DOCUMENT 13
OFFICIAL: SENSITIVE
The contents of this document are OFFICIAL: SENSITIVE
Audit Committee meeting of 27 November 2023
Meeting of Audit Committee Minutes 27 November 2023 12.00pm – 2.00pm (AEDT) 121 Henry Street, Penrith, NSW / Teams
Attendance Committee members: Dr Graeme Innes AM, Chair Ms Meredith Allan Ms Maryanne Diamond AO Dr Denis Napthine AO Ms Estelle Pearson Board members: Mr Kurt Fearnley AO Dr Richard Fejo Ms Leah van Poppel Dr Peta Seaton AM Management representatives: Ms Rebecca Falkingham, Chief Executive Officer Ms Debbie Mitchell PSM, DCEO, Governance, Risk & Integrity Mr Samuel Porter, Chief Operating Officer Mr Mark Sullivan, Chief Risk Officer Other attendees: Mr Chris Breitkreuz, Chief Financial Officer – Item 3 Mr Mick Turner, EO to Board Chair Mr Matthew Curtis, BM Governance & Royal Commissions (Secretariat) Ms Alexandra Collins, Executive Director, Performance Audit Services Group, ANAO Ms Lesa Craswell, A/g Group Executive Director, ANAO Ms Catherine Pauli, Senior Director, Performance Statements Audit Services Group, ANAO. Apologies:
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OFFICIAL: SENSITIVE Minutes — Audit Committee meeting of 27 November 2023
Nil The Minutes are presented in order that items were discussed in the meeting.
- In-camera
The Committee held an in-camera session at the start of the meeting.
- Meeting open 2.1 Chair’s welcome, Acknowledgment of Country and apologies Ms Craswell and Ms Pauli joined the meeting.
The Chair welcomed attendees to the meeting at 12.27pm AEDT and provided an Acknowledgment of Country.
2.2 Declarations of material interests
The Chair noted there were no updates to the Committee members’ declarations of material interests.
- Finance Activity 3.1 Finance Activity Update Mr Breitkruez joined the meeting.
Mr Breitkruez introduced the item and provided an overview of the key matters for the Committee’s awareness, with reference to the Finance paper in the Board pack (agenda item 7).
The Committee noted the update, in particular:
e Lessons Learnt from FY 2022/23 Financial Statements Audit:
o ANAO commented favourably on the Agency’s current project planning methodology for the preparation of the financial statements, particularly the phasing of audit and reporting stages.
o Interactions by ANAO with the Scheme Actuary improved for FY 2022/23, with the Scheme Actuary providing greater assistance to ANAO to clarify underlying Participant Plan Provision calculations and assumptions.
o ANAO would like the Agency to strengthen the management of the interim and closing letter management points reporting to ensure efficient closure within ANAO timeframes.
e Timetable for FY 2023/24 Financial Statements Audit
o Planning for the FY 2023/24 Financial Statement Audit is currently underway.
o Adraft financial statements preparation plan is being prepared.
o Financial statement preparation activities have been split across the key planning, interim audit, hard-close and final financial statements preparation and ANAO audit phases, similar to the activities performed for FY 2022/23.
o ANAO will be onsite at the Canberra Deakin Office for the planning phase for approximately 4 weeks, concluding mid-December 2023.
e Changes and Updates to Accounting Standards
o As at 30 June 2023, Department of Finance have identified 10 changes to existing accounting standards that will be coming into effect in future years, with only one accounting standard identified as having a likely impact on the Agency’s financial statements for FY 2023/24.
OFFICIAL: SENSITIVE Minutes
OFFICIAL: SENSITIVE Minutes — Audit Committee meeting of 27 November 2023
o AASB 2022-10 Amendments to Australian Accounting Standards — Fair Value Measurement of Non-Financial Assets of Not-for-Profit Public Sector Entities will likely impact the Agencies fair value assessment calculation of leasehold improvement and make good (restoration) assets.
o The Agency will be required to consider if the highest and best use of leasehold improvement and make good assets differs from current use at balance date.
o The Agency will engage with its valuer, JLL, to ensure that the upcoming desktop valuation of the right of use, leasehold improvement and make good (restoration) assets for FY 2023/24 is performed taking into consideration this change and compliance with other relevant accounting standards.
e Improvements to the Financial Control Environment and Changes to the Risk Environment
o From 30 October 2023, the Agency began a gradual roll-out of the new PACE system that is replacing SAP CRM. The is expected to take up to 18 months, with full implementation anticipated to be completed by March 2025.
o PACE is expected to drive changes in scheme participant management and interaction processes which may lead to changes and improvements to the Agency’s existing controls and procedures currently used for the SAP CRM environment.
o The financial statements audit risk for Participant Plan Expenses and the Participant Plan Provision line items has currently been assessed by the ANAO to have a higher risk than the other areas of the financial statements.
o The Agency’s financial statements draft risk assessment has both these line items assessed to have a high material inherent risk rating, with residual risk assessed to be medium material rating.
e ANAO Performance Audit for Corporate Credit Cards.
o An ANAO Performance Audit on credit cards commenced at the beginning of September 2023. This audit was focused on the procedural aspects of the use of corporate credit cards across the Agency.
o The Agency has provided a significant amount of data to ANAO including credit card applications, approval processes, credit card use and information, non-compliance data, card management and maintenance, policy, SOPs, acquittals, and general ledger data for expenses recorded.
o ANAO and NDIA have worked closely with Services Australia, who provide the management of credit cards and travel under the current Shared Services agreement.
o ANAO are expected to provide their report to NDIA by 6 December 2023. A response to the report will be required by 20 December 2023.
Mr Breitkreuz left the meeting.
- External Assurance Activity 4.1 ANAO Audit Activity Report Ms Collins joined the meeting.
Ms Craswell and Ms Collins provided an overview of the key matters for the Committee’s awareness and consideration, as set out in the paper.
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OFFICIAL: SENSITIVE Minutes — Audit Committee meeting of 27 November 2023
In particular, Ms Craswell and Ms Collins drew the Committee’s attention to:
e the upcoming Audit Chairs’ Forum on 8 December 2023
e planning for the Financial and Performance Statement audit activity
e updates on the Complaints and Credit Cards audits
e the new entry point for ANAO requests for information
e tracking of recommendations arising from the assistance with daily living audit.
The Committee noted the importance of having a representative at the Audit Chairs’ Forum and endorsed Dr Napthine to attend on the Chair’s behalf.
The Committee noted Ms Collins’ concerns regarding the new entry point for ANAO requests for information and welcomed the assurance from management that this would result in better coordinated responses to ANAO requests.
The Committee noted that an update on the implementation of recommendations arising from the assistance with daily life supports recommendations would be provided to in the New Year, to enable the Committee to monitor progress.
The Committee enquired whether an audit of PACE was premature, given the infancy of national expansion. Ms Collins advised that the audit was proposed at this stage, not confirmed, and that it would be considered through the lens of design and early implementation. Ms Collin’s undertook to update the Committee if the audit progresses.
- Internal Audit Management Report
Mr Sullivan introduced the item and provided an overview of the key matters for the Committee’s consideration, as set out in the paper, highlighting:
e key aspects of the revised draft Internal Audit Plan for 2023-24
e the status of internal and external audit activities
e the resourcing and independence of the External Quality Improvement Program
e overdue internal audit issues
e Internal Audit’s external quality assessment and the action plans to address recommendations and annual quality analysis
e the engagement of Internal Audit’s Co-Sourced Service Provider.
Committee members noted that they had each engaged with the detail of the report and were broadly comfortable with each of the component parts. In relation to the Internal Audit Plan, the Committee sought further detail from management about the scope of each of the audit topics. Management undertook to provide more detailed information to the Committee at the next meeting, in particular the scope and purpose of each of the internal audit activities.
The Committee agreed to endorse the Internal Audit plan in its current form, with the intention that it be a working document.
Ms Collins left the meeting. Resolution: The Audit Committee approved the revised draft Internal Audit Plan for 2023/24.
The Audit Committee noted the update on the status of internal and external audit activities, and overdue internal audit issues.
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OFFICIAL: SENSITIVE Minutes — Audit Committee meeting of 27 November 2023
The Audit Committee noted Internal Audit’s external quality assessment and the action plans to address recommendations. The Audit Committee also noted Internal Audit’s annual quality analysis.
The Audit Committee noted the update on the engagement of Internal Audit’s Co-Sourced Service Provider. 6. Administration
6.1 Minutes of the meeting held on 12 September 2023
The Committee approved the minutes of the meeting held on 12 September 2023.
6.2 Matters arising
The Committee noted the matters arising report for November 2023, approving the closure of the three items proposed to be closed.
6.3 Items for next meeting
- Meeting close
The meeting closed at 1.00 pm.
The next meeting of the Audit Committee will be held on 14 March 2024.
Addendum:
The Audit Committee reconvened informally at 8.30 am on 28 November 2023, immediately prior to the scheduled Board meeting.
The Committee discussed the ANAO Fraud Risk questions and agreed that the Chair would respond on behalf of the Committee. The Chair undertook to provide a response by
8 December 2023, to enable Dr Napthine to prepare for the ANAO’s upcoming Audit Chairs meeting.
The meeting concluded at 8.39am AEDT.
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