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ACHIEVING EARLIER SIGN-OFF Neville I’Anson Director, Financial Audit Reporting Framework - Deadlines * For year ending 30 June 2011 will be 15 August ** For year ending 30 June 2011 will be 30 September Present Reporting Trends CBA financial report and audit report signed 13 August 2008

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ACHIEVING EARLIER SIGN-OFF

Neville I’Anson

Director, Financial Audit


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Reporting Framework - Deadlines

* For year ending 30 June 2011 will be 15 August

** For year ending 30 June 2011 will be 30 September


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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


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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


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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


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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


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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


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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


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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


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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


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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


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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?


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Summary (cont.)

  • QAO - Better Practice Guide

    ‘Strategies for earlier financial statement preparation’

    Web Site: www.qao.qld.gov.au


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