Independence in Auditing
By Caroline Spencer, Auditor General for Western Australia.
Independence is the cornerstone of effective auditing.
In my role as the Auditor General for Western Australia, independence is not just a concept but a practice that underpins every audit we conduct. This independence ensures that our audits are conducted without influence or interference, thereby maintaining the trust and confidence of the Parliament and the community.
In Western Australia (WA), the Auditor General is appointed for a non-renewable 10-year term and as an independent officer of Parliament has complete discretion on what to audit, when and how to report, and what to include in reports.
This allows the Auditor General to carry out their duties without concern for reappointment, ensuring that decisions are guided solely by evidence, the public interest, and a commitment to ensuring that public sector entities are doing the job that we, as citizens, entrust them to do.
This governance model promotes transparency, accountability and public confidence. It also provides stability and the opportunity for new leadership at the end of each term.
Our focus is on providing independent assurance on public spending, while highlighting shortcomings in public administration and positive findings that recognise effective and efficient government service delivery. Our audit findings inform legislative scrutiny and debate. We provide operational information and intelligence that would often be otherwise unavailable to members of Parliament and parliamentary committees. In this respect we act as Parliament’s eyes and ears.
We also strive to recommend ways in which quality and standards can be improved across the entire public sector not just within the entities we audit. However, we rely on parliamentary committees such as the WA Legislative Assembly’s Public Accounts Committee (PAC) and the Legislative Council’s Standing Committee on Estimates and Financial Operations (EFOC) to ensure entities act on our recommendations. PAC and EFOC remain critical to the work and effectiveness of the Office, and we are accountable to the Parliament through them.
The Auditor General Amendment Act 2022 (Amendment Act), passed by Parliament in November 2022, but yet to be proclaimed, introduces provisions that raise significant concerns regarding the independence of the Auditor General. These provisions appear to conflict with the overarching independence guarantee in the current legislation, which clearly state that the Auditor General is not subject to direction from any person in relation to what to audit or report. Such changes have the potential to diminish the effectiveness of the role by constraining professional judgement and limiting the ability to report freely in the public interest.
While the Amendment Act was introduced with the stated intention of enhancing transparency, accountability and integrity across government, particularly by clarifying access to information powers, it also alters the operational framework of the Auditor General. More importantly, it imposes constraints on reporting discretion, including restrictions on who the Auditor General may report to and who may access draft reports prior to publication.
As the Auditor General, I felt duty-bound to publicly raise the issues in the OAG’s annual reports for 2022-23 and 2023-241, noting that the amendments would affect the ability to report directly to Parliament on matters deemed to be in the public interest. Nearly three years on, the Amendment Act is still not proclaimed. My Office and I do not support proclamation in its current form and considers it appropriate that the legislation be subject to careful review by the Joint Audit Committee of Parliament.2
As auditors, we need to remain fearless and thorough in our approach, but mindful and respectful in our dealings with government and entities. While parties may ultimately agree to disagree, it remains essential that our Office maintain a “no-surprises” approach throughout the audit process through proactive and transparent liaison at ministerial, departmental and parliamentary levels. This principle forms a key part of our operational philosophy and practice.
Despite these efforts, it is understandable that government entities may approach audit reporting with caution, particularly given the potential impact of our findings in the media and among the public, who serve as the ultimate assessors of government performance. To maintain credibility, we must remain apolitical. A consistent and balanced approach to reporting is critical, and all we can do is audit and report what is in front of us.
This underscores the importance of balanced reporting, which includes giving appropriate recognition where it is due. Although positive findings may not attract the same level of media attention, they serve to acknowledge effective governance and provide a benchmark for better practice across the sector.
A defining strength of our democratic system is governments accepting independent scrutiny of critical issues of public interest and commitment to addressing recommendations for improvement. Nothing similar is evident under authoritarian regimes.
It is critical that our State continues to uphold strong public audit legislation. The role of the Auditor General must remain anchored in unambiguous, statutorily enshrined independence to ensure that whoever holds the office can fulfil their duties to the Parliament and the people of Western Australia with integrity, impartiality and effectiveness.
- Office of the Auditor General, OAG Annual Report 2022-23, OAG website, 27 September 2023, pp. 11, 110-111; Office of the Auditor General, OAG Annual Report 2023-24, OAG website, 26 September 2024, p. 12. ↩︎
- Per section 48 of the Auditor General Act 2006. ↩︎
