Overview

The Auditor-General Act 1997 establishes the mandate for the Auditor General to undertake financial statement audits of all Commonwealth entities including those of government agencies, statutory authorities and government business enterprises.

Financial statement audits are an independent examination of the financial accounting and reporting of public sector entities. The results of the examination are presented in an audit report, which expresses the auditor's opinion on whether the financial statements as a whole and the information contained therein, fairly reflect the results of each entity's operation and its financial position. The disclosures and management representations made in the financial statements by the entity are assessed against relevant accounting standards, and legislative and other reporting requirements.

In addition to undertaking financial statement audits, the ANAO delivers two reports annually to Parliament addressing the outcomes of the financial statement audits of public sector entities. The first of these, Audit Report No.51 2006–07 Interim Phase of the Audit of Financial Statements of General Government Sector Entities for the Year Ending 30 June 2007, outlined details of the ANAO's assessment of audit findings relating to the internal controls of major entities, including governance arrangements, information systems and control procedures. The findings summarised in that report are the results of the interim phase of the financial statement audits of significant Australian Government reporting entities.

This report complements the interim phase report referred to above, and provides a summary of the final audit results of the audits of the financial statements of all Australian Government entities, including the Consolidated Financial Statements for the Australian Government. The audit findings in this report have been reported to the management of each entity, and to the responsible Minister(s).

Summary of audit findings and related issues

The ANAO is responsible for the audit of the financial statements of all the Australian Government entities. For the 2006–07 financial year, the ANAO has issued 230 unmodified audit opinions (clear opinions); one qualified audit opinion; and one audit report containing ‘other legal and regulatory requirements'. This result is consistent with the trend over recent years that has seen an overall reduction in the number of audit opinions that have been qualified.

At the date of this report, the audit of seven financial statements have not been finalised. During 2006–07 the Auditor–General ceased to be the auditor of 11 entities for the following reasons:

• 6 entities ceased to be owned or controlled by the Commonwealth¹; and
• 5 entities ceased to exist².

The final phase of our 2006–07 audits identified a relatively small number of new moderate or significant control related issues. Those issues that were identified generally related to the management of the IT environment, particularly the management of systems access, business continuity management and reconciliations of balances and/or transactions in key financial systems; these issues were also identified in the interim audit phase in a number of entities. Our audits also found that entities generally had taken or commenced action to address many of the issues identified during the interim audit phase. As a result, a number of these issues had been satisfactorily resolved or their rating downgraded.

This report also discusses the ANAO's assessment of entities' financial statement preparation processes, noting that entity processes were generally effective, reflecting an improvement in recent years. The report also includes commentary on the outcome of the 2006–07 Certificate of Compliance process. A significant number of legislative breaches were identified by entities and many entities indicated that the process had highlighted the need for increased awareness of the requirements of the legislative and policy financial framework.

Report Structure

The report is organised as follows:

• Chapter One - Financial Reporting and Auditing Frameworks: provides commentary on recent developments in the financial reporting and auditing frameworks under which the Australian Government and its reporting entities operate.
• Chapter Two - Results of the Audit of the Consolidated Financial Statements of the Australian Government: provides details of the audit of the Consolidated Financial Statements for 2006–07.
• Chapter Three - Summary of Audit Results and Related Issues: summarises the final results of audits of the financial statements, and provides commentary on two related matters – the preparation of financial statements by entities and the 2006–07 Certificate of Compliance process.
• Chapter Four - Results of financial statements audits by Portfolio: provides the results of individual financial statement audits including any additional significant control matters identified since Audit Report No.51 2006–07. It is structured in accordance with the portfolio arrangements established by the Administrative Arrangements Order (AAO) of 30 January 2007. For reporting purposes, this reflects the portfolio arrangements that existed at 30 June 2007. These arrangements were revised by an AAO dated 3 December 2007.

Footnotes

^{1 These entities are the Telstra Group, the Melbourne Symphony Orchestra Pty Ltd, the Sydney Symphony Orchestra Pty Ltd, the Symphony Australia Holdings Pty Ltd, the Tasmanian Symphony Orchestra Pty Ltd and the West Australian Symphony Orchestra Holdings Pty Ltd.}

^{2 These entities were :}

• ^{Telstra Instalment Receipt Trustee Limited}
• ^{National Institute of Clinical Studies Ltd - functions transferred to the National Health and Medical Research Council}
• ^{Commonwealth Superannuation Scheme Board - merged with the PSS Board and renamed the Australian Reward Investment Alliance (ARIA)}
• ^{Public Sector Superannuation Pooled Investment Trust - name change to ARIA Investments Trust}
• ^{Public Sector Superannuation Scheme Board - merged with the CSS Board and renamed ARIA}