Volume One 2012 focusing on themes from 2011

The Auditor-General, Mr Peter Achterstraat, today released his Volume One Report to Parliament for 2012. The report includes a summary of key issues from his 2011 financial audits of NSW Government agencies’ financial statements, recent performance audits and reviews of information systems.

Below standard financial reporting (pgs 16 to 22)

NSW Government agencies continue to submit financial reports for audit with numerous errors and incorrect accounting treatments.

‘I identified 1,256 misstatements, of which 540 needed to be corrected by agencies before I could issue my audit opinions. There were 25 errors each exceeding $20 million’, Mr Achterstraat said.

‘I have made many recommendations for a number of years to improve the quality and the timeliness of financial reporting in NSW Government agencies. Agencies’ financial reporting systems, risk management processes and the quality of accounting and finance personnel all need to improve’, said Mr Achterstraat.

‘To meet the needs of the 21st century it is important that all agencies have access to suitably qualified and technically competent accounting and finance staff’, he added.

Asset management needs to improve (pgs 12, 14 & 23)

The NSW public sector has over $200 billion in buildings and infrastructure that are crucial to delivering government services. All require maintenance and periodic upgrades or replacement.

‘I am concerned whether the State is managing its assets properly. I could only find limited published information on how quickly assets are being renewed relative to them being used up – one of the fundamental pieces of information necessary to properly manage assets’, Mr Achterstraat said.

‘At an agency level, I have made many recommendations on how to better manage assets, ranging from agencies’ properly identifying what assets they have, to properly reviewing the useful life of assets so they can adequately provide for their maintenance, upgrade or replacement’, he added.

Weak IT services contract management at the former RTA (p 36 to 40)

‘I investigated a complaint that the former Roads and Traffic Authority (RTA) had wasted taxpayers’ money by not properly managing two large, long-term information technology services contracts’, Mr Achterstraat said.

‘I found weaknesses in RTA’s contract management’, said Mr Achterstraat. ‘RTA failed to do enough to claim rebates from one contractor. They also paid for services that were not provided by another contractor - in one case, I identified a potential overpayment of $112,000’, Mr Achterstraat said.

‘My findings on two significant contracts made me doubt whether RTA was effectively managing its other IT services contracts and getting value for money’, he added.

Finance Systems at Risk (pgs 26 & 27)

'I am concerned about the State’s readiness to recover its financial systems’, said Mr Achterstraat. ‘Nearly 1 in 5 of the State’s largest agencies do not have a disaster recovery plan for their financial systems, while nearly a half of the rest have not tested a significant portion of these plans in the last 12 months’, he added.   'Disaster recovery plans must be well constructed and regularly tested’, Mr Achterstraat said.

Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au