Saturday, July 6, 2019

NSW Government public statements raise audit red flags: Rob Stokes reliance on "material accuracy" is not accurate and suggests material exclusions in public accounts

by Ganesh Sahathevan

As reported by Jacob Saulwick of the Sydney Morning Herald:

Planning Minister Rob Stokes and the Greater Sydney Commission are throwing their support behind the organisation’s chief executive, saying they are satisfied with the “material accuracy” of biographical information included in annual report

Mr Stokes’ spokeswoman did not answer questions about what was meant by “material accuracy,” and whether it implied a lower standard of accuracy appropriate for annual reports tabled in parliament.

Materiality with regards information in an annual report has a specific meaning.The concept of materiality is used to determine the inclusion or exclusion of items from an annual report.

Accuracy of course goes to the truth of a given statement.

While what is material and what is accurate can be open to argument, conflating both concepts in a phrase like "material accuracy" suggests an appalling misunderstanding of basic accounting concepts if not a too clever use of language to conceal the lack of accuracy in a material fact.

If the CEO of a public company attempted to explain away a discrepancy by use of weasel words like "material accuracy" the shares in that company would be sold down, and its auditors would be expected to investigate the discrepancy as well as be on the alert for any other matters that the company may be concealing.

The statement by Rob Stokes and his officers is an obvious red flag that NSW Audit should not ignore. As reported previously on this blog (see stories below) even the Attorney General NSW is not averse to excluding inconvenient matters from  annual reports for which he is responsible.

Legal Profession Admission Board Annual Report 2015-16 shown to be incomplete and deficient by publicly available documents,including documents of the Australian Academy Of Law

by Ganesh Sahathevan
Accreditation of PLT providers The LPAB also determines applications from
institutions which offer courses of practical legal training (PLT). Accreditation or
reaccreditation  recognises that successful completion of the course provides the
required competencies for entry-level lawyers set out in Schedule 2 of the Legal Profession Uniform Admission Rules 2015. Similar to its decision in relation to the
reaccreditation of law courses, the LPAB determined that it would reaccredit existing
PLT providers in NSW for a period of 2 years, pending review of the accreditation

The College Of Law Sydney is the largest issuer of PLT certificates in NSW. It is in essence part of the NSW legal establishment, having been once owned by the NSW Law Society.
Consequently statements by its long standing  CEO and Principal ,Neville Carter, which are  readily available in the public domain,cannot be considered irrelevant to the LPAB’s disclosures in its 2015-16 Annual Report. In the words of Neviile Carter , from a paper presented at an  Australian Academy of Law Conference held between  11-13 August 2017 : 
 Increasingly, there were complaints from students, law firms and other stakeholders addressing a variety of issues best summarised in terms of three main areas of concern; uncertainty, unevenness and unfairness. In April 2014 the Board commissioned a Stakeholder Consultation intended to investigate the basis for these concerns, to provide reliable evidence of perceptions of need and a fact-based evaluation of the key issues. Ultimately, its purpose was to inform recommendations to regulators about priorities for a national review of the PLT sector 
Senior executive staff at the College subsequently participated in more than one hundred consultation meetings involving regulators, firms and other employers, professional associations, students, teachers, courts and government. The volume of qualitative information arising from the process was large. Surprisingly, the main themes which emerged were almost entirely about time, cost, flexibility, clarity and utility of the system. 
   Project leaders had expected that, consistent with history, the dominant concerns of stakeholders would be about “standards” in various dimensions, ultimately sourced in opinions about the relative capabilities of the graduates. However, in a post GFC-world, it was plain that the concerns of the stakeholders of the Australian legal education system were very different, essentially economic and logistical in nature.  
“Utility of the system” is an interesting phrase, given the historic complaints about course content.As re-published on the Realpolitikasia blog,quoting the Australian trade paper Lawyers’ Weekly:
Stephanie Booker, another (College Of Law )  PLT student, questioned whether ‘practical legal training’ is an accurate term. “[My course] certainly taught me where to look for things that I may need — rules, areas of law… As for helping me to apply these rules, there is a huge difference between the reality of my workplace and the comfort of my PLT course. For example, I find that the way I draft letters for [my course] is not acceptable in my workplace, and vice versa.”
The LPAB in its Annual Report gives the impression of a routine renewal of accreditation despite the complaints against the College Of Law,which go back to at least 2006.
The College’s CEO  has admitted that the problems have persisted well into at least the middle of this decade and his admission is a matter of public record.
The LPAB’s 2015-16 Annual Report cannot therefore be considered complete;the fact that its contents are contradicted by a publicly available statement of the CEO of an entity it supervises suggests that the exclusion of that information  is not accidental.
As this writer has shown in an earlier post (see below) this is not the only exclusion from the LPAB’s Annual Reports.

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