Figure D1 shows the risk ratings applied to management letter points raised during an audit.

Figure D1
Risk definitions applied to issues reported in audit management letters

Figure C1 shows the dates when entities' 2016–17 financial and performance reports were certified and auditor's reports were issued.

Figure C1
Acquittal of audits

Note: FMA—Financial Management Act 1994.

Figure B1 lists the legal and trading names of the 20 entities, including one controlled entity, that form part of the Victorian water industry.

Figure B1
Water entities and controlled entity

We have consulted with all water entities, DELWP, ESC and VicWater throughout the course of the audit. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report, or relevant extracts, to those entities and asked for their submissions and comments. We also provided a copy of the report to the Department of Premier and Cabinet.

Responsibility for the accuracy, fairness and balance of those comments rests solely with the entity head.

Responses were received as follows:

We consider an entity to be financially sustainable if it can maintain operations over the long term based on existing revenue and expenditure policies. It must also be able to absorb short-term fluctuations in income and expenditure from reasonably foreseeable internal and external factors.

We separately assess the financial performance and position of each cohort over the 2016–17 financial reporting period, because their results are affected by varying circumstances.

3.1 Context

Effective internal controls help entities meet their objectives reliably and cost‑effectively. Entities require strong internal controls to deliver reliable, accurate and timely external and internal financial reports.

2.1 Financial report audit opinions

Independent audit opinions add credibility to financial reports by providing reasonable assurance that the information reported is reliable and accurate. A clear audit opinion confirms that the financial report presents fairly the transactions and balances for the reporting period, in keeping with the requirements of relevant Australian Accounting Standards and applicable legislation. We carried out our financial audits of the water entities in accordance with the Australian Auditing Standards.

Water entities provide a range of water services, including supplying water and sewerage services. Entities may also manage bulk water storage and specific recreational areas, such as caravan parks. Water entities are standalone businesses responsible for their own management and performance.

Victoria's water sector is made up of 19 water entities and one controlled entity. Since the results of the controlled entity are consolidated into its parent entity, we do not discuss this entity separately in our report. Appendix B includes a list of all 20 entities.

Water entities provide a range of water services, including supplying water and sewerage services, managing bulk water storage and looking after specific recreational areas, such as caravan parks. Victoria's water sector is made up of 19 water entities and one controlled entity.

The board of each water entity reports to the Minister for Water through the Department of Environment, Land, Water and Planning (DELWP).