Why do I have to provide this information?
The members of the Audit and Risk Committee (ARC) review the financial statements at key dates during the financial year. These dates are usually determined by the reporting schedule agreed in the Client
Service Plan issued by the Audit Office.
The aim of the ARC review is to provide independent advice to the Secretary on the content and form of the financial statements. ARC members will also provide feedback to the entity on any issues that they feel should be resolved before the statements are provided to the Audit Office.
The Treasury ARC reviews more than 10 sets of separate financial statements at early close, and again at year-end. To be useful in the review role, the ARC must know as much as possible about variances and other related issues before these financial statements are presented to the Audit Office.
To enable the members to review the accounts productively, the Committee requests a cover sheet to accompany each set of statements (suggested template over page). This cover sheet should contain:
 The entity’s name, purpose, key objectives, tasks, and the year being reported on

The big issues for the reporting year and how they affect the financial information

Details of the major variances from the previous year

Version to version explanations e.g. changes since the early close, or since the previous version submitted to the ARC

For draft and/or final statements comment on whether you have adopted previous recommendations made by the ARC in relation to the accounts, and if not, why not.

Issues to watch for next year
Review of Financial Statements for Early Close
The Committee receives the Early Close Pro-forma Financial Statements at the same time that they are sent to the Audit Office. Coversheets should be used for them too.
The Committee reviews these pro-forma statements in accordance with the Audit and Risk Committee
Charter 1 (or Shared Arrangements Charter) and reports any observations to the Chief Audit Executive
(CAE). The CAE passes these comments to the entity concerned, to be introduced into its discussions with the Audit Office.
Review of Financial Statements for Year End
The Committee receives the Draft Financial Statements before they are sent to the Audit Office. It reviews these documents and provides feedback to management prior to submission of the statements to the Audit
Office.
The Chief Financial Officer and the accounting officer who developed the statements in question should attend the ARC meeting where the statements are discussed, so that they can debate any ARC comments with which they disagree and clarify any concerns members may have.
How should the cover sheet look?
The Committee seeks a concise summary and analysis of key issues and major variances that are detailed in the financial statements. You may need to include some scene-setting to explain the background of a particular accounting treatment or decision, but keep this concise.
Attachments
Annexure 1: Agency Accounts Coversheet Template – a WORD document that provides the format for your brief that accompanies each set of financial statements provided to the Committee.
Appendix 1: Guidance on the application of materiality thresholds for Annexure 1.
1 S4.3 of the Treasury Audit & Risk Committee Charter. The Treasury Audit & Risk Committee Charter and the Shared
Arrangements Charter are both available on the Internal Audit and Risk Pages of Treasury’s website.
Treasury Financial Statements Coversheet Template reviewed: September 2015

SUBMISSION OF [EARLY
CLOSE/DRAFT/FINAL] FINANCIAL
STATEMENTS OF [NAME OF ENTITY] FOR
THE 201X-1X FINANCIAL YEAR
Enter text here.
WAS THE ENTITY ACTIVE DURING THE FINANCIAL PERIOD? Y/N
MATERIALITY THRESHOLD(S) 2
Include information on any key issues impacting on the current period’s financial statements and financial performance here.
Examples include:
 significant asset revaluations
 significant revenue /expense items – i.e. significant in size compared to the previous year
 significant adjustments direct to equity – for example from agency restructures
 new disclosures resulting from the adoption of accounting standards, changes in accounting policies
 discontinuing operations, sale of a significant asset , new business acquisitions etc.
 the accounting treatment of new privately financed projects
 new or significant changes to contingent liabilities/assets
 any unresolved accounting policy issues or other matters which the Audit Office has indicated may lead to the qualification of the Independent A uditor’s Report.
 major year-to-year differences
Balance sheet variances
Line Item
Description
Current
Year
Last Year
Operating statement variances
Line Item
Description
Current
Year
Last Year
Variance
($000)
Variance
($000)
Variance
(%)
Variance
(%)
Comment
Comment
Variations from Budget [delete if not applicable to your entity]
Line Item
Description
Budget Actual Variance
($000)
Variance
(%)
Comment
2 See Appendix 1 for guidance on materiality threshold(s)
Treasury Financial Statements Coversheet Template reviewed: September 2015

Balance sheet variances
Line Item
Description
Current
Year
Last Year Variance
($000)
Variance
(%)
Comment
Operating statement variances
Line Item
Description
Current
Year
Last Year Variance
($000)
Variance
(%)
Comment
Variations from Budget [delete if not applicable to your entity]
Line Item
Description
Budget Actual Variance
($000)
Variance
(%)
Comment
Anything else that you would like to let the Audit and Risk Committee know.
Treasury Financial Statements Coversheet Template reviewed: September 2015

MATERIALITY THRESHOLD(S) GUIDANCE 3
This guidance is not expected to replace an officer’s understanding of materiality as described in Accounting Standards.
Materiality by Size
Balance Sheet

greater than 10% of lines in the balance sheet is normally deemed material

Between 5-10% of balance sheet lines
– Assess: are users likely to be relying on the information in making decisions?
Operating Statement

Some judgement is required when reviewing lines in the operating statement, whether to even consider a greater than 10% or 5-10% threshold. It may require other comparison, e.g. is the level of interest consistent with the balance sheet level of borrowings.

Further, the net result can be a very small surplus (or deficit) against the level of gross expenses or revenues.
Materiality by Nature
Subjective assessment may deem a matter as material by nature if its omission, misstatement, or non-disclosure has the potential to:
1. result in an audit qualification
2. mislead financial statement users who are relying on the financial report to make important economic decisions
3. affect the discharge of accountability by the management or governing body of the entity e.g. a breach of a legislative requirement, or Treasury Policy.
3
Refer also AASB 1031 Materiality
http://www.aasb.gov.au/admin/file/content105/c9/AASB1031_07-04_COMPdec09_01-11.pdf
Treasury Financial Statements Coversheet Template reviewed: September 2015