Tax Office Audit Committee - Summary of the 2005-06 annual report to the Commissioner of Taxation
Tax Office Audit Committee - Summary of the 2005-06 annual report to the Commissioner of Taxation
The Audit Committee, as required under the Financial Management and Accountability Act 1997, oversees internal governance and assurance policy to monitor and evaluate internal controls. The Committee oversees:
- implementation of Australian National Audit Office (ANAO) and internal audit recommendations
- internal reviews and actions that support governance
- implementation of external recommendations, including those from the Joint Committee on Public Accounts and Audits, Inspector-General of Taxation, Tax Ombudsman and the Board of Taxation.
The Audit Committee, chaired by Kevin Fitzpatrick, Acting Second Commissioner Law, met on eight occasions with six additional sub-committee meetings during 2005-06.
Achievements in 2005-06
The Committee's achievements in 2005-06 included:
- monitoring the program of work impacting on financial statement issues, in conjunction with the Financial Management Steering Committee
- setting the 2006-07, 2007-08, 2008-09 internal audit program. In doing so, the Committee consulted with second commissioners, national program managers, branch heads and the ANAO and incorporated recommendations from a Price Waterhouse Coopers review
- endorsing 13 fraud control plan chapters. Each chapter incorporated the results of testing against key fraud controls
- reviewing 50 internal audit reports
- continuing a stringent approach in relation to the follow-up of recommendations, particularly in the areas of Internal Audit, ANAO and fraud prevention
- continuing to emphasise the need to obtain assurances around the controls implemented to address the risks inherent in the Change Program . This program seeks to improve Tax Office products and service and to make client experiences easier, cheaper and more personalised.
- continuing to implement initiatives arising from an internal review against the ANAO Better Practice Guide for Public Sector Audit Committees, including the appointment of a second external member in February 2006.
Committee membership increased to five following the appointment of an additional external member in February 2006. Mr Wayne Lonergan's strong corporate finance and accounting knowledge complements the skills of other members. Mr Tony Ayers AC continued as an external member of the Committee.
The Chief Executive's Instructions establish the Audit Committee's terms of reference. These are scheduled for review in 2006-07. The Committee met its obligations in 2005-06 through:
- considering and monitoring tasks falling within its area of responsibility - particularly in relation to Tax Office control framework and the Tax Office financial statements
- maintaining appropriate links with other areas, including external bodies such as the ANAO and internal bodies such as the Integrity Advisory Committee, Security Committee, Financial Management Steering Committee and the Internal Assurance Branch
- active and effective scrutiny and monitoring of matters falling within its terms of reference, as well as the commissioning of remedial work and/or referral to other appropriate forums
- attendance of senior officers at meetings, as requested by the Chair, to assist in fulfilling the Committee's responsibilities and to ensure accountability for further work where necessary.
Significant matters considered by the Committee
Tax Office fraud control plan
Section 45 of the Financial Management Act 1997 and the Commonwealth Fraud Control Guidelines require agency chief executive officers to prepare biennial fraud control plans and to have fraud controls in place.
Fraud control plans record the results of risk assessments and workshops undertaken during the planning process. The process involves staff at all levels in the organisation.
The plans identify potential fraud risks - and controls in place to prevent fraud - across the Tax Office. They also contain recommendations to stakeholders on how to monitor and complete the recommendations. During 2005-06 an increased number of control tests were undertaken to provide assurance that recommendations, as endorsed by the Audit Committee, have been properly implemented. The Audit Committee noted that implementation of the recommendations subject to control testing were found to be effective.
For the 2005-06 year, the Committee:
- endorsed 13 fraud control plan chapters. Each chapter incorporated the results of testing undertaken against key fraud controls.
- endorsed 131 recommendations contained in the 13 fraud control plan chapters.
- monitored the status of fraud plan recommendations through reports presented to each Committee meeting
Internal audit program
The 2005-06 audit program achieved its coverage and assurance objectives with 50 audits tabled during the period.
The Committee commissioned an external review of methodology used in developing the annual Internal Audit Program. This resulted in the development of a three-year program starting with the 2006-09 period. The key features of the program are:
- adopting a three-year rolling Internal Audit Program
- mapping the risks identified by all forms of assurance review
- identifying sub-plan risks covered within audits
- a widening of the types of work conducted by Internal Audit, for example, providing additional support to the Chief Operations Officer and the Chief Finance Officer - aimed at providing more comprehensive assurance and transparency around controls and stocks and flows in Operations' processes
- including budgets within the proposed audit scopes
- increasing transparency in the allocation of internal audit resources.
The Committee and Tax Office financial statements
In 2005-06 the Committee undertook a range of activities in connection with Tax Office financial statements:
- overseeing completion of the 2004-05 financial statements. Of note was the removal of all four qualifications that had applied to the 2003-04 statements
- driving the 2005-06 financial statement work program to further improve financial integrity
- actively shaping Tax Office response to the 2005-06 ANAO interim audit report
- reviewing the draft financial control framework strategy and recommending endorsement by the Tax Office Executive. The strategy - now endorsed by the Executive - includes a new role for the Audit Committee in overseeing the strategy's implementation and monitoring recommendations arising from it.
Certificates of assurance
Assurance processes improved significantly in 2005-06. The Committee recognises, however, that greater consistency and less duplication can be achieved through further integration of processes.
Working with external organisations
The Audit Committee's good relationship with the ANAO continued in 2005-06, facilitated through ANAO representation at Committee meetings, in addition to ongoing liaison with Internal Audit and other Tax Office areas during individual audits.
Guided by Internal Assurance Branch reporting, the Committee monitored recommendations from the ANAO, Board of Taxation, Inspector-General of Taxation, Taxation Ombudsman and Joint Committee on Public Accounts and Audit.
Working with internal committees and groups
Integrity Advisory Committee
The work of the Audit Committee is closely aligned and complementary to that of the Integrity Advisory Committee. Where the Audit Committee considers issues with a view to ensuring that appropriate controls are in place, the Integrity Advisory Committee considers and seeks advice from its broad membership regarding the extent to which processes and systems promote an ethical culture within the Tax Office and whether the behaviour of staff is consistent with APS values and code of conduct.
Financial Management Steering Committee
The Financial Management Steering Committee and Audit Committee inform each other of key issues and current areas of focus that may impact on each committee through updates at each respective meeting by the Chief Finance Officer, as well as three other members who sit on both committees.
Security Committee
During 2005-06 the Audit Committee received reports from the chair of the Security Committee, Assistant Commissioner Internal Assurance Branch. The Commissioner has since reconstituted the Security Committee which will be chaired by Second Commissioner Gregory Farr.
Last Modified: Tuesday, 20 February 2007
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