Considered: Auditor General Report 2: 2020-21—Effectiveness of audit committees in state government entities

COMMITTEE'S CONSIDERATION

In its Report No. 34, 57th Parliament - Annual Report 2021-22, tabled on 17 October 2022, the committee reported on its consideration of a number of Auditor-General's reports referred to it, including Auditor-General Report 2: 2020-21 - Effectiveness of audit committees in state government entities. The committee did not resolve to hold further inquiries into these audit reports and made no recommendations to the Legislative Assembly.

Overview

Role of the Auditor-General 

The role of the Auditor-General is to provide parliament with independent assurance of public sector accountability and performance. This is achieved through reporting to parliament on the results of its financial and performance audits and other insights.

About the Auditor-General Report

View:Auditor-General Report 2: 2020-21—Effectiveness of audit committees in state government entities

This Auditor-General Insights report outlines the findings of a review which assessed the effectiveness of state public sector audit committees, and provides actions and advice on improvements to governance.

The Auditor-General observed that governance is an area that requires greater attention and improvement across the Queensland public sector, as failures in programs and projects which resulted from poor governance within and across entities have been reported in the Auditor-General’s reports to parliament over the last three years.

Queensland’s Financial and Performance Management Standard 2019 requires all government departments to establish an audit committee, although it is not mandatory for statutory bodies. A state government entity that establishes an audit committee must have regard to Queensland Treasury’s Audit Committee Guidelines: Improving Accountability and Performance.

The Queensland Audit office (QAO) collected information through a survey of the chairs of 92 audit committees, conducted interviews with selected entities, and analysed information gathered when conducting its financial audits in order to gain an understanding of the makeup, skills, structures and investment in audit committees across Queensland.

The QAO identified deficiencies which impact on the effectiveness of audit committees, including failures to tailor committee charters to match their entity’s business environment, insufficient attention to regulatory and other legal compliance, and significant variations in how committees discuss risk management. The QAO also sought to highlight barriers to members effectively contributing to the work of audit committees, including conflicts with internal roles and suitability of candidates for membership, and that some audit committees were not conducting an annual self-assessment of their performance.

The QAO identified 11 actions to assist public sector entities to improve the performance of their audit committees in providing assurance to directors-general of departments and chief executives of statutory bodies.

The Auditor-General’s report contains advice from the Department of Premier and Cabinet and the Queensland Treasury agreeing with the actions identified by the QAO, and noting that Treasury has commenced a review of its Audit Committee Guidelines: Improving Accountability and Performance, with a consultation paper having been circulated to departments and statutory bodies for comment.

Referral to Committee 

Standing Order 194B provides that the Committee of the Legislative Assembly shall as soon as practicable after a report of the Auditor-General is tabled in the Assembly refer that report to the relevant portfolio committee(s) for consideration. 

The committee is responsible under section 94 of the Parliament of Queensland Act 2001 for assessing the integrity, economy, efficiency and effectiveness of government financial management by examining government financial documents and considering reports of the Auditor-General.

The Committee of the Legislative Assembly referred this Auditor-General’s report to the former committee on 10 September 2020. The Economics and Governance Committee of the 57th Parliament re-commenced consideration of the report on 22 February 2021.

Continuation of Lapsed Referral

Auditor-General Report 2: 2020-21 was referred to the Economics and Governance Committee of the 56th Parliament (former committee) on 10 September 2020. The former committee’s consideration of the report, which was ongoing when the Parliament was dissolved by proclamation dated 6 October 2020, ultimately lapsed at that time (see lapsed consideration).

The Economics and Governance Committee of the 57th Parliament re-commenced the former committee’s consideration of Report 2: 2020-21—Effectiveness of audit committees in state government entities.

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