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Legislative Assembly for the ACT: 1996 Week 12 Hansard (20 November) . . Page.. 3880 ..

MR DE DOMENICO: I thank Mr Kaine for the question. Before dealing with a number of the specific issues that arose yesterday, it is important to place the process of management letters - which I think is what Mr Kaine was referring to - in perspective, to ensure that this Assembly has a balanced understanding of the independent audit by the Auditor-General. As Ms Follett and Mr Kaine would know, being ex-Chief Ministers, and especially Mr Kaine with his accounting qualifications, the process goes this way: After agencies' submission of annual financial statements to the Auditor-General, a complete audit according to accepted accounting and auditing standards is undertaken, quite obviously. As a consequence of the audit, the Auditor-General provides an opinion as to the "true and fair" view of the financial statements. Following the audit opinion, the Auditor-General follows up with a draft management letter to the chief executive, raising other matters of concern that arose during the audit process. Following further discussion with the Auditor-General, a response to this draft management letter is provided by the agency. Final management letters are issued to the departments through the Minister. The Auditor-General reviews management's response and finalises a submission for tabling in the Assembly in December. That is the process, and it has been for a long time.

In relation to the management letter for the Chief Minister's Department, which is what Mr Kaine was alluding to, annual accounts were certified without qualification. However, a final management letter has not been issued to the Chief Minister by the Auditor-General. In fact, the Auditor-General confirmed on 19 November - yesterday - that most management letters are yet to be issued by the Auditor-General and are still at a draft stage. Questions in a draft report can be "unbalanced" without management comments. Indeed, Mr Speaker, I would like to table a letter received late yesterday by the Chief Minister from the Auditor-General, which expresses concern over the actions of the Labor Party yesterday. I table that letter now, Mr Speaker.

I suppose that I should congratulate the Labor Party on another first. Not only does it have the record for the largest number of Auditor-General qualifications and the late submission of annual reports, but it has now, through its irresponsible and ill-informed actions, created a situation where the Auditor-General has found it necessary to express concern about the antics of the Labor Party in the Assembly and the threat that this poses to his independent role and proper process. I suggest that members opposite read that letter before they make any comments.

While a final management letter has not been issued to the Chief Minister by the Auditor-General, the following comments may be useful for this Assembly in order to provide some "balance" to the inappropriate use of draft reports. The allegation, for example, that $22m of expenditure was understated as a result of unpresented cheques is incorrect. There has been no understatement of expenditure identified by the Auditor-General in his unqualified audit opinion. This allegation by, I think, Ms McRae yesterday may relate to the accounting treatment of cash in transit in the cashbook prior to the completion of the audit. This matter was identified and, in fact, resolved during the course of the audit.

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