Today the Auditor-General of New South Wales, Grant Hehir, released his Volume One Report to Parliament for 2014. The observations included in this report are designed to inform readers of common findings from the 2013 financial and performance audits so agencies and audit committees can use them to identify issues that may be relevant to their organisations.

Key messages from 2013

Financial and Performance Reporting

‘The 2013 audits reported significant improvements in the accuracy and timeliness of agency financial statements though there is still more room for improvement,’ said the Auditor-General.

‘Fewer qualified audit opinions were issued, early close procedures were largely successful and there was a significant reduction in issues with asset valuations,’ said the Auditor-General. ‘More needs to be done to reduce the time it takes for agencies to prepare their financial statements and for them to be audited,’ he added.

Financial Controls

Sound accounting policies, processes and controls improve the consistency, quality and timeliness of financial and management information.

‘The 2013 audits identified that even when there are clear expectations on what services are expected to deliver, poor quality or limited use of management information often impacts the efficiency and effectiveness of services provided,’ said the Auditor-General.

The NSW public sector needs to resolve issues surrounding the control of significant assets; have the ability to adjust their asset portfolios quickly and efficiently to meet changes in demand or costs; and ensure consistent and comprehensive maintenance plans are in place.

‘Information security in IT systems remains an issue along with agency testing of disaster recovery plans for key financial systems,’ said the Auditor-General.
The sector also needs to take further action to control its employee costs by better managing overtime and excessive leave balances.

Governance

The NSW public sector needs to improve governance frameworks so they clearly articulate accountabilities, ensure consistent data is used, establish key performance indicators and better manage risk in a changing environment.

Some audits have highlighted poor coordination of services between agencies and limited management oversight and reporting.

Services Delivery ‘NSW Government agencies have different approaches and levels of maturity when managing their shared service providers,’ said the Auditor-General. ‘Sometimes there are no service level agreements in place. When agreements do exist, some of them do not clearly define what services are to be provided, the responsibilities of parties, how performance is to be measured and pricing,’ he added.

Future Audit Program

Future audit reports to parliament and agencies will focus on the government’s progress with its key priorities in the State Plan 2012 and the major public sector reforms that underpin their achievement.

Financial audits will, in particular, track government progress with Treasury’s Financial Management Transformation Program, which aims to raise the quality of financial management and financial reporting across the NSW public sector.

‘Financial information must play an integral part of organisational planning and operational activity. Costs need to be linked to outcomes and integrated with operational, financial and risk information. Decision-makers need to fully understand the financial consequences of the choices they make,’ said the Auditor-General.

Further information

Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664; email: barry.underwood@audit.nsw.gov.au

Volume One 2014 - Areas of focus from 2013