ACHIEVING EARLIER SIGN-OFF

1. ACHIEVING EARLIER SIGN-OFF Neville I’Anson Director, Financial Audit

2. Reporting Framework - Deadlines * For year ending 30 June 2011 will be 15 August ** For year ending 30 June 2011 will be 30 September

3. Present Reporting Trends • CBA financial report and audit report signed 13 August 2008 • Telstra financial report and audit report signed 13 August 2008 • ANAO give audit clearance to Commonwealth Departments prior to 31 July • Many Tasmanian GBEs and SOCs seeking audit clearance from TAO prior to signing financial reports in August

4. How to Improve the Process • Keep boards and audit committees up-to-date on contentious issues • Resolve key decisions with A-G or delegate before year-end • Undertake revaluations and actuarial reviews early • Ensure monthly reconciliations carried out on a timely basis

5. Improve the Process (cont.) • Ensure early review of asset useful lives and depreciation rates • Ensure timely information from external service providers • Ensure timely lead sheets with explanation of major movements • Ensure time consuming tasks commenced well before year-end

6. TAO General Approach • Substantiate reported balances at end of May or earlier, i.e. examine reconciliations • Obtain confirmations where necessary, e.g. cash, investments, borrowings • Reconcile and review account movements from May to year-end • Examine significant or unusual transactions during June

7. Example - Receivables • Reconcile subsidiary ledger to G/L as at 31 May • Ensure evidence of QA review • Prepare aged analysis of outstanding balances • Provide comments for debts outstanding over 90 days • Write-off any bad debts

8. TAO Approach - Receivables • Verify 31 May reconciliation • Sight evidence of QA review • Review aged analysis of balances • Review debts over 90 days • Sight approvals for debt write-off • Confirm a selection of balances • Review roll forward to 30 June • Review large and unusual June transactions

9. Example – PPE - Revaluation • Complete revaluations before 31 May • Obtain copy of Valuer’s documentation • If in-house – prepare representation letter from engineer or other expert • Ensure Board or executive approval is documented • Provide copies of supporting journals

10. TAO Approach –Revaluations • Review documentation supporting revised valuation • Reconcile adjustments to carrying amounts and review journals • Sight evidence of QA on journals • Sight evidence of acceptance of revaluation by Board or executives

11. Lead Sheets • Lead sheets are the reconciliation of ledger account balances to financial statement line items for both the current and the previous year. • They allow identification and validation of account movements from one year to the other • They are a QA process not an audit process • Must be available early to facilitate the early completion of the audit

12. Summary • Early completion of asset revaluations and actuarial reviews • Early completion of model accounts and draft notes for audit clearance • Monthly reconciliation of subsidiary registers to the G/L • Early completion of lead sheets with explanations for significant movements • Monthly accrual accounts?

13. Summary (cont.) • QAO - Better Practice Guide ‘Strategies for earlier financial statement preparation’ Web Site: www.qao.qld.gov.au