Reports
Actions for Planning, Industry and Environment 2021
Planning, Industry and Environment 2021
This report analyses the results of our audits of the Planning, Industry and Environment cluster agencies for the year ended 30 June 2021.
Our preferred approach is to table the ‘Report on State Finances’ in Parliament before any other cluster report. This is because the 'Report on State Finances' focuses on the audit results and observations relating to the Total State Sector Accounts, in effect a consolidation of all government agencies. This year the 'Report on State Finances' has been delayed due to significant accounting issues being considered in the Total State Sector Accounts and which may impact the Treasury and Transport clusters.
As there are no outstanding matters relating to audits in the Planning, Industry and Environment cluster impacting the Total State Sector Accounts we have decided to break with normal practice and table this cluster report ahead of the ‘Report on State Finances’.
What the report is about
The results of the Planning, Industry and Environment cluster agencies' financial statements audits for the year ended 30 June 2021.
What we found
Unmodified audit opinions were issued for all completed 30 June 2021 financial statements audits of cluster agencies. Three audits are ongoing.
An 'Other Matter' paragraph was included in the Independent Planning Commission's (the IPC) audit opinion because the prior year comparative figures were not audited. Prior to 2020–21, the IPC was not required to prepare separate financial statements under the Public Finance and Audit Act 1983 (PF&A Act). The financial reporting provisions of the Government Sector Finance Act 2018 now require the IPC to prepare financial statements.
The number of identified misstatements increased from 51 in 2019–20 to 54 in 2020–21.
The 2010–11 to 2019–20 audits of the Water Administration Ministerial Corporation’s (the Corporation) financial statements are incomplete due to insufficient records and evidence to support the transactions of the Corporation, particularly for the earlier years. Management has commenced actions to improve the governance and financial management of the Corporation. These audits are currently in progress and the 2020–21 audit will commence shortly.
There are 609 State controlled Crown land managers (CLMs) across New South Wales that predominantly manage small parcels of Crown land.
Eight CLMs prepared and submitted 2019–20 financial statements by the revised deadline of 30 June 2021. A further 24 CLMs did not prepare financial statements in accordance with the PF&A Act. The remaining CLMs were not required to prepare 2019–20 financial statements as they met NSW Treasury's financial reporting exemption criteria.
The Department of Planning, Industry and Environment's (the department) preliminary assessment indicates that 60 CLMs are required to prepare financial statements in 2020–21. To date, no CLMs have prepared and submitted financial statements for audit in 2020–21.
There are also 120 common trusts that have never submitted financial statements for audit. Common trusts are responsible for the care, control and management of land that has been set aside for specific use in a certain locality, such as grazing, camping or bushwalking.
What the key issues were
The number of matters we reported to management increased from 135 in 2019–20 to 180 in 2020–21, of which 40 per cent were repeat findings.
Seven high-risk issues were identified in 2020–21:
- system control deficiencies at the department relating to user access to HR and payroll management systems, vendor master data management and journal processing, which require manual reviews to mitigate risks
- deficiencies related to the Centennial Park and Moore Park Trust's tree assets valuation methodology
- the Lord Howe Island Board did not regularly review and monitor privileged user access rights to key information systems
- the Natural Resources Access Regulator identified and adjusted three prior period errors retrospectively, which indicate deficiencies within the financial reporting processes
- deficiencies relating to the Parramatta Park Trust's tree assets valuation methodology
- lease arrangements have not been confirmed between the Planning Ministerial Corporation and Office of Sport regarding the Sydney International Regatta Centre
- the Wentworth Park Sporting Complex land manager (the land manager) has a $6.5 million loan with Greyhound Racing NSW (GRNSW). GRNSW requested the land manager to repay the loan. However, the land manager subsequently requested GRNSW to convert the loan to a grant. Should this request be denied, the land manager would not be able to continue as a going concern without financial support. This matter remains unresolved for many years.
There continues to be significant deficiencies in Crown land records. The department uses the Crown Land Information Database (CLID) to record key information relating to Crown land in New South Wales that are managed and controlled by the department and land managers (including councils and land managers controlled by the state). The CLID system was not designed to facilitate financial reporting and the department is required to conduct extensive adjustments and reconciliations to produce accurate information for the financial statements.
The department is implementing a new system to record Crown land (the CrownTracker project). The department advised that the project completion date will be confirmed by June 2022.
What we recommended
The department should ensure CLMs and common trusts meet their statutory reporting obligations.
Cluster agencies should prioritise and action recommendations to address internal control deficiencies, with a focus on addressing high-risk and repeat issues.
The department should prioritise action to ensure the Crown land database is complete and accurate. This will allow the department and CLMs to be better informed about the Crown land they control.
Fast facts
The Planning, Industry and Environment cluster aims to make the lives of people in New South Wales better by developing well-connected communities, preserving the environment, supporting industries and contributing to a strong economy.
There are 54 agencies, 609 State controlled Crown land managers that predominantly manage small parcels of Crown land and 120 common trusts in the cluster.
- 42% of the area of NSW is Crown land
- $33.2b water and electricity infrastructure as at 30 June 2021
- 100% unqualified audit opinions were issued for all completed 30 June 2021 financial statements audits
- 7 high-risk management letter findings were identified
- 54 monetary misstatements were reported in 2020–21
- 40% of reported issues were repeat issues
This report provides parliament and other users of the Planning, Industry and Environment cluster (the cluster) agencies’ financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Planning, Industry and Environment cluster (the cluster) for 2021.
Section highlights
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Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statements audits of agencies in the Planning, Industry and Environment cluster.
Section highlights
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Appendix one - Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for Customer Service 2021
Customer Service 2021
This report analyses the results of our audits of the Customer Service cluster agencies for the year ended 30 June 2021.
Our preferred approach is to table the ‘Report on State Finances’ in Parliament before any other cluster report. This is because the ‘Report on State Finances’ focuses on the audit results and observations relating to the Total State Sector Accounts, in effect a consolidation of all government agencies. This year the ‘Report on State Finances’ has been delayed due to significant accounting issues being considered in the Total State Sector Accounts and which may impact the Treasury and Transport clusters.
As there are no outstanding matters relating to audits in the Customer Service cluster impacting the Total State Sector Accounts we have decided to break with normal practice and table this cluster report ahead of the ‘Report on State Finances’.
What the report is about
The results of Customer Service cluster agencies' financial statement audits for the year ended 30 June 2021.
What we found
Unmodified audit opinions were issued for all Customer Service cluster agencies.
The number of monetary misstatements decreased from 48 in 2019–20 to 46 in 2020–21.
Seven out of eight agencies did not complete all mandatory early close procedures.
What the key issues were
Upon the implementation of AASB 1059 'Service Concession Arrangements: Grantors', the Department of Customer Service (the department) recognised a service concession asset, the land titling database, totalling $845 million for the first time at 1 July 2019.
The department reported several retrospective corrections of prior period errors.
The 2020–21 audits identified three high-risk and 59 moderate risk issues across the cluster. The high-risk issues were related to:
- the Department of Customer Service – internal control qualifications and control deviations in GovConnect service providers
- the Department of Customer Service – significant control deficiencies in information technology change management controls
- Rental Bond Board – uncertainties in the accounting treatment of rental bonds.
The percentage of repeat issues we report to management and those charged with governance in management letters increased from 29 per cent in prior year to 42 per cent in 2020–21 while the number of items decreased from 94 to 93.
The magnitude and number of internal control exceptions in GovConnect service providers increased resulting in additional audit procedures to address the risks of fraud and errors in the financial statements.
What we recommended
The department should improve the validation process of key valuation assumptions and inputs provided by the private operator NSW Land Registry Services. It should revisit its accounting treatment of new land titling records.
The department should ensure GovConnect service providers prioritise the remediation of control deficiencies in information technology services.
The department should continue to improve controls in cyber security management.
Cyber Security NSW and NSW Government agencies need to prioritise improvements to their cyber security resilience as a matter of urgency.
The New South Wales Government Telecommunications Authority should improve its fixed assets management and financial reporting process to accommodate its growing fixed assets profile.
Fast factsThe Customer Service cluster aims to plan, prioritise, fund and drive digital transformation and customer service across every cluster in the NSW Government.
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This report provides Parliament and other users of the Customer Service cluster’s financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Customer Service cluster (the cluster) for 2021.
Section highlights
|
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Customer Service.
Section highlights
|
Findings reported to management
Forty-two per cent of findings reported to management were repeat issues
Breakdowns and weaknesses in internal controls increase the risk of fraud and error. Deficiencies in internal controls, matters of governance interest and unresolved issues were reported to management and those charged with governance of agencies. The Audit Office does this through management letters, which include observations, related implications, recommendations and risk ratings.
In 2020–21, there were 93 findings raised across the cluster (94 in 2019–20). Forty-two per cent of all issues were repeat issues (29 per cent in 2019–20).
The most common repeat issues related to weaknesses in controls over information technology user access administration.
A delay in implementing audit recommendations increases the risk of intentional and accidental errors in processing information, producing management reports and generating financial statements. This can impair decision-making, affect service delivery and expose agencies to fraud, financial loss and reputational damage. Poor controls may also mean agency staff are less likely to follow internal policies, inadvertently causing the agency not to comply with legislation, regulation and central agency policies.
The table below describes the common issues identified across the cluster by category and risk rating.
Risk rating | Issue |
Information technology | |
High3 1 new, 1 repeat |
The financial audits identified the need for agencies to improve information technology processes and controls that support the integrity of financial data used to prepare agencies' financial statements. Of particular concern are issues associated with:
High-risk issues are discussed later in the chapter. |
Moderate2 |
|
Low1 |
|
Internal control deficiencies or improvements | |
Moderate2 |
The financial audits identified internal control weaknesses across key business processes, including:
|
Low1 |
|
Financial reporting | |
High3 |
The financial audits identified opportunities for agencies to strengthen financial reporting, including:
High-risk issues are discussed later in the chapter. |
Moderate2 |
|
Low1 |
|
Governance and oversight | |
Moderate2 10 new, 3 repeat |
The financial audits identified opportunities for agencies to improve governance and oversight processes, including:
|
Low1 3 new |
|
Non-compliance with key legislation and/or central agency policies | |
Moderate2 4 new, 4 repeat |
The financial audits identified the need for agencies to improve its compliance with key legislation and central agency policies, including:
|
Low1 1 repeat |
2020–21 audits identified three high-risk findings
High-risk findings, including repeat findings, were reported at the following cluster agencies. One of the 2019–20 high-risk findings were not resolved.
Agency | Description |
2020–21 findings | |
Department of Customer Service Repeat finding: Qualifications and control deviations in GovConnect NSW controls assurance reports |
The GovConnect information technology general controls (ITGC) provided by the department, Infosys and Unisys were qualified in 2020–21. The key controls over user access, system changes and batch process failed in all ITGC reports. Most of these deviations were not mitigated or sufficiently mitigated to address the risk of unauthorised user access. The control deficiencies in ITGC increase:
The role of the department has changed significantly from a coordinating agency on behalf of GovConnect customers to a GovConnect IT service provider. It is leading a new IT operating model called ‘Service Integration and Application Management’ (SIAM) to strengthen governance and improve performance of GovConnect service providers. The Department is responsible for the remediation of control deficiencies and continuous improvement in the GovConnect environment. This matter was assessed as high-risk, if not adequately addressed, it had the potential to result in material fraud and error in the department's financial statements and reputation damages. This issue is further discussed later in this chapter. |
2020–21 findings | |
Department of Customer Service New finding: Change management significant control deficiencies |
Revenue NSW, a division of the department has a key role in managing the State’s finances. It administers State taxes, manages fines, recovers State debt and administers grants and subsidies. The audit team found significant control deficiencies in change management controls:
We have included this matter as a high-risk management letter finding, as the audit team could not identify mitigating controls. The system activity of these developers was also not being independently logged and monitored. This increases the risk of unauthorised system change. This can significantly affect the integrity of tax calculation, business process approvals, invalid changes to bank accounts, unauthorised refunds and write-offs. The audit team conducted a risk analysis over the relevant business processes affected by this issue and performed additional audit procedures to address the audit risk. |
Rental Bond Board Repeat finding: Accounting treatment of rental bonds held in trust |
The Rental Bond Board (the Board) holds rental bonds totalling $1.7 billion at 30 June 2021. The Board treated the rental bonds off-balance sheet and disclosed the rental bonds as ‘trust funds’. This treatment is based on management’s judgement that the Board does not have control of these funds. Previously the Board obtained advices from the Crown Solicitors who stated that in their view the rental bond funds held in the rental bond account were not moneys held in trust and the Residential Tenancies Act 2010 (the Act) should be reviewed and amended to better support its accounting treatment of rental bonds. The Board has initiated the need to amend the Act, however the implementation of the legislative amendments is still pending. This matter was assessed as high-risk, if not adequately supported, it had the potential to result in material misstatements in the Board's financial statements. |
The number of moderate risk findings increased from prior year
Fifty-nine moderate risk findings were reported in 2020–21, which was a 11.3 per cent increase from 2019–20. Of these, 26 were repeat findings, and 33 were new issues.
Moderate risk findings include:
- weaknesses in user access management, such as untimely access removal for terminated staff, and a lack of periodic user access review
- accounting for leases such as the review of extension options, assessing indicators of impairment and reviewing the lease reports for completeness and accuracy
- formalising arrangements between agencies including corporate service arrangements, funding arrangements, leases, use of SAP system and computer assets
- use of purchasing cards where our data analytics performed indicated potential gaps and controls and non-compliance with government policies.
The magnitude and number of internal control exceptions in GovConnect service providers have increased
In 2015, the NSW Government selected Unisys Australia Pty Limited’s (Unisys) as an information technology (IT) outsourced service provider and Infosys Limited (Infosys) as a business process outsourced service provider. The outsourced services arrangement was branded GovConnect NSW (GovConnect). The Department of Customer Service (the department) is the contract authority for the NSW Government. In 2019, the NSW Government transitioned a number of Unisys’ IT services progressively to the department and ceased all Unisys's IT services in May 2021. In 2020-21, Infosys, Unisys and the Department were co-providers of business processes and information technology services that constitute the GovConnect environment.
The role of the department has changed significantly from a coordinating agency on behalf of GovConnect customers to a GovConnect IT service provider. The department is responsible for the remediation of control deficiencies and continuous improvement in GovConnect internal control environment.
The department leads the project management of GovConnect services, including the arrangement to provide internal control assurance reports to customers in 2020–21. It engages an independent service auditor (service auditor) from the private sector to perform annual assurance reviews of controls at GovConnect service providers in accordance with Australian Standard on Assurance Engagements 3402 'Assurance Reports on Controls at a Service Organisation' (ASAE 3402). The service auditor reports on the internal controls at a service organisation, which are relevant to a user entity's internal control environment.
The service auditor issued eight ASAE 3402 reports covering business processes controls and information technology general controls (ITGC) provided by the service providers. Four out of eight reports were qualified, a significant increase from previous years.
The table below shows the service auditor's ASAE 3402 opinions issued in various business processes and information technology services provided by service providers for the last five years.
ASAE 3402 controls report# | 2015–16^ | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 |
Infosys Accounts receivable | Qualified | Unqualified | Unqualified | Unqualified | Unqualified | Qualified |
Infosys Accounts payable | Qualified | Qualified | Unqualified | Unqualified | Unqualified | Unqualified |
Infosys Fixed assets | Qualified | Unqualified | Unqualified | Unqualified | Unqualified | Unqualified |
Infosys General ledger | Qualified | Qualified | Unqualified | Unqualified | Unqualified | Unqualified |
Infosys Payroll | Adverse | Qualified | Unqualified | Unqualified | Unqualified | Unqualified |
Infosys ITGC | Qualified | Qualified | Unqualified | Unqualified | Unqualified | Qualified |
Unisys ITGC | Qualified | Unqualified | Qualified | Qualified | Unqualified | Qualified |
The department ITGC* | -- | -- | -- | -- | Qualified | Qualified |
ServiceFirst** | Disclaimer | -- | -- | -- | -- | -- |
In 2020–21, the information technology services controls reports issued to the department, Infosys and Unisys were qualified. Infosys' accounts receivable business process controls report was also qualified. The audit qualifications were because:
- the service auditor did not get access to the complete set of records processed during the financial year for several ITGC controls. The system that stored these records was hosted at Unisys. From December 2019 to 28 May 2021, the services at Unisys were progressively migrated to the department's IT environment but this system could not be migrated to the department in the required format, resulting in audit scope limitation for service auditors
- of the deviations identified during sample testing of ITGC controls
- the monthly follow up of outstanding receivables was not performed regularly, which was the only key control to address the timely collection of accounts receivable.
Internal control exceptions in GovConnect information and technology services require urgent remediations
The relevant controls over user access, system changes and password controls failed in all three ASAE 3402 GovConnect ITGC reports. These control failures can lead to unauthorised system access, system and configuration changes (workflow approvals, three-way match, etc.) and modifications to key reports. It increases the risk of:
- fraud and error in the financial statements
- ineffective segregation of duties controls
- accuracy and completeness of system generated reports for the agencies using the SAPConnect system.
The table shows the number of ITGC control deviations compared to prior year:
Year ended 30 June | 2021 | 2020 | ||
Total controls tested | Total number of control deviations and findings | Total controls tested | Total number of control deviations and findings | |
Infosys ITGC | 41 | 16 | 35 | 8 |
Unisys ITGC | 25 | 11 | 33 | 4 |
DCS ITGC | 31 | 9 | 10 | 5 |
Most of these deviations were not mitigated or sufficiently mitigated to address the risk of unauthorised user access.
The service auditor identified significant areas for remediation:
- governance arrangement of the IT services
- user access management controls
- SAP database controls
- logical access
- incident management.
In response to the internal control qualifications, the audit teams performed data analytics over payroll and accounts payable. The data analytics identified several terminated employees that were paid long after their termination dates which resulted in salary overpayments during 2020–21. While management had put processes in place to recover these overpayments, the payroll processing controls need to be improved to prevent such overpayments.
The Department of Customer Service advised that it established a ‘Control Reframe Project’ (the project) to address the internal control exceptions at GovConnect service providers. The objective of the project is to ensure the GovConnect assurance model is aligned with clear lines of responsibility and remediation actions are in place to support the delivery of services and achieve an improved outcome for future years.
Recommendation
We recommend the Department of Customer Service:
- improve governance and internal control environment over the information technology services
- ensure GovConnect service providers prioritise remediation actions to address internal control exceptions
- perform a post-implementation review of the transition of the Unisys arrangement to identify lessons learnt and continuous improvement
- develop data analytics to help analyse and identify high-risk patterns and anomalies in GovConnect key transaction systems, augmenting their existing monitoring and detective controls.
The NSW Public Sector's cyber security resilience needs urgent attention
The 2020 'Central Agencies' Report to Parliament highlighted the need for Cyber Security NSW, a business unit within the Department of Customer Service, and NSW Government agencies to prioritise improvements to their cyber security resilience as a matter of urgency. A status update of the 2020 recommendation is included in Appendix five of this report.
The Audit Office's Annual Work Program identifies cyber security as a focus area for the Audit Office in 2021–24. It outlines a three-pronged approach to auditing cyber security in this period:
- considering how agencies are responding to the risks associated with cyber security across our financial audits across the NSW public sector
- examining the effectiveness of cyber security planning and governance arrangements for large NSW state government agencies for our Internal Controls and Governance report
- conducting deep-dive performance audits of the effectiveness of specific agency activities in preparing for, and responding to cyber security risks.
A performance audit 'Managing cyber risks' was tabled in Parliament in July 2021. The audit made several recommendations to audited agencies to uplift their cyber security management. It also recommended the Department of Customer Service to:
- clarify the requirement of the NSW Cyber Security Policy (CSP) reporting to all systems
- require agencies to report the target level of maturity for each mandatory requirement.
A compliance audit 'Compliance with the NSW Cyber Security Policy' was tabled in October 2021. The audit examined whether agencies are complying with the NSW Cyber Security Policy to ensure all NSW Government departments and public service agencies are managing cyber security risks to their information and systems.
The report found that key elements to strengthen cyber security governance, controls and culture are not sufficiently robust and not consistently applied. There has been insufficient progress to improve cyber security safeguards across NSW Government agencies. The poor levels of cyber security maturity are a significant concern. Improvement requires dedicated leadership and resourcing. To comply with some elements of the government’s policy agencies will have to invest in technical uplift and some measures may take time to implement. However, other elements of the policy do not require any investment in technology. They simply require leadership and management commitment to improve cyber literacy and culture. And they require accountability and transparency. Transparent reporting of performance is a key means to improve performance.
The report noted that the CSP was not achieving the objective of improved cyber governance, controls and culture. The compliance audit made several recommendations to Cyber Security NSW and other NSW Government agencies.
The 2021 maturity self-assessment results against the Australian Cyber Security Centre Essential 8 for the 25 largest NSW State Government agencies are reported in the 2021 'Internal Control and Governance' Report to Parliament.
Repeat recommendation
Cyber Security NSW and NSW Government agencies need to prioritise improvements to their cyber security resilience as a matter of urgency.
Management of cyber security risk
Our 2020-21 financial audit assessed whether cyber security risks represent a risk of material misstatement to the department's own financial statements. A request performance audit 'Service NSW's handling of personal information' was tabled on 18 December 2020. The audit followed two cyber security incidents that resulted in data breaches of customer information. As part of our audit procedures, we obtained an understanding of the controls the department has in place to address the risk of cyber security incidents and respond to any incidences which may have occurred during the year, including its impact on the audit.
Our assessment of the department’s own cyber risk management shows that:
- an approved security incident response plan was not in place during the reporting period. There was a lack of testing over incident detection and monitoring process
- a formal process over patch management that includes assessment, determining relevance and priority, timely rollout and escalation and reporting of long outstanding patches to senior management is being established.
The department provides information security services including cyber security management to cluster agencies. We found that there were insufficient communications within the Customer Service cluster over the controls and assurance over cyber security risk management. Some cluster agencies had put in place limited controls over cyber security risk management.
Recommendation
We recommend the Department of Customer Service:
- establish an approved security incident response plan and formal process over patch management
- improve communications with cluster agencies over the controls and assurance in cyber security management.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
Appendix five – Status of 2020 recommendations
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for Stronger Communities 2021
Stronger Communities 2021
This report analyses the results of our audits of the Stronger Communities cluster agencies for the year ended 30 June 2021.
Our preferred approach is to table the ‘Report on State Finances’ in Parliament before any other cluster report. This is because the 'Report on State Finances' focuses on the audit results and observations relating to the Total State Sector Accounts, in effect a consolidation of all government agencies. This year the 'Report on State Finances' has been delayed due to significant accounting issues being considered in the Total State Sector Accounts and which may impact the Treasury and Transport clusters.
As there are no outstanding matters relating to audits in the Stronger Communities cluster impacting the Total State Sector Accounts we have decided to break with normal practice and table this cluster report ahead of the ‘Report on State Finances’.
What the report is about
The results of the Stronger Communities cluster agencies' financial statement audits for the year ended 30 June 2021.
What we found
Unqualified audit opinions were issued for all 30 June 2021 financial statements of cluster agencies.
Eleven of the 15 cluster agencies required to submit 2020–21 early close financial statements and other mandatory procedures did not meet the statutory deadline. Five agencies did not perform all mandatory procedures.
The implementation of AASB 1059 'Service Concession Arrangements: Grantors' had a significant impact on the Department of Communities and Justice's (the department) 2020–21 financial statements. The department applied a modified retrospective approach upon initial adoption at 1 July 2020 and recognised service concession assets and liabilities of $1.0 billion and $1.2 billion respectively (relating to three correctional centres with private sector operators).
The department was, this year for the first time, able to reliably measure Incurred But Not Reported (IBNR) claims relating to its Victims Support Scheme. The department recorded a liability of $200 million at 30 June 2021. Liabilities for Child Sexual Assault IBNR claim continue to be not recorded on the basis they are unable to be reliably measured.
The number of monetary misstatements identified during the audit of the financial statements for the cluster increased from 61 in 2019–20 to 72 in 2020–21.
What the key issues were
The number of issues reported to management decreased from 191 in 2019–20 to 172 in 2020–21. However, 45 per cent were repeat issues related to information technology, governance and oversight controls.
Seven high risk issues were identified in 2020–21, an increase of five compared to last year. High risk issues related to deficiencies in IT access controls at Sydney Cricket and Sports Ground Trust; a lack of a formal agreement between the Office of Sport and Planning Ministerial Corporation over the management of a sporting venue; asset revaluations at both Fire and Rescue NSW and the Trustees of the Anzac Memorial Building; and three issues related to revenue recognition control deficiencies at New South Wales Aboriginal Land Council and two of its subsidiaries.
What we recommended
Cluster agencies should ensure all applicable mandatory early close procedures are completed and the outcomes provided to the audit team in accordance with the deadlines set by NSW Treasury.
We recommend cluster agencies action recommendations to address internal control weaknesses promptly. Focus should be given to addressing high risk and repeat issues.
Fast factsThe Stronger Communities cluster, consisting of 28 agencies, aims to deliver community services that support a safe and just New South Wales.
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This report provides Parliament and other users of the Stronger Communities cluster’s financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Stronger Communities cluster (the cluster) for 2021.
Section highlights
|
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Stronger Communities cluster.
Section highlights
|
Findings reported to management
The overall number of findings has decreased, but the level of repeat issues increased
Breakdowns and weaknesses in internal controls increase the risk of fraud and error. Deficiencies in internal controls, matters of governance interest and unresolved issues were reported to management and those charged with governance of agencies. The Audit Office does this through management letters, which include observations, related implications, recommendations and risk ratings.
In 2020–21, there were 172 findings raised across the cluster (191 in 2019–20). 45 per cent of all issues were repeat issues (32 per cent in 2019–20).
Repeat issues largely related to weaknesses in controls over information technology (IT), governance and oversight.
A delay in implementing audit recommendations increases the risk of intentional and accidental errors in processing information, producing management reports and generating financial statements. This can impair decision‑making, affect service delivery and expose agencies to fraud, financial loss and reputational damage. Poor controls may also mean agency staff are less likely to follow internal policies, inadvertently causing the agency not to comply with legislation, regulation and central agency policies.
2020–21 audits identified seven high risk findings
High risk findings were reported at the following cluster agencies. Two high risk findings reported in 2019–20 were resolved.
Agency | Description |
2020–21 findings | |
Sydney Cricket and Sports Ground Trust (new finding) * | The audit of Sydney Cricket and Sports Ground Trust's IT access controls identified:
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Fire and Rescue NSW (new finding) | Fire and Rescue NSW (FRNSW) completed a comprehensive revaluation of its fire appliances in 2020–21. The audit of the revaluation found there was inadequate analysis and quality control by management over the valuation process prior to the outcomes being included in the financial statements. FRNSW had 57 fleet assets that have not been revalued due to problems with data supplied by the valuer. The written down value:
The review also found:
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New South Wales Aboriginal Land Council (NSWALC) (new finding) | The audit of NSWALC's revenue identified there was no formal assessment of relevant contracts for the nature, amount and timing of revenue recognition before preparing the financial statements. This matter has been included as a high risk finding as it contributed to material monetary misstatements and disclosure deficiencies relating to revenue transactions. |
NSWALC Employment and Training Limited (new finding) | The audit of NSWALC Employment and Training Limited's revenue found:
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NSWALC Housing Limited (new finding) | The audit of NSWALC Housing Limited's revenue identified it:
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Office of Sport (new finding) |
The Olympic Co-ordination Authority Dissolution Act 2002 transferred the assets, rights and liabilities relating to the Sydney International Regatta Centre (SIRC) to the Planning Ministerial Corporation (the Corporation) effective from 1 July 2002. The Corporation recognised the related land assets but did not recognise any of the built assets at the time of transfer. The total value of the land and built assets at 30 June 2021 was The SIRC has been managed by the Office of Sport (the Office) for many years in accordance with a not yet executed management agreement. It appears there was a clear intention in 2005 that the control of SIRC built assets was to be transferred from the then Department of Planning to the then Department of Tourism, Sport and Recreation (a predecessor of the Office), through the exchange of letters between the relevant Ministers and an Administrative Order (the Order). The Order transferred the SIRC staff from the then Department of Planning to the then Department of Tourism, Sport and Recreation. However, it was silent on whether the relevant built assets were transferred. Currently, the Office recognises the SIRC built assets in the financial statements whilst the Corporation recognises the land assets as the legal owner of the property. This matter has been included as a high risk finding as the lack of a formal management agreement casts doubt over the accounting treatment of SIRC property. |
The Trustees of the Anzac Memorial Building (new finding) |
The audit of the Trustees of the Anzac Memorial Building's property, plant and equipment identified:
This matter has been included as a high risk finding as it contributed to material monetary misstatements and disclosure deficiencies relating to property, plant and equipment. |
Recommendation (repeat issue)We recommend cluster agencies action recommendations to address internal control weaknesses promptly. Focus should be given to addressing high risk and repeat issues. |
The table below describes issues commonly identified across the cluster by category and risk rating.
Risk rating | Issue |
Information technology | |
High3 |
The financial audits identified weaknesses in information technology processes and controls that support the integrity of financial data used to prepare agencies' financial statements. Of particular concern are issues with:
|
Moderate2 |
|
Low1 5 new, 6 repeat |
|
Internal control deficiencies or improvements | |
High3 |
The financial audits identified internal control weaknesses across the following key business processes:
|
Moderate2 |
|
Low1 |
|
Financial reporting | |
High3 |
The financial audits identified weaknesses in financial reporting processes, including:
|
Moderate2 |
|
Low1 |
|
Governance and oversight | |
High3 1 new |
The financial audits identified areas where agencies could strengthen governance and oversight processes, including:
|
Moderate2 5 new, 11 repeat |
|
Low1 12 new, 8 repeat |
|
Non-compliance with key legislation and/or central agency policies | |
Moderate2 7 new, 6 repeat |
The financial audits identified the need for agencies to improve their compliance with key legislation and/or central agency policies, including:
|
Low1 2 new, 8 repeat |
2 Moderate risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
1 Low risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
Note: Management letter findings are based either on final management letters issued to agencies, or draft letters where findings have been agreed with management.
The number of moderate risk findings decreased from prior year
Seventy‑eight moderate risk findings were reported in 2020–21, representing a 22 per cent decrease from 2019–20. Of these, 43 were repeat findings, and 35 were new issues.
Moderate risk findings reported in 2020–21 include:
- weaknesses in governance arrangements, including outdated policies and procedures and arrangements that do not align with NSW Government guidelines, such as the NSW Government Procurement Policy Framework and NSW Cyber Security Policy
- weaknesses in user access administration including:
- user access reviews
- monitoring of privileged user access and activities
- password policy configuration
- cyber security improvements including:
- implementation and update of governance arrangements
- monitoring of third‑party system access
- patch management improvement
- outdated instruments of financial delegation and non‑compliance with established financial delegations
- weaknesses in supplier and employee masterfile maintenance.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for COVID Intensive Learning Support Program
COVID Intensive Learning Support Program
What the report is about
This audit examined a state-wide program to provide small-group tuition to students disadvantaged by the move to learning from home during 2020.
The audit assessed the design and implementation of the program.
What we found
The program design was based on research and data showing learning loss during 2020.
The department rapidly planned and developed the policy design and guidelines for schools.
Governance arrangements matured during program delivery.
The department changed the models for funding schools but did not clearly explain the reasons for doing so.
Government schools with over 900 students were disadvantaged by the funding model compared to smaller schools.
Guidelines, resources and professional learning helped schools implement the program.
Staff eligibility for the program was expanded after reported difficulties in recruiting qualified teachers in some areas.
Online tuition and third-party provider options were developed throughout the program.
There were issues with the quality and timeliness of data used to monitor school progress.
Evaluation arrangements were developed early in the program.
Data limitations mean the evaluation will not be able to fully assess all program objectives.
What we recommended
- Distributing funds between schools more equitably and improving communication of the funding methods.
- Clearer communication about the intended targeted group of students.
- Reviewing the time needed to administer the program.
- Improve support for educators other than qualified teachers.
- Offer the online tuition program to more schools.
- Analysis of the effects of learning from home during 2021 across equity groups and geographic areas.
- Working with universities to increase use of pre-service teachers in the program.
The report also identifies lessons learned for future programs.
Fast facts
- $337m in total program funding. $289 million for government schools and $31 million for non government schools
- 12 days to develop the policy and provide costings to Treasury
- 290,000 targeted students in government schools and 31,000 in non government schools
- 80% of schools were providing small group tuition by the target start date of Week 6, Term 1
- 2–4 months was the estimated student learning loss from the move to learning from home during 2020
- 7,600 tutors engaged in the program as at September 2021.
The NSW Government announced the COVID Intensive Learning Support Program on 10 November 2020, as part of the 2020–21 NSW Budget. The primary goal of the $337 million program was to deliver intensive small group tuition for students who were disadvantaged by the move to remote and/or flexible learning, helping to close the equity gap. It included:
- $306 million to provide small-group tuition for eligible students across every NSW Government primary, secondary and special purpose school
- $31.0 million for around 400 non-government schools to provide small-group tuition to students with the greatest levels of need.
The objective of this audit was to assess the effectiveness of the design and implementation of the COVID Intensive Learning Support Program (the program). To address this objective, the audit assessed whether the Department of Education (the department):
- effectively designed the program and supporting governance arrangements
- is effectively implementing the program.
This audit focuses on activities between October 2020 and August 2021, which aimed to address the first session of learning from home in New South Wales. From August to October 2021, students in many areas of New South Wales were learning from home again, but this second period has not been a focus of this audit. On 18 October 2021, the NSW Government announced the program would be extended into 2022.
Conclusion
The COVID Intensive Learning Support Program was effectively designed to help students catch up on learning loss due to the interruptions to schooling caused by COVID-19. The department rapidly stood up a taskforce to implement the program and then developed supporting governance arrangements during implementation.
Most students in New South Wales were required to learn from home for at least seven weeks during 2020 due to the impact of the Novel-Coronavirus (COVID-19). The department researched, analysed and advised government on several options to address the learning loss that resulted. It recommended small group tuition as the preferred option as it was supported by available evidence and could be rolled out at scale with speed. It identified risks of ensuring an adequate supply of educators and options to address those risks. Consistent with its analysis of where the impact of the learning loss was most severe, the department proposed to direct funding to schools with higher concentrations of students from the most disadvantaged backgrounds.
The department established a cross-functional taskforce to conduct detailed planning and support program implementation. Short timeframes meant the taskforce initially sought approval for key decisions from the program sponsor and existing oversight bodies on an as-needed basis before dedicated program governance arrangements were formalised. Once established, the governance body met regularly to oversee program delivery.
The COVID Intensive Learning Support Program is being effectively implemented. The department has refined the program during rollout to respond to risks, issues and feedback from schools. Issues with how schools enter data into department systems have affected the timeliness and accuracy of program monitoring information.
The department provided schools with guidelines, example models of delivery, systems to record student progress and professional learning. Around 80 per cent of schools had begun delivering tuition under the program by the target date. Schools reported issues with sourcing qualified teachers as a key reason they were unable to start the program by the expected date. In response, the department expanded the type of staff schools could employ, developed an online tuition program, and allowed schools to engage third-party providers to help schools that had difficulty finding qualified teachers for the program.
The department used existing systems to monitor school progress in implementing the program. This reduced the administrative burden on schools, but there were several issues with data quality and timeliness. The program included a mid-year review point to check whether schools were on track to spend their funding. This helped focus schools on ensuring funding would be spent and allowed for redistribution between schools.
The department considered program evaluation early in policy design and planning. It embedded an evaluator on the taskforce and expanded a key assessment program to help provide evidence of impact. A process and outcome evaluation is underway which will help inform future delivery. The evaluation will examine educational impacts for students participating in the program but it has not established methods to reliably assess the extent to which the program has met a goal to help 'close the equity gap' for students.
This chapter considers how effectively the COVID Intensive Learning Support Program (the program) was designed and planned for implementation.
This chapter considers how effectively the COVID Intensive Learning Support Program was implemented over our period of review (Terms 1 and 2, 2021).
Appendix one – Response from agency
Appendix two – About the audit
Appendix three – Performance auditing
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Parliamentary reference - Report number #358 - released (15 December 2021).
Actions for Education 2021
Education 2021
This report analyses the results of our audits of the Education cluster agencies for the year ended 30 June 2021.
Our preferred approach is to table the ‘Report on State Finances’ in Parliament before any other cluster report. This is because the 'Report on State Finances' focuses on the audit results and observations relating to the Total State Sector Accounts, in effect a consolidation of all government agencies. This year the 'Report on State Finances' has been delayed due to significant accounting issues being considered in the Total State Sector Accounts and which may impact the Treasury and Transport clusters.
As there are no outstanding matters relating to audits in the Education cluster impacting the Total State Sector Accounts we have decided to break with normal practice and table this cluster report ahead of the ‘Report on State Finances’.
What the report is about
The results of the Education cluster (the cluster) agencies' financial statements audits for the year ended 30 June 2021.
What we found
Unmodified audit opinions were issued on the Department of Education (the department), the NSW Education Standards Authority and the NSW Skills Board's financial statements.
An 'other matter' paragraph was included in the Technical and Further Education Commission's (the TAFE Commission) audit opinion drawing attention to legislative non-compliance concerning financial delegations during the reporting year.
The number of misstatements identified in the financial statements of cluster agencies decreased from 14 in 2019–20 to seven.
What the key issues were
The department and the TAFE Commission revalued their land assets this year, recognising collective increases of $863.8 million.
The department and the TAFE Commission are not scheduled to perform comprehensive revaluations of their buildings until 2022–23. Construction costs, which are a key input in their current replacement cost valuation methodologies for buildings, may have increased by an estimated nine per cent since the last comprehensive revaluation in 2017–18 based on broad based indices used by the department and the TAFE Commission. While the estimated index increase indicates the fair value of buildings may exceed the carrying values, the use of such high-level indicators has a degree of estimation uncertainty due to the specialised nature of the assets. Therefore, both agencies did not adjust the values of their buildings.
The number of issues we reported to management decreased. Fifty per cent of issues were repeated from prior years.
Of the 11 newly identified moderate rated issues, seven related to internal control deficiencies, with six identified in procurement and payroll controls.
What we recommended
The department and the TAFE Commission reconsider policy settings governing the frequency of revaluations; and refine and consider the outcomes of interim fair value assessments to ensure asset carrying values reflect fair value at each balance date.
Cluster agencies should prioritise and action recommendations to address internal control deficiencies.
Fast facts
The Education cluster, comprising four agencies, administers and delivers education and training services for NSW students, workers and industry.
- $38.6b property, plant and equipment as at 30 June 2021
- $21.2b total expenditure incurred in 2020–21
- 100% unqualified audit opinions were issued on agencies’ 30 June 2021 financial statements
- 22 moderate risk management letter findings were identified and reported to management
- 7 monetary misstatements were reported in 2020–21
- 50% of reported issues were repeat issues
This report provides Parliament and other users of the Education cluster’s financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Education cluster (the cluster) for 2021.
Section highlights
|
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Education cluster.
Section highlights
|
Findings reported to management
The number of findings reported to management has decreased. Fifty per cent of all issues were repeat issues
Breakdowns and weaknesses in internal controls increase the risk of fraud and error. Deficiencies in internal controls, matters of governance interest and unresolved issues were reported to management and those charged with governance of agencies. The Audit Office does this through management letters, which include observations, related implications, recommendations and risk ratings.
In 2020–21, there were 28 findings raised across the cluster (33 in 2019–20). Fifty per cent of all issues were repeat issues (45 per cent in 2019–20).
The most common repeat issues related to weaknesses in controls over information technology general controls, application controls, and identified deficiencies in procurement and payroll practices.
A delay in implementing audit recommendations increases the risk of intentional and accidental errors in processing information, producing management reports and generating financial statements. This can impair decision-making, affect service delivery and expose agencies to fraud, financial loss and reputational damage. Poor controls may also mean agency staff are less likely to follow internal policies, inadvertently causing the agency not to comply with legislation, regulation and central agency policies.
The table below describes the common issues identified across the cluster by category and risk rating.
Risk rating | Issue |
Information technology | |
Moderate2 |
The financial audits identified areas for agencies to improve information technology processes and controls that support the integrity of financial data used to prepare agencies' financial statements. Of note were deficiencies identified in:
|
Low1 |
|
Internal control deficiencies or improvements | |
Moderate2 |
The financial audits identified internal control weaknesses across key business processes relevant to financial reporting. Of note were deficiencies identified in:
|
Low1 |
|
Financial reporting | |
Moderate2 |
The financial audits identified:
|
Low1 |
3 High risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
2 Moderate risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
1 Low risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
The department continues to address recommendations to improve monitoring of privileged user access
Privileged users have higher levels of access to systems, and in some instances, may include access that can bypass segregation of duty controls. If reviews of access logs are not fully embedded in the control environment, the risk of unauthorised transactions occurring and not being detected in a timely manner is elevated.
In 2019–20 a high-risk issue was reported at the department relating to the inadequate monitoring and follow up of privileged user activity in its enterprise resource planning system – SAP. This year the department has largely addressed our findings by initiating a review of the identified instances of privileged user activity and establishing periodic oversight controls. There remains a need to improve the timeliness and completeness of these newly implemented controls.
Data analytics identified the root cause of internal control deficiencies in procurement and payroll
Our 2020–21 agency management letters identified seven new moderate risk internal control deficiency matters, of which six related to payroll and procurement.
To enhance our financial statement audit of the department we applied data analytics over elements of the department's procurement and payroll control processes. Our procedures, conducted over periods across the financial year, helped identify the following:
- a low level of compliance with procurement practices requiring the creation of purchase orders before invoices are received. The root cause was a lack of understanding by agency staff of the procurement processes
- transactions related to previous years being recorded in the current year. The root cause was a lack of understanding of the three-way matching process and the goods received/not invoiced facilities within SAP
- negative payments in fortnightly pay runs, predominantly representing deductions to recover salary payments made in error. The root cause was the lack of timeliness in notifying payroll for cessation of employment, or for employees undertaking secondments who should have been classified as being on leave without pay.
Recommendation
We recommend cluster agencies prioritise and action recommendations to address the internal control deficiencies outlined above.
Appendix one – Early close procedures
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for Regional NSW 2021
Regional NSW 2021
This report analyses the results of our audits of the Regional NSW cluster agencies for the year ended 30 June 2021.
Our preferred approach is to table the ‘Report on State Finances’ in Parliament before any other cluster report. This is because the 'Report on State Finances' focuses on the audit results and observations relating to the Total State Sector Accounts, in effect a consolidation of all government agencies. This year the 'Report on State Finances' has been delayed due to significant accounting issues being considered in the Total State Sector Accounts and which may impact the Treasury and Transport clusters.
As there are no outstanding matters relating to audits in the Regional NSW cluster impacting the Total State Sector Accounts we have decided to break with normal practice and table this cluster report ahead of the ‘Report on State Finances’.
What the report is about
The results of the Regional NSW cluster (the cluster) agencies’ financial statement audits for the year ended 30 June 2021.
What we found
Unmodified audit opinions were issued for all completed 30 June 2021 financial statement audits of cluster agencies. Four audits are ongoing.
The number of misstatements identified in the financial statements of cluster agencies decreased from 27 in 2019–20 to seven in 2020–21.
The Department corrected an understatement of $82.2 million in prepaid income related to the Bushfire Clean-up Program.
What the key issues were
Local Land Services (LLS) undertook a comprehensive revaluation of asset improvements on land reserves used for moving stock (travelling stock reserves).
The revaluation process identified that improvements on land reserves, with a value of $93.0 million, had not been previously recognised in the financial statements. LLS corrected this error by restating the 2019–20 comparative balances in its 2020–21 financial statements.
The Forestry Corporation of NSW revalued its biological assets that comprise approximately 225,000 hectares of softwood plantations and 34,000 hectares of hardwood forests. The current year valuation resulted in $71.4 million decrement in the total biological assets from $824.9 million in 2019–20 to $753.5 million in 2020–21.
The number of matters reported to management decreased from 36 in 2019–20 to 19 in 2020–21. Twelve moderate risk issues were identified and 47 per cent of reported issues were repeat issues.
What we recommended
Cluster agencies should prioritise and action recommendations to address internal control deficiencies.
Fast factsThe Regional NSW cluster plans and delivers regional programs and infrastructure to respond to regional issues, creating and preserving regional jobs, driving regional economy, growing existing and supporting emerging industries. There are 31 agencies in the cluster.
|
This report provides Parliament and other users of the Regional NSW cluster agencies’ financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Regional NSW cluster for 2021.
Section highlights
|
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Regional NSW cluster.
Section highlights
|
Appendix one - Misstatements in financial statements submitted for audit
Appendix two - Early close procedures
Appendix three - Financial data
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for Rail freight and Greater Sydney
Rail freight and Greater Sydney
What the report is about
The movement of freight contributes $66 billion annually to the NSW economy. Two thirds of all freight in NSW moves through Greater Sydney, and the volume of freight moving through Greater Sydney is expected to increase by 48 per cent by 2036.
This audit assessed the effectiveness of transport agencies in improving the use of rail freight capacity in Greater Sydney, and to meet current and future freight demand.
What we found
Transport agencies do not have strategies or targets in place to improve the efficiency or capacity of the metropolitan shared rail network for freight.
The transport agencies acknowledge that they do not have sufficient information to achieve the most efficient freight outcomes and they do not know how to use the shared rail network to maximise freight capacity without compromising passenger rail services.
The Freight and Ports Plan 2018-2023 contains one target for rail freight - to increase the use of rail at Port Botany to 28 per cent by 2021. However, Transport for NSW (TfNSW)'s data indicates this target will not be met.
Sydney Trains records data on train movements and collects some data on delays and incidents. TfNSW collects data for the construction of the Standard Working Timetable and third-party contracts.
However, a lack of clarity around what data is gathered and who has ownership of the data makes data sharing difficult and limits its analysis and reporting.
The Freight and Ports Plan 2018-2023 includes the goal of 'Reducing avoidable rail freight delays', but the transport agencies do not have any definition for an avoidable delay and, as a result, do not measure or report them.
TfNSW and Sydney Trains are appointed to manage and deliver the Transport Asset Holding Entity of New South Wales (TAHE)'s obligations to allow rail freight operators to use the shared rail network. There are no performance measures in rail freight operator contracts or inter-agency agreements. This limits transport agencies' ability to improve performance.
TfNSW’s Freight Branch is working on four freight-specific strategies; a review of the Plan, a freight rail strategy, a port efficiency strategy and a freight data strategy.
TfNSW has not yet determined the timeframes or intended outcomes of these strategies.
What we recommended
Transport agencies should:
- commit, as part of the review of Future Transport 2056, to delivering the freight-specific strategies currently in development and develop whole-of-cluster accountability for this work including timeframes, specific targets and clear roles and responsibilities
- improve the collection and sharing of freight data
- develop a plan to reduce avoidable freight delays
- systematically collect data on the management of all delays involving and/or impacting rail-freight
- develop and implement key performance indicators for the agreements between the transport agencies.
Fast facts
-
288 million tonnes of freight volume predicted to pass through Greater Sydney in 2036, up from 194 million in 2016 (an increase of 48%)
-
54 trucks that can be replaced by one 600 m long port shuttle freight train
-
26,671 freight trains that passed through the metropolitan shared rail network between 1 July 2020 and 30 June 2021
The movement of freight contributes $66.0 billion annually to the New South Wales economy — or 13 per cent of the Gross State Product. Two thirds of all freight in New South Wales moves through Greater Sydney, and the volume of freight moving through Greater Sydney is expected to increase by 48 per cent by 2036. This increasing demand is driven by increasing population and economic growth.
The sequence of activities required to move goods from their point of origin to the eventual consumer (the supply chain) is what matters most to shippers and consumers. Road can provide a single-mode door-to-door service, whereas conveying goods by rail typically involves moving freight onto road at some point. In Greater Sydney, 80 per cent of all freight is moved on road. Freight often passes through intermodal terminals (IMTs) as it transitions from one mode of transport to the next.
In 2016, Transport for NSW (TfNSW) released Future Transport 2056 - the NSW Government's 40-year vision for transport in New South Wales, which is intended to guide investment over the longer term. In Future Transport 2056, TfNSW noted that New South Wales will struggle to meet increasing demand for freight movements unless rail plays a larger role in the movement of freight.
Sydney Trains manages the metropolitan shared rail network, which is made up of rail lines that are used by both passenger and freight trains. The Transport Administration Act 1988 requires that, for the purposes of network control and timetabling, NSW Government transport agencies give ‘reasonable priority’ to passenger trains on shared lines. As the Greater Sydney population and rail patronage continue to grow, so too will competition for access to the shared rail network. See Appendix two for details of the area encompassed by Greater Sydney.
Freight operators can also use dedicated rail freight lines operated by the Australian Rail Track Corporation (ARTC - an Australian Government statutory-owned corporation). As the metropolitan shared rail network connects with dedicated freight lines, freight operators often use both to complete a journey.
TfNSW, Sydney Trains and the Transport Asset Holding Entity (TAHE) work in conjunction with other rail infrastructure owners and private sector entities, including port operators, privately operated IMTs and freight-shipping companies. TfNSW and Sydney Trains are responsible for managing the movement of freight across the metropolitan shared rail network. TAHE is the owner of the rail infrastructure that makes up the metropolitan shared rail network. The NSW Government established TAHE, a NSW Government state-owned corporation, on 1 July 2020 to replace the former rail infrastructure owner - RailCorp. The Auditor-General for New South Wales has commenced a performance audit on TAHE which is expected to table in 2022.
On 1 July 2021, TAHE entered into new agreements with TfNSW and Sydney Trains to operate, manage and maintain the metropolitan shared rail network. Until 30 June 2021, and in accordance with TAHE's Implementation Deed, TAHE operated under the terms of RailCorp's existing arrangements and agreements.
This audit assessed the effectiveness of TfNSW, Sydney Trains and TAHE in improving the use of rail freight capacity in Greater Sydney, and to meet current and future freight demand.
The audit focused on:
- the monitoring of access to shared rail lines
- the management of avoidable delays of rail freight movements
- steps to increase the use of rail freight capacity in Greater Sydney.
Conclusion
Transport agencies do not have clear strategies or targets in place to improve the freight efficiency or capacity of the metropolitan shared rail network. They also do not know how to make best use the rail network to achieve the efficient use of its rail freight capacity. These factors expose the risk that rail freight capacity will not meet anticipated increases in freight demand.
Future Transport 2056 notes that opportunities exist to shift more freight onto rail, and that making this change remains an important priority for the NSW Government. However, the transport agencies acknowledge that they do not have sufficient information to achieve the most efficient freight outcomes. In particular, transport agencies do not know how to use the shared rail network in a way that maximises freight capacity without compromising passenger rail services.
Neither Future Transport 2056 nor the Freight and Ports Plan 2018–2023 give any guidance on how transport agencies will improve the efficiency or capacity of the shared rail network. Other than a target for rail freight movements to and from Port Botany, which TfNSW's data indicates will not be met, there are no targets for improving rail freight capacity across the shared network. The lack of specific strategies, objectives and targets reduces accountability and makes it difficult for transport agencies to effectively improve the use of rail freight capacity in line with their commitment to do so.
Sydney Trains and Transport for NSW do not effectively use data to improve rail freight performance and capacity.
To drive performance improvement when planning for the future, transport agencies need good quality data on freight management and movements. Sydney Trains records data on train movements in real-time and collects some data on delays and incidents. TfNSW collects data for the construction of the Standard Working Timetable (SWTT) and third-party contracts. However, the different types of data gathered and the separation between the teams responsible mean that there is a lack of clarity around what data is gathered and who has ownership it. This lack of coordination prevents best use of the data to develop a single picture of how well the network is operating or how performance could be improved.
Sydney Trains' ability to evaluate the effectiveness of its incident and delay mitigation strategies is also limited by a lack of information on its management of rail-freight related delays or incidents. While Sydney Trains collects data on major incidents, it can only use this to conduct event-specific analysis on the causes of an incident, and to review the operational and management response. The use of complete and accurate incident data would assist to define, identify and reduce avoidable delays. Reducing avoidable delays is a goal of the Freight and Ports Plan 2018–2023. More complete data on all incidents would help TfNSW to have more effective performance discussions with rail freight operators to help improve performance.
TfNSW has started developing strategies to identify how it can use rail freight capacity to achieve efficient freight outcomes, but it has not committed to implementation timeframes for this work.
TfNSW’s Freight Branch has started work on four freight-specific strategies to improve freight efficiency: a review of the Plan, a freight rail strategy, a port efficiency strategy and a freight data strategy. However, none of these strategies will be fully developed before the end of 2022. TfNSW has not yet determined the implementation timeframes or intended outcomes of these strategies, although TfNSW reports that it is taking an iterative approach and some recommendations and initiatives will be developed during 2022.
Appendix one - Response from agencies
Appendix two - The Greater Sydney region
Appendix three - TfNSW strategic projects
Appendix four - Sydney Trains path priority principles
Appendix five - Sydney Trains delay management
Appendix six - About the audit
Appendix seven - Performance auditing
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Parliamentary reference - Report number #357 - released (19 October 2021).
Actions for Access to health services in custody
Access to health services in custody
What the report is about
This audit assessed whether adults in custody have effective access to health services. The audit examined the activities of Justice Health and Corrective Services NSW.
What we found
The majority of custodial patients receive timely health care, but a small proportion of patients are not receiving care within target timeframes.
Eleven per cent of scheduled health appointments are not attended, and agencies can do more to understand the reasons for non-attendance.
Demand for mental health care exceeds service capacity and some patients are held in environments not appropriate for their needs.
Justice Health's information systems do not support the effective transfer of medical records as patients move around the prison network.
Not all patients are released from custody with a discharge plan.
Justice Health's system managers do not receive sufficiently detailed reports to understand strategic risks or opportunities to improve access to health services.
Public and private prison health operators do not report against consistent performance measures.
Justice Health is mandated to assess health services in private prisons. This conflicts with its role as a contracted provider of health services in the private prison system.
What we recommended
Enhanced reporting on patient access to health services, to identify risks and challenges across key service areas.
Identification and implementation of the improvements required for information to be shared across the custodial network and with external health providers.
Development of a framework to govern and monitor costs for patient health escorts and movements.
Development of a framework to govern responsibilities for mental health services.
Progression of infrastructure plans that address the lack of specialist accommodation for mental health patients and aged and frail patients.
Collaboration to align the performance measures to enable benchmarking between public and private prison health services.
Action to remediate the conflicting monitoring arrangements of public and private prison health operators.
Fast facts
|
Access to health services in custody
This audit examined whether adults in the New South Wales public prison system have effective access to health services. In making this assessment, we considered whether Justice Health and Corrective Services NSW effectively cooperate and coordinate so that patients have timely access to health services, systems and practices support continuity of care, and access to health services is monitored and reviewed.
As part of this audit, we assessed actions undertaken by Justice Health and Corrective Services NSW in managing the first COVID-19 outbreak in 2020. However, due to the timing of this audit report, this audit does not report on the agencies’ response to managing the current outbreak of COVID-19 in September 2021.
Health services in New South Wales prisons are delivered by both public and private operators. The public prison system is made up of 33 correctional centres and the Long Bay Hospital. All health services in the public prison system are delivered by the Justice Health and Forensic Mental Health Network (Justice Health).
In the public prison system, Justice Health is responsible for the clinical care of patients with physical and mental illnesses. Clinicians provide health assessments, treatments, medication management, and some counselling services in prison health clinics. Patients are triaged by primary health nurses and if they require treatments or medication, they are referred to prison‑based doctors including specialists or other clinicians. Patients requiring complex or emergency care are transferred to hospitals or other specialty services outside the prison complex.
Private operators deliver health services in three private prisons through contract arrangements with Corrective Services NSW. Justice Health delivers health care at one correctional centre via a contract arrangement with Corrective Services NSW. In total, contracted health service operators deliver health care to approximately 25 per cent of the New South Wales prison population.
Justice Health is required by law to monitor the performance of contracted health service providers in New South Wales prisons, including services provided at the John Morony Correctional Centre. The Auditor‑General’s mandate does not permit a direct examination of information held by private sector entities, however this audit does assess the effectiveness of Justice Health's role in monitoring health services in private prisons.
Corrective Services NSW is responsible for security in public prisons, including the facilitation of patient access to health care at prison health clinics and the transfer of patients to hospitals and other health services outside of the prison environment. Corrective Services NSW also delivers behaviour‑based psychology services. Some are delivered as behaviour modification courses that aim to reduce criminal and offending activity amongst the prison population. These programs may be linked to parole or other custodial conditions. Other psychology services include counselling for people with self‑harming or suicidal behaviours.
Research from the Australian Institute of Health and Welfare indicates that people in custody are more likely than the general population to be affected by chronic and acute illnesses, including higher rates of mental illness and communicable diseases1. In March 2021, there were 13,063 adults in custody in New South Wales.
The objective of this performance audit was to assess whether adults in the public prison system have effective access to health services. In making this assessment, we considered whether Justice Health and Corrective Services NSW effectively cooperate and coordinate so that:
- patients have timely access to health services
- systems and practices support the continuity of health care
- access to health services is monitored, reviewed, and reported across the network.
ConclusionJustice Health delivers timely health care to adult custodial patients who need routine medications and treatment for minor medical conditions. Justice Health also delivers timely care to patients requiring urgent medical attention, including emergency transfers to hospitals. However, Justice Health does not always meet recommended timeframes to deliver health care to patients who are waitlisted for treatment from doctors and other medical specialists, or for those waiting for assessments and prescriptions.In 2020, Justice Health provided over 770,000 instances of medical care to adults in the New South Wales prison network. Approximately half of this health care was delivered on the spot, by nurses who dispensed routine medications or treated the minor medical ailments of 'walk‑in' patients. Doctors, specialists, and nurse clinicians delivered the other half of prison health care via scheduled health appointments. In most cases, this health care was timely, except for a proportion of patients who were waiting for time‑critical treatments, prescriptions, or assessments. In 2020, 40 per cent of patients identified as 'Priority 1' did not receive care within the recommended three‑day timeframe. Patients waiting for these appointments constitute a small proportion of all health care delivered in 2020, at about one per cent of all health care. Nevertheless, the needs of Priority 1 patients are significant, and Justice Health does not know whether the prolonged wait times led to deteriorations in health outcomes, or other adverse outcomes. Close to 1,000 patients required emergency treatment in 2020, and were transferred to hospitals as soon as their medical condition was identified by prison health staff. Justice Health uses multiple information management systems that are not sufficiently linked to transfer all patient medical records and appointment information when patients are moved across the prison system. Appointment schedules and patient medications are transferred through manual processes. There is also limited information sharing with community health providers when custodial patients enter or leave custody.Justice Health has multiple and parallel information systems, including paper‑based medical records. These systems are not effective for information sharing across the prison system as patients are moved between prisons and facilities at frequent intervals. Clinical staff are not always alerted when a patient is moved from one prison to another, or released from custody after a court appearance. This impacts on the effective scheduling and management of prison health appointments, and the exchange of patient health records across the prison network. Justice Health's information systems and protocols also do not support the effective exchange of information with external health providers. The transfer of health information is a manual process and there can be significant delays in providing or receiving information from community health providers when custodial patients enter prisons or are released. Corrective Services NSW and Justice Health executives do not receive sufficiently detailed information or reports to understand the impediments to health service accessibility and to enable system improvements. There is also limited joint planning between the two agencies to improve patient access to health care. The governance and monitoring arrangements for public and private prison health services are flawed and create a conflict of interest for Justice Health as both a service provider and a system monitor.Justice Health's data dashboard assists managers and clinicians to understand and manage the wait times for health appointments at the prison service level. However, reporting to senior executives on wait times for health services is insufficiently detailed to indicate risks or opportunities for strategic improvement. Corrective Services NSW does not produce sufficiently detailed reports on the costs of transferring custodial patients to health appointments outside the prison network to improve efficiencies or understand trends over time. There is not enough system‑level planning between Corrective Services NSW and Justice Health to optimise patient attendance at health appointments. Greater collaboration is needed to improve appointment scheduling through notifications about patient movements across the prison network. There are limitations in the performance monitoring of public and private prison health services. It is not possible to benchmark or compare public and private prison health services and outcomes because the two systems do not report against common Key Performance Indicators. While Justice Health has taken steps to maintain independence and transparency in its legislated role as assessor of health services in private prisons, there is an inherent conflict of interest in this monitoring role, as Justice Health is also a contracted provider of health services in the private prison system. |
1. Key findings
The majority of custodial patients receive timely health care, but a small proportion of patients with priority appointments are not receiving care within target timeframes
Approximately half of all health care provided by Justice Health is immediate. It is delivered to 'walk‑in' patients as soon as they present at prison health clinics. Most of these patients are receiving daily medications, while a small proportion require urgent or immediate care for injuries or illnesses. The other half of prison health care is delivered via scheduled appointments. Patients waiting for health appointments are given a priority rating according to the time within which they should be seen by a clinician.
Patients requiring the most time‑critical care are given a Priority 1 rating. These patients should receive treatment within one to three days. In December 2020, the average wait time for Priority 1 treatment was five and a half days, almost double the target. This is an improvement on wait times in June 2019, when the average wait time was just over 13 days. Justice Health does not assess or measure the impacts of delayed care on these patients.
According to Justice Health, the high numbers of ‘walk‑ins’ contribute to increased wait times for medical appointments. In addition, some specialty health clinics operate weekly, which means that patients cannot be seen by specialists within a one to three‑day timeline. Security events such as prison lockdowns can also contribute to increased wait times, as they limit the access that patients have to prison health clinics during out‑of‑cell hours.
If patients need emergency medical treatment, they are transferred to hospitals in line with Justice Health's policy. In 2020, just over 1,000 patients were transferred to hospital for emergency medical care.
A significant proportion of prison health appointments are not attended, and not enough is being done to understand the reasons, or to improve attendance rates
In 2020, 11 per cent of all scheduled health appointments in prison clinics were not attended. This amounts to approximately 60,000 appointments over the year. Non‑attended appointments have flow‑on impacts on wait times and backlogs for scheduled health appointments. Understanding why they occur is necessary to improve efficiencies in scheduling and patient access to health services.
In 2020, the most common reason for non‑attended health appointments was: 'patient unable to attend'. Justice Health clinicians use this when patients do not arrive at the prison health clinic at the scheduled time, and clinicians lack any other information to explain the non‑attendance.
The second most common recorded reason for non‑attended appointments was: 'cancelled by Corrective Services NSW'. These cancellations are due to operational or security reasons, including prison lockdowns. Data from Justice Health indicates that in 2020, there were an average of 12 lockdowns per week across New South Wales prisons.
A range of factors can impact on patient attendance at appointments, some of which are unavoidable. That said, more can be done to understand and reduce non‑attendance. For example, there is potential for Corrective Services NSW to implement tighter protocols to update information about patient availability on the daily movement lists. This might include checking whether patients are willing to attend appointments. Similarly, there is potential for Justice Health clinicians to implement tighter protocols to check patient lists ahead of scheduled appointments, and to re‑schedule appointments where patients are unavailable.
Demand for mental health care exceeds service capacity and some patients are held in environments that are not appropriate for their needs
There is a high demand for mental health services in New South Wales prisons. In March 2021, at least 143 mental health patients were waiting for access to an acute or sub‑acute mental health unit across the New South Wales prison system. The average wait time for a mental health facility was 43 days. Seventeen patients had wait times of over 100 days. Patients waiting for sub‑acute mental health services had longer wait times than those waiting for acute mental health services.
There are limited mental health beds for women across the New South Wales prison network. There are ten allocated beds for women at the Mental Health Screening Unit at Silverwater Correctional Complex, and no allocated beds for women at Long Bay Hospital.
A lack of bed availability in the Forensic Hospital means that, as of February 2021, 63 forensic patients were being held in mental health facilities in mainstream prisons, when they should have been accommodated in the Forensic Hospital. Some of these forensic patients have been held in mainstream prison facilities for decades.
Cross‑agency co‑operation and planning is required to identify and build infrastructure that will reduce wait times for mental health beds. Over several years, Justice Health has developed, reviewed, and worked to progress a strategic plan for NSW Forensic Mental Health that includes enhanced mental health bed capacity across the NSW system. The latest version of this strategic plan remains in draft and has yet to be approved by the NSW Ministry of Health.
In 2016, Corrective Services NSW commenced a Prison Bed Capacity Program. It was focussed on enhancing capacity across the prison system and did not include specialist health beds. More recently, Corrective Services NSW has been developing a business case to improve the provision of specialist health care facilities across the network, including mental health facilities.
Justice Health's clinical information systems do not support the effective transfer of health appointments or medication records as patients are moved to new prison locations
Justice Health's clinical information systems are multiple and complex. There are five health information systems that include a mix of electronic and paper‑based records. Information management systems contain clinical records, appointment information, medication records, dental records, and specialist health information. Corrective Services NSW maintain separate information systems relating to prison records and psychology treatment information.
The transfer of people across different correctional centres is a frequent occurrence. In 2020, there were over 41,000 movements between correctional centres. People are transferred for a range of reasons including for security purposes, or to be located closer to hospitals or specialist health services.
Justice Health receives a list of patient transfers one day prior to transfer. Nurses are required to prepare medications and clinical handovers for patients with complex health conditions. These handovers are verbal, however short timeframes mean that handover is not always possible.
While each patient's electronic health records are available across the network, transfer of appointment waitlists must be done manually. There is no automatic alert within the information systems to tell staff that a patient has been moved to another prison. There is a risk that if appointment records are not manually updated, or if staff at destination clinics are not contacted, then appointments will be overlooked.
Justice Health is working with eHealth NSW to develop an improved Electronic Medication Management (EMM) program with expected delivery in late 2021. The EMM has potential to improve the transfer of patient medication records, but it will not fully remediate all inefficiencies of the current systems.
Corrective Services NSW and Justice Health do not engage in sufficient joint planning to improve efficiencies in transports or escorts to health services
Corrective Services NSW and Justice Health do not engage in joint system‑level planning to mitigate the risks and the costs associated with transferring patients to health clinics in prisons, or non‑prison‑based health care. There are no protocols, and limited sharing of information to improve efficiencies in planning and coordinating patient transfers.
Corrective Services NSW does not collate or report on the costs of transporting patients to hospitals and specialist care. While there is data on the overall cost of medical escorts, estimated to be $19.9 million in 2020, Corrective Services NSW is not able to disaggregate this data to determine the reasons for transfers or the system‑level costs. For example, Corrective Services NSW does not know how many prison lockdowns occur when hospital transfers are required.
Medical escorts to specialist health services and hospitals increase the costs to the prison system and contribute to risks in prison management. Medical escorts contributed to 16 per cent of metropolitan prison lockdowns at the peak in 2018, though escort numbers have since been declining. Some Local Health Districts report significant concerns around safety incidents and assaults on staff during medical escorts to hospital.
Corrective Services NSW does not know if transport costs have increased since the 2016 Prison Bed Capacity Program which expanded prison beds in regional New South Wales. To date, there has been no assessment of the cost of taking patients to tertiary hospitals or specialist services. Corrective Services NSW has identified this as an area for improvement.
Justice Health's system managers do not receive sufficiently detailed reports on wait times for health care, to understand strategic risks or opportunities for system improvement
Justice Health's senior executives receive monthly reports on patient wait times for services in prison health clinics. These reports contain headline data about the numbers of days that patients wait for scheduled health appointments by their allocated priority level. Wait time data are averaged across all New South Wales prison health clinics. With some exceptions, almost all executive level reports describe system‑wide appointment wait times without offering further specific detail. For example, there is limited information which would allow managers to understand the performance of specialty health groups, or to make any comparative analysis of the performance of different prison facilities.
Executive reports are also not detailed enough to indicate whether prisons with particular security classifications offer greater or lesser access to health services. It is not possible to assess whether patients in metropolitan or regional prisons have different levels of health service access. This prevents managers from identifying strategic risks across the prison network, targeting resources to the areas of greatest risk, and making strategic improvements in system performance.
Trend data on wait times for the different health specialty areas is also required to enable senior managers to compare wait times across prison facilities, security classifications, and localities.
In response to the preliminary findings of this audit, Justice Health has made some improvements to its executive‑level wait time reports. This includes additional detail on health appointment wait times by prison facilities and wait times by health specialty areas.
It is not possible to compare or benchmark the performance of public and private prison health operators or to compare prison health against community health standards
It is not possible to compare or benchmark the performance of the public and private prison health operators in New South Wales using the current Key Performance Indicator (KPI) data. KPI data do not correlate across the public and private systems.
Justice Health reports to the Ministry of Health on 44 prison health KPIs. The 44 KPIs for the public prison system do not align with the seven KPIs the private health operators report against in their contracts with Corrective Services NSW. This means that public and private operators focus on different service areas. For example, private operators have a performance measure for ensuring that custodial patients are provided with release plans. Justice Health does not have a similar measure.
The KPI specifications for the private prison health system were developed by Corrective Services NSW with input from the Ministry of Health. The KPI specifications for the public prison health system were developed by the Ministry of Health in collaboration with Justice Health. There is no rationale for the difference in performance indicators across the public and private systems.
Private providers currently deliver prison services to 25 per cent of the prison population of New South Wales. This proportion has been increasing since 2016. Public and private health operators deliver comparable health services so there is scope to compare performance across the systems.
Justice Health aligns its standard for prison health services with a 'community’ standard of health care access. However, with existing health monitoring measures, it is not possible to assess how well Justice Health is tracking against community health standards with available data from most health specialties.
There is an inherent conflict of interest in Justice Health's monitoring role of health services in private prisons, as Justice Health is also a provider of health services in a private prison
There is a legislated requirement for Justice Health to monitor the performance of private health operators in New South Wales prisons. This monitoring role is described in the Crimes (Administration of Sentences) Act 1999.
Justice Health's monitoring role includes the collection and analysis of health performance data from private health operators, and periodic site visits to assess health service performance. Justice Health reports the findings of monitoring activities to Corrective Services NSW, the contract manager for private prisons.
Justice Health's monitoring role commenced in the late 1990s. In recent years, this role has expanded as the NSW Government has increased the number of privately managed prisons across the state. Justice Health now monitors health services in four private prisons, accounting for approximately one quarter of all custodial patients in the New South Wales prison system.
In 2018, Justice Health was awarded a contract to provide health services at the John Morony Correctional Centre. Justice Health also monitors the health services this Correctional Centre. The timing of the 1999 legislation did not anticipate that Justice Health would be a provider of the services it is required to monitor.
Justice Health has taken steps to maintain independence and transparency in its monitoring role by establishing a number of arms‑length governance arrangements. Justice Health set up a Commissioning Unit that operates independently from its service delivery operations. Justice Health also established an alternative reporting chain via a Board subcommittee to oversee the performance of health providers in private prisons.
Despite all actions to establish independence, the monitoring role confers dual responsibilities on the Chief Executive of Justice Health as both an operational manager of health services in a private prison and as a manager responsible for monitoring these same services. As a result, the Chief Executive of Justice Health has access to information about the overall performance of the private prison health system in New South Wales.
As a competitor for the provision of health services in privately operated prisons, Justice Health has access to information to which other private health providers do not. This potentially gives Justice Health a competitive advantage over other private health operators.
2. Recommendations
By December 2022, Justice Health should:
1. enhance reporting on patient access to health services to ensure that system managers can identify risks, challenges, and system improvements across key areas of its service profile
2. in collaboration with the NSW Ministry of Health, identify and implement the required improvements to its health information management systems that will enable effective transfers of patient clinical records and appointment information across the custodial network and with external health providers.
By December 2022, Justice Health and Corrective Services NSW should:
3. develop a joint framework to govern and monitor the costs of their common and connected responsibilities for patient health movements across the prison network and to external health services
4. develop a joint framework to govern their common and connected responsibilities for mental health services.
By December 2022, Justice Health and Corrective Services NSW, in collaboration with the NSW Ministry of Health, should:
5. progress infrastructure plans and projects that address the lack of specialist accommodation for mental health patients and aged and frail patients
6. standardise and align the key performance indicators that monitor the performance of health operators in public and private prisons so that system‑wide benchmarking is possible.
By December 2022, the NSW Ministry of Health should:
7. take action to remediate the conflicting monitoring arrangements of public and private prison health operators.
Appendix one – Response from agencies
Appendix two – About the audit
Appendix three – Performance auditing
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Parliamentary reference - Report number #356 - released (23 September 2021).
Actions for Managing climate risks to assets and services
Managing climate risks to assets and services
What the report is about
This report assessed how effectively the Department of Planning, Industry and Environment (DPIE) and NSW Treasury have supported state agencies to manage climate risks to their assets and services.
Climate risks that can impact on state agencies' assets and services include flooding, bushfires, and extreme temperatures. Impacts can include damage to transport, communications and energy infrastructure, increases in hospital admissions, and making social housing or school buildings unsuitable.
NSW Treasury estimates these risks could have significant costs.
What we found
DPIE and NSW Treasury’s support to agencies to manage climate risks to their assets and services has been insufficient.
In 2021, key agencies with critical assets and services have not conducted climate risk assessments, and most lack adaptation plans.
DPIE has not delivered on the NSW Government commitment to develop a state-wide climate change adaptation action plan. This was to be complete in 2017.
There is also no adaptation strategy for the state. These have been released in all other Australian jurisdictions. The NSW Government’s draft strategic plan for its Climate Change Fund was also never finalised.
DPIE’s approach to developing climate projections is robust, but it hasn’t effectively educated agencies in how to use this information to assess climate risk.
NSW Treasury did not consistently apply dedicated resourcing to support agencies' climate risk management until late 2019.
In March 2021, DPIE and NSW Treasury released the Climate Risk Ready NSW Guide and Course. These are designed to improve support to agencies.
What we recommended
DPIE and NSW Treasury should, in partnership:
- enhance the coordination of climate risk management across agencies
- implement climate risk management across their clusters.
DPIE should:
- update information and strengthen education to agencies, and monitor progress
- review relevant land-use planning, development and building guidance
- deliver a climate change adaptation action plan for the state.
NSW Treasury should:
- strengthen climate risk-related guidance to agencies
- coordinate guidance on resilience in infrastructure planning
- review how climate risks have been assured in agencies’ asset management plans.
Fast facts
4 years
between commitments in the NSW Climate Change Policy Framework, and DPIE and NSW Treasury producing key supports to agencies for climate risk management.
$120bn
Value of physical assets held by nine NSW Government entities we examined that have not completed climate risk assessments.
Low capability to do climate risk assessment has been found across state agencies. The total value of NSW Government physical assets is $365 billion, as at 30 June 2020.
x3
NSW Treasury’s estimates of the annual fiscal and economic costs associated with natural disasters will triple by 2060–61.
According to the Intergovernmental Panel on Climate Change in 2021, each of the last four decades has been successively warmer and surface temperatures will continue to increase until at least the mid-century. The Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Bureau of Meteorology (BoM) have reported that extreme weather across Australia is more frequent and intense, and there have been longer-term changes to weather patterns. They also report sea levels are rising around Australia increasing the risk of inundation and damage to coastal infrastructure and communities.
According to the Department of Planning, Industry and Environment (the department), in New South Wales the impacts of a changing climate, and the risks associated with it, will be felt differently across regions, populations and economic sectors. The department's climate projections indicate the number of hot days will increase, rainfall will vary across the state, and the number of severe fire days will increase.
The NSW Government is a provider of essential services, such as health care, education and public transport. It also owns and manages around $365 billion in physical assets (as at June 2020). More than $180 billion of its assets are in major infrastructure such as roads and railway lines.
In NSW, climate risks that could directly impact on state agencies' assets and services include flooding, bushfires, and extreme temperatures. In recent years, natural hazards exacerbated by climate change have damaged and disrupted government transport, communications and energy infrastructure. As climate risks eventuate, they can also increase hospital admissions when people are affected by poorer air quality, and make social housing dwellings or schools unsafe and unusable during heatwaves. The physical impacts of a changing climate also have significant financial costs. Taking into account projected economic growth, NSW Treasury has estimated that the fiscal and economic costs associated with natural disasters due to climate change will more than triple per year by 2061.
The department and NSW Treasury advise that leading practice in climate risk management includes a process that explicitly identifies climate risks and integrates these into existing risk management, monitoring and reporting systems. This is in line with international risk management and climate adaptation standards. For agencies to manage the physical risks of climate change to their assets and services, leading practice identified by the department means that they need to:
- use robust climate projection information to understand the potential climate impacts
- undertake sound climate risk assessments, within an enterprise risk management framework
- implement adaptation plans that reduce these risks, and harness opportunities.
Adaptation responses that could be planned for include: controlling development in flood-prone locations; ensuring demand for health services can be met during heatwaves; improving thermal comfort in schools to support student engagement; proactive asset maintenance to reduce disruption of essential services, and safeguarding infrastructure from more frequent and intense natural disasters.
According to NSW Treasury policy, agencies are individually responsible for risk management systems appropriate to their context. The department and NSW Treasury have key roles in ensuring that agencies are supported with robust information and timely, relevant guidance to help manage risks to assets and services effectively, especially for emerging risks that require coordinated responses, such as those posed by climate change.
This audit assessed whether the department and NSW Treasury are effectively supporting NSW Government agencies to manage climate risks to their assets and services. It focused on the management of physical risks to assets and services associated with climate change.
Conclusion
The Department of Planning, Industry and Environment (the department) has made climate projections available to agencies since 2014, but provided limited guidance to assist agencies to identify and manage climate risks. NSW Treasury first noted climate change as a contextual factor in its 2012 guidance on risk management. NSW Treasury only clarified requirements for agencies to integrate climate considerations into their risk management processes in December 2020.
The department has not delivered on a NSW Government commitment for a state-wide climate change adaptation action plan, which was meant to be completed in 2017. Currently many state agencies that own or manage assets and provide services do not have climate risk management in place.
Since 2019, the department and NSW Treasury have worked in partnership to develop a coordinated approach to supporting agencies to manage these risks. This includes guidance to agencies on climate risk assessment and adaptation planning published in 2021.
More work is needed to embed, sustain and lead effective climate risk management across the NSW public sector, especially for the state's critical infrastructure and essential services that may be exposed to climate change impacts.
The NSW Government set directions in the 2016 NSW Climate Change Policy Framework to 'manage the impact of climate change on its assets and services by embedding climate change considerations into asset and risk management’ and more broadly into 'government decision-making'.
The department released climate projections and has made information on projected climate change impacts available since 2014, but this has not been effectively communicated to agencies. The absence of a state-wide climate change adaptation action plan has limited the department's implementation of a coordinated, well-communicated program of support to agencies for their climate risk management.
NSW Treasury is responsible for managing the state's finances and providing stewardship to the public sector on financial and risk management, but it did not consistently apply dedicated resourcing to support agencies' climate risk management until late 2019. NSW Treasury estimates the financial costs of climate-related physical risks are significant and will continue to grow.
The partnership between the department and NSW Treasury has produced the 2021 Climate Risk Ready NSW Guide and Course, which aim to help agencies understand their exposure to climate risks and develop adaptation responses. The Guide maps out a process for climate risk assessment and adaptation planning and is referenced in NSW Treasury policy on internal audit and risk management. It is also referenced in NSW Treasury guidance to agencies on how to reflect the effects of climate-related matters in financial statements.
There is more work to be done by the department on maintaining robust, accessible climate information and educating agencies in its use. NSW Treasury will need to continue to update its policies, guidance and economic analyses with relevant climate considerations to support an informed, coordinated approach to managing physical climate risks to agencies' assets and services, and to the state's finances more broadly.
The effectiveness of the department and NSW Treasury's support involves the proactive and sustained take-up of climate risk management by state agencies. There is a key role for the department and NSW Treasury in monitoring this progress and its results.
The support delivered to agencies around climate risk management, including risk assessment and adaptation planning, has been slow to start and of limited impact. The department's capacity to implement a coordinated approach to supporting agencies has also been limited by the absence of a state-wide adaptation strategy and related action plan.
In 2021, products were released by the department and NSW Treasury with potential to improve support to agencies on climate risk assessment and adaption planning (that this, Climate Risk Ready NSW Guide and Course, which provides links to key NSW Treasury polices). The department and NSW Treasury are now leading work to develop a more coordinated approach to climate risk management for agencies' assets and services, and building the resilience of the state to climate risk more broadly.
While climate projections have been available to agencies and the community more broadly since 2013–14, the department has not been effective in educating the relevant data users within agencies in how to use the information for climate risk assessments and adaptation planning.
The absence of a strategy focused on this is significant and has contributed to the current low levels of climate risk assessment uptake across agencies (see section 2). Agencies are required to use the climate projections developed by the department when developing long term plans and strategies as part of the NSW Government Common Planning Assumptions.
For the department, key opportunities to embed climate risk management include leveraging land use planning policies and guidance to drive adaptation, which has potential to better protect the state's assets and services. NSW Treasury has a role in continuing to update its policies, guidance and economic analyses with relevant climate change considerations to support an informed, coordinated approach to addressing physical climate risks to agencies' assets and services, and to the state's finances more broadly.
There is currently no plan on how the department and NSW Treasury intend to routinely monitor the progress of agencies with implementing the CRR Guide or developing climate risk 'maturity' more broadly. As agencies are responsible for implementing risk management systems that meet NSW Treasury standards, which now clearly includes consideration of climate risk (TPP20-08), establishing effective monitoring, reporting and accountability around this progress should be a priority for the department and NSW Treasury.
Appendix one – Response from agencies
Appendix two – Timeline of key activities
Appendix three – About the audit
Appendix four – Performance auditing
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Parliamentary reference - Report number #355 - released (7 September 2021).
Actions for Fast-tracked Assessment Program
Fast-tracked Assessment Program
What the report is about
This report examines the effectiveness of the Fast-tracked Assessment Program, administered by the Department of Planning, Industry and Environment (DPIE) between April 2020 and October 2020.
The program aimed to support the construction industry during the COVID-19 crisis by accelerating the final assessment stages for planning proposals and development applications.
DPIE selected projects and planning proposals for fast tracked assessment that demonstrated the potential to:
- deliver jobs
- progress to the next stage of development within six months of determination
- deliver public benefit.
The audit assessed whether the Fast-tracked Assessment Program achieved its objectives while complying with planning controls.
What we found
Through tranches three to six of the program, DPIE successfully accelerated the final stages of 53 assessments. DPIE reported that 89 per cent of these proceeded to the next stage of development within six months.
Assessment of projects and planning proposals was compliant with legislation and other requirements. However, the audit found gaps in DPIE's management of conflicts of interest.
DPIE has not evaluated or costed the program and is not able to demonstrate the extent to which it provided support to the construction industry during COVID-19.
Aspects of the program have been incorporated into longer term reforms to create a new level of transparency over the progress and status of planning assessments.
What we recommended
DPIE should:
- strengthen controls over conflicts of interest
- evaluate the Fast-tracked Assessment Program.
Fast facts
Construction industry support
- The program aimed at providing immediate support to the construction industry during the COVID-19 crisis
59 fast-tracked projects
- 59 projects and 42 planning proposals projects were assessed in six tranches
89% of all fast-tracked assessments in tranches three to six progressed to the next stage of the planning process within six months of determination
In April 2020, the Department of Planning, Industry and Environment (DPIE) introduced programs aimed at providing immediate support to the construction industry during the COVID-19 crisis. One of these was the Fast-tracked Assessment Program. This program identified planning proposals and development applications (DAs), across six tranches, that were partially-assessed and could be accelerated to determination.
In accordance with the program objectives, the planning proposals and DAs selected for fast-tracked assessment had to:
- deliver jobs – particularly in the construction industry
- be capable of progressing to the next stage of development within six months of determination
- deliver public benefit.
At the same time, the Fast-tracked Assessment Program was to lay a foundation for future reform of the planning system by piloting changes in the assessment process that could be adopted in the medium to long term.
This audit assessed whether the Fast-tracked Assessment Program achieved its objectives while complying with planning controls. The audit focused on tranches three to six of the program, which were determined between July 2020 and October 2020. The rationale for focusing on these four tranches was that the program design had been slightly modified after the first two tranches to address identified risks.
Conclusion
Through tranches three to six of the Fast-tracked Assessment Program, DPIE successfully accelerated the final stages of 53 assessments. DPIE’s internal monitoring indicates that 31 DAs and 16 planning proposals selected in these tranches proceeded to the next stage of development within six months of determination. DPIE achieved this while also successfully managing the risk of non-compliance with planning controls arising from the accelerated process. While DPIE has incorporated components of the Fast-tracked Assessment Program into other longer-term reforms, it has not evaluated the program and is not able to demonstrate the extent to which the program provided support to the construction industry during COVID-19.
Between April and October 2020, DPIE adopted a case management approach to accelerate the final stages of assessment for 42 planning proposals and 59 DAs in six tranches. Tranches three to six were the focus of this audit and included 22 planning proposals and 31 DAs. Applicants involved in the program were expected to progress their projects to the next stage of development within six months of determination. While DPIE had no way of compelling applicants to do this and relied on non-binding commitments obtained from applicants, DPIE’s internal monitoring indicates that 47 of the 53 applicants selected in tranches three to six honoured this commitment.
Fast-tracked assessment only applied to the final stages of assessment and required DPIE staff and other stakeholders to work towards a determination deadline. DPIE effectively used a case management approach to manage the risk that the accelerated timeframe could result in planning controls not being fully compliant with legislation. There is some room for improvement in the process, as four of 28 staff assessing planning proposals and DAs had not lodged current conflict of interest declarations.
Based on the results of and learnings from the Fast-tracked Assessment Program, DPIE has incorporated some elements of the program into other longer-term reforms. There is now increased transparency about when applicants can expect to receive a planning determination and DPIE has also introduced a case management approach for strategic and high priority planning applications. Applicants benefiting from case-managed assessment are now required to commit to a formal service charter that specifies the obligations of both DPIE and the applicant.
DPIE has not evaluated the Fast-tracked Assessment Program to understand the costs and benefits of the program, nor which aspects of the program were most effective as a basis for future reform.
Appendix one – Response from agency
Appendix two – Planning determination pathways
Appendix three – About the audit
Appendix four – Performance auditing
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Parliamentary reference - Report number #354 - released (27 July 2021).