Des Pearson on Public Sector Audit

DP PicThe International Governance and Performance (IGAP) Research Centre was pleased to host Mr Des Pearson, who recently retired as Auditor General of Victoria, as the IGAP Executive in Residence sponsored by CPA Australia. Des’s public sector career spanned over 40 years and 5 jurisdictions, with more than 30 years’ experience at senior, chief executive and statutory officer levels. Des has worked in governance, financial and program management, performance evaluation and accountability roles, including more than 21 years as an Auditor General across two jurisdictions.

During his time at IGAP, Des presented two seminars: at an IGAP/ CPA Australia Roundtable on performance reporting; and at Macquarie University’s Department of Accounting and Corporate Governance on public sector reporting. The slides and key points from Des’s presentations are below.

Performance Reporting (at CPA Australia)

  • Public sector audits include financial and non-financial audit: both financial ‘how much’ and performance ‘how well’, are critical.
  • While financial reporting in the public sector is well-developed, performance reporting is still ad-hoc.
  • Public sector audits have unique challenges: a democracy (and therefore adversarial governance); and the rationing of limited (taxpayer funded) resources against excess demand (from the community).
  • Other challenges include: adopting market models within the public sector; co-ordination between the government and other entities; and public sector timelines (3-4 year terms of office).
  • Possible responses to these challenges are: comprehensive performance reporting; sustainability and integrated reporting; and, building on the Productivity Commission’s Report of Government Services.

SLIDES: PERFORMANCE REPORTING CPA

Public Sector Reporting (at Macquarie University)

  • The Federal, NSW and Victorian state public sectors arguably represent Australia’s first, second and third largest businesses. The auditor general needs to provide assurance to Parliament that these sectors are performing and accountable.
  • Public sector clients are diverse, including local governments, water corporations, police, emergency services, financial institutions, and universities.
  • The key focus for all audits is accountability: that is, reporting back to those who have charged you with a responsibility. The funding of the public sector by a forcible extraction of funds via taxes and charges adds an extra layer of accountability as there is an obligation to apply these funds ‘in the public interest ‘.
  • The Australian public sector needs to be made accountable, not only for probity, integrity and performance management, but also for a working democracy. Quality in public service audit, means reliable assurance of efficiency, economy and effectiveness in program delivery.

SLIDES: PUBLIC SECTOR ACCOUNTING MACQUARIE UNIVERSITY

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