State Government agencies need to improve the way employees accept gifts, according to a report by the Auditor General.
Auditor General Colin Murphy said while some issues had been highlighted in the 2011-12 financial reports of the agencies audited, the number of issues identified in relation to financial and management controls and key performance indicators were down from last year.
The annual financial Audit Results Report was tabled in the WA State Parliament on Wednesday and covered a number of government departments and agencies such as the Rottnest Island Authority and the Western Australian Tourism Commission.
Mr Murphy said most of the 11 agencies audited needed to improve their policies and practices for employees accepting gifts.
"Employees at six agencies accepted a total of 38 gifts without the approval of another officer, which is a fundamental control to prevent conflicts of interest," he said.
"Eight of the agencies need to monitor compliance with their policies to identify potential conflicts of interest or trends such as frequent providers or receivers of gifts."
A total of 835 gifts were listed as being accepted.
Most were worth less than $100, while some were worth up to $1100, including invitations to corporate functions, tickets to sporting events, low value ornaments and consumables.
Mr Murphy said agencies needed to understand that no matter how appropriate it may be, the acceptance of any gift by a public officer had the potential to cause a real or perceived conflict of interest.
"This risk needs to be properly monitored and managed," he said.
The report also found that financial and management issues identified within some government agencies last year remain unresolved a year on.
"The number of financial and management control deficiencies rated as significant and requiring prompt attention did not improve from last year, and there was a 15 per cent increase in the number of information system control weaknesses," Mr Murphy said.
"Disappointingly, 19 per cent of the financial and management control weaknesses at 24 agencies were unresolved from last year."
A statement in response from the Public Sector Commission said the Commission did not mandate a gifts policy and it was not “necessarily appropriate to have a blanket ‘one size fits all’ policy for all agencies.”
“Rather, the Commission requires all agencies to develop a code of conduct that addresses gifts and benefits,” the statement said.
“The Commission will continue to work with agencies to assist in evaluating the workability of policies, the strength and reliability of compliance controls.
“However, as always, responsibility for management of issues and for engendering a commitment to integrity in the agency rests with the employing authority.”
An accountable and ethical decision making training program and a conduct guide have been developed by the Commission to assist agencies in the development of their own code.
The report noted that the majority of the management deficiencies were simple to fix.
"But while not resolved, they leave agencies vulnerable to security incidents and disruptions to systems," it said.
"These control systems reduce the risk of error and fraud and provide assurance to management and auditors that management reports and financial statements are materially correct."
Financial weaknesses included reconciliation procedures not routinely being done on a periodic basis and procedures not being reviewed by an appropriate officer.
"This can affect the accuracy and completeness of financial reporting," the report noted.
"Reconciliations can also be more time consuming and costly if performed a long time after the underlying transactions."
Mr Murphy said Parliament and the community need to know the state's finances were well managed.
"I expect all agencies to take note and act on the findings throughout this report," he said.