Reports
Actions for Education 2023
Education 2023
What this report is about
Results of the Education portfolio of agencies’ financial statements audits for the year ended 30 June 2023.
What we found
Unqualified audit opinions were issued for all Education portfolio agencies.
An ‘other matter’ paragraph was included in the TAFE Commission’s independent auditor’s report as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.
What the key issues were
Comprehensive valuations of buildings at the Department of Education (the department) and at the TAFE Commission found that certain assumptions applied in previous years needed to be updated, resulting in prior period restatements.
The department prepaid a building contractor for early works on a project and some of the prepayment is in legal dispute.
The department duplicated a claim for project funding from Restart NSW in 2021.
New parental leave legislation increased employee liabilities for portfolio agencies. The department and the NSW Education Standards Authority (the Authority) updated their financial statements to record parental leave liabilities.
A high risk matter was raised for the Authority to improve the quality and timeliness of information to support their financial statement close process.
What we recommended
Portfolio agencies should ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards.
The department should:
- improve processes to ensure project claims are not duplicated
- assess the risks associated with providing prepayments to contractors.
This report provides Parliament and other users of the Education portfolio of agencies’ financial statements with the results of our audits, 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 portfolio (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all the portfolio agencies 2022–23 financial statements.
- An ‘other matter’ paragraph was included in the independent auditor’s report for the Technical and Further Education Commission (the TAFE Commission) as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.
- Comprehensive valuations of buildings in the current year identified that certain assumptions applied in previous years were incorrect. The effects of these corrections are disclosed as prior period errors in the financial statements of the Department of Education (the department) and the TAFE Commission.
- The department made corrections to its financial statements to reflect increases to NSW teachers’ wages announced post balance date. This impacted amounts recorded as liabilities for a range of employee benefits and entitlements totalling $225.4 million, of which $147.9 million is accepted by the Crown and $77.5 million is borne by the department.
- A change to the NSW paid parental leave scheme, effective October 2022, created a new legal obligation that needed to be recognised by impacted government agencies. Of the three affected portfolio agencies, only the department and the NSW Education Standards Authority recognised a liability to account for this change. The aggregated unrecorded liabilities of other agencies in the portfolio totalled $2.4 million. The errors within the individual agencies’ financial statements were not material.
- The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
- The NSW Childcare and Economic Opportunity Fund should prepare financial statements unless NSW Treasury releases a Treasurer’s Direction under section 7.8 of the GSF Act that will exempt the SDA from financial reporting requirements.
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 portfolio.
Section highlights
- The 2022–23 audits identified one high risk and 20 moderate risk issues across the portfolio. Of these, one was a high risk repeat issue and four were moderate risk repeat issues.
- The total number of findings increased from 29 to 36, which mainly related to deficiencies in financial reporting, information technology, payroll and purchasing controls.
- The high risk matter relates to the lack of quality and timely information to support the financial statement close process at the NSW Education Standards Authority.
Appendix one – Early close procedures
© 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 Education 2022
Education 2022
What the report is about
Result of the Education cluster financial statement audits for the year ended 30 June 2022.
What we found
Unmodified audit opinions were issued for Education cluster agencies.
An 'other matter' paragraph was included in the TAFE Commission's independent auditor's report as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure from cluster grants.
What the key issues were
Annual fair value assessments of land and buildings showed material differences in their carrying values. As a result, the Department of Education and the TAFE Commission completed desktop revaluations of land and buildings, collectively increasing the value of these assets by $1.2 billion and $4.7 billion respectively.
The Department of Education and the NSW Education Standards Authority accepted changes to their office leasing arrangements managed by Property NSW. These changes resulted in the collective derecognition of $270.6 million of right-of-use assets and $382.9 million in lease liabilities.
What we recommended
A high-risk matter was reported in the management letter for the TAFE Commission highlighting non-compliance with policies and procedures guiding appropriate use of purchasing cards.
We recommended cluster agencies prioritise and address internal control deficiencies.
This report provides Parliament and other users of the Education cluster’s financial statements with the results of our audits, 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 2022.
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
|
The number of findings reported to management has increased, and 31% 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 2021–22, there were 29 findings raised across the cluster (28 in 2020–21). Thirty-one per cent of all issues were repeat issues (50% in 2020–21).
The most common new and repeat issues related to internal control deficiencies in agencies’ information technology general controls, application controls, and 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.
A high-risk matter was reported at the TAFE Commission highlighting instances of non-compliance with policies and procedures guiding appropriate purchasing card use
As part of our audit of the TAFE Commission, we integrated the use of data analytics into the audit approach. We performed data analytics over aspects of payroll, procurement and accounts payable activities. This helped us to highlight anomalies or risks in those data sets that are relevant to the audit of the TAFE Commission and plan testing procedures to address those risks. Data analytics also assisted us in providing an insight into the internal control environment of the TAFE Commission, highlighting areas where key controls are not in place or are not operating as management intended.
Our analysis over purchasing card data supplied by the TAFE Commission for the period July 2021 to March 2022 found deficiencies in the provisioning, use and cancellation of purchasing cards. This included identified instances of:
- controls effectively bypassed when a purchasing card surrendered by a former employee had been used by another employee
- split payments, circumventing delegation / cardholder limits
- delays in the submission and approval of purchasing card transactions.
The table below describes the common issues identified across the cluster by category and risk rating:
Risk rating | Issue |
Information technology | |
High: 0 new, 0 repeat 1 Moderate: 5 new, 3 repeat 2 Low: 2 new, 1 repeat 3 |
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:
|
Internal control deficiencies or improvements | |
High: 1 new, 0 repeat 1 Moderate: 5 new, 3 repeat 2 Low: 4 new, 1 repeat 3 |
The financial audits identified internal control weaknesses across key business processes relevant to financial reporting. Of note were deficiencies identified in:
|
Financial reporting | |
High: 0 new, 0 repeat 1 Moderate: 1 new, 1 repeat 2 Low: 2 new, 0 repeat 3 |
The financial audits identified:
|
2 Moderate risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
3 Low risk from the consequence and/or likelihood of an event that has had, or may have a negative impact on the entity.
Recommendation
We recommend cluster agencies prioritise and action recommendations to address the internal control deficiencies outlined above.
Actions for Audit Insights 2018-2022
Audit Insights 2018-2022
What the report is about
In this report, we have analysed the key findings and recommendations from our audit reports over the past four years.
This analysis includes financial audits, performance audits, and compliance audits of state and local government entities that were tabled in NSW Parliament between July 2018 and February 2022.
The report is framed by recognition that the past four years have seen significant challenges and emergency events.
The scale of government responses to these events has been wide-ranging, involving emergency response coordination, service delivery, governance and policy.
The report is a resource to support public sector agencies and local government to improve future programs and activities.
What we found
Our analysis of findings and recommendations is structured around six key themes:
- Integrity and transparency
- Performance and monitoring
- Governance and oversight
- Cyber security and data
- System planning for disruption
- Resource management.
The report draws from this analysis to present recommendations for elements of good practice that government agencies should consider in relation to these themes. It also includes relevant examples from recent audit reports.
In this report we particularly call out threats to the integrity of government systems, processes and governance arrangements.
The report highlights the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit.
A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.
Fast facts
- 72 audits included in the Audit Insights 2018–2022 analysis
- 4 years of audits tabled by the Auditor-General for New South Wales
- 6 key themes for Audit Insights 2018–2022.
I am pleased to present the Audit Insights 2018–2022 report. This report describes key findings, trends and lessons learned from the last four years of audit. It seeks to inform the New South Wales Parliament of key risks identified and to provide insights and suggestions to the agencies we audit to improve performance across the public sector.
The report is framed by a very clear recognition that governments have been responding to significant events, in number, character and scale, over recent years. Further, it acknowledges that public servants at both state and council levels generally bring their best selves to work and diligently strive to deliver great outcomes for citizens and communities. The role of audit in this context is to provide necessary assurance over government spending, programs and services, and make suggestions for continuous improvement.
A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.
However, in this report we particularly call out threats to the integrity of government systems, processes and governance arrangements. We highlight the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit. Arguably, these considerations are never more important than in an increasingly complex environment and in the face of significant emergency events and they will be key areas of focus in our future audit program.
While we have acknowledged the challenges of the last few years have required rapid responses to address the short-term impacts of emergency events, there is much to be learned to improve future programs. I trust that the insights developed in this report provide a helpful resource to public sector agencies and local government across New South Wales. I would be pleased to receive any feedback you may wish to offer.
Margaret Crawford
Auditor-General for New South Wales
Integrity and transparency | Performance and monitoring | Governance and oversight | Cyber security and data | System planning | Resource management |
Insufficient documentation of decisions reduces the ability to identify, or rule out, misconduct or corruption. | Failure to apply lessons learned risks mistakes being repeated and undermines future decisions on the use of public funds. | The control environment should be risk-based and keep pace with changes in the quantum and diversity of agency work. | Building effective cyber resilience requires leadership and committed executive management, along with dedicated resourcing to build improvements in cyber security and culture. | Priorities to meet forecast demand should incorporate regular assessment of need and any emerging risks or trends. Absence of an overarching strategy to guide decision-making results in project-by-project decisions lacking coordination. | Governments must weigh up the cost of reliance on consultants at the expense of internal capability, and actively manage contracts and conflicts of interest. |
Government entities should report to the public at both system and project level for transparency and accountability. | Government activities benefit from a clear statement of objectives and associated performance measures to support systematic monitoring and reporting on outcomes and impact. | Management of risk should include mechanisms to escalate risks, and action plans to mitigate risks with effective controls. | In implementing strategies to mitigate cyber risk, agencies must set target cyber maturity levels, and document their acceptance of cyber risks consistent with their risk appetite. | Service planning should establish future service offerings and service levels relative to current capacity, address risks to avoid or mitigate disruption of business and service delivery, and coordinate across other relevant plans and stakeholders. | Negotiations on outsourced services and major transactions must maintain focus on integrity and seeking value for public funds. |
Entities must provide balanced advice to decision-makers on the benefits and risks of investments. | Benefits realisation should identify responsibility for benefits management, set baselines and targets for benefits, review during delivery, and evaluate costs and benefits post-delivery. | Active review of policies and procedures in line with current business activities supports more effective risk management. | Governments hold repositories of valuable data and data capabilities that should be leveraged and shared across government and non-government entities to improve strategic planning and forecasting. | Formal structures and systems to facilitate coordination between agencies is critical to more efficient allocation of resources and to facilitate a timely response to unexpected events. | Transformation programs can be improved by resourcing a program management office. |
Clear guidelines and transparency of decisions are critical in distributing grant funding. | Quality assurance should underpin key inputs that support performance monitoring and accounting judgements. | Governance arrangements can enable input into key decisions from both government and non-government partners, and those with direct experience of complex issues. | Workforce planning should consider service continuity and ensure that specialist and targeted roles can be resourced and allocated to meet community need. | ||
Governments must ensure timely and complete provision of information to support governance, integrity and audit processes. | |||||
Read more | Read more | Read more | Read more | Read more | Read more |
This report brings together a summary of key findings arising from NSW Audit Office reports tabled in the New South Wales Parliament between July 2018 and February 2022. This includes analysis of financial audits, performance audits, and compliance audits tabled over this period.
- Financial audits provide an independent opinion on the financial statements of NSW Government entities, universities and councils and identify whether they comply with accounting standards, relevant laws, regulations, and government directions.
- Performance audits determine whether government entities carry out their activities effectively, are doing so economically and efficiently, and in accordance with relevant laws. The activities examined by a performance audit may include a selected program or service, all or part of an entity, or more than one government entity. Performance audits can consider issues which affect the whole state and/or the local government sectors.
- Compliance audits and other assurance reviews are audits that assess whether specific legislation, directions, and regulations have been adhered to.
This report follows our earlier edition titled 'Performance Audit Insights: key findings from 2014–2018'. That report sought to highlight issues and themes emerging from performance audit findings, and to share lessons common across government. In this report, we have analysed the key findings and recommendations from our reports over the past four years. The full list of reports is included in Appendix 1. The analysis included findings and recommendations from 58 performance audits, as well as selected financial and compliance reports tabled between July 2018 and February 2022. The number of recommendations and key findings made across different areas of activity and the top issues are summarised at Exhibit 1.
The past four years have seen unprecedented challenges and several emergency events, and the scale of government responses to these events has been wide-ranging involving emergency response coordination, service delivery, governance and policy. While these emergencies are having a significant impact today, they are also likely to continue to have an impact into the future. There is much to learn from the response to those events that will help the government sector to prepare for and respond to future disruption. The following chapters bring together our recommendations for core elements of good practice across a number of areas of government activity, along with relevant examples from recent audit reports.
This 'Audit Insights 2018–2022' report does not make comparative analysis of trends in public sector performance since our 2018 Insights report, but instead highlights areas where government continues to face challenges, as well as new issues that our audits have identified since our 2018 report. We will continue to use the findings of our Insights analysis to shape our future audit priorities, in line with our purpose to help Parliament hold government accountable for its use of public resources in New South Wales.
Appendix one – Included reports, 2018–2022
Appendix two – About this report
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 Delivering school infrastructure
Delivering school infrastructure
The Auditor-General for New South Wales, Margaret Crawford, released a report today examining the planning and delivery of new, redeveloped and upgraded public schools.
School Infrastructure NSW has identified the need to accommodate an additional 180,000 enrolments in public schools by 2039 with a large portion of this growth expected in metropolitan Sydney. It has also identified that around 34,000 teaching spaces will require upgrading to be fit-for-purpose.
Although School Infrastructure NSW has developed a long-term strategic plan that advises government of ongoing funding requirements, it has not presented a list of priorities to meet those needs. Developing a longer-term list of priorities would help signal the areas of greatest need and allow more time to develop the best options to meet those needs.
The audit found that School Infrastructure NSW has focused on delivering existing projects, election commitments and other government announcements. This has diverted attention from identifying and delivering projects that would have better met present and future needs.
The report makes eight recommendations to improve long-term planning for future needs, strengthen the quality of estimated project costs and benefits, and embed a continuous improvement program.
In 2016, the Department of Education prepared a School Assets Strategic Plan (2016 SASP) which outlined long-term funding needs to support the expected growth in enrolments to 2031. Following the release of the 2016 SASP, the NSW Government substantially increased funding for new and upgraded schools from $2.4 billion in the 2016–17 State Budget to $4.2 billion in 2017–18.
In 2017, the Department of Education established School Infrastructure NSW (SINSW) to lead the delivery of the 2016 SASP and the 123 new projects announced in the 2017–18 Budget. This significantly larger program of work required rapid development of internal capacity, governance arrangements, and project management systems. This needed to be done at the same time as scoping and planning for the list of announced projects.
As there are limited funds available to meet growing needs across the State, it is important that SINSW has effective methods to prioritise projects to communities with the greatest need. To ensure that projects deliver value for money, business cases need to have robust estimates of project costs and benefits. Business cases also need to account for the inherent risks in delivering infrastructure projects. Unplanned cost escalations can reduce the number of new or modernised classrooms SINSW can deliver. Unforeseen delays may also impact families who make significant life choices based on their expectations that a school will open at the beginning of the school year.
The objective of this audit was to assess the effectiveness of planning and delivery of new, upgraded and redeveloped schools to meet demand for public school education in New South Wales. To address this objective, the audit examined whether the Department:
- has effective procedures for planning and prioritising school capital works to meet present and future demands
- develops robust business cases for school capital works that reliably inform decision-making
- has effective program/project governance and management systems that support delivering projects on-time, within budget and achievement of intended benefits.
The audit examined business cases for 12 projects as case studies. These include a mix of projects initiated before and after the establishment of SINSW.
This audit commenced in June 2020 and examined strategies and demographic projections developed prior to the emergence of COVID-19. This audit did not examine potential longer-term impacts of COVID-19 on future demands for public school education.
ConclusionSchool Infrastructure NSW has been focused on delivering existing projects, election commitments and other government announcements. This has diverted attention from identifying and delivering projects that would have better met present and future student and classroom needs. While it has developed a long-term strategic plan that advises government of ongoing funding requirements, it has not presented a list of priorities to meet these needs. In its first years of operation, SINSW has focused on delivering existing projects and the 123 new projects announced in the 2017–18 Budget. Further NSW Government announcements in the 2018–19 Budget, election commitments in the 2019–20 Budget, and announcements in the 2020–21 Budget, made up the majority of new projects, rather than projects prioritised by SINSW. In early 2020, SINSW advised the NSW Government that the currently funded infrastructure program would not meet forecast classroom requirements for 2023 and beyond. The School Asset Strategic Plan 2020 estimates the annual level of investment needed over the next 20 years to meet growth, update and upgrade facilities to meet compliance obligations. However, SINSW’s ten-year Capital Investment Plans for 2018–19, 2019–20 and 2020–21 only identified priorities over a two-year horizon. Developing a longer-term pipeline of priorities would signal the areas of greatest need and allow greater scope to consider a range of options to best meet those needs. SINSW has made progress in planning across geographic areas but needs to better prioritise which projects move forward. Given the current and projected needs for new classrooms, it is vital that SINSW provides long-term advice based on thorough state-wide analysis to help prioritise projects that best meet this demand. SINSW has improved its capabilities, processes, and systems to support planning in ‘School Community Groups’, which are clusters of between 5 to 15 schools in a geographic area. This addresses a key direction identified in the School Assets Strategic Plan 2016. It has developed a planning tool which allows it to prioritise School Community Groups based on weighted criteria. It has also developed an approach to identify potential projects within School Community Groups but has not yet put in place a structured process to prioritise which projects move to the business case stage to seek funding for delivery. Business cases we examined established service needs, but several had shortcomings in scope definition, cost estimation and risk identification. Most business cases we examined demonstrated the service need and consultation with stakeholders helped to incorporate educational requirements. Common templates and specific cost-benefit guidance developed in partnership with NSW Treasury has helped to promote consistency across business cases. However, there were shortcomings in several business cases we reviewed. Business cases for projects already announced by government presented a limited number of options, and the process for eliminating other options was not transparent. Cost increases and contingency drawdowns for several projects indicate that scoping, costing and risk assessments could be improved, especially for complex projects. Standard program management systems and governance arrangements support project delivery, however, there is scope for better ongoing oversight of benefits. SINSW applies standard governance arrangements to projects based on their size. Higher value projects have executive oversight while lower value projects are overseen on a regional basis. SINSW has improved its project management systems to provide more consistent data and greater transparency to senior management over project status, cost and use of contingencies. SINSW has worked with NSW Treasury to define a consistent set of benefits for new and redeveloped schools. Estimated benefits are currently based on international contexts but SINSW advises it is undertaking further research to improve the evidence base in this area. The current approach to ongoing monitoring, reporting and evaluation of project benefits places responsibility on the infrastructure delivery team. This team is not the most appropriate area to monitor ongoing benefits, which are expected to accrue many years after delivery and depend on actions in other areas of the Department. |
1. Key findings
SINSW delivered projects against an established program of works in its first years of operation
At establishment, SINSW inherited a portfolio of existing projects and 123 new projects announced as part of the 2017–18 Budget (to commence over 2017–18 and 2018–19). It has progressively worked through individual project planning to deliver against these projects.
The 2018–19 Budget funded two new projects that had not already been announced. Both projects were identified by SINSW as a priority. The 2018–19 Budget also allocated funding for 'planning' 22 new projects. Seventeen of the 22 projects had been identified by SINSW as a priority.
SINSW identified 31 new priority projects in its Capital Investment Plan for 2019–20. Thirteen of these projects were funded in that year with a further 27 projects included as election commitments. SINSW identified 20 new projects in its Capital Investment Plan for 2020–21 but only two of these were funded. SINSW advised this was due to a constrained budget environment.
There is an anticipated shortfall of classrooms based on the current funded program
Despite increased funding since 2017–18, SINSW advised the NSW Government in early 2020 that the currently funded infrastructure program would not meet forecast classroom requirements for 2023 and beyond. Accordingly, it is vital that new funding is prioritised to projects which best meet demand.
SINSW only identified specific priorities over a two-year horizon in its Capital Investment Plans for 2018–19, 2019–20 and 2020–21. The School Assets Strategic Plan 2016 and the 2020 update make the case for sustained funding for school building and redevelopment. These plans estimate annual funding requirements and show geographic areas with increasing forecast enrolments. Detailing how priorities over a ten-year timeframe fit within a ten-year capital planning limit would create more certainty about meeting growth demands.
There has been progress in formalising prioritisation frameworks, data tools and supporting governance arrangements
SINSW committed to planning for new and redeveloped schools in 'School Community Groups' in the School Assets Strategic Plan 2016. This is a new way of planning which considers the educational needs over a defined geographical area. It has developed a planning tool to prioritise School Community Groups based on weighted criteria. It has also established governance frameworks to improve transparency over decisions to reprioritise this list.
SINSW has refined its approach to planning in School Community Groups over the past four years. It now prepares Service Needs Reports to investigate needs, identify projects, prioritise, determine scope and timing, and assess non-capital options. SINSW has yet to finalise arrangements for how needs identified in Service Needs Reports progress to the strategic business case stage.
Projects announced prior to developing a business case have less opportunity to consider a range of options to meet the service needs
Business cases for projects already announced by government (or announced for planning) go through the same process of determining the service need and impacts on surrounding schools. However, for some announced projects, the range of options considered in the business case is influenced by the parameters of the announcement. This makes it more difficult to genuinely pursue alternate options that could better meet the identified service need.
Projects identified by SINSW have a more rigorous process of considering options. Service Needs Reports explore a wide range of asset and non-asset interventions across the School Community Group. Options are narrowed as the projects move through the strategic and final business case stages. SINSW uses its Investment Review Committee to engage key stakeholders early in the process so that they are informed about how non-asset solutions have been considered and why SINSW is progressing the business case for a capital solution for particular projects.
Several business cases underestimated project costs and risks, leading to scope and budget increases
Several business cases we reviewed did not adequately identify the initial scope requirements, project-specific risks or the likely project cost. For two business cases, this appeared to be due to an attempt to fit the project within a predetermined amount. Announcing a project’s scope, budget and timeframe before proper planning increases risks to successful delivery against expectations.
Several of the projects we examined required drawdowns on contingency funds due to inadequate consideration of scope, costs and project risks at the planning stage. Contingency funds are intended for unanticipated extra costs rather than those that could have or should have been identified at the planning stage.
Guidance on benefit calculations has provided a consistent framework for business cases
Business cases we examined presented a consistent set of benefits based on guidance developed in partnership with NSW Treasury. Following this guidance helps to compare cost-benefit analyses across business cases. However, the evidence for the estimated benefits is based on contexts outside of NSW. SINSW has the tools and data sources to calculate benefits more suited to the context of particular schools. Doing so would improve the accuracy of cost-benefit analyses. SINSW advised that it is currently updating the guidance in partnership with NSW Treasury.
SINSW involves school principals, executives and teaching staff in developing education rationales when commencing projects. These documents help align projects with education outcomes. They also provide a baseline for post-occupancy evaluation, which is important to determine whether the new school infrastructure is being used in the ways that were anticipated in the business case.
SINSW could elevate its existing assurance review process to consolidate lessons learned
SINSW engages external peer reviewers to conduct assurance reviews on its projects at multiple stages of planning and delivery. It has established a Community of Practice for external reviewers to keep them up to date on new developments and requirements. Higher value projects are also subject to review by Infrastructure NSW under the Investor Assurance Framework.
By looking at all projects at all stages, assurance reviews can identify systematic issues across the full portfolio of projects. A recent assurance review analysed common findings from reviews of strategic and final business cases. This provides a helpful way to improve internal processes. SINSW advised that it is implementing a continuous improvement program, which will be able to take findings from assurance reviews to build organisational capabilities.
2. Recommendations
By September 2021, the Department of Education should:
- finalise the investment prioritisation approach with agreement from key stakeholders
- finalise and update on an ongoing basis a ten-year list of priorities to meet the forecast demand for new classrooms and contemporary fit for purpose learning environments, which identifies individual projects and programs in the short-term and priority geographic areas and programs in the medium-term
- seek a ten-year Capital Planning Limit from NSW Treasury to ensure the needs identified in the ten-year list of priorities are met and are coordinated with the forward capital programs of other agencies
- improve the quality of data on cost benchmarks that underpin the annual ten-year Capital Investment Plan and updates to the School Assets Strategic Plan
- embed an evidence-based cost benefit analysis framework for school investment, in consultation with NSW Treasury, by:
- validating benefits estimated in previous business cases with actual results
- building the evidence base in relation to contemporary learning environments
- regularly share data on forecast needs with relevant planning agencies to promote strategic opportunities for servicing education needs
- implement the continuous improvement program for service planning, options assessment, business case development, project delivery and handover. The program should be informed by findings from assurance reviews, post-occupancy evaluations and project lessons learned
- establish benefits realisation processes and practices that:
- ensure business cases set baselines and targets for benefits
- review benefits during delivery, prior to handover and as part of Post Occupancy Evaluations
- identify which part(s) of the Department are best placed to develop, manage and evaluate benefits on an ongoing basis.
Note: The Department's formal response to this report at Appendix one states that while it 'supports the recommendations, it considers the proposed six-month timeframe to be an unreasonably short period for a large and complex organisation to effectively implement many of these recommendations'. It suggests 12 months would be needed to implement the recommendations. The recommendations stemming from this audit are core business for SINSW. The Audit Office considers it important for SINSW to place priority on implementing the recommendations in time to inform the 2022–23 budget cycle. Extending the deadline to April 2022 would place action outside of that budget cycle. |
There have been significant increases in funding for education infrastructure since the 2017–18 Budget and further growth in demand for places in schools is forecast. SINSW has the challenge, not only of meeting the need for new classrooms due to population growth, but also upgrading facilities to enable modern teaching techniques. In addition, community expectations of what constitutes a vibrant and successful school community continues to increase.
Given growing demand and budget constraints, projects must be selected to best meet the needs of the community and planning and prioritisation are vital. SINSW has been progressing planning for announced projects as well as implementing a new type of strategic state-wide planning and prioritisation, cluster planning, where options are developed for School Community Groups.
The primary role of a business case is to reliably inform an investment and/or policy decision. Over the period of review, the NSW Government's guidelines for business cases have established this requires recommendations based on convincing arguments, sufficient evidence, and accurate costing of alternatives and expected benefits. Business case guidelines are underpinned by guides for economic appraisal and cost-benefit analysis.
As SINSW moves to prioritise business cases for interventions in School Community Groups, it will increasingly need to demonstrate rigour in its assessment of all options. It will also need to ensure that scope identification, cost and risk planning and the setting of contingencies are accurate. This will help decision-makers better understand, plan for and manage the investment required to meet the demand for school infrastructure.
For this audit, we examined business cases and related documentation for 12 projects. Several of these projects were developed before School Infrastructure NSW was established in mid-2017.
Over the period of review, NSW Government policies for business case development and submission have emphasised that effective governance arrangements are critical to a proposal's successful implementation.
SINSW's guidance similarly highlight the importance of effective governance and project management for achieving good outcomes. It prescribes a general governance structure managed by SINSW that can be tailored to the planning and delivery of school infrastructure projects.
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 #347 - released (8 April 2021).
Auditor-General’s Report to Parliament on Delivering School Infrastructure
This corrigendum has been prepared to amend the following text within my Auditor-General’s Report to Parliament on Delivering School Infrastructure, dated 8 April 2021.
On page two, the original text was as follows:
Further NSW Government announcements in the 2018–19 Budget and election commitments in the 2019–20 Budget made up the majority of new projects, rather than projects prioritised by SINSW.
The original text has now been changed to
Further NSW Government announcements in the 2018–19 Budget, election commitments in the 2019–20 Budget, and announcements in the 2020–21 Budget, made up the majority of new projects, rather than projects prioritised by SINSW.
On page three, the original text was as follows:
The 2018–19 Budget funded three new projects that had not already been announced. One of the three projects was identified by SINSW as a priority.
The original text has now been changed to:
The 2018–19 Budget funded two new projects that had not already been announced. Both projects were identified by SINSW as a priority.
On page three the original text was as follows:
SINSW identified 33 priority projects in its Capital Investment Plan for 2019–20.
The original text has now been changed to
SINSW identified 31 new priority projects in its Capital Investment Plan for 2019–20.
On page eleven, in Exhibit 4, the original text was as follows:
The 2018–19 NSW Budget announced funding for an additional 43 new and upgraded schools to commence works in 2018–19. Of the 43 projects:
• 1 was identified by SINSW as a priority in its Capital Investment Plan (SINSW requested funding for one new project)
• 40 had already been announced
• 2 were new announcements (not identified as a priority by SINSW in its Capital Investment Plan).
The original text has now been changed to:
The 2018–19 NSW Budget announced funding for an additional 42 new and upgraded schools to commence works in 2018–19. Of the 42 projects:
• 2 were identified by SINSW as a priority in its Capital Investment Plan (SINSW requested funding for two new projects)
• 40 had already been announced.
On page eleven, the original text was as follows:
The 2019–20 NSW Budget announced funding for an additional 40 new and upgraded schools as election commitments. Of the 40 election commitment projects:
• 13 were identified by SINSW as priorities in its Capital Investment Plan (SINSW requested funding for a total of 33 new projects)
• 27 were new announcements (not identified as a priority by SINSW in its Capital Investment Plan).
The original text has now been changed to:
The 2019–20 NSW Budget announced funding for an additional 40 new and upgraded schools as election commitments. Of the 40 election commitment projects:
• 13 were identified by SINSW as priorities in its Capital Investment Plan (SINSW requested funding for a total of 31 new projects)
• 27 were new announcements (not identified as a priority by SINSW in its Capital Investment Plan).
The above changes will be reflected in the version of the report published on the Audit Office website and should be considered the true and accurate version.
Actions for Internal controls and governance 2020
Internal controls and governance 2020
The Auditor-General for New South Wales, Margaret Crawford today released her report on the findings and recommendations from the 2019–20 financial audits that relate to internal controls and governance at 40 of the largest agencies in the NSW public sector.
The bushfire and flood emergencies and the COVID‑19 pandemic continue to have a significant impact on the people and public sector of New South Wales. The scale of the government response to these events has been significant. The report focuses on the effectiveness of internal controls and governance processes, including relevant agencies’ response to the emergencies. In particular, the report focuses on:
- financial and information technology controls
- business continuity and disaster recovery planning arrangements
- procurement, including emergency procurement
- delegations that support timely and effective decision-making.
Due to the ongoing impact of COVID‑19 agencies have not yet returned to a business‑as‑usual environment. ‘Agencies will need to assess their response to the recent emergencies and update their business continuity, disaster recovery and other business resilience frameworks to reflect the lessons learnt from these events’ the Auditor-General said.
The report noted that special procurement provisions were put in place to allow agencies to better respond to the COVID-19 pandemic. The Auditor-General recommended agencies update their procurement policies to reflect the current requirements of the NSW Procurement Framework and the emergency procurement requirements.
This report analyses the internal controls and governance of 40 of the largest agencies in the NSW public sector for the year ended 30 June 2020. These 40 agencies constitute an estimated 85 per cent of total expenditure for all NSW public sector agencies.
1. Internal control trends
New, repeat and high risk findings |
Internal control deficiencies increased by 13 per cent compared to last year. This is predominately due to a seven per cent increase in new internal control deficiencies and 24 per cent increase in repeat internal control deficiencies. There were ten high risk findings compared to four last year. The recent emergencies have consumed agency time and resources and may have contributed to the increase in internal control deficiencies, particularly repeat deficiencies. Agencies should:
|
Common findings |
A number of findings remain common across multiple agencies over the last four years, including:
|
2. Information technology controls
IT general controls |
We found deficiencies in information security controls over key financial systems including:
The deficiencies above increase the risk of non-compliance with the NSW Cyber Security Policy, which requires agencies to have processes in place to manage user access, including privileged user access to sensitive information or systems and remove that access once it is not required or employment is terminated. |
3. Business continuity and disaster recovery planning
Assessing risks to business continuity and Scenario testing |
The response to the recent emergencies and the COVID-19 pandemic has encompassed a wide range of activities, including policy setting, on-going service delivery, safety and availability of staff, availability of IT and other systems and financial management. Agencies were required to activate their business continuity plans in response, and with the continued impact of COVID-19 have not yet returned to a business-as-usual environment. Our audits focused on the preparedness of agency business continuity and disaster recovery planning arrangements prior to the onset of the COVID-19 pandemic. We identified deficiencies in agency business continuity and disaster recovery planning arrangements. Twenty-three per cent of agencies had not conducted a business impact analysis (BIA) to identify critical business functions and determine business continuity priorities. Agencies can also improve the content of their BIA. For example, ten per cent of agencies' BIAs did not include recovery time objectives and six per cent of agencies did not identify key IT systems that support critical business functions. Scenario testing improves the effectiveness with which a live crisis is handled, but 40 per cent of agencies had not conducted a business continuity scenario testing exercise in the period from 1 January 2019 to 31 December 2019. There were also opportunities to improve the effectiveness of scenario testing exercises by:
Agencies have responded to the recent emergencies but addressing deficiencies will ensure agencies have adequate safeguards in their processes to again respond in the future, if required. During 2020–21 we plan to conduct a performance audit on 'Business continuity and disaster recovery planning'. This audit will consider the effectiveness of agency business continuity planning arrangements to maintain business continuity through the recent emergencies and/or COVID-19 pandemic and return to a business-as-usual environment. We also plan to conduct a performance audit on whole-of-government 'Coordination of emergency responses'. |
Responding to disruptions |
We found agencies' governance functions could have been better informed about responses to disruptive incidents that had activated a business continuity or disaster recovery response between 1 January 2019 to 31 December 2019. For instance: in 89 per cent of instances where a business continuity response was activated, a post-incident review had been performed. In 82 per cent of these instances, the outcomes were reported to a relevant governance or executive management committee in 95 per cent of instances where a disaster recovery response was activated, a post incident review had been performed. In 86 per cent of these instances, the outcomes were reported to a relevant governance committee or executive management committee. Examples of recorded incidents included extensive air quality issues and power outages due to bushfires, system and network outages, and infected and hijacked servers. Agencies should assess their response to the recent emergencies and the COVID-19 pandemic and update business continuity, disaster recovery and other business resilience frameworks to incorporate lessons learned. Agencies should report to those charged with governance on the results and planned actions. |
Management review and oversight | Eighty-two per cent and 86 per cent of agencies report to their audit and risk committees (ARC) on their business continuity and disaster recovery planning arrangements, respectively. Only 18 per cent and five per cent of ARCs are briefed on the results of respective scenario testing. Briefing ARCs on the results of scenario testing exercises helps inform their decisions about whether sound and effective business continuity and disaster recovery arrangements have been established. |
4. Procurement, including emergency procurement
Policy framework |
Agency procurement policies did not capture the requirements of several key NSW Procurement Board Directions (the Directions), increasing the risk of non-compliance with the Directions. We noted:
Recommendation: Agencies should review their procurement policies and guidelines to ensure they capture the key requirements of the NSW Government Procurement Policy Framework, including NSW Procurement Board Directions. |
Managing contracts |
Eighty-eight per cent of agencies maintain a central contract register to record all details of contracts above $150,000, which is a requirement of GIPA legislation. Of the agencies that maintained registers, 13 per cent did not capture all contracts and eight per cent did not include all relevant contract details. Sixteen per cent of agencies did not periodically review their contract register. Timely review increases compliance with GIPA legislation, and enhances the effectiveness with which procurement business units monitor contract end dates, contract extensions and commence new procurement. |
Training and support |
Ninety-three per cent of agencies provide training to staff involved in procurement processes, and a further 77 per cent of agencies provide this training on an on-going basis. Of the seven per cent of agencies that had not provided training to staff, we noted gaps in aspects of their procurement activity, including:
Training on procurement activities ensures there is effective management of procurement processes to support operational requirements, and compliance with procurement directions. |
Procurement activities | While agencies had implemented controls for tender activities above $650,000, 43 per cent of unaccredited agencies did not comply with the NSW Procurement Policy Framework because they had not had their procurement endorsed by an accredited agency within the cluster or by NSW Procurement. This endorsement aims to ensure the procurement is properly planned to deliver a value for money outcome before it commences. |
Emergency procurement |
As at 30 June 2020, agencies within the scope of this report reported conducting 32,239 emergency procurements with a total contract value of $316,908,485. Emergency procurement activities included the purchase of COVID-19 cleaning and hygiene supplies. The government, through NSW Procurement released the 'COVID-19 Emergency procurement procedure', which relaxed procurement requirements to allow agencies to make COVID-19 emergency procurements. Our review against the emergency procurement measures found most agencies complied with requirements. For example:
Complying with the procedure helps to ensure government resources are being efficiently, effectively, economically and in accordance with the law. Recommendation: Agency procurement frameworks should be reviewed and updated so they can respond effectively to emergency situations that may arise in the future. This includes:
|
5. Delegations
Instruments of delegation |
We found that agencies have established financial and human resources delegations, but some had not revisited their delegation manuals following the legislative and machinery of government changes. For those agencies impacted by machinery of government changes we noted:
Delegations manuals are not always complete; 16 per cent of agencies had no delegation for writing off bad debts and 26 per cent of agencies had no delegation for writing off capital assets. Recommendation: Agencies should ensure their financial and human resources delegation manuals contain regular set review dates and are updated to reflect the Government Sector Finance Act 2018, machinery of government changes and their current organisational structure and roles and responsibilities. |
Compliance with delegations |
Agencies did not understand or correctly apply the requirements of the Government Sector Finance Act 2018 (GSF Act), resulting in non-compliance with the Act. We found that 18 per cent of agencies spent deemed appropriations without obtaining an authorised delegation from the relevant Minister(s), as required by sections 4.6(1) and 5.5(3) of the GSF Act. Further detail on this issue will be included in our Auditor-General's Reports to Parliament on Central Agencies, Education, Health and Stronger Communities, which will be tabled throughout December 2020. Recommendation: Agencies should review financial and human resources delegations to ensure they capture all key functions of laws and regulations, and clearly specify the relevant power or function being conferred on the officer. |
6. Status of 2019 recommendations
Progress implementing last year's recommendations |
Recommendations were made last year to improve transparency over reporting on gifts and benefits and improve the visibility management and those charged with governance had over actions taken to address conflicts of interest that may arise. This year, we continue to note:
While we acknowledge the significance of the recent emergencies, which have consumed agency time and resources, we note limited progress has been made implementing these recommendations. Further detail on the status of implementing all recommendations is in Appendix 2. Recommendation: Agencies should re-visit the recommendations made in last year's report on internal controls and governance and action these recommendations. |
Internal controls are processes, policies and procedures that help agencies to:
- operate effectively and efficiently
- produce reliable financial reports
- comply with laws and regulations
- support ethical government.
This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies we found across agencies. The rest of this report presents this year’s controls and governance findings in more detail.
Section highlights We identified ten high risk findings, compared to four last year with two findings repeated from the previous year. There was an overall increase of 13 per cent in the number of internal control deficiencies compared to last year due to a seven per cent increase in new internal control deficiencies, and a 24 per cent increase in repeat internal control deficiencies. The recent emergencies have consumed agency time and resources and may have contributed to the increase in internal control deficiencies, particularly repeat deficiencies. We identified a number of findings that remain common across multiple agencies over the last four years. Some of these findings related to areas that are fundamental to good internal control environments and effective organisational governance. Examples include:
Policies, procedures and internal controls should be properly designed, be appropriate for the current organisational structure and its business activities, and work effectively. |
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to manage key financial systems.
Section highlights Government agencies’ financial reporting is heavily reliant on information technology (IT). We continue to see a high number of deficiencies related to IT general controls, particularly those related to user access administration. These controls are key in adequately protecting IT systems from inappropriate access and misuse. IT is also important to the delivery of agency services. These systems often provide the data to help monitor the efficiency and effectiveness of agency processes and services they deliver. Our financial audits do not review all agency IT systems. For example, IT systems used to support agency service delivery are generally outside the scope of our financial audit. However, agencies should also consider the relevance of our findings to these systems. Agencies need to continue to focus on assessing the risks of inappropriate access and misuse and the implementation of controls to adequately protect their systems, focussing on the processes in place to grant, remove and monitor user access, particularly privileged user access. |
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency business continuity and disaster recovery planning arrangements.
Section highlights We identified deficiencies in agency business continuity and disaster recovery planning arrangements and opportunities for agencies to enhance their business continuity management and disaster recovery planning arrangements. This will better prepare them to respond to a disruption to their critical functions, resulting from an emergency or other serious event. Twenty-three per cent of agencies had not conducted a business impact analysis (BIA) to identify critical business functions and determine business continuity priorities and 40 per cent of agencies had not conducted a business continuity scenario testing exercise in the period from 1 January 2019 to 31 December 2019. Scenario testing improves the effectiveness with which a live crisis is handled. This section focusses on the preparedness of agency business continuity and disaster recovery planning arrangements prior to the onset of the COVID-19 pandemic. While agencies have responded to the recent emergencies, proactively addressing deficiencies will ensure agencies have adequate safeguards in their processes to again respond in the future, if required. During 2020–21 we plan to conduct a performance audit on 'Business continuity and disaster recovery planning'. This audit will consider the effectiveness of agency business continuity planning arrangements to maintain business continuity through the recent emergencies and/or COVID-19 pandemic and return to a business-as-usual environment. We also plan to conduct a performance audit on whole-of-government 'Coordination of emergency responses'. |
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of procurement agency procurement policies and procurement activity.
Section highlights We found agencies have procurement policies in place to manage procurement activity, but the content of these policies was not sufficiently detailed to ensure compliance with NSW Procurement Board Directions (the Directions). The Directions aim to ensure procurement activity achieves value for money and meets the principles of probity and fairness. Agencies have generally implemented controls over their procurement process. In relation to emergency procurement activity, agencies reported conducting 32,239 emergency procurements with a total contract value of $316,908,485 up to 30 June 2020. Our review of emergency procurement activity conducted during 2019–20 identified areas where some agencies did not fully comply with the 'COVID-19 Emergency procurement procedure'. We also found not all agencies are maintaining complete and accurate contract registers. This not only increases the risk of non-compliance with GIPA legislation, but also limits the effectiveness of procurement business units to monitor contract end dates, contract extensions and commence new procurement in a timely manner. We noted instances where agencies renewed or extended contracts without going through a competitive tender process during the year. |
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency compliance with financial and human resources delegations.
Appendix one – List of 2020 recommendations
Appendix two – Status of 2019 recommendations
Appendix three – Cluster agencies
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 Education 2019
Education 2019
This report focuses on key observations and findings from the most recent financial audits of agencies in the Education cluster. From 1 July 2019, the Technical and Further Education Commission, the NSW Skills Board and the functions and activities associated with vocational training and skills form part of the Education cluster.
Unqualified audit opinions were issued for all cluster agencies’ financial statements. However, internal control deficiencies were identified across the cluster agencies, including 14 findings that were repeated from the previous year. Control deficiencies were also identified in a sample of the state’s 2,200 schools. Schools did not always apply the guidance in the Department of Education's ‘Finance in Schools Handbook’, resulting in control weaknesses in key areas such as governance, cash management and procurement.
'In addition, we continue to observe inconsistencies in the employee leave data reported from the Department of Education’s payroll system, which impact the reliability of estimates of the Department’s liability for employee benefits. The robustness of the Department's quality assurance over leave liability data should be improved', the Auditor-General said.
This report analyses the results of our audits of financial statements of entities within the Education cluster for the year ended 30 June 2019. The table below summarises our key observations.
1. Machinery of Government changes
The Education cluster has expanded | From 1 July 2019, the Technical and Further Education Commission, the NSW Skills Board and the functions and activities associated with vocational training and skills now form part of the Education cluster. |
2. Financial reporting
Audit opinions |
Unqualified audit opinions were issued for all cluster agencies' 30 June 2019 financial statements audits. The number of corrections to disclosures in the financial statements, which increased this year, could have been reduced by a more thorough quality assurance over the information underpinning the financial statements. Recommendation: Cluster agencies should improve their quality assurance processes for financial reporting to improve the accuracy of financial statements presented for audit. |
Preparedness for new accounting standards |
Agencies will implement four new accounting standards shortly. Three are effective from 1 July 2019 and the fourth is effective from 1 July 2020. Cluster agencies needed to do more work on their impact assessments to better prepare for their implementation from 1 July 2019. Recommendation: Cluster agencies should finalise their plans to implement the new accounting standards as soon as possible. |
Timeliness of financial reporting |
All cluster agencies met the statutory deadline for completing early close procedures and submitting their financial statements for audit. The Department of Education (the Department) delays tabling its financial statements in parliament so it can report its operational outcomes, which are aligned to the calendar year, in a single report. This reduces transparency over the Department's financial statements as they are tabled more than ten months after the end of the financial year. Recommendation: The Department should table its financial statements in parliament earlier, in line with other NSW Government agencies. |
Inconsistencies in the employee leave data | We continue to observe inconsistencies in the employee leave data reported from the Department’s payroll system, which impacts the reliability of estimates of the Department's liability for employee benefits. The robustness of the Department's quality assurance over leave liability data should be improved. |
3. Audit observations
Internal control deficiencies |
We identified 55 internal control issues, including 14 findings that were repeated from the previous year. Issues were identified with user access administration, segregation of duties in the Department's key application system and timely preparation and review of key reconciliations. Recommendation: Cluster agencies should prioritise and action recommendations to address internal control weaknesses. |
Schools review 2018 |
Our review of a selection of NSW schools identified deficiencies in how they applied the Department of Education's ‘Finance in Schools Handbook’, resulting in control weaknesses in key areas such as governance, cash management and procurement. Recommendation: The Department should ensure all schools apply the Department’s ‘Finance in Schools Handbook’ as it is a key internal control. |
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.
This cluster was significantly impacted by the Machinery of Government changes. The Technical and Further Education Commission and the NSW Skills Board, part of the former Industry cluster, were transferred on 1 July 2019. This report focuses on agencies in the Education cluster from 1 July 2019. Please refer to the section on Machinery of Government changes for more details.
Machinery of Government refers to how the government organises the structures and functions of the public service. Machinery of Government changes are where the government reorganises these structures and functions, and the changes are given effect by Administrative Arrangements Orders.
Section highlights
The 2019 Machinery of Government changes significantly impacted the Education cluster. From 1 July 2019, the functions and activities associated with the administration of legislation allocated to the Minister for Skills and Tertiary Education were transferred from the former Industry cluster to the Education cluster. Aboriginal Affairs NSW was transferred from the Department of Education (the Department) to the Department of Premier and Cabinet.
The Department is the principal agency in the cluster. The Machinery of Government changes bring new responsibilities, risks and challenges to the cluster.
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 for 2019.
Section highlights
Unqualified audit opinions were issued on the financial statements of cluster agencies. However, a more thorough quality review process of the financial statements submitted for audit would help reduce the number of corrections to those statements.
All cluster agencies met the statutory deadlines for completing the early close procedures and submitting the financial statements.
We continue to observe inconsistencies in the employee leave data reported from the Department of Education’s (the Department) payroll system. The robustness of the Department's quality assurance over leave liability data should be improved.
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. It also comments on our review of the financial control framework applied by 70 schools in NSW whose financial results form part of the Department of Education's (the Department) financial statements.
Section highlights
- Audit Office management letter recommendations to address internal control weaknesses should be actioned promptly, with a focus on addressing repeat issues. The 2018–19 financial audits of cluster agencies identified 55 internal control issues, including 14 that were carried forward from the previous year.
- Application controls are procedures that operate at a business process level designed to ensure the integrity of accounting records. The Department can mitigate the risk of fraud or error in preparing its financial statements if segregation of duties are appropriately configured in their key application system.
- Our review of a selection of schools across NSW identified deficiencies in how schools apply the Department’s financial management practices and governance arrangements.
Appendix one – List of 2019 recommendations
Appendix two – Status of 2018 recommendations
Appendix three – Cluster agencies
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 Internal Controls and Governance 2019
Internal Controls and Governance 2019
This report covers the findings and recommendations from the 2018–19 financial audits that relate to internal controls and governance at 40 of the largest agencies in the NSW public sector. The 40 agencies selected for this report constitute around 84 per cent of total expenditure for all NSW public sector agencies.
The report provides insights into the effectiveness of controls and governance processes across the NSW public sector. It evaluates how agencies identify, mitigate and manage risks related to:
- financial controls
- information technology controls
- gifts and benefits
- internal audit
- contingent labour
- sensitive data.
The Auditor-General recommended that agencies do more to prioritise and address vulnerabilities in their internal controls and governance. The Auditor-General also recommended agencies increase the transparency of their management of gifts and benefits by publishing their registers on their websites.
This report analyses the internal controls and governance of 40 of the largest agencies in the NSW public sector for the year ended 30 June 2019.
1. Internal control trends
New, repeat and high risk findings |
There was an increase in internal control deficiencies of 12 per cent compared to last year. The increase is predominately due to a 100 per cent increase in repeat financial and IT control deficiencies. Some agencies attributed the delay in actioning repeat findings to the diversion of staff from their regular activities to implement and operationalise the recent Machinery of Government changes. As a result, actions to address audit recommendations have been deferred or re prioritised, as the changes are implemented. Agencies need to ensure they are actively managing the risks associated with having these vulnerabilities in internal control systems unaddressed for extended periods of time. |
Common findings |
A number of findings were common to multiple agencies. These findings often related to areas that are fundamental to good internal control environments and effective organisational governance, such as:
|
2. Information technology controls
IT general controls |
We examined information security controls over key financial systems that support the preparation of agency financial statements. We found:
We also found 20 per cent of agencies had deficient IT program change controls, mainly related to segregation of duties in approval and authorisation processes, and user acceptance testing of program changes prior to deployment into production environments. User acceptance testing helps identify potential issues with software incompatibility, operational workflows, absent controls and software issues, as well as areas where training or user support may be required. |
3. Gifts and benefits
Gifts and benefits registers |
All agencies had a gifts and benefits policy and 90 per cent of agencies maintain a gifts and benefits register. However, 51 per cent of the gifts and benefits registers we examined contained incomplete declarations, such as missing details for the approving officer, value of the gift and/or benefit offered and reasons supporting the decision. In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions in those instances were appropriate, compliant with policy and were not direct or indirect inducements to the recipients to favour suppliers or service providers. Agencies should ensure their gifts and benefits register includes all key fields specified in the Public Service Commission's minimum standards for gifts and benefits. Agencies should also perform regular reviews of the register to ensure completeness and ensure any gift or benefit accepted by a staff member meets the public's expectations for ethical behaviour. |
Managing gifts and benefits |
We found opportunities to improve gifts and benefits processes and enhance transparency. For example, only three per cent of agencies publish their gifts and benefits registers on their websites. Agencies can improve management of gifts and benefits by:
|
Reporting and monitoring |
Only 35 per cent of agencies reported trends in the number and nature of gifts and benefits recorded in their registers to the agency's senior executive management and/or a governance committee. Agencies should regularly report to the agency executive or other governance committee on trends in the offer and acceptance of gifts and benefits. |
4. Internal audit
Obtaining value from the internal audit function |
Agencies have established and maintained internal audit functions to provide assurance on the effectiveness of agency controls and governance systems. However, we identified areas where agencies' internal audit functions could improve their processes to add greater value. For example, only 73 per cent of CAEs regularly attend meetings of the agency board or executive management committee. Internal audit functions can add greater value by involving the CAE more extensively in executive forums as an observer. Internal audit functions should also consider producing an annual report on internal audit. An annual report allows the internal audit function to report on their performance and add value by drawing to the attention of audit and risk committees and senior management strategic issues, thematic trends and emerging risks. |
Role of the Chief Audit Executive |
Forty-five per cent of agencies assigned responsibilities to the Chief Audit Executive (CAE) that were broader than internal audit, but 17 per cent of these had not documented safeguards to protect the independence of the CAE. The reporting lines and status of the CAE at some agencies also needs review. At two agencies, the CAE reported to the CFO. Agencies should ensure:
|
Quality assurance and improvement program |
Thirty-five per cent of agencies did not have a documented quality assurance and improvement program for its internal audit function. The policy and the International Standards for the Professional Practice of Internal Auditing require agencies to have a documented quality assurance and improvement program. The results of this program should be reported annually. Agencies should ensure there is a documented and operational Quality Assurance and Improvement Program for the internal audit function that covers both internal and external assessments. |
5. Managing contingent labour
Obtaining value for money from contingent labour |
According to NSW Procurement data, spend on contingent labour has increased by 75 per cent over the last five years, to $1.5 billion in 2018–19. Improvements in internal processes and a renewed focus on agency monitoring and oversight of contingent labour can help ensure agencies get the best value for money from their contingent workforces. Agencies can improve their management of contingent labour by:
We also found 57 per cent of the 23 agencies we examined with contingent labour spend of more than $5 million in 2018–19 have implemented the government's vendor management system and service provider 'Contractor Central'. |
6. Managing sensitive data
Identifying and assessing sensitive data |
Sixty-eight per cent of agencies maintain an inventory of their sensitive data and where it resides. However, these inventories are not always complete and risks may be overlooked. Agencies can improve processes to manage sensitive data by:
|
Managing data breaches |
Eighty-eight per cent of agencies have established policies to respond to potential data breaches when they are identified and 70 per cent of agencies maintain a register to record key information in relation to identified data breach incidents. Agencies should maintain a data breach register to effectively manage the actions undertaken to contain, evaluate and remediate each data breach. |
This report covers the findings and recommendations from our 2018–19 financial audits that relate to internal controls and governance at 40 of the largest agencies (refer to Appendix three) in the NSW public sector. The 40 agencies selected for this volume constitute around 84 per cent of total expenditure for all NSW public sector agencies.
Although the report includes several agencies that have changed as a result of the Machinery of Government changes that were effective from 1 July 2019, its focus on sector wide issues and insights means that its findings remain relevant to NSW public sector agencies, including newly formed agencies that have assumed the functions of abolished agencies.
This report offers insights into internal controls and governance in the NSW public sector
This is the third report dedicated to internal controls and governance at NSW State Government agencies. The report provides insights into the effectiveness of controls and governance processes in the NSW public sector by:
- highlighting the potential risks posed by weaknesses in controls and governance processes
- helping agencies benchmark the adequacy of their processes against their peers
- focusing on new and emerging risks, and the internal controls and governance processes that might address those risks.
Without strong governance systems and internal controls, agencies increase the risks associated with effectively managing their finances and delivering services to citizens. For example, if they do not have strong information technology controls, sensitive information may be at risk of unauthorised access and misuse.
Areas of specific focus of the report have changed since last year
Last year's report topics included transparency and performance reporting, management of purchasing cards and taxi use, and fraud and corruption control. We are reporting on new topics this year and re-visiting agency management of gifts and benefits, which we first covered in our 2017 report. Re-visiting topics from prior years provides a baseline to show the NSW public sectors’ progress implementing appropriate internal controls and governance processes to mitigate existing, new and emerging risks in the public sector.
Our audits do not review all aspects of internal controls and governance every year. We select a range of measures and report on those that present heightened risks for agencies to mitigate. This year the report focusses on:
- internal control trends
- information technology controls, including access to agency systems
- protecting sensitive information held within agencies
- managing large and diverse workforces (controls around employing and managing contingent workers)
- maintaining an ethical culture (management of gifts and benefits)
- effectiveness of internal audit function and its oversight by Audit and Risk Committees.
The findings in this report should not be used to draw conclusions on the effectiveness of individual agency control environments and governance arrangements. Specific financial reporting, internal controls and audit observations are included in the individual 2019 cluster financial audit reports, which will be tabled in parliament from November to December 2019.
Internal controls are processes, policies and procedures that help agencies to:
- operate effectively and efficiently
- produce reliable financial reports
- comply with laws and regulations
- support ethical government.
This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies we found across agencies. The rest of this report presents this year’s controls and governance findings in more detail.
Key conclusions and sector wide learnings
- out of date policies or an absence of policies to guide appropriate decisions
- poor record keeping and document retention
- incomplete or inaccurate centralised registers or gaps in these registers.
Policies, procedures and internal controls should be properly designed, be appropriate for the current organisational structure and its business activities, and work effectively.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to manage key financial systems.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to manage gifts and benefits.
Key conclusions and sector wide learnings
We found most agencies have implemented the Public Service Commission's minimum standards for gifts and benefits. All agencies had a gifts and benefits policy and 90 per cent of agencies maintained a gifts and benefits register and provided some form of training to employees on the treatment of gifts and benefits.
Based on our analysis of agency registers, we found some areas where opportunities existed to make processes more effective. In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions in those instances were appropriate and compliant with policy. Fifty-one per cent of the gifts and benefits registers reviewed contained declarations where not all fields of information had been completed. Seventy-seven per cent of agencies that maintained a gifts and benefits register did not include all key fields suggested by the minimum standards.
Areas where agencies can improve their management of gifts and benefits include:
- ensuring agency policies comprehensively cover the elements necessary to make it effective in an operational environment, such as identifying risks specific to the agency and actions that will be taken in the event of a policy breach
- establishing and publishing a statement of business ethics on the agency's website to clearly communicate expected behaviours to clients, customers,suppliers and contractors
- updating gifts and benefits registers to include all key fields suggested by the minimum standards, as well as performing regular reviews of the register to ensure completeness
- providing on-going training, awareness activities and support to employees, not just at induction
- regularly reporting gifts and benefits to executive management and/or a governance committee such as the audit and risk committee, focussing on trends in the number and types of gifts and benefits offered to and accepted by agency staff
- publishing their gifts and benefits registers on their websites to demonstrate a commitment to a transparently ethical environment.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency internal audit functions.
Key conclusions and sector wide learnings
We found agencies have established and maintained internal audit functions to provide assurance on the effectiveness of agency controls and governance systems as required by TPP15-03 'Internal Audit and Risk Management Policy for the NSW Public Sector'. However, we identified areas where agencies' internal audit functions could improve their processes to add greater value, including:
- documenting and implementing safeguards to address conflicting roles performed by the Chief Audit Executive (CAE)
- ensuring the reporting lines for the CAE comply with the NSW Treasury policy, and the CAE reports neither functionally or administratively to the finance function or other significant recipients of internal audit services
- involving the CAE more extensively in executive forums as an observer
- documenting a Quality Assurance and Improvement Program for the internal audit function and performing both internal and external performance assessments to identify opportunities for continuous improvement
- reporting against key performance indicators or a balanced scorecard and producing an annual report on internal audit to bring to the attention of the audit and risk committee and senior management strategic issues, thematic trends and emerging risks that may require further attention or resources.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to on-board, manage and off-board contingent labour.
Key conclusions and sector wide learnings
Agencies have implemented controls to manage contingent labour and most agencies have some level of reporting and oversight of contingent labour at an executive level. However, the increasing trend in spend on contingent labour warrants a renewed focus on agency monitoring and oversight of their use of contingent labour. Over the last five years spend on contingent labour has increased by 75 per cent, to $1.5 billion in 2018–19.
There are also some key gaps that limit the ability of agencies to effectively manage contingent labour. Key areas where agencies can improve their management of contingent labour include:
- preparing workforce plans to inform their resourcing strategy, and confirm prior to engaging contingent labour, that this solution aligns with the strategy and best meets business needs
- involving agency human resources units in decisions about engaging contingent labour
- regularly reporting on contingent labour use to agency executive teams, particularly in terms of trends in agency spend, tenure and compliance with policies and procedures
- strengthening on-boarding and off-boarding processes, including establishing checklists to on-board and off-board contingent labour, making provisions for knowledge transfer, and assessing, documenting and capturing performance information.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of governance and processes in relation to the management of sensitive data.
Key conclusions and sector wide learnings
Information technology risks are rapidly increasing. More interfaces between agencies and greater connectivity means the amounts of data agencies generate, access, store and share continue to increase. Some of this information is sensitive information, which is protected by the Privacy Act 1988.
It is important that agencies understand what sensitive data they hold, the risks associated with the inadvertent release of this information and how they are mitigating those risks. We found that agencies need to continue to identify and record their sensitive data, as well as expand the methods they use to identify sensitive data. This includes data held in unstructured repositories, such as network shared drives and by agency service providers.
Eighty-eight per cent of agencies have established policies to respond to potential data breaches when they are identified and 70 per cent of agencies maintain a register to record key information in relation to identified data breach incidents.
Key areas where agencies can improve their management of sensitive data include:
- identifying sensitive data, based on a comprehensive and structured process and maintaining an inventory of the data
- assessing the criticality and sensitivity of the data so that the protection of high risk data can be prioritised
- developing comprehensive data breach management policies to ensure data breaches are appropriately managed
- maintaining a data breach incident register to record key information in relation to identified data breaches incidents, including the estimated cost of the breach
- providing on-going training and awareness activities to employees in relation to sensitive data and managing data breaches.
Appendix one – List of 2019 recommendations
Appendix two – Status of 2018 recommendations
Appendix three – In-scope agencies
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Actions for Ensuring teaching quality in NSW public schools
Ensuring teaching quality in NSW public schools
The Auditor-General for New South Wales, Margaret Crawford, has released a report on how the New South Wales Education and Standards Authority (NESA) and the Department of Education (the Department) ensure teaching quality in NSW public schools.
Around 2,200 NSW public school principals are responsible for accrediting their teachers in line with the Australian Professional Standards for Teachers. The report found that NESA does not oversight principals’ decisions to ensure that minimum standards for teaching quality are consistently met.
The Department does not effectively monitor teaching quality across the state. With limited data, it is difficult for the Department to ensure its strategies to improve teaching quality are appropriately targeted to improve teaching quality.
The Department’s Performance and Development Framework does not adequately support principals and supervisors to effectively manage and improve teacher performance or actively improve teaching quality. The Department manages those teachers formally identified as underperforming through teacher improvement programs. Only 53 of over 66,000 teachers employed by the Department were involved in these programs in 2018.
The report makes three recommendations towards NESA to improve accreditation processes, and four recommendations to the Department to improve its systems and processes for ensuring teaching quality across the State.
Australian research has shown that quality teaching is the greatest in-school influence on student engagement and outcomes, accounting for 30 per cent of the variance in student performance. An international comparative study of 15-year-old students showed the performance of New South Wales students in reading, mathematics and science has declined between 2006 and 2015.
The Australian Professional Standards for Teachers (the Standards) describe the knowledge, skills and understanding expected of effective teachers at different career stages. Teachers must be accredited against the Standards to be employed in NSW schools. The NSW Education Standards Authority (NESA) is responsible for ensuring all teachers in NSW schools are accredited. As part of the accreditation process the NSW Department of Education (The Department) assesses whether public school teachers meet proficient accreditation standards and advises NESA of its decisions.
The School Excellence Framework provides a method for the Department to monitor teaching quality at a school level across four elements of effective teaching practice. The Performance and Development Framework provides a method for teachers and their supervisors to monitor and improve teaching quality through setting professional goals to guide their performance and development.
The Department has a strategic goal that every student, every teacher, every leader and every school improves every year. In line with this goal, the Department has a range of strategies targeted to improving teaching quality at different career stages. These include additional resources to support new teachers, a program to support teachers to gain higher-level accreditation, support for principals to manage underperforming teachers, and a professional learning program where teachers observe and discuss each other's practice.
The objective of this audit was to assess the effectiveness of the NSW Department of Education's and the NSW Education Standards Authority's arrangements to ensure teaching quality in NSW public schools. To address this objective, the audit examined whether:
- agencies effectively monitor the quality of teaching in NSW public schools
- strategies to improve the quality of teaching are planned, communicated, implemented and monitored well.
Appendix one – Response from agencies
Appendix two – About the audit
Appendix three – Performance auditing
© 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 #327 - released 26 September 2019
Actions for Ensuring contract management capability in government - Department of Education
Ensuring contract management capability in government - Department of Education
This report examines whether the Department of Education has the required contract management capability to effectively manage high-value goods and services contracts (over $250,000). In 2017–18, the department managed high-value goods and services contracts worth $3.08 billion, with most of the contracts running over multiple years.
NSW government agencies are increasingly delivering services and projects through contracts with third parties. These contracts can be complex and governments face challenges in negotiating and implementing them effectively.
Contract management capability is a broad term, which can include aspects of individual staff capability as well as organisational capability (such as policies, frameworks and processes).
In 2017–18, the Department of Education (the Department) managed high-value (over $250,000) goods and services contracts worth $3.08 billion, with most of the contracts running over multiple years. The Department delivers, funds and regulates education services for NSW students from early childhood to secondary school.
This audit examined whether the Department has the required capability to effectively manage high-value goods and services contracts.
We did not examine infrastructure, construction or information communication and technology contracts. We assessed the Department against the following criteria:
- The Department’s policies and procedures support effective contract management and are consistent with relevant frameworks, policies and guidelines.
- The Department has capable personnel to effectively conduct the monitoring activities throughout the life of the contract.
The NSW Public Service Commission and the Department of Finance, Services and Innovation are included as auditees as they administer policies which directly affect contract management capability, including:
- NSW Procurement Board Directions and policies
- NSW Procurement Agency Accreditation Scheme
- NSW Public Sector Capability Framework.
The Department of Finance, Services and Innovation's responsibility for NSW Procurement will transfer to NSW Treasury on 1 July 2019 as part of changes to government administrative arrangements announced on 2 April 2019 and amended on 1 May 2019.
Conclusion The Department of Education's procedures and policies for goods and services contract management are consistent with relevant guidance. It also has a systemic approach to defining the capability required for contract management roles. That said, there are gaps in how well the Department uses this capability to ensure its contracts are performing. We also found one program (comprising 645 contracts) that was not compliant with the Department's policies. The Department has up-to-date policies and procedures that are consistent with relevant guidance. The Department also communicates changes to procurement related policies, monitors compliance with policies and conducts regular reviews aiming to identify non-compliance. The Department uses the NSW Public Service Commission's capability framework to support its workforce management and development. The capability framework includes general contract management capability for all staff and occupation specific capabilities for contract managers. The Department also provides learning and development for staff who manage contracts to improve their capability. The Department provides some guidance on different ways that contract managers can validate performance information provided by suppliers. However, the Department does not provide guidance to assist contract managers to choose the best validation strategy according to contract risk. This could lead to inconsistent practice and contracts not delivering what they are supposed to. We found that none of the 645 contracts associated with the Assisted Schools Travel Program (estimated value of $182 million in 2018–19) have contract management plans. This is contrary to the Department's policies and increases the risk that contract managers are not effectively reviewing performance and resolving disputes. |
Appendix one - Response from agencies
Appendix two - About the audit
Appendix three - Performance auditing
Parliamentary Reference: Report number #325 - released 28 June 2019
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.