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The Auditor-General’s Role in Auditing Performance Reporting:

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2014

Presentation for the Indonesian Ministry of Finance

Shilinka Smith: Director, Research and Development

2What is performance?

• Financial (e.g. return on investment)

• Non-financial

• Service delivery (i.e. supply of goods and services)

• The effect of service delivery (i.e. benefits to society)

3Elements of performance – older language

Inputs• Resources used to produce outputs

Outputs• Goods and services supplied to external customers

Outcomes• The effect on, or changes to, our world (i.e. the

community, society, economy, environment etc.)

Elements of performance – new language

For strategic intentions – the strategic objectives that the agency “intends to achieve or contribute to” over a minimum 4-year period.

For expenditure – agencies provide a concise explanation of “what is intended to be achieved” with annual appropriation (money).

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5External Reporting

• For external users

• e.g. Parliament and public (taxpayers, ratepayers)

• Governed by legislation and “generally accepted accounting practice” (GAAP)

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External Reports

• Forecast reports – beginning of the year• Central government: Statements of Intent (SOI)• Local government: Long-term Council Community

Plans (LTP)

• End of the year: Annual report• Financial statements• Report against intentions in the forecast report• Statement of Service Performance • Audit report

Annual Report has financial and performance information

• Statement of Service Performance• Describe each class of output• Report on the performance measures• Actual revenue & expenses vs budget

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8Audit requirements

• Legislation requires the Auditor-General to audit the:• Financial statements in the Annual Report• Statement of Service Performance (SSP)

• Public Audit Act• A-G is auditor of every public entity (s14)• Must audit statements a public entity is required to

have audited (s15)• May examine matters concerning efficiency,

effectiveness, legislative compliance, waste, probity / prudence (s16)

9Audit requirements

Consider the quality of the information:• Performance story (strategy ↔ operations)

• Outcomes and impacts (identified, well specified)

• Main measures and targets (the vital few)

• Output classes (identified, well specified, sensibly grouped)

• Links between outcomes/impacts and outputs (“intervention logic”)

• Output performance measures and targets (quantity, quality, timeliness)

10Audit requirements

Verify the Statement of Service Performance content

• In accordance with normal audit procedures

Issue an audit opinion (as per revised Standard)

• Complies with GAAP

• A true and fairly reflection of the entity’s performance for the year

11Reporting our audit findings

To the entity:

• Management Letter

To the Minister and Select Committees

• Ministerial Letter• Management control environment, appropriateness of Statement

of Service Performance, legislative compliance, systems & controls

• Graded: Very good – Good – Needs Improvement – Poor

To the entity, Parliament, and the Public

• Audit report• Audit opinion on SSP and financial statements

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Questions

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