Public Accounts Committee

19th October 2022

TEMPORARY SPEAKER (Ms Sonia Hornery): The question is that the House take note of the report.

Mr GREG PIPER (Lake Macquarie) (12:43): As Chair: I take note of the Public Accounts Committee's report on the quadrennial review of the Audit Office of New South Wales, which presents both the results of an external review of the Audit Office and the committee's comments and conclusions on some of the issues raised. The review is a statutory requirement under section 48A of the Government Sector Audit Act 1983 and is to be conducted at least once every four years. This review follows the previous review in 2017. The Act requires that the Public Accounts Committee appoint an external assessor to conduct the review. In 2021 the committee appointed O'Connor Marsden, or OCM. I place on record my appreciation for the work of OCM. It was a challenge to find a suitable candidate to conduct the review due to self-reported conflicts of interest with the majority of other candidates. Much of that was due to the Audit Office taking on the role of auditor of local government, where many of those auditors had played a role.

However, the committee was very pleased to offer the work to OCM and for the report it produced. OCM kept the committee informed throughout the review and was responsive to questions and comments. Overall, the review found that the Audit Office is complying with relevant auditing standards and practices in carrying out its functions. OCM also found that the Audit Office is well functioning and staffed by professional and dedicated auditors. That aligns with the committee's experience when working with the Auditor-General and her staff in Parliament. They are an excellent team of auditors, who conduct thorough reviews over a wide range of issues and produce well-thought-out work.

The report also contained several recommendations to improve both the efficiency and effectiveness of the Audit Office and to protect the independence of the Auditor-General. The committee supports those recommendations. I note the Auditor-General has accepted the recommendations directed to the Audit Office and has already begun work to implement them. A number of the recommendations will require more significant change to the legislation that provides for the Auditor-General. The Public Accounts Committee supports those recommendations and also recommended that the Government work to implement them. The Government is working in that space and a private member's bill is also being developed. Key amongst the recommendations is to give the Auditor-General "follow the dollar" powers, which will allow the Auditor-General to conduct performance audits on third-party providers of government services. That is a key recommendation and I urge the Government to act upon it as soon as possible. It has been recommended in previous quadrennial reviews by various external auditors. The committee has long supported that recommendation and has made previous recommendations to enact it.

There is a growing trend in the use of outsourced service delivery and other contracting arrangements by the Government. Under current legislation, those cannot be directly audited in performance audits, which reduces the scope of public money over which the Audit Office has oversight. That is an area where New South Wales is falling behind other Australasian jurisdictions, and it should be fixed. Other recommendations that the committee support are that the Auditor-General be given powers to access certain sensitive documents and to have more control over its audit program.

As I have mentioned, the Audit Office does great work, and we support all efforts to remove any barriers to it maintaining those high standards. It was also recommended that Parliament be involved in assessing the adequacy of the Auditor-General's budget. We support that recommendation and note the Public Accounts Committee would be in a position to support the consideration of the Auditor-General's budget. Implementing those recommendations and others made in the quadrennial review will ensure that the independence of the Auditor-General is well guarded and so it is properly empowered in its work to examine the effectiveness and efficiency of government agencies and spending. There are changing requirements in the auditing environment, and it is crucial that the Audit Office stays at the forefront of best practice.

Finally, under the current process and on completion of the quadrennial review, the final report is provided to the Auditor-General, who is required to provide it to the committee before it is then presented to the House. The committee found that unusual. Given the committee commissions that external review, it is more appropriate for it to receive the report first. The Auditor-General and Audit Office should have the opportunity to review the report and comment on any concerns of accuracy, and it is likely the committee would discuss the final report with the Auditor-General. However, to prevent delay, the report should be provided directly to the committee, and it has made a recommendation to that effect.

The Public Accounts Committee continues to have a strong working relationship with the Audit Office, which supports the safeguarding of public accountability of government expenditure. Again I thank O'Connor Marsden for its work on the review and the Auditor-General and Audit Office staff for their cooperation. I also thank my colleagues on the committee for their contributions and consideration of the issues. Of course, membership of the committee has changed over time but I acknowledge the member for Upper Hunter and deputy chair of the committee, David Layzell, as well as the member for Keira, the member for Monaro, the member for Castle Hill and the member for Holsworthy, all of whom provided excellent input and service to the committee. I acknowledge also the excellent assistance from the committee staff. We all know that committees could not function without them. I particularly acknowledge the manager of the Public Accounts Committee, Leon Last. But all of this was initiated under now retired and well-known Bjarne Nordin. I thank Bjarne for what he has done for the Public Accounts Committee over the years.

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