Wednesday, 5 June 2019

 Mr PEARSON (Essendon) (10:09): I am delighted to make a contribution on the appointment of a financial auditor for the Victorian Auditor-General’s Office (VAGO). As the member for Euroa has indicated, the Victorian Auditor-General’s Office does play an important function. We need to make sure as a Parliament that the Auditor-General’s office continues to conduct itself to the highest standard, and the Public Accounts and Estimates Committee (PAEC) has been allocated these roles and functions on behalf of the Parliament.

Certainly from my perspective I loved my time on the Public Accounts and Estimates Committee. I think the Public Accounts and Estimates Committee plays a really vitally important role in terms of supporting the functions of the Parliament and providing a degree of contact, guidance and engagement with the Victorian Auditor-General’s Office. I think it is fair to say that over the course of the journey PAEC has had differing relations with the various Auditors-General that have held the post, but I think that at all times it is important that there is the capacity and the ability to make sure that Parliament has some line of sight as to the way in which VAGO is conducting itself and its operations. That is done via the Public Accounts and Estimates Committee.

There are two aspects that are regular, I suppose, bread-and-butter issues that the Public Accounts and Estimates Committee performs in relation to the Auditor-General’s office. The first relates to the performance audit function, and the second relates to the financial audit function. Now, with the performance audit function, this is a very large engagement that occurs every three years. It looks at the way in which the Auditor-General conducts its work and tries to do an assessment about the way in which the Auditor-General’s office runs performance audits. As members would know, when the Auditor-General tables his or her reports they either relate to performance audits or they relate to financial audits. Performance audits relate to the way in which a public sector entity discharges its statutory obligations and duties. Financial audits purely relate to the way in which financial moneys are expended, making sure, basically, that all the columns add up. So a financial audit function is probably more low level than a performance audit function, but they are both really important issues.

In relation to stepping back a step and looking at VAGO   , there is a need to make sure that, in relation to the money that is appropriated to the Auditor-General’s office, that money is fairly accounted for and expensed. In addition to that, there is a need to make sure that the performance audits that the office is doing are done as best as they can. It is important that there is a degree of contestability and rigour in these processes to ensure that the way in which VAGO conducts itself is at the leading edge and is the best it can be.

I really enjoyed my time working, in the case of the 58th Parliament, with KPMG, which did the performance audit report, looking at the way in which VAGO went about its business and making recommendations about its systems and processes and how it can be better, because we can never allow a situation where there is not that robustness and where there is not that contestability of performance and contestability of ideas. We need to make sure that there is the capacity for the Parliament to say to VAGO, ‘Look, we really want to make sure that what you are doing is the best it can be and that you are doing the best that you can do, and we want to make sure you get the support you need to do that’.

Obviously in relation to this report, this relates more to financial audit functions. Again, it is making sure that the money that is provided by the appropriation bill to VAGO is properly accounted for. It is a fairly small-scale audit—I think that in relation to a financial audit of this scope it is around about $35 000 to $40 000 a year. A performance audit is considerably more, as you would expect. But we do have a really important role to play as a Parliament to make sure that there are those appropriate checks and balances in place on the Victorian Auditor-General’s Office and to try to encourage a way in which we can ensure that they can be the best that they can be, because if we have got a strong VAGO and they have the capacity to make very good policy insights in relation to their performance audits, then hopefully it will follow that the performance audits produced are of a high standard.