Federal Register of Legislation - Australian Government

Primary content

Standards/Accounting & Auditing as made
This instrument repeals and replaces the previously published Australian National Audit Office (ANAO) Auditing Standards.
Administered by: Prime Minister and Cabinet
Registered 02 Mar 2021
Tabling HistoryDate
Tabled HR15-Mar-2021
Tabled Senate15-Mar-2021
Table of contents.

 

 

 

 

 

Explanatory Statement:

 

 

Australian National Audit Office Auditing Standards 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant Hehir

Auditor-General

 

February 2021


Table of Contents

 

 

   

Mandate of the Auditor-General 3

Purpose of ANAO Auditing Standards. 3

AUASB standards. 5

Development and application of the ANAO Auditing Standards. 5

Commencement 6

Main changes to the ANAO Auditing Standards made in February 2018  6

Amendments to the standards made by the AUASB since March 2018. 6

Consultation prior to re-issuing the ANAO Auditing Standards. 8

Statement of Compatibility with Human Rights. 9

Attachment A - Statement of Compatibility with Human Rights. 10

 


 

Explanatory Statement

 

Mandate of the Auditor-General

·                     The office of Auditor-General for the Commonwealth is established by the Auditor-General Act 1997 (the Act). The Act sets out the functions and powers of the Auditor-General. Functions and powers may also be conferred on the Auditor-General by other legislation.

 

·                     The Act also establishes the Australian National Audit Office (ANAO), which consists of the Auditor-General and staff appointed under the Public Service Act 1999. The function of the ANAO is to assist the Auditor-General in performing Auditor-General functions. The Auditor-General may also engage people under contract to assist in the performance of an Auditor-General function.

Purpose of ANAO Auditing Standards

·                     The Auditor-General sets the ANAO Auditing Standards to meet the requirement of section 24 of the Act.

 

·               Section 24 of the Act provides:

‘The Auditor-General must, by notice in the Gazette, set auditing standards that are to be complied with by persons performing any of the following functions:

(a)        an audit or review referred to in Division 1, 1A, 2 or 2A;

(b)        an audit under Division 2 of Part 7;

(c)        an audit under section 49 of the Public Governance,              Performance and Accountability Act 2013.’

 

·                     These Auditing Standards are legislative instruments under the Legislation Act 2003.

 

·               The functions referred to in subsection 24(a) of the Act are:

 

o    from Division 1 of Part 4 of the Act, annual financial statements audits of

-       Commonwealth entities and their subsidiaries in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) (section 11 of the Act);

-       Commonwealth companies and their subsidiaries in accordance with the PGPA Act (section 11 of the Act); and

-       Annual consolidated financial statements in accordance with the PGPA Act (section 12 of the Act);

 

o    from Division 1A of Part 4 of the Act, annual performance statement audits of Commonwealth entities in accordance with the PGPA Act (section 15 of the Act);

 

o    from Division 2 of Part 4 of the Act

-       performance audits of Commonwealth entities and their subsidiaries and Commonwealth companies and their subsidiaries (subsection 17(1) of the Act);

-       audits of the appropriateness of the performance measures of, and the reporting against those performance measures  by, Commonwealth entities and their subsidiaries and Commonwealth companies and their subsidiaries (subsection 18A(1) of the Act);

-       performance audits of Commonwealth partners (subsection 18B(1) of the Act); and

 

o    from Division 2A of Part 4 of the Act, assurance reviews of Commonwealth entities and their subsidiaries and Commonwealth companies and their subsidiaries (subsection 19A(1) of the Act).

 

·                     The functions referred to in subsection 24(b) of the Act are audits by the Independent Auditor of the ANAO’s annual financial statements under section 44 of the Act and any performance audits undertaken under section 45 of the Act.

 

·                     The function referred to in subsection 24(c) is the audit of the annual consolidated financial statements of the Australian Government as required by section 49 of the PGPA Act.

 

·                     The persons performing the functions mentioned in section 24 of the Act will include the Auditor-General, the staff of the Australian National Audit Office, contractors engaged to assist in the performance of an Auditor-General function under section 27 of the Act, and the ANAO’s Independent Auditor.


 

AUASB standards

·                     The primary functions of the AUASB under section 227B of the Australian Securities and Investments Commission Act 2001 (ASIC Act) include:

o    to make auditing standards (under section 336 of the Corporations Act 2001 (Corporations Act) for the purposes of the corporations legislation;

o    to formulate auditing and assurance standards for other purposes; and

o    to formulate guidance on auditing and assurance matters (that do not prescribe or create mandatory requirements).

 

·                     Further information and explanation of the nature of AUASB standards can be found in the Foreword to AUASB Pronouncements and the Framework for Assurance Engagements issued by the AUASB. These pronouncements do not form part of the ANAO Auditing Standards but provide information about the AUASB, its operations and standard-setting activity.

 

·                     The AUASB has also issued ASA 100 Preamble to AUASB Standards and ASA 101 Preamble to Australian Auditing Standards, which form part of the ANAO Auditing Standards that set out the AUASB’s intentions on how the AUASB Standards are to be understood, interpreted and applied. The AUASB standards contain both mandatory requirements, consisting of principles and essential procedures, and application and other explanatory material, which assists auditors in the application of the mandatory requirements.

Development and application of the ANAO Auditing Standards

·                     It is the intention of the Auditor-General that audits conducted by the ANAO should be conducted to the same standards required of the auditing profession in Australia and consistent with the international public sector auditing community, to the extent that they are not inconsistent with the provisions of the Auditor-General Act or other relevant legislation.      

 

·                     The ANAO Auditing Standards, therefore incorporate:

o    all standards issued by the Australian Auditing and Assurance Standards Board (AUASB) pursuant to paragraph 227B(1)(a) of the ASIC Act and section 336 of the Corporations Act;

o    relevant standards formulated by the AUASB pursuant to paragraph 227B(1)(b) of the ASIC Act; and

o    relevant auditing and assurance standards issued by standard-setting bodies other than the AUASB as appropriate.

 

·                     AUASB standards formulated under paragraph 227B(1)(b) of the ASIC Act and auditing and assurance standards issued by standard-setting bodies other than the AUASB do not have legal effect under the Corporations Act. Hence they do not have the same legal status as the ANAO Auditing Standards or the AUASB standards made under section 336 of the Corporations Act, (which are given legal effect by the Corporations Act).

 

·                     In the event of an inconsistency between a provision in an ANAO Auditing Standard and a provision in the Act or other relevant legislation, the provision in the legislation prevails over the relevant ANAO Auditing Standard.

 

·                     The AUASB standards incorporated in the ANAO Auditing Standards are freely available online at the following address:

http://www.auasb.gov.au/Pronouncements/AUASB-Standards.aspx

Commencement

·                     The ANAO Auditing Standards commence on registration on the Federal Register of Legislation.

 

·                     The standards replace the ANAO Auditing Standards which were made on 28 February 2018 and registered on the Federal Register of Legislation on 2 March 2018. The standards apply in accordance with the operative dates given or indicated in each individual standard.

Main changes to the ANAO Auditing Standards made in February 2018

·                     The main change from the ANAO Auditing Standards made in February 2018 is allowing for the Auditor-General to elect, wholly or in part, to conduct a performance audit under Division 2 of Part 4 of the Act as a compliance engagement under ASAE 3100 Compliance Engagements (ASAE 3100) issued by the AUASB on 21 February 2017, (supplemented with relevant requirements from the International Standards of Supreme Audit Institutions).

Amendments to the standards made by the AUASB since March 2018

·                     The following standard (which has been incorporated in the ANAO Auditing Standards) has been reissued by the AUASB pursuant to paragraph 227B(1)(b) of the ASIC Act since the ANAO Auditing Standards were last made in February 2018:

 

ASRS 4400

Agreed-Upon Procedures Engagements to Report Actual Findings.

 

·                     The above standard was approved on 11 September 2020 and applies to agreed-upon procedures engagements for which terms of engagement are agreed upon on or after 1 January 2022. Early adoption of the above standard is permitted prior to this date.

 

·                     The following standard was repealed as a standard made pursuant to section 227B of the ASIC Act and section 336 of the Corporations Act by the AUASB since the ANAO Auditing Standards were last made in February 2018. As the standard continues to exist as an AUASB standard and remains relevant to some Auditor-General functions, the standard is now listed in clause 4(b) of the ANAO Auditing Standards as a consequence of the standard’s change in legal status.

 

 

ASA 100

 

 

Preamble to AUASB Standards

 

 

·                     The following standard issued on 21 February 2017 by the AUASB pursuant to paragraph 227B(1)(b) of the ASIC Act already formed part of the ANAO Auditing Standards last made in February 2018, but did not apply to performance audits under Division 2 of Part 4 or Division 2 of Part 7 of the Act. This amendment to the ANAO Auditing Standards provides an option for the Auditor-General or the ANAO’s Independent Auditor to elect to wholly or in part conduct a performance audit as a compliance engagement under ASAE 3100. While the previous ANAO Auditing Standards allowed for a performance audit under ASAE 3500 Performance Engagements that addressed aspects of an audited entity’s compliance with relevant requirements, making ASAE 3100, the Australian Standard on Assurance Engagements specific to compliance, available to such performance audits may be more efficient and effective to such audit topics.

 

 

ASAE 3100

 

 

Compliance Engagements

 

·                     For performance audits under Division 2 of Part 4 or Division 2 of Part 7 of the Act, the ANAO Auditing Standards incorporate ASAE 3100 for audits designated as performance engagements, except for the following requirement under paragraph 56 relating to the assurance report content.

 

·                     The requirements of paragraph 56 include a checklist of minimum content requirements, some of which are not currently included in performance audit reports. Examples include certain statements around the responsibilities of the responsible party (audited entity), auditor's responsibility and compliance with independence and ethical requirements. While these could easily be appended to the performance audit report, they are less relevant to users than matters not required as minimum content, such as findings, recommendations and data sources.

 

·                     In place of paragraph 56 of ASAE 3100, the ANAO Auditing Standards have incorporated the reporting requirements specified by the International Standard of Supreme Audit Institutions ISSAI 4000 Standard for Compliance Auditing (ISSAI 4000). These reporting requirements are consistent with the practice of the ANAO in reporting conclusions, findings and recommendations in performance audit reports. Specifically, the reporting requirements of ISSAI 4000 allow for the audit conclusion to include and be presented together with other information that highlights both positive and negative aspects of performance. This is consistent with the ANAO’s purpose of improving public sector performance and supporting accountability and transparency in the Australian Government sector through independent reporting to the Parliament, the Executive and the public.

 

·                     ISSAI 4000 is freely available online at the following address: https://www.issai.org/pronouncements/issai-4000-compliance-audit-standard/

 

·                     The amendment to ASAE 3100 in the ANAO Auditing Standards described above is specific only to performance audits under Division 2 of Part 4 or Division 2 of Part 7 of the Act. For any other Auditor-General function where ASAE 3100 is applied, the unmodified standard as issued by the AUASB is applied.

Consultation prior to re-issuing the ANAO Auditing Standards

·                     In addition to the Auditor-General’s functions under the Act, the ANAO Auditing Standards apply to the audit of ANAO’s annual financial statements audit and any performance audits undertaken by the ANAO’s Independent Auditor. Consequently the Independent Auditor was consulted on this re-issue of the ANAO Auditing Standards. Except for this, there has been no consultation prior to re-issuing the ANAO Auditing Standards because the instrument is of a machinery nature. Other than the Independent Auditor, persons likely to be affected by the Standards will be employees of the ANAO, contractors to the ANAO and others subject to ANAO direction. These persons will be familiar with AUASB Standards through membership of a professional accounting body or through ANAO internal training programs.

 

·                     Public consultation for the instrument was unnecessary because appropriate consultation has already been undertaken through the AUASB. The due process for the issue of AUASB Standards is set out in the Foreword to AUASB Pronouncements issued by the AUASB. That due process includes the issue of exposure drafts of proposed standards for public comment.

 

·                     Public consultation in respect of the application of ASAE 3100 in the instrument was unnecessary because the omissions from ASAE 3100 and insertions from ISSAI 4000 were made to ensure that performance audits performed as compliance engagements by the ANAO will continue to be presented in a manner that is broadly consistent with the current form of performance audits. Therefore there are no impacts on ANAO performance audit reports and, accordingly, no persons impacted by these changes.

Statement of Compatibility with Human Rights

·                     A Statement of Compatibility with Human Rights is attached as Attachment A.


 


Attachment A - Statement of Compatibility with Human Rights

Prepared in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011, Part 3.

 

Australian National Audit Office Auditing Standards

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Legislative Instrument

The Auditor-General, through this legislative instrument, sets the ANAO Auditing Standards to meet the requirement of section 24 of the Auditor-General Act 1997.

 

The purpose of these ANAO Auditing Standards is to replace the pre-existing standards and to conform to the equivalent revised AUASB and other relevant standards.

 

The powers exercisable in the performance of these functions are set out in the Auditor-General Act 1997.

 

Human rights implications

The Australian National Audit Office Auditing Standards do not diminish or limit any of the applicable human rights or freedoms, and thus do not raise any human rights issues.

 

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues due to the nature and content of the Instrument.

 

Grant Hehir

Auditor-General