INTERNAL AUDIT BUREAU BILL
Second Reading
Debate resumed from 9th April.
Mr J. H. MURRAY (Drummoyne) [9.14]: The relevance and need for some form of internal performance review mechanism has been recognised by most government authorities. In New South Wales performance review mechanisms have taken several forms. Firstly, internal inspectorates and also management consulting groups, which seem to have got a bit of a run on since 1988, usually concentrate on reviews of the effectiveness, efficiency and economy of systems and organisations, and in many cases assist management in implementing improvements. There are also internal audit units which may be restricted to reviewing financial regularity and compliance, or may be extended to provide reviews of effectiveness, efficiency and economy. For reasons of independence, these audit units do not usually assist in implementing improvements. The essential features of internal audits are that they provide a service to management. They also provide assurance to management that the internal control and management
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information systems that have been put in place are adequate and working, and give early warning of any breakdowns in control. However, they are not substitutes for sound management planning and decision-making, but rather provide added safeguards to management accountability.
I would place on record that the father of the internal audit system in New South Wales, as we have it within the State Government bureaucracy, was the late Ken Booth, a former Treasurer in the Labor Government. Honourable members would realise that in 1982 the Public Accounts Committee undertook a review of internal auditing within the public service system, and reported to Treasurer Booth. Consequently, in 1983, he amended the Public Finance and Audit Act to include a provision which made it compulsory for chief executives to establish an internal audit function within their organisation. Ken Booth was a man ahead of his time. As I understand it, New South Wales is still the only State that gives statutory recognition to internal auditing within the public sector.
The impact of this bill will improve the current situation. The purpose of the Internal Audit Bureau Bill is to bring the operations of the Internal Audit Bureau on to a commercial footing by freeing it from the constraints of the Public Sector Management Act. Since 1983, however, some of the small organisations have been unable to sustain an internal audit unit of an appropriate size or calibre to provide a fully professional service. To meet their needs, Treasury created, by administrative action, an Internal Audit Bureau of New South Wales to provide the internal audit function to these smaller public sector organisations or to supplement the internal audit functioning bodies which had their own units but had additional workload and required a special audit to be carried out. I understand the current bureau is administratively lean. Of the 18 staff 16 are full-time auditors. Only the director, who undertakes marketing, client contact and tendering, and the director's secretary do other than audit work. The Opposition believes that the creation of a small statutory authority along the lines of or similar to the Treasury Corporation is the way to go. We support the bill.
Mr SOURIS (Upper Hunter - Minister for Sport, Recreation and Racing and Minister Assisting the Premier) [9.18], in reply: I thank the Opposition for its support.
Motion agreed to.
Bill read a second time and passed through remaining stages.