1.22 Statements about the future, by their very nature, involve uncertainty and rely on circumstances that may or may not occur. From an assurance review perspective, the risk of misstatement about future occurrences is higher than the risk of a misstatement about an event that has occurred and where sufficient documentary evidence can be provided. Generally, the longer the timeframe involved in the forecast the more uncertain are the underpinning assumptions, and the greater the risk of actual outcomes differing materially from forecast outcomes.
1.23 Some information in the DMO's PDSSs contains forecasts for achieving project milestones (for example, FOC) and expected developments which may impact on the project (for example, technology development). Presently, this information draws on a large range of DMO and contractor systems and processes, with varying levels of internal control. As schedule is the major issue for the management of the DMO's Major Projects34, alternative processes for the validation of prospective information are available to the DMO, for example the Wedgetail project where independent experts were consulted on the ability to achieve the technical solution, and thereby the implications for the final schedule.
1.24 In accordance with the agreement between the DMO and the ANAO, the review of prospective information has been excluded from the scope of our review. Nevertheless, the ANAO and DMO have continued to invest resources in this area as part of the development of the 2009-10 MPR. However, the ANAO's assessment of the systems and processes currently in place is that they do not provide sufficient documentary evidence over prospective information within the PDSSs to support the information being included in the review by the ANAO.
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34 Australian National Audit Office, 2009-10 MPR, Part 2, p.73.