SCHOOL AUDIT ARRANGEMENTS

In reply to Mr PISONI (Unley) (14 November 2012).

The Hon. J.M. RANKINE (Wright—Minister for Education and Child Development, Minister for Multicultural Affairs): I have been advised:

1. The respective needs of the department and audit are determined by legislation such as the Public Finance and Audit Act, Treasurers Instructions and Australian Accounting Standards.

Section 31(1)(b) of the Public Finance and Audit Act provides for the Auditor-General to audit the accounts of the department for each financial year. The Auditor-General's Department carries out the annual financial statements audit to provide assurance that:

the financial statements reflect the financial position of the department at the end of the preceding financial year and the results of its operations and cash flows for that financial year; and

the controls exercised by the department in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities are sufficient to provide reasonable assurance that the financial transactions of the department have been conducted properly and in accordance with law.

In the Department for Education and Child Development (DECD) context, the Auditor-General makes use of the work undertaken by internal audit in relation to the audits of schools in order to assess the risk of material misstatement of the financial statements.

This arrangement has supported DECD in implementing financial controls over schools' financial accounting functions and to reflect their financial accounts in the DECD financial statements.

The current school audit program covers the audit of annual school financial statements and a review of key controls. The Auditor-General places a degree of reliance on the school audit program in forming his opinion on the DECD consolidated financial statements and its control environment.

The requirement for every site to be audited every year is not embodied in the Education Act or Children's Services Act. The requirement for financial statements to be prepared, audited and presented to governing councils is reflected through ministerial directions under the Education Act 1972.

These requirements are embodied in the Administrative Instruction Guidelines (AIGs) Section 5(17) which states that 'Councils and affiliated committees (and principals for the school fund account) must send a copy of the audited statement of accounts for the previous school financial year to the Chief Executive no later than 1st June each year.'

The current school audit arrangements meet this requirement and therefore, by undergoing an annual audit of their accounts, all schools meet the respective needs of the department and audit.

2. The Auditor-General has formed the opinion that the Department for Education and Child Development financial report gives a true and fair view of the financial position of the department. He also believed the controls exercised are sufficient to provided reasonable assurance that the transactions of the department have been conducted properly and in accordance with the law.

In forming this opinion, the Auditor-General made use of the work undertaken by internal audit in relation to the audits of schools to assess the risk of material misstatement of the financial statements.

Overall the results of the school audits were satisfactory and did not present a risk of material misstatement of the departmental financial statements.

3. As stated, the results of the school audits were satisfactory and did not present a risk of material misstatement of the departmental financial statements.