Financial Audit - Procedures

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1. Purpose and Objectives

The purpose of these procedures is to define the financial audit function and requirements of the University, and to clarify that all management and staff are responsible for ensuring they follow financial policy and procedures in all dealings. 

2. Definitions, Terms, Acronyms

Audit Trail - a means of tracing from source documents through journals and ledgers to summary totals in the financial statements or other financial outputs and vice versa.

External Financial Audit - Examination of the University’s financial records and operations by an independent, external party.

Internal Audit - Examination of the University’s financial records and operations by a member of its own staff to determine the accuracy and acceptability of its accounting practices.

QAO - Queensland Audit Office or external audit firms that have been contracted by QAO under section 43 Auditor General Act 2009.

3. Procedures Scope/Coverage

These procedures apply to all University staff.

4. Procedures Statement

The University Senate, under The University of Queensland Act 1989, through its delegated officers, is responsible for keeping proper accounts and maintaining adequate systems of internal control, preparing and presenting the financial statements, and complying with the Financial and Performance Management Standard 2009 and any other relevant written law.

The Office of the Auditor-General conducts an annual audit of the accounts and financial statements of The University of Queensland under the provisions of the Financial Accountability Act 2009, Financial and Performance Management Standard 2009 and Auditor-General Act 2006. The University provides financial statements which include the consolidated accounts of the consolidated entity made up of the University and the entities it controls at the year’s end or periodically during the financial year. The Office of the Auditor-General may choose to conduct the financial audit of The University through a body contracted by the Office of the Auditor-General.

Members of the University community are responsible for assisting with the satisfactory conduct of the financial audit as necessary and for complying with the legislative requirements.

5. Accountability

5.1 Audit trails

Audit trails are a necessary and demonstrable component of accountability. When performing a University-sanctioned act which either has or can have financial consequences (direct or indirect), each staff member must ensure they prepare, obtain and retain documentary evidence of the transaction flow/event to facilitate future follow-up, inquiry or audit of the process that will provide the history of and authorisation for expenditure and income into the University. Such documents should appear in English. These documents should be kept in good condition in suitable storage which is readily accessible and maintained in accordance with PPL 9.20.03 Retention of Financial Information and Documents.

5.2 Financial management practices

Organisational units are responsible for ensuring staff responsible for financial matters are familiar with the contents of the PPL and liaise with FBS on any policy, procedures and guidelines which are unclear. Organisational units are also responsible for implementing any necessary procedures and processes as necessary to adhere with financial audit requirements.

5.3 Internal controls

Section 8(1) and (5) of the Financial and Performance Management Standard 2009 (the Standard) states that the University must establish a cost-effective internal control structure that is developed and implemented by the University and included in the University’s policies and procedures.

5.4 Deviation from standard practice

No member of management or staff has the authority to deviate from UQ policy, however it is expected that any deviation from University procedures or guidelines concerning financial matters is fully documented and duly authorised by the Head of the organisational unit or authorised delegated officer. 

Any unauthorised deviation from officially-endorsed financial practice (as documented) could lead to a greater risk of error, omission, inappropriate behaviour, misappropriation, theft and fraud.  Auditors use University documentation as their code of practice to assess officially-sanctioned financial practice against actual practice.  Where deviations are noted, Audit would expect the deviation to be properly justified, approved and documented. 

6. Internal Audit

The Financial and Performance Management Standard 2009 specifies that the University must establish an internal audit function, if directed by the appropriate Minister, or if the University considers it appropriate.

The internal audit function at the University is administered by the Internal Audit Office (IA)

7. External Financial Audit

Section 3 of the Auditor-General Act 2009 establishes the position of the Queensland Auditor-General and the QAO. QAO provides an independent review of the University’s financial records and financial statements, and may undertake performance management system audits.

Section 62(1)(c) of the Financial Accountability Act 2009 states that the University, in the way and within the time stated in a financial and performance management standard, have the annual financial statements audited by the Auditor-General.

The financial audit functions performed by QAO provide an independent assessment as to whether:

  • University records have been properly and accurately kept;
  • University financial statements present a true and fair view of an University’s financial position; and
  • financial statements comply with appropriate statutory and regulatory requirements and accounting standards.

Section 37 of the Auditor-General Act 2009 provides that the Auditor-General is entitled to conduct audits in the way the Auditor-General deems appropriate.

7.1 Management and staff responsibilities

All University staff must assist the auditors in the performance of the audit with such responsibilities detailed in the Auditor-General Act 2009.

In particular, sections 46-48 define management and staff obligations in relation to authorised auditors in the performance of the audit and include:

  • providing full and free access to documents and property;
  • complying with information requests; and
  • providing evidence when requested.

Penalties apply for breaches of sections 46-48 of the Auditor-General Act 2009. Sections 50–52 of the Act also outline penalties that may apply to staff for providing false or misleading information, obstructing an auditor during the audit, or impersonating an auditor.

7.2 Relationship between internal and external financial audit functions

External financial auditors may seek to rely on work undertaken by internal audit to avoid duplication of effort and to achieve a more efficient audit process.

Such reliance, however, will only occur where external financial audit is satisfied that the work of internal audit is adequate for the purpose of the external financial audit, in accordance with Australian Auditing Standard 610 Considering the Work of Internal Audit.

7.3 External financial audit recommendations

The external financial audit may highlight possible deficiencies in the operations of the University. The University has the discretion to accept, or reject, recommendations made by external financial audit.

Additionally, the Financial and Performance Management Standard 2009 requires the University to consider the Auditor-General’s report at the first ordinary meeting after the financial statements have been certified.

Where recommendations are not accepted, the University should clearly document reasons for its decision not to adopt the external financial audit recommendations.

Where recommendations considered “significant” are not adopted and remain unresolved, the Auditor-General may include details in a Report to Parliament.

Chief Financial Officer Mr Andrew Flannery
Chief Financial Officer Mr Andrew Flannery