1 The Auditor-General’s Role in Auditing Performance Reporting: Image here 2014 Presentation for the Indonesian Ministry of Finance Shilinka Smith: Director, Research and Development

2 What is performance? Financial (e.g. return on investment) Non-financial Service delivery (i.e. supply of goods and services) The effect of service delivery (i.e. benefits to society)

3 Elements of performance – older language Inputs Resources used to produce outputs Outputs Goods and services supplied to external customers Outcomes The effect on, or changes to, our world (i.e. the community, society, economy, environment etc.)

Elements of performance – new language For strategic intentions – the strategic objectives that the agency “intends to achieve or contribute to” over a minimum 4-year period. For expenditure – agencies provide a concise explanation of “what is intended to be achieved” with annual appropriation (money). 4

5 External Reporting For external users e.g. Parliament and public (taxpayers, ratepayers) Governed by legislation and “generally accepted accounting practice” (GAAP)

6 External Reports Forecast reports – beginning of the year Central government: Statements of Intent (SOI) Local government: Long-term Council Community Plans (LTP) End of the year: Annual report Financial statements Report against intentions in the forecast report Statement of Service Performance Audit report

Annual Report has financial and performance information Statement of Service Performance Describe each class of output Report on the performance measures Actual revenue & expenses vs budget 7

8 Audit requirements Legislation requires the Auditor-General to audit the: Financial statements in the Annual Report Statement of Service Performance (SSP) Public Audit Act A-G is auditor of every public entity (s14) Must audit statements a public entity is required to have audited (s15) May examine matters concerning efficiency, effectiveness, legislative compliance, waste, probity / prudence (s16)

9 Audit requirements Consider the quality of the information: Performance story (strategy ↔ operations) Outcomes and impacts (identified, well specified) Main measures and targets (the vital few) Output classes (identified, well specified, sensibly grouped) Links between outcomes/impacts and outputs (“intervention logic”) Output performance measures and targets (quantity, quality, timeliness)

10 Audit requirements Verify the Statement of Service Performance content In accordance with normal audit procedures Issue an audit opinion (as per revised Standard) Complies with GAAP A true and fairly reflection of the entity’s performance for the year

11 Reporting our audit findings To the entity: Management Letter To the Minister and Select Committees Ministerial Letter Management control environment, appropriateness of Statement of Service Performance, legislative compliance, systems & controls Graded: Very good – Good – Needs Improvement – Poor To the entity, Parliament, and the Public Audit report Audit opinion on SSP and financial statements

12 Image here Questions ?