between 2015–16 and 2017–18.

We have always asked entities to inform us on their progress in implementing our recommendations, but it has been a relatively manual process involving hardcopy documents. Our new online system allows entities to more easily self‑assess and monitor their progress. Our new system:

• gives entities a record of all QAO performance audit recommendations we made to them, including those re‑directed to them from recent machinery of government changes
• gives entities and audit committees clarity over their previous and current self-reported status of QAO recommendations
• identifies and shares the QAO recommendations made more broadly across government.

We need to allow some time for entities to action our recommendations before we follow them up. Thus, this year we started with our 30 reports tabled between 2015–16 and 2017–18. We asked 54 entities to self‑assess their implementation of the recommendations and all of them completed it.  

In developing the system, we pilot tested and refined it with input from three entities, and we prepared a range of materials to show entities how to use it. This included online frequently asked questions (FAQs), live Microsoft Teams workshops, direct feedback mechanisms, and providing overviews of the new approach at our client and stakeholder events.

In response to feedback from parliamentary committees that they are seeking more insights on the progress of our recommendations, in 2021 we will report to parliament on what entities self-assess and report to us for the first time. This report will be titled Status of Auditor-General recommendations 2021. We will table this report each year covering more recent recommendations.

Building our relationships and learning about our clients

Effective communication and engagement with our clients and stakeholders remained crucial to QAO. We continued to work closely with entities to understand their work and provide our insights and advice. We are invested in building long-term, productive relationships with our clients, while balancing audit quality and our independence. 

To better focus and align our engagement strategy, we analysed our large and varied client base to identify those with whom we need to engage with more and better. Some of our clients have responsibility for delivering a significant volume of public services, some have influence over other entities (which we can leverage), and others may be less satisfied with our services. This helps us prioritise our engagement and allows key clients to become a bigger part of our collective effort to improve public services.

We have been improving how we bring together our clients and workforce to collectively share and discuss topical issues in a timely manner. In March 2021, we held a forum specifically with our energy clients and ASPs. One attendee said:

‘The workshop was brilliant – I received a lot of very positive feedback from the staff that attended, as well as the staff who watched the livestream.’—Audit client, May 2021.

Another shared:

‘[She] said it was amazing, which is high praise from our technical expert. The presenters were very engaging, and maintained our interest, providing insights and highlighting issues for consideration.’—Audit client, May 2021.

We certainly benefited greatly from our technology this year, however face-to-face engagement continued to give us the best understanding of the unique environments our clients operate in and for building personal relationships. Some clients are more comfortable asking us for advice or discussing any concerns in person.

Following COVID-19, the Auditor-General, and the Assistant Auditor-General who leads our local government services, also recommenced their visits to more remotely located clients. They travelled across Queensland to meet with the chief executives, mayors, board chairs and other contacts across a wide range of public sector and local government clients.

We not only use the information we receive from these visits to build our knowledge and improve our services, but we also pass it on to relevant departments or members of parliament.

A client told us:

‘We would like to note the high level of support we receive from QAO in terms of requests for advice and we appreciate the positive and open communication between QAO and ourselves.’—Audit client (Orima survey, October 2020).

Listening to our clients’ feedback on our services

Feedback from our clients tells us where we can improve our service delivery and operations, informs our decision making, and influences innovation and change. Each year, we engage an independent research provider to survey our clients on their satisfaction with our services. We ask our clients for feedback on our audit processes, our reports to parliament and the value of our services.

Over the past three years, our client survey trends remained relatively steady, with ups and downs in some specific areas. We will continue to work on maintaining and improving these results.

For 2020–21, we surveyed 328 audit clients throughout the year, receiving a 72 per cent response rate.

Our audit client satisfaction is a blended average from the surveys of our financial audit and assurance or performance audit clients, as we deliver these services wholistically as OneQAO team.

Our overall result across all our audit and assurance services was 81 index points (ip)—the same as 2020 and one point over our target of 80. (IP is the average of the aggregate indices for each area of performance that the survey explored.)

We received, overall, 79ip for our audit process, 80ip for reporting and 85ip for value of our services.

We further analysed our results by our client service areas. Our departments and whole-of-government clients, and statutory bodies and government owned corporations, gave us the strongest ratings across all our work at 82ip. Local government gave us a slightly lower rating at 80ip.

Ninety-nine per cent of our clients across our services rated us positively for our auditors’ professionalism, and 96 per cent rated us positively for our professional skills and knowledge. As one client shared:  

‘QAO conducted themselves in a professional and timely manner, as always. We appreciate their technical assistance and approach taken every year.’—Audit client (Orima survey, October 2020).

And another said:

‘The audit team was very professional, and audit was conducted in a really efficient manner, particularly given that it was during COVID-19 impacts and audit team was remote.’—Audit client (Orima survey, October 2020).

Most of our financial audit clients, 97 per cent, agreed they obtained value from our audits, up from 94 per cent in 2020. And 96 per cent agreed that they obtained value in our recommendations on improving their financial management and internal controls, up from 93 per cent in 2020.

All clients were more likely to agree this year that we gave them adequate opportunities to comment on our audit findings and issues before our final report was tabled in parliament, at 93 per cent across our various report types, up from 90 per cent last year.

Some clients would like us to improve the timeliness of our financial audit program, with 83 per cent saying it was undertaken in a timely manner. We also need to increase how deeply we understand our clients’ organisations, with 89 per cent for our financial audit services and 67 per cent for our performance and assurance services agreeing that we do so adequately.  

We received a range of positive comments in our surveys this year, which we are grateful for. One client told us:

‘We appreciated the level of engagement provided by QAO staff, and willingness to discuss issues and matters of perspective.’—Audit client (Orima survey, October 2020).

Another shared:

‘QAO and us experienced a great process, good collaboration and a great working relationship.’—Audit client (Orima survey, October 2020).

Feedback from audit committee chairs

It is key that we deliver our insights to audit committees in an effective, timely and engaging manner so they can use their position to influence the change we are seeking for our clients. They are an important group for advocating our recommendations and monitoring entities’ progress in implementation.

Our last survey—which was the first time we surveyed chairs—was in 2019. However, since then we have changed our questions to reduce repetition in the survey and align the valuable insights it gives us on our services as a whole. This means we cannot accurately compare results between the years, but can do so in another two years’ time.  

This year, we surveyed 185 audit committee chairs, receiving a 66 per cent response rate, up on 62 per cent in 2019.

We asked chairs for feedback on how we supported them, how they value our services and recommendations, how clearly we communicated, how they use our reports and resources, and their thoughts on our audit processes.

Nearly all chairs indicated QAO is meeting their needs and expectations, at 98 per cent. Ninety‑five per cent said we provide valuable assurance on the reliability of public sector financial reporting, and 93 per cent said that we help improve public sector accountability.

Most chairs had used our products at least once in the past 12 months, with 96 per cent using our reports to parliament, fact sheets, blog posts or interactive data dashboards. Ninety-three per cent said they find our reports to parliament easy to understand, and nearly all chairs, 99 per cent, said we clearly communicated our audit findings and issues in our management reports.

We were pleased to learn that 86 per cent have visibility of the recommendations QAO makes in its reports to parliament, and 89 per cent have oversight of their entity’s implementation of them—but we will engage with them closely to increase this.

One area for us to explore more deeply is how we share our advice and recommendations for entities of varying size or type, for example different types of local governments or hospital and health services, to ensure we are providing everyone with relevant insights.

One chair shared with us:

‘The performance of QAO has improved materially over the past few years. Far more engagement and understanding of our businesses and teams are very helpful and engaging where there are changes and difficult issues.’—Audit committee chair (Orima survey, May 2021).

Transforming our engagement with parliament

We help the Queensland Parliament in its oversight of how entities deliver public services and use public resources. This year, we strengthened our engagement with parliamentarians and related stakeholders to help them better understand the key issues facing the public sector and to drive positive change over public sector performance.

Our approach to our engagement was more strategic this year as we improved the timing and frequency of our briefings, broadened our engagement, and adapted our communication approaches to their needs.

After the October 2020 election, we sent a welcome pack containing information on our role to members of parliament (MPs) and provided introductory letters and briefings for incoming ministers. We also presented at an induction event for new MPs and launched a new webpage housing useful resources, which has been viewed 164 times. Internally, we ensured our staff understood the caretaker arrangements ahead of the election so they could plan work accordingly.

We provided two private and seven public briefings to parliamentary committees covering 18 reports to parliament. We also responded to various requests for advice from parliamentary committees about our work, in addition to our briefings on each report. 

We met twice with the secretaries of parliamentary committees to better understand committee members’ needs and glean insights into how they use our reports and resources. Following the election, we proactively encouraged the newly arranged committees to continue the inquiries on our reports to parliament.

We greatly increased our engagement with ministers by reaching out on our reports—as they were being developed and following tabling. The Auditor-General met with 15 ministers between November 2020 and June 2021. Thirteen of these meetings were a result of us reaching out to meet after the election to provide information on our services and source feedback, and two were on our reports to parliament. We continued to consult widely when developing our forward work plan and shared the draft plan with all parliamentary committees, ministers, and the leader of the opposition for input.

We remained responsive to parliamentarians’ needs and requests, including examining requests for audits that they sent us—such as our new audit we commenced this year on regulating animal welfare, following a request from the former Natural Resources, Agricultural Industry Development and Environment Committee.

One MP told us:

‘I want to commend the A.G & QAO for their willingness to accept suggestions for audit inquiries & investigation. Though fiercely independent, its appreciated that the A.G is willing to consider and follow up on well-intentioned inquiries about Departmental performance.’—MP (Orima survey, May 2021).

Better understanding how parliament values our services

Via an independent researcher, we survey members of parliament (MPs) twice during their term. Our last survey was in 2019.

This year, we significantly refreshed our survey questions to increase the value of the feedback we receive and to better analyse the insights the survey can give us on our relationships.

Forty-four per cent of MPs responded to this year’s survey, down from 47 per cent in 2019. For the next survey, we will look at ways to improve this response rate to receive as much information from as many MPs as possible.

We asked MPs about the value of our reports to parliament and services, how clearly we communicate, their use and understanding of our reports and resources, and their general impressions of QAO. Over the past six years (three surveys), the results of our MP surveys have increased and steadied.

In an overall great result this year, 89 per cent of MPs were satisfied with the Auditor‑General’s reports and services, unchanged from 2019, and nine per cent over our target of 80 per cent. There was also a slight increase in the proportion of those who were ‘very satisfied’.

Nearly all, 96 per cent, agreed that our reports and services provide valuable information on public sector performance, up from 94 per cent in 2019. The majority, 82 per cent, rated their understanding of the Auditor-General’s role highly.

Although still largely positive, MPs were somewhat less likely than in 2019 to agree that our reports and services communicate issues clearly, at 87 per cent (down from 94 per cent). Preparing clear, succinct, well-messaged and timely reports continues to be a focus for us, and we will explore improvements with MPs to quickly implement changes. We also reached out to parliamentary committee staff to ask them for feedback on the quality of our reports, including how we can make them more readable, engaging, and, overall, more valuable.

Fifty-eight per cent of MPs reported having received a briefing or meeting with the Auditor-General about QAO’s reports or services in the past 12 months, which is a good result given the pause in our engagement with COVID-19 and during the state election and caretaker period. And 92 per cent were positive about the overall usefulness and responsiveness of our office.

Following our recent improvements to our parliamentary engagement, we will use all of this feedback as a baseline and compare it to the next survey in approximately two years’ time.

‘As a Parliamentarian, I appreciate the valuable role provided by the QAO. The role of the QAO is an important one given that the Queensland Parliament is unicameral and I appreciate the service it provides.’—MP (Orima survey, May 2021).

Another said:

‘The independence and impartiality of the Auditor-General reports in my experience have given the office a strong brand that reflects these characters.’—MP (Orima survey, May 2021).

Designing a work plan focused on strategic issues

Doing audits of the right areas at the right time is the key to achieving better public services for Queenslanders. We carefully plan our work so it meets the needs of parliament and our audit clients, and so we draw out the insights that are most likely to drive positive change.

The Auditor-General Act 2009 requires us to publish a three-year plan of the performance audits that we intend to carry out. We prepare our program for three years ahead to give our clients early notice on what our focus is going forward and to ensure transparency around our work.

For the first time, this year we published our Forward work plan 2021–24, which includes the strategic or critical risks to public service delivery that QAO has identified and our expected audit activity in response.

The plan covers all our audit work—our financial audits, performance audits and assurance activities, which work together to provide a full picture of state and local government performance and accountability. The plan shares important contextual information on the factors impacting public service delivery over the coming years.

We circulated the draft version of the Forward work plan 2021–24 with our audit clients and stakeholders, including parliamentary committees and chief executives of public sector entities and local governments. Consultation on the draft plan is important for ensuring that we have included the right topics and are conducting the audits at the right time to achieve outcomes from our work.

We will continue to revisit and republish a new plan each year as we reconsider each topic’s relative importance, the timing of our audits, and, importantly, our ability to influence changes in public service delivery.

Selecting audit topics that matter to Queensland

We have a very clear process for selecting, rating, and analysing potential audit topics. There are a range of inputs:

• We continually scan the environment that state and local government entities operate in to reflect emerging or systemic risk.
• We meet regularly with our clients and peak bodies to understand their challenges and where they see risk in the public sector.
• We invite all stakeholders, whether they be entities, parliament, or the public, to submit topic suggestions. We analyse these submissions to identify any emerging, consistent, or persistent concerns.
• We use the insights we have access to through the power of our mandate, and through the breadth and reach of our annual audit work. During our performance audits or assurance activities, we may also see issues that warrant a future audit. 
• We examine trends and developments in Australian and international environments, and key bodies of large research, to see what the pressing issues are for the world today.
• We look at the priorities and focus areas of other audit jurisdictions.

Via our moderation process, we ensure we have a spread of topics covering matters of efficiency, effectiveness, and economy, and we look at how they would fit across a three-year program. We also ensure potential audit topics fit within our mandate—for example, we cannot comment on the merit of public policy objectives; rather, we will only examine how efficiently and effectively a service has been delivered.

Improving how we manage requests for audit

QAO welcomes information on public sector performance and requests for audits from members of the public, elected representatives, entity management, and from other integrity offices.

This information is a valuable input to our audit work, and we carefully consider all the information and requests we receive.

For the first time, this year we started publishing a summary of the requests for audits we receive from Queensland members of parliament and councillors on our website. This provides transparency around the information we receive and keeps our stakeholders informed about why and how we audit these matters.

This year, we received a total of 74 requests for audit (two less than last year) relating to 44 different state or local government entities. Forty-three requests primarily related to departments, 17 to other agencies such as government owned corporations and statutory bodies, and 14 to local governments.

Forty-five—61 per cent of the requests—came from the general public, and the rest were from elected members, entity staff and other integrity agencies. Some requests were also made anonymously and/or some as public interest disclosures. The predominant themes or topics of the requests were around grants management and procurement.

We finalised 77 requests this year as at 30 June 2020 (including finalising some from previous years). We continue to improve how we analyse and apply the intelligence these requests provide us, and use it to inform our work, including our forward work program.

Collaborating with our peers and professional networks

Our many and varied relationships across industry and with our peers give us opportunities to share information and best practice, and learn from each other.

Central agencies

Central agencies for QAO include the Department of the Premier and Cabinet, the Public Service Commission, Queensland Treasury, and the Department of State Development, Infrastructure, Local Government and Planning.

We liaise regularly with these agencies on significant financial accounting issues and the development of legislative and policy requirements applicable to public sector entities. In 2020–21, we provided advice and support on the continuing impact of COVID-19, the establishment of the Queensland Future Fund and the impact of machinery of government changes following the October 2020 state election.

Integrity agencies

QAO participates in the quarterly Queensland Integrity Committee, an informal committee chaired by the Integrity Commissioner. This year, it discussed employees returning to the office post-COVID-19 and parliamentary engagement during the Queensland state election. QAO also provided updates on the insights from its reports, upcoming audits, and its outreach work with local governments.

Each year, we participate in the quarterly Local Government Liaison Meetings, attended by integrity agencies and the Department of State Development, Infrastructure, Local Government and Planning. Each attendee provides an update on the insights and initiatives it has underway as relevant to local government matters.

Audit plays a role in deterring and detecting fraud in public sector and local government entities and in helping entities prevent the loss of public money through mistakes. This year, we continued to liaise with the Queensland Crime and Corruption Commission where relevant to our investigations and as permissible under our respective legislation.

Peers

The Australasian Council of Auditors-General (ACAG) is an association established by auditors‑general for the sharing of information on mutual interest. Brendan Worrall was the ACAG Convenor for 2020–21, operating as the designated ACAG spokesperson and representative.

A key joint deliverable this year for ACAG was a submission to the Commonwealth Joint Committee on Public Accounts and Audit (JCPAA) Review of the Auditor-General Act 1997.

The submission emphasised the importance of auditor independence and legislation being designed to achieve the highest level of public sector accountability and transparency.

Due to the COVID-19 period, ACAG met once this financial year, and the sub-committees, typically led by assistant auditors-general, met 17 times to share intelligence and expertise. These committees included the Auditing Standards Committee, Audit Analytics Committee, Corporate Services Committee, Financial Accounting and Reporting Committee, Heads of Financial Audit, and Heads of Performance Audit.

Our audit analytics team provided webinars to our ACAG colleagues on how QAO’s new financial audit application delivers more effective audit, and on the value of collaboration between assurance work and analytics using our report Regulating firearms (Report 8: 2020–21) as a case study.

QAO also virtually attended the Pacific Association of Supreme Audit Institutions (PASAI) annual congress in June 2021. The congress provides members with an opportunity to gather in formal and informal settings to share ideas and resources. At this year’s event, audit office heads presented on the leadership opportunities and challenges they experienced as a result of COVID-19.  

Industry and community groups

QAO was proud to co-present with Gold Coast Health Service at the Institute of Internal Auditors SOPAC 2021 conference on how to apply—and make the most of—digital reporting tools.

Our audit analytics team presented to CPA Australia members via a webinar, and to the CPA Centre of Excellence on tips and tricks on integrating data science. And they were invited to present as a guest lecturer at the University of Queensland’s Master of Business Administration (MBA) program on analysing and visualising corporate data.

Professional networks

QAO participated in several outreach events for the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) as part of their due process for projects and new standards. QAO staff are members of project advisory groups. We continued to work closely with the AASB on their Fair Value Advisory Panel and on their Disclosure Initiative Advisory Panel.

We further developed our strong relationships with the Local Government Finance Professionals (LGFP) association and the Institute of Public Works Engineering Australasia Queensland (IPWEAQ) in their support and advice for local governments. We liaised regularly with both groups and collaborated on projects to improve financial sustainability and asset management—both pertinent and pressing areas for local governments.

In November 2020, one of our directors presented to the IPWEAQ conference on cyber security, sharing insights from our report Managing cyber security risks (Report 3: 2019–20). In May this year, another one of our directors presented at IPWEAQ’s Asset Management Symposium under the topic of ‘working smarter’, covering the findings from our reports to parliament and forward work plan.

In August 2020, we delivered the first webinar for the LGFP—sharing our advice on cyber security and managing information and communication technology (ICT) projects, and using audit analytics. We also continued to assist LGFP in its development of a new guide on accounting for environmental waste management.

Throughout the year, we co-hosted financial reporting workshops for local governments with the Department of State Development, Infrastructure, Local Government and Planning. We covered our maturity model for financial statement preparation, our upcoming model for assessing internal controls, and a debrief on the accounting standards that were applied for the first time in the prior year.

Summary of our financial performance

QAO continues to operate as a financially sustainable public sector audit practice. Our audit work funds most of our operating costs each year, with the balance provided through parliamentary appropriation.

Our funding from parliament, received under the Appropriation (Parliament) Bill 2019, for 2020–21 was $6.588 million, marginally under budget of $6.598 million with the reduction due to decisions made in the Queensland Government Debt and Savings Plan. Our appropriation is allocated to our reporting and advice or assistance to parliament, delivering performance audit and assurance activities, preparing the forward work plan, investigating requests for audits, and remunerating the Auditor‑General.

Overall, our revenue and operational expenses tracked well against our budget for 2020–21. We delivered most of our audit work as planned, with little impact on our overall position.

We achieved an operating surplus of $1.582 million, over our budgeted $723,000. Our budget aims to make regular, modest surpluses so we can refresh our technology and innovate to ensure we have efficient and effective audit services.

Our overall total income from our continuing operations was $45.752 million, slightly under our budget of $45.935 million.

The revenue from our audit fees was $38.952 million, $178,000 under our budget of $39.130 million. This was due to delays in the timing of our financial year-end work by our clients and the impact of machinery of government changes on them.

QAO’s total expenses were $44.170 million, marginally below our budget of $44.957 million. More than half of our expenses were staff costs at $23.807 million—$1.083 million under our budget of $24.890 million due to staff attrition and challenges in replacing them given the competitive recruitment market for audit professionals.

Our next largest cost was our supplies and services at $19.511 million, $356,000 over our budget of $19.155 million as we replaced some of our technology (laptops and mobile phones), which had reached end of life. This was partially offset by timing differences in our fees for our audit service providers and lower travel costs. Our cost for our audit service providers was $11.818 million, under our budget of $12.544 million. Our other expenses were conservative, covering some specialist consultants, rent and office services, information technology or minor office equipment, and staff development.

QAO’s financial statements and independent auditor’s report are on pages 33–56 of this annual report.

We pride ourselves on being an exemplar organisation in demonstrating high standards of financial management. We are committed to being cost-effective and efficient with the resources provided to us.

Through a passion for continuous improvement, we sought innovative ways to share the insights from our work.

Technology reshaped our relationships and we aimed to optimise its benefits.

We continued to focus on delivering quality audits through all facets of our business, that met expectations and regulatory requirements.

New models for reporting on clients’ financial maturity and assessing internal controls

This year, our new financial reporting maturity model effectively gave our clients and QAO valuable insights into areas of strength, and opportunities for improvement, around the processes some entities use to prepare their financial statements. Our clients found that the stronger their financial statement preparation processes were, the easier it was for them to complete their financial statements by the legislated deadlines.

We worked closely with the state government entities and some larger local governments as they started using the new model to undertake their initial self-assessments. And we collated and shared learnings via a blog post for all our clients.

As part of our audits, we also assess whether entities have designed effective internal controls—the people, systems, and processes that ensure an entity can achieve its objectives, prepare reliable financial reports, and comply with applicable laws.

Over the past year, we have been developing new assessment tools that will help us better communicate with our clients about the strength of their internal controls and the areas they can improve. We recently started trialling the tool with some clients, and continued our consultation with department chief financial officers and heads of internal audit. Key to the success of the trials is the feedback we are receiving from our clients as we refine and finalise these tools to ensure mutual benefit. Following implementation of the new approach, we will also share learnings and better practice in our reports to parliament the following year.

Expanding on our audit analytics capability

QAO’s analytics services help our auditors deliver more effective and insightful audits. Our tools and techniques enable speed, accuracy, unique insights, and better collaboration.

It was a big year for the team. We expanded our data strategy, worked on the development of QAO’s new audit software, continued to automate our data processing, and improved teamwork across our workforce.

We started to bring more local governments onboard with our data strategy—expanding our data supply to include local governments outside of South East Queensland. The benefits of including more local governments in our data strategy include:

• better insights about our local government clients—both individual councils and across all councils we audit. We can better analyse data to identify risks, and therefore focus our work
• more seamless data collection due to fewer manual data requests from auditors to our clients—reducing the number of touchpoints and number of people contacting clients
• higher resilience to business interruptions with an increased ability to view information remotely.

Our innovation in analytics is changing how we deliver our work and positioning us for the future of audit.

This year, as OneQAO, we designed analytics on fixed assets, journal testing, and advanced relationship testing, which will deliver better standardisation and a base for our insights. We also recently worked with an external analytics firm to explore how we could use advanced data science techniques on our audits related to information technology.

QAO’s Audit Analytics team found innovative ways to use technology to drive collaboration across QAO—between staff and with our audit service providers. We created an analytics collaboration space on Microsoft Teams, facilitated more discussion around new ideas, and created workshop templates using Microsoft ‘whiteboards’ to encourage participation and creativity from all staff.

We are passionate about sharing our expertise and our learnings with our stakeholders and across industry. We supported our clients and audit service providers in the early stages of their own analytics journeys with around 20 sessions on our data strategy and on how to lead a data capability.

More resources for our clients

Our mandate gives us access to a wealth of information, which we share during our audit work directly with our clients, in our reports to parliament, and through our supporting resources. When we share information, we ensure that client confidentiality is respected.

It is important we ensure longevity of the important messages from our audit work, well after our reports are tabled in parliament. We have implemented engaging and more tailorable ways for us to share the insights and advice we gather.

The suite of digital materials we develop to promote our reports supports our following assumptions:

• Our users would like better, more accessible versions of our reports.
• Our users have less time to read reports—skim reading is the new normal, along with changing device trends.
• We have diverse audiences in terms of their demographics; thus, their information consumption and channel usage varies.
• We take a content-marketing approach to our communications, ensuring we provide thought‑provoking or compelling content.

By delivering our reports as fully interactive, HTML webpages, readers can search our reports, view them on mobile devices, and share them via a range of channels. HTML reports also support our search engine optimisation (SEO) strategy, which improves the quantity and quality of traffic to our website.

Interactive data dashboards

For six of our reports, we translated our data and insights into meaningful and engaging stories via interactive dashboards or maps. We used visualisations to help explain complex ideas or share large volumes of data in a more user-focused manner, for example, by providing regional context.

These dashboards presented the information we gathered during our audits, and we sometimes combined it with publicly available data, for example, interesting population or demographic data.

Some of our dashboards, such as those for some of our performance audit or assurance reports, pertained to specific topics. Some, such as the ones we developed for our financial audit reports, contain enduring data sets that we update each year. We continue to receive positive feedback from our clients, stakeholders and peers on the value they provide, with some keen to follow our lead and embark on their own data visualisation journeys. Our most viewed dashboard this year was our one for Local government 2020 (Report 17: 2020–21) with over 1,300 views.

Blog series

One of our most successful channels for sharing our advice and insights is our blog. This year we published 23 blog posts, and, overall, all our blog posts were viewed over 28,000 times.

Our blog covered a wide range of topics from ensuring the right membership of local government audit committees, to conflicts of interest, using risk appetite in the public sector, how to treat immaterial adjustments, and much more. We also used our blog to provide updates on our services, such as our new approach to requests for audits and our new self-assessment tool for QAO recommendations.

Our most viewed blog post during this year was Using risk appetite in the public sector with just over 800 views, followed closely by Assessing COVID-19 events after the reporting date and why auditors are required to review this, which was viewed nearly 800 times.

Via an online website poll, for each blog post we asked our readers ‘Was this blog post valuable?’ and 96 per cent of respondents said yes.

Fact sheets

We published four fact sheets this year, providing advice and support for our clients in response to their needs or information gaps:

• Working with electronically signed financial statements—user guide
• How we prepare our reports to parliament
• Requests for audits
• Entity self-assessments on implementation of QAO recommendations.

Our fact sheets were viewed on our website collectively over 2,500 times. Our fact sheet on Requests for audits was the most downloaded, followed closely by our one on Working with electronically signed financial statements—user guide.  

Better practice guides

We take every opportunity to provide more detailed guides or checklists on areas our clients are seeking advice on or where we can share examples of best practice.

In addition to pulling out key information from some of our reports to parliament, we published an Example client assistance schedule. It provides our smaller clients with a list of the information QAO needs to undertake an audit efficiently and helps them plan for the audit to reduce unnecessary disruption. As of 30 June 2021, our overall better practice section of our website was viewed nearly 3,500 times.

Maximising the benefits of our information and communication technology systems

Digital resources are essential to our business and this year we continued to improve our core systems, digital hardware, and how we use mobile technology. We are ensuring that we have resilient and high‑quality systems to support our audit work regardless of external environmental changes or disruption.

Many of our clients and colleagues experienced challenges during the COVID-19 period due to their use of legacy systems and practices. This led us to look at how we could help them. We expanded our online collaboration platforms to launch collaborative ‘client hubs’ and our ‘partner portal’ for our audit service providers, which enable secure data transfers and information sharing.

QAO used technology to improve its workforce mobility through additional Microsoft Teams functionalities and hardware. This technology also facilitated a ‘blended’ approach to staff learning and development during lockdown periods. We were able to deliver richly interactive training courses to dozens of staff at the one time, with interstate virtual presenters, local presenters, and attendees across multiple locations.

A major achievement for this year was our migration from SharePoint to SharePoint Online. The cloud‑based SharePoint Online platform allows us to use new applications, improve sharing and management of content, and is mobile-friendly.

Rolling out our new audit software

At the start of the new audit year in October 2020, we successfully rolled out our new audit software for use on our 2020–21 audits. This has been a major project for QAO over the past two years.

Our new cloud-based program has been configured to our specific audit office needs and allows us to promote effective and efficient documentation of our audit work.

A major part of the effort this year was improving the consistency of audit quality in how we document our audits. Key to this was standardising an array of templates such as work papers, worksheets, and checklists for use in audit files including for smaller audit clients.

We successfully developed and implemented a foundation for integrating our audit analytics insights directly into audit work papers. And we implemented a new reporting mechanism for capturing any deviations from policy or process.

Providing greater transparency around our audit quality

We focus on delivering quality audits with insightful impacts that meet the expectations and regulatory requirements of our clients. All our work, and the way we deliver it, is underpinned by policy and guidance provided by QAO’s audit practice specialists.

To demonstrate our commitment to audit quality, in 2020–21 QAO published the first of its annual transparency reports, Transparency report 2019–20, to provide insights into the way we audit and our internal practices and processes. It explains the culture, governance, independence, and quality frameworks that support our quality review practices and results. Importantly, it shares how we seek to continuously improve our audit and assurance practices.

Throughout the year, we actively monitored our audit quality with a program of reviews. This included hot reviews, which examined quality while audits were in-progress to proactively identify and address issues, and cold reviews, which examined audits after they were completed to identify areas for improvement. We shared the themes, observations, and learnings from these reviews with our staff, and externally in our Transparency report 2019–20.

Our quality assurance is overseen by QAO’s Quality Management Group, which supports the Auditor‑General in complying with professional and ethical requirements. It is independently monitored by QAO’s Audit Quality Sub-Committee, which looks at what we need to prioritise, our policies and processes, and how we share the findings from our reviews.