Financial statements are prepared at a point in time, so the relevance of the information they contain reduces the longer it takes for entities to publish them. Delays in tabling an entity’s annual report, which contains its financial statements, reduces the usefulness of the financial statements to parliament and the public.
Why is timely financial information important?
Publicly available financial statements are a key source of information for parliament, the public and other interested parties.
People use government financial statements for different reasons. Parliamentarians need to understand how entities have managed public money and assets, including those allocated to them through the state budget. Community groups may want to know what grants the government has provided, so they can apply for future funding and work with government in their service delivery. Suppliers may want to understand what the government is spending money on, and what opportunities there are for future business. Other users of financial statements can include the public, employees, other governments, donors and those receiving government services.
Timely financial reporting is integral to effective decision making, and is in line with the core principles of transparency and accountability in government. It also assists the wider public in its engagement with, and trust in, the public sector.
Delays in making financial information publicly available may result in:
- information becoming less relevant to users in making decisions
- users having reduced ability to meaningfully assess entities’ financial results
- entities’ transparency and accountability to the Queensland public being weakened.
Is the publishing of public sector entity financial statements timely?
The Financial and Performance Management Standard 2019 requires ministers to table the annual reports of departments and statutory bodies – including their audited financial statements – in parliament within 3 months of the end of the financial year. Until they do this, departments and statutory bodies are not able to publish their financial statements.
QAO has found that the timeliness of financial statements being made publicly available has deteriorated since 2019. In our report State entities 2021 (Report 14: 2021–22), we found that while public sector entities have made continuous improvements to their financial reporting processes over the past few years, there have been delays in making their financial statements publicly available through the tabling of annual reports.
In 2020–21, QAO signed most of its clients’ audited financial statements well before the deadline of 31 August. However, their financial statements were published, on average, 56 days after being certified, with 98 per cent of annual reports tabled in the last week of September 2021 or later. The delay of well over a month in releasing financial information is not consistent with the community’s expectations of timeliness and transparency in government.
What is preventing the timely publication of financial information?
A minister often receives all annual reports for their portfolio at the same time. This occurs after their department has reviewed them to ensure the reports comply with the annual report requirements. This review occurs despite each entity providing a letter of compliance and compliance checklist with their annual report. This process also allows the department to provide a brief to the minister on the activities and results of the entire portfolio.
Entities who sign their financial statements and prepare their annual reports earlier must wait until the department receives and reviews all annual reports in the same portfolio.
This was particularly evident in the health portfolio in 2021. Departmental practice meant that delays with some annual reports in the health portfolio, and staffing shortages due to COVID-19, resulted in most annual reports not being provided to the minister until 2 December – up to 3 months after they were prepared. They were then tabled in parliament on 13 December.
Only one minister tabled annual reports for their portfolio over 4 successive days, with most ministers tabling all annual reports for their portfolio on one day.
How can the Queensland Government improve transparency?
Public sector entities should consider the root causes of the delay in timely release of annual reports to the public and explore opportunities to improve the process.
This may include: