Key findings

This audit focused on the results of financial audits of local councils, county councils and joint organisations for 2025.  

• Financial reporting quality has improved.
• Financial sustainability continues to be a concern for some councils.
• Water supply infrastructure needs $1 billion to ensure access to safe and secure water.
• Councils held $5.4 billion in local infrastructure and other developer contributions, but spending was low for some.
• Capital project guidance is outdated and inadequate.
• Most councils lack an artificial intelligence strategy and governance.
• Significant cyber security control deficiencies exist. 

Key insights for committees

• Timely financial reporting assists decision making, governance and accountability to communities: Performing early financial reporting procedures, such as completing valuations by 30 June, will enable more complete draft financial statements and reduce the risk of requiring adjustments.
• Effective governance and oversight is critical for capital projects: Governance bodies with appropriate expertise, independence set up to challenge assumptions and major decisions and authority and regular assurance reviews will support risk mitigation.
• Openness, transparency and accountability support financial sustainability: Councils can respond to early warning signs by reporting on lead and lag performance indicators, where there is clarity on how decisions are reached and when committees are involved in reviewing and questioning key financial reports.
• Oversight of AI will ensure sound implementation: Senior leaders that are informed of the opportunities and challenges in AI, are better positioned to champion strategic initiatives, resourcing, and ensure that ethical and governance standards are upheld. 

Key findings

This audit examined whether Corrective Services NSW and Youth Justice NSW (the agencies) provide effective and efficient support and programs for First Nations peoples in custody and after release to reduce reoffending.

• The agencies have invested in support for First Nations peoples.
• The agencies have not operationalised systemic and structural transformation.
• The agencies do not monitor, evaluate or report on expenditure and outcomes for First Nations peoples.
• The agencies have not established governance and accountability arrangements to support their targets.
• The agencies’ assessment tools disproportionately impact First Nations peoples.
• The agencies have not identified culturally appropriate post-release services.
• The agencies have not taken sufficient steps to adapt their systems to growth in remand. 

Key insights for committees

• Strategy without operationalisation increases risk: Strategies require translation into funded actions and changes to frontline practice to achieve outcomes.
• Governance and accountability must align to material risks: Where agencies identify a strategic risk, clear ownership, oversight forums, and measurable controls should be demonstrated.
• Outcome and expenditure tracking is essential: Inability to link spending to outcomes undermines value‑for‑money assurance.
• Policy commitments must be matched by system and capability change: Failure to embed reforms into business systems, tools, and staff capability is a recurring risk.
• Data and tools can create unintended bias or exclusion: Testing whether risk assessment or prioritisation tools embed structural biases is essential.
• Transitions between agencies are high‑risk points: Weak referral frameworks and hand‑offs undermine outcomes across human services systems.

Key findings

• There is limited public reporting of major capital project budgets, costs and timelines.
• The estimated total costs of some projects have increased significantly.
• There is limited public information on the total costs of completed projects.
• The State wrote off $907 million of capital project costs over the past 3 years.
• There is limited integration of risk oversight at the enterprise level in multi-agency led projects.
• Infrastructure NSW applies an investor assurance framework to provide scrutiny over capital projects.

Key insights for committees 

• Poor upfront planning and inadequate scope definition are a common cause of cost overruns and delivery delays: Challenging the assumptions and cost estimations will support project planning.
• Governance and assurance arrangements: Governance bodies for major capital projects that are established with appropriate expertise, independence and authority to challenge assumptions and major decisions will improve performance.
• Proactive oversight reduces risk of contract variations, disputes and cost escalation: Visibility over high-risk contracts and significant contract variations can assess whether management is proactively managing project delivery risks to achieve value for money.
• Systematically embed lessons learned into future projects: Without adequate post-delivery evaluation, lessons learnt may be lost and systemic issues, such as scope creep, cost escalation and performance shortfalls may be repeated in future projects.

Key findings 

This audit assessed whether the Office of Local Government administered the Local Government Recovery Grants program in line with the Grants Administration Guide and the Program Guideline.

• Funding was administered in line with the Grants Administration Guide and the Program Guideline.
• Some of the monitoring and reporting requirements were not implemented.
• There is no clear plan to finalise the program.
• Roles and responsibilities have not been defined.

Key insights for committees 

• Aligning process with the Grants Administration Guide: Policies, procedures and assurance processes should be in place to ensure grant programs are administered in line with the Guide, including in relation to conflict of interest and fraud risk management.
• Planning for the whole grant lifecycle from inception: Acquittals processes should be implemented at the outset of grant funding arrangements and be a continuous part of administration through to finalisation.
• Clarity in roles and responsibilities for shared delivery: Where administering a grant on behalf of another entity, roles and responsibilities should be sufficiently documented to support accountability.