International Journal of Government Auditing – October 2005
Australia
National Audit Office’s Work Program
The Australia National Audit Office’s (ANAO) Audit Work Program for 2005-2006 includes an ongoing and integrated approach to planning its financial statement and performance audits. This integration of financial and performance audit activities helps ensure that identified major audit risks are covered and significant risks are addressed. In a resource-constrained environment, the ANAO is cognizant of the need to maximize the value and level of audit assurance through good planning and risk management.
In developing the program, the draft was canvassed with the Joint Committee of Public Accounts and Audit, a statutory committee of the Australian Parliament that determines Parliament’s audit priorities and advises the Auditor-General of those priorities. The ANAO also held discussions with the various public sector agencies and sought comments on the draft audit program. In developing the audit program, the Auditor-General takes into consideration all comments received.
This process ensures that the ANAO’s audit products and outputs meet the needs of the Parliament and public sector bodies, and are in tune with the key risks and challenges facing the Australian public sector in a rapidly changing world. These risks and challenges are taken into account in identifying the key areas the performance audit work program will focus on and in evaluating and assessing potential issues to be addressed during the course of financial statement audits.
In addition, the audit activity included in the work program was planned with regard to
- financial materiality,
- program significance,
- audit impact (i.e., likely gain from the audit),
- program visibility as reflected in its national importance or political sensitivity, and
- extent of recent audit coverage and internal and external program review.
In planning and prioritizing audit coverage, the ANAO also considered the need to provide the Parliament with an assurance, over time, of the performance of public sector bodies. To achieve this objective, audits will address activities of public sector bodies that are less material, as well as more significant matters of national importance.
The program is necessarily dynamic and may be altered during the year to accommodate changes in priority tasks identified by the ANAO’s clients, particularly Parliament. The Audit Work Program provides some capacity to address the se requests, although the Auditor-General determines the final audit program.
Audit Assurance Tool
Some 17 major departments in the Australian federal government use the SAP application, an integrated software solution developed in Germany , as a financial management information system. SAP provides support for a wide range of business functions, including both financial and human resource management. Understanding and gaining assurance/reliance over the internal control environment surrounding SAP is, the refore, critical for financial statement and reporting purposes.
The use of technology offers the opportunity to gain audit assurance in an efficient and effective manner. In the latter part of 2004, the ANAO identified a set of new SAP audit and assurance tools, called Assure, that could greatly assist and enhance audit efforts within SAP environments. The tools offer the promise of automating the monitoring and assessment of the SAP internal control environment and also claim to automatically identify recommendations to correct security and control weaknesses.
The ANAO undertook a desktop evaluation of the tools and subsequently ran a pilot installation in a major government department to assess the tools’ potential to meet audit needs. The results of the se assessments indicated that using the tools would significantly benefit the audit efforts of the ANAO. The tools were purchased in December 2004 and
have now been implemented across some 15 government entities. The tools comprise three modules:
Assure Control, Assure Security, and Assure Integrity.
The Control module monitors SAP configuration controls by assessing internal controls against a best practice book of controls and automatically identifying and reporting internal control weaknesses. The module can also provide notification of changes to internal controls.
The Security module enables users to monitor the adequacy of access security by identifying users that have access to sensitive and incompatible functions and providing automatic notification when access rights change.
The Integrity module assists in identifying integrity risks and fraud by detecting potentially fraudulent transactions, inappropriate use of privileged user access, duplicate transactions, and integrity problems with master data.
The ANAO intends to continue to use the Assure tools on future audits as the ir benefits have been and are continuing to be achieved. The benefits achieved to date include
- reduced effort and cost,
- increased knowledge base of SAP controls,
- continuous monitoring of key SAP controls,
- greater coverage of SAP transactions,
- reduced substantive testing, and
- focus on 100 percent of the transaction population.
For additional information, contact: ANAO, fax: ++61 (2) 62 03 77 77; email: ag1@anao.gov.au; Web site: www.anao.gov.au.