Volume Fourteen 2014 focusing on Trade and Investment

Auditor-General's Report to Parliament

17 December 2014

Today the Auditor-General of New South Wales, Grant Hehir, released his Volume Fourteen 2014 Report to Parliament focusing on agencies in the Trade and Investment, Regional Infrastructure and Services cluster.

There are 63 agencies in the DTIRIS cluster. These agencies include nine electricity and eight water agencies that were reported in the NSW Auditor-General’s report to Parliament Volume Five 2014 on 11 November 2014. Commentary in this volume is on the remaining 46 DTIRIS cluster agencies.

Financial reporting and budget management require further improvement

The quality of financial statements in the trade and investment cluster needs to improve.

Inadequate controls over financial reporting existed across much of the cluster. Twenty-nine agencies had misstatements in 2014 compared to 28 entities reported in the previous year. In total there were 129 reported misstatements in 2014 – an improvement from 141 in 2013.

There were delays in audits predominantly due to cluster agencies not providing documents on time and a significant portion of those documents not reconciling to the financial statements. Some agencies also submitted financial statements for audit without appropriate work papers. These delays lead to audit opinions issued after the statutory deadline for ten agencies and a further six agency audits are ongoing.

The financial statements of the cluster agencies where audits are completed received unqualified audit opinions.

Prior period errors were again significant in DTIRIS’s 2013-14 financial statements. In particular, land under water and crown lands had not been properly recognised and some entities should have had separate financial statements in previous years.

Many cluster agencies’ actual revenues, expenses, assets and liabilities varied from budget by more than five per cent, suggesting financial management and budgetary controls could be improved.

'A focus is needed on the quality and timeliness of financial reporting,' said the Auditor-General.

'Cluster agencies should strengthen budgetary controls and improve financial management to contribute to better financial outcomes,' he added.

Asset maintenance backlog

DTIRIS management do not systematically track maintenance backlog at the department or cluster level. Four cultural institutions confirmed their backlog maintenance was $23.7 million at 30 June 2014 ($24.0 million at 30 June 2013).

'DTIRIS should undertake a review of all major assets to determine the extent of backlog maintenance,' said the Auditor-General.

Reducing agencies in the cluster

The government recently improved efficiency by reducing the number of cluster agencies.

'There is opportunity for greater efficiency gains by further reducing the number of reporting agencies in the cluster,' the Auditor-General said.

Aboriginal land claims

The number of unprocessed Aboriginal land claims has remained steady for the past three years at nearly 26,000 - 504 of these are more than 10 years old. Additionally, DTIRIS has not transferred the land title to the approved claimants for 287 approved land claims at 30 June 2014, up from 260 in 2013.

'DTIRIS should reduce the number of unprocessed claims and clear approved land claims where the land title has not been transferred,' said the Auditor-General.

Shared services agreements need to be improved

DTIRIS has been providing corporate services without signed agreements to many cluster agencies for several years. There were no signed agreements for 2013-14. Ten agencies signed agreements between May to July 2014, seven of these included key performance indicators, however none contained penalty clauses for not meeting services levels.

'Signed agreements that clearly define roles, responsibilities, and performance expectations are essential,' said the Auditor-General.

'DTIRIS should sign service partnership agreements with all serviced divisions and agencies. Such agreements should include relevant key performance indicators and penalty clauses for not meeting service levels,' he added.

Further information

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

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