Chew Ng

Public Sector Corporate Governance Disclosures: An Examination of Annual Reporting Practices in Queensland

In the public sector, corporate governance is an expression that is yet to be explicitly defined. This paper examines the existing public sector literature in order to derive a set of broad principles of corporate governance in the public sector. These principles are then applied through a content analysis of corporate governance disclosures in a group of government-owned corporations, state government departments, local governments and statutory bodies. The results indicate the set of principles derived is generally applicable to various forms of public entities. However, due to a lack of an established public sector corporate governance framework, the disclosure of corporate governance is piecemeal. Government-owned corporations achieved better disclosure practices in most principles than other public sector bodies. The paper aims to stimulate debate on public sector corporate governance and provides a basis for a more extensive survey on corporate governance disclosures.

The Relative Ability of Earnings and Cash Flow Data in Forecasting Future Cash Flows: Some Australian Evidence

Purpose: This paper examines the relative predictive ability of earnings, cash flow from operations as reported in the cash flow statement, and two traditional measures of cash flows (i.e. earnings plus depreciation and amortisation expense, and working capital from operations) in forecasting future cash flows for Australian companies. Further, an empirical investigation of the extent to which firm size, as a contextual factor, influences the predictability of earnings and cash flow from operations is presented. Methodology: Our sample includes 323 companies listed on the Australian Stock Exchange between 1992 and 2004 (3,512 firm-years). We employ the ordinary least squares and fixed-effects approaches to estimate our regression models. To evaluate the forecasting performance of the regression models, both within-sample and out-of-sample forecasting tests are employed. Findings: We provide evidence that reported cash flow from operations has more power in predicting future cash flows than earnings and traditional cash flow measures. Further, the predictability of both earnings and cash flow from operations significantly increases with firm size. However, the superiority of cash flow from operations to earnings in predicting future cash flows is robust across small, medium and large firms.

The practice of probity audits in one Australian jurisdiction

“Probity audits” are a new type of audit gaining some popularity in the Australian public sector. Probity audits refer to independent reviews of government privatisations, contracting out projects (government procurements), and expression of interests to ascertain whether procedures followed are consistent with appropriate regulations, guidelines and best practice principles of openness and transparency. In recent times probity audits have been used by Australian public sector agencies in such activities as procurement, disposal of assets and contracting out of services. They provide one means of demonstrating open and accountable government processes, and assuring taxpayers that they are receiving value for money. However, there is scant empirical evidence on this topic. Surveys government departments in one Australian jurisdiction on their practices in relation to probity audits. Concludes that, while many have conducted probity audits, the concept is not fully understood. Further, the majority of the audits conducted were “real‐time” and performed by parties outside the public sector. Concludes by suggesting areas for further research.

Australian auditors‐general involvement in probity auditing: evidence and implications

Probity audits, real time audits which review compliance with process and conformance with guidelines, are gaining popularity in the Australian public sector. Prior research has noted that the conduct of probity audits by auditors‐general may pose problems for their independence. This paper provides empirical evidence on the extent to which probity audits are performed by auditors‐general in Australia, and the perceptions of auditors‐general to any dilemmas posed. The study finds that approximately half of the auditors‐general conduct probity audits, and that “independence” is a key concern for those who do not perform these tasks. This in‐depth study of probity audits contributes to an understanding of the changing nature of public sector audit.