Office of the Auditing and Assurance Standards Board

Section 1: Agency overview and resources

1.1 Strategic direction statement

The Office of the Auditing and Assurance Standards Board (AUASB) is an Australian Government agency under the Australian Securities and Investments Commission Act 2001.

The functions of the AUASB are to:

• make auditing standards under section 336 of the Corporations Act 2001 for the purposes of the corporations legislation;
• formulate auditing and assurance standards for other purposes;
• formulate guidance on auditing and assurance matters;
• participate in and contribute to the development of a single set of auditing standards for world‑wide use; and
• advance and promote the main objectives of part 12 of the Australian Securities and Investments Commission Act 2001.

The vision of the AUASB is to be recognised as a leading national auditing and assurance standards setting body that develops high quality auditing and assurance standards and guidance in the public interest.

The mission of the AUASB is to develop, in the public interest, high quality auditing and assurance standards and related guidance as a means to enhance the relevance, reliability and timeliness of information provided to users of audit and assurance services.

Key strategies during 2013‑14 include to:

• develop auditing and assurance standards and guidance;
• identify emerging auditing and assurance issues;
• contribute to and influence the development of international auditing standards; and
• promote awareness and understanding of the AUASB role and work program, auditor responsibilities, and the role of auditing and assurance services.

1.2 Agency resource statement

Table 1.1 shows the total resources for the AUASB.

Table 1.1: Office of the Auditing and Assurance Standards Board resource statement — Budget estimates for 2013‑14 as at Budget May 2013

		Estimate of prior year amounts available in 2013‑14 $'000	+	Proposed at Budget 2013‑14 $'000	=	Total estimate 2013‑14 $'000	Actual available appropriation 2012‑13 $'000
Ordinary annual services
Departmental
Prior year departmental appropriation		931	4	-		931	-
Departmental appropriation3		-		2,244	1	2,244	2,239
Receipts from other sources (s31)		-		33	2	33	32
Total ordinary annual services	A	931		2,277		3,208	2,271
Other services
Departmental non-operating
Equity injections		579	4	-		579	-
Total other services	B	579		-		579	-
Total net resourcing for AUASB (A+B)		1,510		2,277		3,787	2,271

1. Appropriation Bill (No. 1) 2013‑14.

2. Receipts received under section 31 (s31) of the Financial Management and Accountability Act 1997.

3. Includes $0.04 million in 2013‑14 for the departmental capital budget (also refer to Table 3.2.5).

4. Estimated adjusted balance carried from previous year for annual appropriations.

1.3 Budget measures

Budget measures relating to the AUASB are summarised below.

Table 1.2: Australian Bureau of Statistics 2013‑14 Budget measures

	Program	2012‑13 $'000	2013‑14 $'000	2014‑15 $'000	2015‑16 $'000	2016‑17 $'000
Expense measures
Targeted savings — public service efficiencies1	1.1	(10)	(14)	(12)	(11)	(10)
Total expense measures		(10)	(14)	(12)	(11)	(10)

1 This measure was included as a cross portfolio measure in the Mid‑Year Economic and Fiscal Outlook 2012‑13.

Prepared on a Government Finance Statistics (fiscal) basis.

Section 2: Outcomes and planned performance

2.1 Outcomes and performance information

Government outcomes are the intended results, impacts or consequences of actions by the Government on the Australian community. Commonwealth programs are the primary vehicle by which government agencies achieve the intended results of their outcome statements. Agencies are required to identify the programs which contribute to Government outcomes over the Budget and forward years.

The AUASB's outcome is described below,
specifying the strategy, program objective, program deliverables and program key performance indicators used to assess and monitor the performance of the AUASB.

Outcome 1 strategy

The key strategies to achieve Outcome 1 are:

• making auditing standards under section 336 of the Corporations Act 2001 and related guidance for use by Australian auditors who are undertaking audit engagements for the purposes of the Corporations legislation, including facilitating and monitoring the implementation of the Australian Auditing Standards;
• formulating auditing and assurance standards and related guidance for use by Australian auditors who are undertaking auditing or assurance;
• engagements for purposes other than the purposes of the Corporations legislation; and
• providing Australian participation in, and contributing to, the development of a single set of auditing standards for world‑wide use. In this regard the AUASB will continue to participate in key International Auditing and Assurance Standards Board (IAASB) projects on auditor reporting, audit quality, International Standards on Auditing implementation monitoring and review engagements.

Outcome expense statement

Table 2.1 provides an overview of the total expenses for Outcome 1.

Table 2.1: Budgeted Expenses for Outcome 1

Outcome 1: The formulation and making of auditing and assurance standards that are used by auditors of Australian entityfinancial reports or for other auditing and assurance engagements	2012‑13 Estimated actual expenses $'000	2013 ‑14 Estimated expenses $'000
Program 1.1: Auditing and Assurance Standards Board
Departmental expenses
Departmental appropriation	2,234	2,241
Expenses not requiring appropriation in the budget year	103	120
Total expenses for Outcome 1	2,337	2,361
	2012‑13	2013‑14
Average staffing level (number)	8	8

Contributions to Outcome 1

Program 1.1: Auditing and Assurance Standards Board

Program objective

Formulate and maintain Auditing Standards that are legally enforceable under the Corporations Act 2001 and contribute to the development of international auditing standards.

Contribute to the ongoing implementation of Australian Auditing Standards, including:

• monitoring the implementation of Australian Auditing Standards and providing periodic and formal feedback to the IAASB, which has established a project monitoring task force for this purpose;
• monitoring the revision of IAASB International Standards on Auditing and considering the implications for the following equivalent AUASB standards:
• Auditor Reporting; and
• Standard on review engagements.
• developing articles that will highlight key principles in auditing standards; and
• presenting at various public forums, conferences and information sessions.

Formulate and maintain other auditing and assurance standards, ensuring quality and complete coverage of relevant auditing and assurance topics including:

• standards on review engagements;
• assurance engagements other than on historical financial statements;
• assurance on water accounting reports;
• assurance on internal control; and
• assurance on compliance and performance engagements.

Formulate and maintain guidance pronouncements, ensuring that guidance is high quality, timely and provides appropriate coverage through pronouncements that supplement standards and address emerging issues including:

• auditing under National Greenhouse and Energy Reporting and Clean Energy schemes;
• the Australian Prudential Regulation Authority including superannuation, general insurance, approved deposit taking institutions and life insurance companies;
• the Australian Securities and Investments Commission regulated areas, including managed investment schemes;
• auditing self‑managed superannuation funds;
• privity letter requests; and
• auditing grant acquittals.

Influence the development of international and national standards by liaising with the IAASB and other national standard‑setting organisations to contribute to improving the quality of global auditing and assurance standards. This includes working with the New Zealand Auditing and Assurance Standards Board to harmonise Australian and New Zealand auditing standards and undertake joint projects where possible, consistent with the Outcome Proposals agreed in August 2009 by the Australian and New Zealand Prime Ministers.

Through research, communication and consultations to identify and respond to emerging issues on a timely basis, including participating in the early stages of the development of legislation and regulation to better define audit requirements, including:

• development of AUASB Bulletins on various current topics relating to the Board's areas of interest, including the value of using the AUASB auditing framework;
• updating the Audit Committees Guide; and
• promoting thought leadership on the importance of achieving and heightening audit quality.

Through a detailed communication and consultation plan, the AUASB strategy is to increase awareness of the AUASB's work among its stakeholders, and to ensure that stakeholders' views are appropriately considered in the AUASB activities and initiatives.

Program expenses

There are no significant changes to estimates across the forward years.

Table 2.2: Program expenses

	2012‑13 Revised budget $'000	2013‑14 Budget $'000	2014‑15 Forward year 1 $'000	2015‑16 Forward year 2 $'000	2016‑17 Forward year 3 $'000
Annual departmental expenses
Departmental items	2,337	2,361	2,380	2,391	2,372
Total departmental expenses	2,337	2,361	2,380	2,391	2,372

Program deliverables

The AUASB has the following deliverables:

• prepare and issue auditing standards under section 336 of the Corporations Act 2001;
• pre
  pare and issue new and revised assurance standards, standards on review engagements and related guidance; and
• contribute to the development of international auditing and assurance standards.

Program key performance indicators

The AUASB has the following key performance indicators:

• issued auditing standards are high quality, developed on a timely basis, are consistent with those developed by the IAASB and are based on the corresponding versions of International Standards on Auditing;
• issued assurance standards and standards on review engagements are high quality and developed on a timely basis;
• relevant guidance is issued to auditors, assurance practitioners and other users, as appropriate, on a timely basis;
• emerging auditing and assurance issues are identified and addressed on a timely basis;
• responses are made to all significant IAASB exposure drafts; and
• appropriate input is provided to the IAASB.

Section 3: Explanatory tables and budgeted financial statements

Section 3 presents explanatory tables and budgeted financial statements which provide a comprehensive snapshot of the agency finances for the budget year 2013‑14. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations, program expenses, and special accounts.

3.1 Explanatory tables

3.1.1 Movement of administered funds between years

The AUASB does not have any administered funds.

3.1.2 Special accounts

The AUASB does not have any special accounts.

3.1.3 Australian Government Indigenous Expenditure

The AUASB does not have any Australian Government Indigenous Expenditure.

3.2 Budgeted financial statements

3.2.1 Differences in agency resourcing and financial statements

There are no material differences between agency resourcing and financial statements.

3.2.2 Analysis of budgeted financial statements

The budgeted financial statements have been prepared on an Australian Accounting Standards basis.

The AUASB is budgeting for a break‑even operating result for 2013‑14 after adding back non‑appropriated depreciation and amortisation expenses.

3.2.3 Budgeted financial statements tables

Table 3.2.1: Comprehensive income statement (Showing Net Cost of Services)
(for the period ended 30 June)

	Estimated actual 2012‑13 $'000	Budget estimate 2013‑14 $'000	Forward estimate 2014‑15 $'000	Forward estimate 2015‑16 $'000	Forward estimate 2016‑17 $'000
EXPENSES
Employee benefits	1,542	1,541	1,591	1,645	1,701
Supplier expenses	713	721	688	655	623
Depreciation and amortisation	79	96	98	88	45
Finance costs	3	3	3	3	3
Total expenses	2,337	2,361	2,380	2,391	2,372
LESS:
OWN-SOURCE INCOME
Revenue
Sale of goods and rendering of services	32	33	35	36	37
Total revenue	32	33	35	36	37
Gains
Other	24	24	24	24	24
Total gains	24	24	24	24	24
Total own-source income	56	57	59	60	61
Net cost of (contribution by) services	2,281	2,304	2,321	2,331	2,311
Appropriation revenue	2,202	2,208	2,223	2,243	2,266
Surplus (deficit) attributable to the Australian Government	(79)	(96)	(98)	(88)	(45)
Note: Impact of Net Cash Appropriation Arrangements
	2012-13 $'000	2013-14 $'000	2014-15 $'000	2015-16 $'000	20116-17 $'000
Total Comprehensive Income (loss) less depreciation/amortisation expenses previously funded through revenue appropriations	-	-	-	-	-
plus depreciation/amortisation expenses previously funded through revenue appropriations	(79)	(96)	(98)	(88)	(45)
Total Comprehensive Income (loss) - as per the Statement of Comprehensive Income	(79)	(96)	(98)	(88)	(45)

Prepared on Australian Accounting Standards basis.

Table 3.2.2: Budgeted departmental balance sheet
(as at 30 June)

	Estimated actual 2012‑13 $'000	Budget estimate 2013‑14 $'000	Forward estimate 2014‑15 $'000	Forward estimate 2015‑16 $'000	Forward estimate 2016‑17 $'000
ASSETS
Financial assets
Cash and equivalents	200	200	200	200	200
Trade and other receivables	1,265	1,235	1,206	1,168	1,185
Total financial assets	1,465	1,435	1,406	1,368	1,385
Non-financial assets
Infrastructure, plant and equipment	208	148	82	24	33
Intangibles	8	12	10	12	5
Other	5	5	5	5	5
Total non-financial assets	221	165	97	41	43
Total assets	1,686	1,600	1,503	1,409	1,428
LIABILITIES
Provisions
Employees	563	594	625	657	690
Other	85	88	90	93	96
Total provisions	648	682	715	750	786
Payables
Suppliers	50	51	50	49	45
Other	244	183	115	37	31
Total payables	294	234	165	86	76
Total liabilities	942	916	880	836	862
Net assets	744	684	623	573	566
EQUITY
Contributed equity	595	499	401	313	268
Asset Revaluation Reserve	22	22	22	22	22
Retained surpluses or accumulated deficits	127	163	200	238	276
Total equity	744	684	623	573	566
Current assets	1,470	1,440	1,411	1,373	1,390
Non-current assets	216	160	92	36	38
Current liabilities	340	372	402	432	462
Non-current liabilities	602	544	478	404	400

Prepared on Australian Accounting Standards basis.

Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)

	Estimated actual 2012‑13 $'000	Budget estimate 2013‑14 $'000	Forward estimate 2014‑15 $'000	Forward estimate 2015‑16 $'000	Forward estimate 2016‑17 $'000
OPERATING ACTIVITIES
Cash received
Goods and services
Appropriations	2,254	2,211	2,217	2,236	2,275
Other	80	61	70	78	37
Total cash received	2,334	2,272	2,287	2,314	2,312
Cash used
Employees	1,512	1,512	1,560	1,613	1,668
Suppliers	743	757	733	708	606
Other	-	-	-	-	29
Total cash used	2,255	2,269	2,293	2,321	2,303
Net cash from (used by) operating activities	79	3	(6)	(7)	9
INVESTING ACTIVITIES
Cash used
Purchase of property, plant and equipment	89	39	31	31	47
Total cash used	89	39	31	31	47
Net cash from (used by) investing activities	(89)	(39)	(31)	(31)	(47)
FINANCING ACTIVITIES
Cash received
Contributed equity	37	36	37	38	38
Total cash received	37	36	37	38	38
Net cash from (used by) financing activities	37	36	37	38	38
Net increase (decrease) in cash held	27	-	-	-	-
Cash at the beginning of the reporting period	173	200	200	200	200
Cash at the end of the reporting period	200	200	200	200	200

Prepared on Australian Accounting Standards basis.

Table 3.2.4: Departmental statement of changes in equity — summary of movement (Budget year 2013‑14)

	Retained surpluses $'000	Asset revaluation reserve $'000	Other reserves $'000	Contributed equity/ capital $'000	Total equity $'000
Opening balance as at 1 July 2013
Balance carried forward from previous period	595	22	-	127	744
Adjusted opening balance	595	22	-	127	744
Comprehensive income
Surplus (deficit) for the period	(96)	-	-	-	(96)
Total comprehensive income recognised directly in equity	(96)	-	-	-	(96)
Transactions with owners
Contributions by owners
Appropriation (departmental capital budget)	-	-	-	36	36
Total transactions with owners	-	-	-	36	36
Estimated closing balance as at 30 June 2014	499	22	-	163	684

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Departmental capital budget (DCB) statement

	Estimated actual 2012‑13 $'000	Budget estimate 2013‑14 $'000	Forward estimate 2014‑15 $'000	Forward estimate 2015‑16 $'000	Forward estimate 2016‑17 $'000
NEW CAPITAL APPROPRIATIONS
Capital budget - Bill 1 - DCB	37	36	37	38	38
Total new capital appropriations	37	36	37	38	38
Provided for:
Purchase of non-financial assets	37	36	37	38	38
Total Items	37	36	37	38	38
PURCHASE OF NON-FINANCIAL ASSETS
Funded by capital appropriation - DCB	89	39	31	31	47
TOTAL	89	39	31	31	47
RECONCILIATION OF CASH USED TO ACQUIRE ASSETS TO ASSET MOVEMENT TABLE
Total purchases	89	39	31	31	47
Total cash used to acquire assets	89	39	31	31	47

Prepared on Australian Accounting Standards basis.

Table 3.2.6: Statement of asset movements — departmental

	Buildings $'000	Other infrastructure, plant and equipment $'000	Intangibles $'000	L&B, IP&E held for sale $'000	Total $'000
As at 1 July 2013
Gross book value	-	589	50	-	639
Accumulated depreciation/amortisation and impairment	-	380	42	-	422
Opening net book balance	-	209	8	-	217
Capital asset additions
By purchase - appropriation ordinary annual services	-	25	14	-	39
Total additions	-	25	14	-	39
Other movements
Depreciation/amortisation expense	-	86	10	-	96
Total other movements	-	86	10	-	96
As at 30 June 2014
Gross book value	-	614	64	-	678
Accumulated depreciation/amortisation and impairment	-	466	52	-	518
Closing net book balance	-	148	12	-	160

Prepared on Australian Accounting Standards basis.