The Commonwealth Auditor General has found significant errors in the annual reports of some Commonwealth reporting entities which it says have led them to publish incorrect or confusing information.
The revelations come with the government under fire from financial commentators who accuse it of publishing misleading information in the budget.
After an extensive business process support audit the Australian National Audit Office found 29 per cent of Commonwealth reporting entities scored at least one significant error in replicating their financial statements and audit report into their annual report.
“Although most of the significant errors would be unlikely to adversely affect decisions by users, or the discharge of accountability by management, most of the errors resulted in the publication of incorrect or confusing information,” Auditor General Pat Barratt concluded.
The Audit Office found there was room for significant improvement in the replication process and warned reporting entities to implement more stringent checking procedures to ensure complete and accurate public reporting of their audited financial statements and audit reports.
The Auditor-General audited the financial statements and audit reports of 117 reporting entities (48 per cent of the total number) to determine whether they agreed in all respects with their certified financial statements and audit reports. The audit involved a line-by-line check of the hardcopy and Web site annual reports against the certified financial statements and audit reports.
It concluded 71 per cent of the reporting entities had managed the replication process with either no or insignificant errors. The remaining 29 per cent scored at least one significant error as a result of the replication process. Although most of the significant errors would be unlikely to adversely affect decisions by users, or the discharge of accountability by management, most of the errors resulted in the publication of incorrect or confusing information.
Nine of the reporting entities were unable to be audited, since they either had not placed their annual reports (or their financial statements and audit report) on the Internet by 24 December 2002, or did not operate a Web site at that date. In addition, the annual reports of two of these entities had not been tabled by 24 December 2002.
The report found fifty-one reporting entities had errors in at least one form of their annual report. There were 122 errors in total, of which 115 occurred in the published financial statements and seven in the published audit reports. Thirty two per cent of the errors were numerical (mostly dollar amounts).
Thirty-three reporting entities had significant errors in at least one form of their annual report. There were 51 significant errors in total, of which 53 per cent were numerical (mostly dollar amounts).
The report comes at a bad time for the government, with Labor and several financial commentators now accusing it using “rubbery figures” in the budget, in denying that the GST is a Commonwealth tax in the face of Australian Bureau of Statistics insistence on the contrary. The report was also released in the same week as Labor Senator Stephen Conroy confirmed the Government had failed to apply the proper IMF-decreed accounting rules to its treatment of Commonwealth unfunded super liabilities. Figures show that if it had, this year’s budget would be in deficit by some $3 billion.
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