What this report is about

This report analyses the internal controls and governance of the 25 largest agencies in the NSW public sector, excluding state owned corporations and public financial corporations, for the year ended 30 June 2023.

Findings

Internal control trends

The proportion of control deficiencies identified as high-risk this year decreased to 4.5% (8.2% in 2022).

Repeat findings of control deficiencies represent 38% of all findings (48% in 2022). 

Information technology

Over half of the agencies reviewed have deficiencies in managing user access to their information systems. Over a third of agencies had deficiencies in their controls over privileged user accounts within their information technology environments. 

Cyber security

Over 80% of assessments for maturity levels against the NSW Cyber Security Policy have reported one or more self-assessed Mandatory Requirements are not practiced on a consistent and regular basis.

Essential Eight cyber controls have not improved, and they need to. 

Governance framework

Deficiencies were noted in agencies' governance and risk management frameworks, namely: outdated risk management policies, lack of risk appetite statements, and internal audit functions not being externally evaluated.  

Payroll and work health and safety (WHS)

Overtime expenses increased by 40% between 2020 and 2023, compared to salaries and wages which increased by 16% over the same period.

Five agencies have WHS policies that do not reflect current WHS regulations.

Recommendations

Several important recommendations were made for agencies to prioritise efforts to improve cyber security controls and cyber resilience measures.

It was also recommended that agencies periodically review their risk management maturity and implement action plans, and ensure their WHS policies and procedures reflect current legislation requirements including the need to manage psychosocial risks.

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 found across agencies.

For consistency and comparability, we have adjusted the 2022 results to incorporate additional audit findings that were reported after the date of the Internal controls and governance 2022 report. Therefore, the 2022 figures will not necessarily align with those reported in our 2022 report.

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 agencies' cyber security.

Governance in the context of the NSW public service refers to the structures, processes, and mechanisms by which government departments and agencies are held to account when they make decisions and implement policies and programs in the service of the public interest. It also includes the principles and practices that guide how these agencies work together.

This chapter outlines our audit observations, conclusions and recommendations from our review of agencies' governance frameworks and practices, with consideration of NSW Treasury issued policies and best practices. It focuses on two key areas: governance arrangements and risk management.

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' payroll controls and management of work health and safety (WHS).

What this report is about

Results of the Health portfolio of agencies' financial statement audits for the year ended 30 June 2023.

The audit found

Unmodified audit opinions were issued for all Health portfolio agencies' financial statements. 

The number of monetary misstatements increased in 2022–23, driven by key accounting issues, including the first-time recognition of paid parental leave and plant and equipment fair value adjustments. 

The key audit issues were 

NSW Health identified errors regarding the recognition and calculation of long service leave entitlements for employees with ten or more years of service that had periods of part time service in the first ten years, resulting in prior period restatements. 

Comprehensive revaluation of buildings at the Graythwaite Charitable Trust found errors in the previous year's valuation, resulting in prior period restatements. 

New parental leave legislation increased employee liabilities for portfolio agencies. The Ministry of Health corrected the consolidated financial statements to record parental leave liabilities for all agencies within the Health portfolio.   

A repeat high-risk issue relates to processing time records by administrators that have not been reviewed prior to running the pay cycle.   

Thirty per cent of reported issues were repeat issues. 

The audit recommended 

Portfolio agencies should ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards. 

Portfolio agencies should address deficiencies that resulted in qualified reports on:   

• the design and operation of shared service controls
• prudential non-compliance at residential aged care facilities.

This report provides Parliament and other users of the Health 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 Health portfolio of agencies (the portfolio) for 2023.

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 observations and insights from our financial statement audits of agencies in the Health portfolio.  

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

© Copyright 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.

What this report is about

Results of the Premier and Cabinet portfolio of agencies' financial statement audits for the year ended 30 June 2023.

What we found

Unqualified audit opinions were issued for all Premier and Cabinet portfolio agencies.

What the key issues were

The Administrative Arrangements Orders, effective 1 July 2023, changed the name of the Department of Premier and Cabinet to the Premier's Department and transferred parts of Department of Premier and Cabinet to The Cabinet Office.

The number of monetary misstatements identified in our audits decreased from 15 in 2021–22 to 12 in 2022–23.

The total number of management letter findings across the portfolio of agencies increased from ten in 2021–22 to 20 in 2022–23.

Thirty per cent of all issues were repeat issues. The most common repeat issues related to deficiencies in controls over financial reporting.

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
• prioritise and address internal control deficiencies identified in Audit Office management letters.

This report provides Parliament and other users of the Premier and Cabinet 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 Premier and Cabinet portfolio of agencies (the portfolio) for 2023.

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 Premier and Cabinet portfolio.

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.

Click here for the Easy English version of the report highlights

The Easy English version of the report highlights is intended to meet the needs of some people with lower literacy skills, some people with an intellectual disability, and some people from different cultural backgrounds.

The Easy English document is not the final audit report that has been prepared and tabled in NSW Parliament under s.38EB and s.38EC of the Government Sector Audit Act 1983. It should not be relied on or quoted from as the final audit report.

What this report is about

This audit assessed whether NSW Trustee and Guardian is effectively delivering public guardianship and financial management services in line with legislative requirements and standards.

What we found

NSW Trustee and Guardian is delivering guardianship and financial management services in line with its broad legal authority.

However, NSW Trustee and Guardian does not have sufficient oversight to ensure that its services are consistent with legislative principles which aim to promote positive client outcomes.

The agency's governance and practices could be better supported by relevant training and guidance to account for the diversity of its clients.

It does not track the actual costs of service delivery, the quality of services or client experiences and key findings from previous reviews remain unresolved.

Government funding for public guardianship services and direct financial management services for low-wealth clients has not kept pace with the growth in clients.

There is a risk that some fee-paying clients are unknowingly subsidising others.

NSW Trustee and Guardian has applied additional funding to increase frontline staff, but gaps in monitoring and IT system constraints create a risk that it will not address service quality issues, nor be able to demonstrate the impact of this new funding.

What we recommended

We recommended that NSW Trustee and Guardian:

• Broaden governance arrangements to enable input to key decisions from people with lived experience, relevant peak bodies and representatives of diverse communities.
• Implement mechanisms to seek feedback on the effectiveness and quality of services from clients under orders.
• Assess staff competency and implement regular training in effectively serving clients with disability, dementia, mental illness, cognitive impairments and other factors relevant to decision-making incapacity.
• Implement a risk-based quality framework to assess whether public guardian and financial management decisions are in line with policy and the legislative principles.
• Improve data collection and monitoring to track performance, the costs to serve, and client outcomes and report on these publicly.

NSW Trustee and Guardian is a NSW Government agency in the Stronger Communities cluster. It supports the NSW Trustee and the Public Guardian in the exercise of their statutory functions. It is accountable to the relevant Minister, the Attorney General.

The legislative responsibilities for the Public Guardian and the NSW Trustee are provided in separate statutes (NSW Trustee and Guardian Act 2009 and Guardianship Act 1987). Together, these establish a number of functions and services that NSW Trustee and Guardian as an agency is expected to deliver, including:

• acting as executor and administrator of deceased estates
• acting as a trustee responsible for managing trust property on behalf of another person or organisation in line with the trust terms
• drafting Will, Power of Attorney and Enduring Guardianship instruments, and educating the community about the importance of having these documents in place
• making decisions on behalf of people under guardianship or financial management orders as a guardian or a financial manager 'of last resort', or overseeing and assisting private financial managers.

This audit focuses on the last of these - NSW Trustee and Guardian's financial management and guardianship services.

The NSW Trustee and the Public Guardian are appointed to provide direct financial management and/or guardianship services (respectively) to over 13,300 people (as at 30 June 2022) who are deemed by a court or tribunal unable to manage their own affairs. This involves making decisions for people under a relevant court or tribunal order, within the terms of the order. The court or tribunal order enables the appointed guardian or financial manager to make decisions on behalf of the person for whom the order is made. The legislation allows the financial manager or guardian to exercise all the functions of the person under management has or would have were they not incapable of managing for themselves. From a legal perspective, these 'substitute decisions' have the same effect as if the person had made the decision themselves. While the legal presumption is that a person has capacity to care for themselves and manage their own affairs, a financial manager or guardian can be appointed without the person's consent if the court or tribunal finds the person does not have relevant decision-making capacity.

There can be a range of factors that impact on a person's decision-making capacity, including cognitive impairment, intellectual disability, dementia, mental illness and addiction. Guardianship (of both the person and their estate) developed as a response, through European and English law over hundreds of years. In Australia, it was a function of the Supreme Court of NSW before the establishment of government agencies. What is now known as substitute decision-making can sometimes be referred to as a 'protective' function because:

• it relates to decisions or actions that need to be taken, which the person under an order cannot take because they are incapable of managing their own affairs
• due to this lack of competence, the person may be disadvantaged in the conduct of their affairs (for example, their money or property may be dissipated or lost, they may enter agreements unwisely or they may be at risk of abuse or exploitation)
• substitute decisions must be made in the best interests of the person on whose behalf they are made.

An alternative model is 'supported decision-making'. This refers to processes and approaches that assist people with impaired decision-making capacity to exercise their autonomy and legal capacity by supporting them to make decisions. This approach seeks to give effect to the will and preferences of the person requiring decision-making support wherever possible, including decisions involving risk. There has been a longstanding legal and community push for Australian guardianship and administration systems to move from substituted to supported decision-making. However, the legislation in New South Wales provides for 'best interests' substitute decision-making and this is the framework against which we have audited NSW Trustee and Guardian.

The Public Guardian and the NSW Trustee may be appointed as substitute decision makers by the NSW Civil and Administrative Tribunal (NCAT) and the Supreme Court. The NSW Trustee may also be appointed by the Mental Health Review Tribunal for financial management orders only.¹ They are intended to be appointed as a 'last resort' when there is no one willing or suitable to fill the role, or there is significant family conflict regarding decision-making for the person. The Public Guardian and the NSW Trustee cannot refuse to accept a court or tribunal appointment to administer an order for guardianship or financial management.

Public Guardian decisions cover healthcare, lifestyle, accommodation and/or medical decisions such as where a person should live (for example: at home, in an aged care facility or disability group home), what disability or other support services they receive, who can have access to them (for example: through establishing visiting schedules between conflicting family members) and consent to the use of restrictive practices on the advice of independent experts (for example: seclusion, chemical restraint such as anti-psychotic medication, environmental restraints such as limiting access to knives).

Under a financial management order where the NSW Trustee is appointed as financial manager, the NSW Trustee carries out such functions as securing and collecting assets, income and entitlements, paying expenses, debts and designing budgets, investing financial assets, lodging tax returns and paying maintenance for dependents, taking or defending legal proceedings and managing other financial and legal affairs for the person. This is referred to as direct financial management.

A court or tribunal may appoint a private financial manager, such as a family member, friend, private trustee company or other commercial provider. Where a private manager is appointed, the NSW Trustee provides authorisation and directions to the private manager and oversees their performance. As at 30 June 2022, over 6,200 people had private managers.

As an agency, the majority of NSW Trustee and Guardian's overall revenue is from fees (including for services outside the scope of the audit, such as will preparation) and investments. The remainder is from the NSW Government as funding for non-commercial services including guardianship services and subsidised financial management services for low-wealth clients. Public guardian clients do not pay fees. Financial management clients pay fees, but these are subsidised where the client does not have capacity to pay full fees. NSW Trustee and Guardian is considered a self-funded agency by NSW Treasury definitions.

Demand for financial management and guardianship services, and the complexity of clients' circumstances for these services, has grown over the last decade. In November 2020, NSW Trustee and Guardian advised the Attorney General that it had run an operating deficit in 2019–20 driven by an increase in non/low fee paying customers and an increase in the complexity of matters. NSW Trustee and Guardian advised the Attorney General that government funding was no longer meeting the full cost of guardianship services, and of direct financial management services for people with low balances. NSW Trustee and Guardian's analysis had identified a shortfall in government funding of $8.4 million in 2019–20 that was expected to increase over the forward estimates. A working group was established with officers from NSW Trustee and Guardian, NSW Treasury and the Department of Communities and Justice to advise the government on options for improving the financial sustainability of NSW Trustee and Guardian overall.

NSW Trustee and Guardian subsequently received a funding boost of $41.5 million across four years in the 2021–22 State Budget. NSW Trustee and Guardian applied the majority of the budget enhancement to recruit approximately 120 new roles mostly in financial management and guardianship services.

The objective of this audit was to assess whether NSW Trustee and Guardian is effectively delivering guardianship and financial management services in line with legislative requirements and relevant non-legislative standards. These include a legislative duty to observe certain principles when exercising the relevant legislative functions, including to: give primary consideration to clients’ welfare and interests, restrict their freedom of decision and action as little as possible, take account of their views, and encourage their self-reliance.

The audit was guided by three questions:

• Does NSW Trustee and Guardian align its service delivery with its legislative functions and principles, and relevant standards?
• Does NSW Trustee and Guardian drive and monitor performance to give effect to its legislative functions and principles, and relevant standards?
• Has NSW Trustee and Guardian effectively planned the use of additional funding to improve service delivery and adherence to its legislative functions and principles, and relevant standards?

The audit review period was the five years between 1 July 2017 - 30 June 2022.

Throughout this report:

• 'client' refers to a person who is under a guardianship order and/or whose estate is under financial management, for whom the Public Guardian and/or the NSW Trustee is appointed to act or responsible to oversee their private financial manager
• 'financial management' refers to clients under financial management orders (direct and private financial management) and/or the services provided by NSW Trustee and Guardian to these clients or their private managers
• 'guardianship' refers to clients under guardianship orders where the Public Guardian is appointed, and/or the services provided by the Public Guardian to these clients
• 'frontline staff' refers to the staff responsible for engagement with, and decision-making for, clients and private managers (titled client service officers, senior client service officers and principal client service officers in NSW Trustee and Guardian)
• Aboriginal refers to the First Nations peoples of the land and waters now called Australia and includes Aboriginal and Torres Strait Islander peoples.

NSW Trustee and Guardian has only recently identified measures to track the performance of its financial management and guardianship services

Between 2021 and 2022, NSW Trustee and Guardian developed new divisional key performance indicators which aim to track the quality of services delivered to people under financial management and guardianship orders. These measures are reported quarterly to the organisation's executive leadership team. The divisions have started measuring some of these new performance indicators, but many will require changes to consumer engagement processes and IT legacy systems to collect additional data. At this stage it is unclear when these necessary changes will occur, and when relevant data will begin to be collected and analysed.

Before 2021, NSW Trustee and Guardian measured the performance of some of its financial management and guardianship operational processes. While these operational measures identify whether it is fulfilling some of its legislative functions, they are predominantly activity measures and do not inform on the quality of decision-making for direct financial management or guardianship clients, or on client experiences and outcomes.

Operational performance targets and measures have only recently been developed and used to centrally track the time elapsed between requests for certain decisions and the decisions made or relevant actions taken by relevant frontline staff. Baseline data for these measures show that target timeframes are not close to being met for minor medical decisions for people under guardianship orders, or for first customer payment, and redirection of income for people who are directly financially managed.

NSW Trustee and Guardian has proactively developed a benefits realisation framework to monitor the expected benefits from the additional funding received in 2021–22

NSW Trustee and Guardian has developed a benefits realisation framework to monitor the expected benefits from the additional funding (and other elements of the budget bid including increased fees and business improvements for efficiencies). This is not a requirement imposed by NSW Treasury, but a proactive step taken by NSW Trustee and Guardian to account for the use of the additional funding and to attempt to identify its impacts.

The benefits realisation framework includes interim and preferred measures, which reflect the things that can be tracked with existing data, and those that require new data collection, respectively. The measures are underpinned by separate program logics for direct and private financial management, and guardianship, and an overall investment logic. 'Logics' articulate the inputs, outputs and short/medium/long term outcomes expected from a project, program or investment, as well as the underpinning assumptions about how desired changes will occur (the 'mechanism' or 'theory' of change).

The targets and measures for NSW Trustee and Guardian's benefits realisation framework are the responsibility of the organisational divisions delivering guardianship and financial management services. The baseline data against which change will be measured is 30 June 2021, as the budget enhancement funds were allocated from 1 July 2021. The audit has been provided with baseline data, but not first year results (covering 2021–22) and as such, cannot assess whether any progress has been made towards the targets.

The benefits realisation framework may not provide the information needed to demonstrate the effectiveness of the budget enhancement

A lack of available data and limited measures in the benefits realisation framework may mean NSW Trustee and Guardian will not be able to meaningfully assess the impact of the additional funding.

The 22 measures in the benefits realisation framework across guardianship and financial management functions are predominantly monitoring activity and outputs which seek to track staff caseloads, the number of decisions made, the timeliness of key actions/tasks, and annual consumer engagements.

There is one service quality outcome measure: that customers, family and carers report an improved experience. The metrics for this measure will initially be monitored using the whole-of-government customer satisfaction measurement survey administered by the Department of Customer Service, until such time as other additional sources are developed. The whole-of-government survey is built around six core customer commitments relating to respondents' experiences with government services and staff - that they are: 'easy to access, act with empathy, respect my time, explain what to expect, resolve the situation and engage the community'. It is not clear whether or how the whole-of-government survey targets and engages people with impaired decision-making capacity or accessible communication needs.

Some measures in the NSW Trustee and Guardian benefits realisation framework do not yet have targets set, such as the ratio of the number of clients to the number of guardians or financial managers. Many relate to compliance with internal operational policies.

One interim measure for a direct financial management service indicator is 'increased personalised face-to-face consultations by phone or virtually'. It is intended to be replaced with the preferred measure 'ensure the client’s story is understood by staff and systems by consulting stakeholders and adding to the client’s story in the IT system'. However, the interim measure would better align with the national standards regarding regular and accessible engagement (discussed above).

A lack of availability of key data to track the preferred measures was identified by NSW Trustee and Guardian as an enterprise risk, and issues with existing data collected were identified early on, including that:

• data can be entered into systems inconsistently by staff
• current systems mask some issues – for example, a task can be completed within internal timeframes but not reflect the actual waiting time of consumers
• current systems cater to measuring outputs rather than service quality.

IT system improvements are slated in order to allow data to be collected to inform on preferred measures, but these depend on capital funding that has not yet been secured. At the time of writing, data sources were yet to be identified for three of the 22 measures, and NSW Trustee and Guardian did not have staff trained and available to run and analyse data for the benefits realisation framework.

The mechanisms of change and the underlying assumptions in the program and investment logics are also not clearly articulated in the benefits realisation framework, and nor is the underpinning evidence (such as from earlier reviews, research or pilots, or experiences elsewhere). Identifying and evidencing these would give some confidence that the assumptions are sound and that the mechanisms of change will operate as expected (for example, that a decline in frontline staff caseloads will translate into more time spent on individual matters, and improved service quality).

Given these limitations in measures, data collection and logics, there is a risk that the benefits realisation framework may not provide the performance and impact evidence necessary to assess the effectiveness of the budget enhancement, or to justify further additional funding in the future.

NSW Trustee and Guardian cannot track its financial management and guardianship service performance over time

NSW Trustee and Guardian's operational performance activity measures have changed over the audit review period, which limits NSW Trustee and Guardian’s ability to identify whether it has sustained or improved performance in its guardianship and financial management services over time.

NSW Trustee and Guardian has consistently tracked the number and themes of complaints about financial management and guardianship services, which do provide some insight into service quality and experiences. However, this is an incomplete measure as people under financial management and guardianship orders are a more vulnerable cohort than other NSW Trustee and Guardian customers and may require support to make a complaint. There is also a structural power imbalance between clients and their guardian or financial manager which may dissuade clients and their stakeholders from raising concerns. Therefore, it is not clear whether the numbers and themes in complaints received are representative of broader experiences.

Appendix one – Response

Appendix two – Client characteristics

Appendix three – Easy English, Easy Read and Plain English formats

Appendix four – Financial management fees

Appendix five – NSW Trustee and Guardian Common Funds

Appendix six – About the audit

Appendix seven – Performance auditing

Copyright notice

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #379 - released 18 May 2023

What the report is about

This audit assessed how effectively NSW government agencies procure and manage consultants. It examined the role of the NSW Procurement Board and NSW Procurement (a unit within NSW Treasury) in supporting and monitoring agency procurement and management of consultants.

The audit used four sources of data that contain information about spending on consultants by NSW government agencies, including annual report disclosures and the State's financial consolidation system (Prime). It also reviewed a sample of consulting engagements from ten NSW government agencies.

What we found

Our review of a selection of consulting engagements indicates that agencies do not procure and manage consultants effectively.

We found most agencies do not use consultants strategically and do not have systems for managing or evaluating consultant performance. We also found examples of non-compliance with procurement rules, including contract variations that exceeded procurement thresholds.

NSW Procurement has made improvements to the information available about spending on consultants, including additional analysis and reporting. However, there is no single data source that accurately captures spending on consultants.

Our analysis of data on whole-of-government spending on consultants, drawn from agency annual reports, indicates that four large professional services firms accounted for about a quarter of consultancy expenditure from 2017–18 to 2021–22. This concentration increases strategic risks, including over-reliance on a limited number of providers and potential reduction in the independence of advice.

It is also highly unlikely that NSW government agencies will meet the government's 2019 policy commitment to reduce consultancy expenses by 20% each year, over four years, from 2019–20. NSW Treasury advised that to implement this commitment, agency budgets were reduced in Prime in line with the savings targets. However, actual spending on consulting in NSW Treasury's Reports on State Finances 2020–21 and 2021–22 was almost $100 million higher than the savings targets over the first three years since 2019–20.

What we recommended

The report made seven recommendations which aim to improve:

• the quality and transparency of data on spending on consultants
• monitoring of strategic risks and agency compliance with procurement and recordkeeping rules
• agencies' strategic use of consultants, including evaluation and knowledge retention.

Between 2017–18 and 2021–22, NSW government agency annual reports disclosed total spending of around $1 billion on consultants across more than 10,000 engagements. More than 1,000 consulting firms provided services to NSW government agencies during this period. Consulting is a classification of professional services that is characterised by giving advice or recommendations on a specific issue. The NSW Procurement Board Direction PBD-2021-03 defines a consultant as a person or organisation that provides 'recommendations or professional advice to assist decision-making by management'. PBD-2021-03 notes that the advisory nature of the work of consultants is the main factor that distinguishes them from other providers of professional services.

The NSW Procurement Board is responsible for setting procurement policy, issuing directions to support policies, and monitoring and reporting on agency compliance with policies and directions. NSW Procurement, a division within NSW Treasury, supports agencies to comply with the NSW Procurement Board’s policies and directions. A 'devolved governance model' is used for procurement in New South Wales. This means the heads of government entities that are covered by the NSW Procurement Board’s directions are responsible for managing the entity's procurement, including managing risks, reporting and ensuring compliance, in line with procurement laws and policies.

This audit assessed how effectively NSW government agencies procure and manage consultants. It assessed the role of the NSW Procurement Board and NSW Procurement in supporting and monitoring agency procurement and management of consultants. It also reviewed a sample of consulting engagements from ten NSW government agencies to examine how agencies procured, managed and reported on their use of consultants. The ten NSW government agencies were:

• NSW Treasury
• Department of Communities and Justice
• Department of Customer Service
• Department of Education
• Department of Planning and Environment
• Department of Premier and Cabinet
• Department of Regional NSW
• Infrastructure NSW
• Sydney Metro
• Transport for NSW

There are four different sources of data that contain information about spending on consultants by NSW government agencies: the State's financial consolidation system (Prime), disclosures of spending on consultants in agency annual reports, and two systems operated by NSW Procurement (the Business Advisory Services (BAS) dashboard and Spend Cube). Each of these data sources serves a different purpose, and collects and categorises information differently. None of these provide a complete source of data on spending on consultants, either in their own right or collectively.

NSW Treasury considers Prime to be the 'source of truth' on consulting expenditure across the NSW public sector. An account within Prime records recurrent spending on consultants, but this account does not include capital expenditure (that is, spending on consultants that has from a financial reporting perspective been 'capitalised' to a project on the balance sheet). As the State's financial consolidation system, Prime captures all financial information. However, capitalised consulting expenditure is recorded within various capital accounts, and is not identifiable within these accounts. While this is appropriate for accounting purposes, it means that the Prime account that records recurrent consulting expenditure does not reflect total spending on consultants by NSW government agencies. We used the data in Prime to assess whether NSW government agencies met the NSW Government's policy commitment—stated before the 2019 election and costed by the Parliamentary Budget Office—to reduce recurrent expenditure on consulting by 20% each year, over four years, from 2019–20. We did this because, while the Prime account for recurrent consulting expenditure does not reflect all spending on consultants, it does capture the recurrent spending that was subject to the policy commitment.

Most NSW government agencies are required by legislation to disclose spending on consultants (as defined in PBD-2021-03) in their annual reports. These disclosures include both recurrent and capital expenditure. For consulting engagements that cost more than $50,000, the disclosures also provide itemised information, including the names of the individual projects and the consultants used. While this data is more complete than Prime because it includes capital expenditure, it also has some gaps. Some entities are excluded from public reporting requirements on consultant use. For example, NSW Local Health Districts (LHD) are not required to produce annual reports, and the Ministry of Health does not include LHD consulting expenditure in its annual report.¹ We used annual report disclosure data to report on total expenditure on consultants, and the concentration of suppliers of consulting services to NSW government agencies.

The BAS dashboard and Spend Cube are systems created by NSW Procurement to collect information about spending on suppliers of professional services. This includes consultants, but also includes other professional services providers. The systems were not designed for reporting on spending on consulting as defined in PBD-2021-03. However, we have used this data to assess specific aspects of NSW Procurement's monitoring of the use of consultants by NSW government agencies.

In 2018, we conducted an audit titled 'Procurement and reporting of consultancy services'. This assessed how 12 NSW government agencies complied with procurement requirements and how NSW Procurement supported the functions of the NSW Procurement Board. The 2018 audit found that none of the 12 agencies fully complied with NSW Procurement Board Directions on the use of consultants and that the NSW Procurement Board was not fully effective in overseeing and supporting agencies’ procurement of consultants. Specific findings from the 2018 audit included: 

• Agencies applied the definition of consultant inconsistently, which affected the accuracy of reporting on consultancy expenditure.
• There was inadequate guidance from NSW Procurement for agencies implementing the procurement framework, with a need for additional tools, automated processes, and other internal controls to improve compliance.
• NSW Procurement had insufficient data for effective oversight of procurement and did not publish any data on the procurement of consultancy services by NSW government agencies.

This chapter outlines our findings on the role of NSW Procurement in overseeing the use of consultants by NSW government agencies.

This chapter outlines our findings on the use of consultants by the ten NSW government agencies that were included in this audit.

Appendix one – Responses from auditees

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 #378 - released 2 March 2023

What the report is about

This audit assessed the effectiveness of the NSW Rural Fire Service (RFS) and local councils in planning and managing equipment for bushfire prevention, mitigation, and suppression.

What we found

The RFS has focused its fleet development activity on modernising and improving the safety of its firefighting fleet, and on the purchase of new firefighting aircraft.

There is limited evidence that the RFS has undertaken strategic fleet planning or assessment of the capability of the firefighting fleet to respond to current bushfire events or emerging fire risks.

The RFS does not have an overarching strategy to guide its planning, procurement, or distribution of the firefighting fleet.

The RFS does not have effective oversight of fleet maintenance activity across the State, and is not ensuring the accuracy of District Service Agreements with local councils, where maintenance responsibilities are described.

What we recommended

1. Develop a fleet enhancement framework and strategy that is informed by an assessment of current fleet capability, and research into appropriate technologies to respond to emerging fire risks.
2. Develop performance measures to assess the performance and capabilities of the fleet in each RFS District by recording and publicly reporting on fire response times, fire response outcomes, and completions of fire hazard reduction works.
3. Report annually on fleet allocations to RFS Districts, and identify the ways in which fleet resources align with district-level fire risks.
4. Develop a strategy to ensure that local brigade volunteers are adequate in numbers and appropriately trained to operate fleet appliances in RFS Districts where they are required.
5. Establish a fleet maintenance framework to ensure regular update of District Service Agreements with local councils.
6. Review and improve processes for timely recording of fleet asset movements, locations, and maintenance status.

This audit assessed how effectively the NSW Rural Fire Service (the RFS) plans and manages the firefighting equipment needed to prevent, mitigate, and suppress bushfires. This audit also examined the role of local councils in managing bushfire equipment fleet assets. Local councils have vested legal ownership of the majority of the land-based firefighting fleet, including a range of legislated responsibilities to carry out fleet maintenance and repairs. The RFS has responsibilities to plan and purchase firefighting fleet assets, and ensure they are ready for use in response to fires and other emergencies.

This report describes the challenges in planning and managing the firefighting fleet, including a confusion of roles and responsibilities between the RFS and local councils in relation to managing certain land-based rural firefighting fleet – a point that has been made in our Local Government financial audits over several years. This role confusion is further demonstrated in the responses of the RFS and local councils to this audit report – included at Appendix one.

The lack of cohesion in roles and responsibilities for managing rural firefighting vehicles increases the risk that these firefighting assets are not properly maintained and managed, and introduces a risk that this could affect their readiness to be mobilised when needed.

While the audit findings and recommendations address some of the operational and organisational inefficiencies in relation to rural firefighting equipment management, they do not question the legislative arrangements that govern them. This is a matter for the NSW Government to consider in ensuring the fleet arrangements are fit for purpose, and are clearly understood by the relevant agencies.

The NSW Rural Fire Service (hereafter the RFS) is the lead combat agency for bushfires in New South Wales, and has the power to take charge of bushfire prevention and response operations anywhere in the State. The RFS has responsibilities to prevent, mitigate and suppress bushfires across 95% of the State, predominantly in the non-metropolitan areas of New South Wales. Fire and Rescue NSW is responsible for fire response activity in the cities and large townships that make up the remaining five per cent of the State.

The RFS bushfire fleet is an integral part of the agency's overall bushfire risk management. The RFS also uses this fleet to respond to other emergencies such as floods and storms, motor vehicle accidents, and structural fires. Fleet planning and management is one of a number of activities that is necessary for fire mitigation and suppression.

The Rural Fires Act 1997 (Rural Fires Act) imposes obligations on all landowners and land managers to prevent the occurrence of bushfires and reduce the risk of bushfires from spreading. Local councils have fire prevention responsibilities within their local government areas, principally to reduce fire hazards near council owned or managed assets, and minor roads.

The RFS is led by a Commissioner and is comprised of both paid employees and volunteer rural firefighters. Its functions are prescribed in the Rural Fires Act and related legislation such as the State Emergency Rescue Management Act 1989. The RFS functions are also described in Bush Fire Risk Management Plans, the State Emergency Management Plan, District Service Agreements, and RFS procedural documents. Some of the core responsibilities of the RFS include:

• preventing, mitigating, and suppressing fires across New South Wales
• recruiting and managing volunteer firefighters in rural fire brigades
• purchasing and allocating firefighting fleet assets to local councils
• establishing District Service Agreements with local councils to give the RFS permissions to use the fleet assets that are vested with local councils
• carrying out fleet maintenance and repairs when authorised to do so by local councils
• inspecting the firefighting fleet
• supporting land managers and private property owners with fire prevention activity.

In order to carry out its legislated firefighting functions, the RFS relies on land-based vehicles, marine craft, and aircraft. These different firefighting appliance types are referred to in this report as the firefighting fleet or fleet assets.

RFS records show that in 2021 there were 6,345 firefighting fleet assets across NSW. Most of the land-based appliances commonly associated with firefighting, such as water pumpers and water tankers, are purchased by the RFS and vested with local councils under the Rural Fires Act. The vesting of firefighting assets with local councils means that the assets are legally owned by the council for which the asset has been purchased. The RFS is able to use the firefighting assets through District Service Agreements with local councils or groups of councils.

In addition to the land-based firefighting fleet, the RFS owns a fleet of aircraft with capabilities for fire mitigation, suppression, and reconnaissance during fire events. The RFS hires a fleet of different appliances to assist with fire prevention and hazard reduction works. These include aircraft for firefighting and fire reconnaissance, and heavy plant equipment such as graders and bulldozers for hazard reduction. Hazard reduction works include the clearance of bush and grasslands around major roads and protected assets, and the creation and maintenance of fire trails and fire corridors to assist with fire response activity.

The RFS is organised into 44 RFS Districts and seven Area Commands. The RFS relies on volunteer firefighters to assist in carrying out most of its firefighting functions. These functions may include the operation of the fleet during fire response activities and training exercises, and the routine inspection of the fleet to ensure it is maintained according to fleet service standards. Volunteer fleet inspections are supervised by the RFS Fire Control Officer.

In 2021 there were approximately 73,000 volunteers located in 1,993 rural fire brigades across the State, making the RFS the largest volunteer fire emergency service in Australia. In addition to brigade volunteers, the RFS has approximately 1,100 salaried staff who occupy leadership and administrative roles at RFS headquarters and in the 44 RFS Districts.

Local councils have legislative responsibilities relating to bushfire planning and management. Some of the core responsibilities of local councils include:

• establishing and equipping rural fire brigades
• contributing to the Rural Fire Fighting Fund
• vested ownership of land-based rural firefighting equipment
• carrying out firefighting fleet maintenance and repairs
• conducting bushfire prevention and hazard reduction activity.

The objective of this audit was to assess the effectiveness of the RFS and local councils in planning and managing equipment for bushfire prevention, mitigation, and suppression. From the period of 2017 to 2022 inclusive, we addressed the audit objective by examining whether the NSW RFS and local councils effectively:

• plan for current and future bushfire fleet requirements
• manage and maintain the fleet required to prevent, mitigate, and suppress bushfires in NSW.

This audit did not assess:

• the operational effectiveness of the RFS bushfire response
• the effectiveness of personal protective equipment and clothing
• the process of vesting of rural firefighting equipment with local councils
• activities of any other statutory authorities responsible for managing bushfires in NSW.

As the lead combat agency for the bushfire response in NSW, the RFS has primary responsibility for bushfire prevention, mitigation, and suppression.

Three local councils were selected as case studies for this audit, Hawkesbury City Council, Wagga Wagga City Council and Uralla Shire Council. These case studies highlight the ways in which the RFS and local councils collaborate and communicate in rural fire districts.

The RFS has not made significant changes to the size or composition of the firefighting fleet in the past five years and does not have an overarching strategy to drive fleet development

Since 2017, the RFS has made minimal changes to its firefighting fleet volumes or vehicle types. The RFS is taking a fleet renewal approach to fleet planning, with a focus on refurbishing and replacing ageing firefighting assets with newer appliances and vehicles of the same classification and type. While the RFS has adopted a fleet renewal approach, driven by its Appliance Replacement Program Guide, it does not have a strategy or framework to guide its future-focused fleet development. There is no document that identifies and analyses bushfire events and risks in NSW, and matches fleet resources and fleet technologies to meet those risks. The RFS does not have fleet performance measures or targets to assess whether the size and composition of the fleet is meeting current or emerging bushfire climate hazards, or fuel load risks across its 44 NSW Fire Districts.

The RFS fleet currently comprises approximately 4,000 frontline, operational firefighting assets such as tankers, pumpers, and air and marine craft, and approximately 2,300 logistical vehicles, such as personnel transport vehicles and specialist support vehicles. Of the land-based firefighting vehicles, the RFS has maintained a steady number of approximately 3,800 tankers and 65 pumpers, year on year, for the past five years. This appliance type is an essential component of the RFS land-based, firefighting fleet with capabilities to suppress and extinguish fires.

Since 2017, most RFS fleet enhancement activity has been directed to upgrades and the modernisation of older fleet assets with new safety features. There is limited evidence of research into new fleet technologies for modern firefighting. The RFS fleet volumes and fleet types have remained relatively static since 2017, with the exception of the aerial firefighting fleet. Since 2017, the RFS has planned for, and purchased, six additional aircraft to add to the existing three aircraft in its permanent fleet.

While the RFS has made minimal changes to its fleet since 2017, in 2016 it reduced the overall number of smaller transport vehicles, by purchasing larger vehicles with increased capacity for personnel transport. The consolidation of logistical and transport vehicles accounts for an attrition in fleet numbers from 7,058 in 2016, to 6,315 in 2017 as shown in Exhibit 2.

The firefighting fleet management system is not always updated in a timely manner due to insufficient RFS personnel with permissions to make changes in the system

The RFS uses a fleet management system known as SAP EAM to record the location and status of firefighting fleet assets. The system holds information about the condition of the firefighting fleet, the home location of each fleet asset, and the maintenance, servicing, and inspection records of all assets. The RFS uses the system for almost all functions related to the firefighting fleet, including the location of vehicles so that they can be dispatched during operational exercises or fire responses.

Staff at RFS Headquarters are responsible for creating and maintaining asset records in the fleet management system. RFS District staff have limited permissions in relation to SAP EAM. They are able to raise work orders for repairs and maintenance, upload evidence to show that work has been done, and close actions in the system.

RFS District staff are not able to enter or update some fleet information in the system, such as the location of vehicles. When an RFS District receives a fleet appliance, it cannot be allocated to a brigade until the location of the asset is accurately recorded in the system. The location of the asset must be updated in the SAP EAM system by staff at RFS Headquarters. District staff can request system support from staff at RFS Headquarters to enter this information. At the time of writing, the position responsible for updating the fleet management system at RFS Headquarters was vacant, and RFS District personnel reported significant wait times in response to their service requests.

The RFS conducts annual audits of SAP EAM system information to ensure data is accurate and complete. RFS staff are currently doing data cleansing work to ensure that fleet allocations are recorded correctly in the system.

Communication between brigades, local councils and the RFS needs improvement to ensure that fleet information is promptly updated in the fleet management system

RFS brigade volunteers do not have access to the fleet management system. When fleet assets are used or moved, volunteers report information about the location and condition of the fleet to RFS District staff using a paper-based form, or by email or phone. Information such as vehicle mileage, engine hours, and defects are all captured by volunteers in a logbook which is scanned and sent to RFS District staff. RFS District staff then enter the relevant information into the fleet management system, or raise a service ticket with RFS Headquarters to enter the information.

Brigade volunteers move fleet assets for a range of reasons, including for fire practice exercises. If volunteers are unable to report the movement of assets to RFS District staff in a timely manner, this can lead to system inaccuracies. Lapses and backlogs in record keeping can occur when RFS staff at district offices or at Headquarters are not available to update records at the times that volunteers report information. A lack of accurate record keeping can potentially impact on RFS operational activities, including fire response activity.

Brigade volunteers notify RFS District staff when fleet appliances are defective, or if they have not been repaired properly. District staff then enter the information into the fleet management system. The inability of volunteers to enter information into the system means they have no visibility over their requests, including whether they have been approved, actioned, or rejected.

Local councils are responsible for servicing and maintaining the firefighting fleet according to the Rural Fires Act, but this responsibility can be transferred to the RFS through arrangements described in local service agreements. Council staff record all fleet servicing and maintenance information in their local systems. The types of fleet information that is captured in local council records can vary between councils. RFS staff described the level of council reporting, and the effectiveness of this process, as 'mixed'.

Councils use different databases and systems to record fleet assets, and some councils are better resourced for this activity than others

Firefighting fleet information is recorded in different asset management systems across NSW. Each council uses its own asset management system to record details about the vested fleet assets. All three councils that were interviewed for this audit had different systems to record information about the fleet. In addition, the type of information captured by the three councils was varied.

Local councils have varying levels of resources and capabilities to manage the administrative tasks associated with the firefighting fleet. Some of the factors that impact on the ability of councils to manage administrative tasks include: the size of the council; the capabilities of the information management systems, the size of the staff team, and the levels of staff training in asset management.

Uralla Shire Council is a small rural council in northern NSW. This council uses financial software to record information about the firefighting fleet. While staff record information about the condition of the asset, its replacement value, and its depreciation, staff do not record the age of the asset, or its location. Staff manually enter fleet maintenance information into their systems. Uralla Shire Council would like to purchase asset maintenance software that generates work orders for fleet repairs and maintenance. However, the council does not have trained staff in the use of asset management software, and the small size of the fleet may not make it financially worthwhile.

The Hawkesbury City Council uses a single system to capture financial and asset information associated with the firefighting fleet. Hawkesbury is a large metropolitan council located north-west of Sydney, with a relatively large staff team in comparison with Uralla Shire Council. The Hawkesbury City Council has given RFS District staff access to their fleet information system. RFS District staff can directly raise work orders for fleet repairs and maintenance through the council system, and receive automated notifications when the work is complete.

Two of the three audited councils report that they conduct annual reviews of fleet assets to assess whether the information they hold is accurate and up-to-date.

More than half of the fleet maintenance service agreements between the RFS and local councils have not been reviewed in ten years, and some do not reflect local practices

Local councils have a legislated responsibility to service, repair, and maintain the firefighting fleet to service standards set by the RFS. Councils may transfer this responsibility to the RFS through District Service Agreements. The RFS Districts are responsible for ensuring that the service agreements are current and effective.

The RFS does not have monitoring and quality control processes to ensure that service agreements with local councils are reviewed regularly. The RFS has 73 service agreements with local councils or groups of councils. Sixty-three per cent of service agreements had not been reviewed in the last ten years. Only four service agreements specify an end date and, of those, one agreement expired in 2010 and had not been reviewed at the time of this audit.

The RFS does not have a framework to ensure that service agreements with local councils reflect actual practices. Of the three councils selected for audit, one agreement does not describe the actual arrangements for fleet maintenance practices in RFS Districts. The service agreement with Hawkesbury City Council specifies that the RFS will maintain the firefighting fleet on behalf of council when, in fact, council maintains the firefighting fleet. The current agreement commenced in 2012, and at the time of writing had not been updated to reflect local maintenance practices.

When District Service Agreements are not reviewed periodically, there is a risk that neither local councils nor the RFS have clear oversight of the status of fleet servicing, maintenance, and repairs.

RFS District Service Agreements set out a requirement that RFS and local councils establish a liaison committee. Liaison committees typically include council staff, RFS District staff, and RFS brigade volunteers. While service agreements state that liaison committees must meet periodically to monitor and review the performance of the service agreement, committee members determine when and how often the committee meets.

RFS District staff and staff at the three audited councils are not meeting routinely to review or update their service agreements. At Wagga Wagga City Council, staff meet with RFS District staff each year to report on activity to fulfil service agreement requirements. Uralla Shire Council staff did not meet routinely with RFS District staff before 2021. When liaison committees do not meet regularly, there is a risk that the RFS and local councils have incorrect or outdated information about the location, status, or condition of the firefighting fleet. Given that councils lack systems to track and monitor fleet locations, regular communication between the RFS and local councils is essential.

The RFS has not established processes to ensure that local councils and RFS District personnel meet and exchange information about the fleet. Of the three councils selected for this audit, one council had not received information about the number, type, or status of the fleet for at least five years, and did not receive an updated list of appliances until there was a change in RFS District personnel. This has impacted on the accuracy of council record keeping. Councils do not always receive notification about new assets or information about the location of assets from the RFS, and therefore cannot reflect this information in their accounting and reporting.

RFS area commands audit system records to ensure fleet inspections occur as planned, but central systems are not always updated, creating operational risks

RFS District staff are required by the Rural Fires Act to ensure the firefighting fleet is inspected at least once a year. Regular inspections of the fleet are vital to ensure that vehicles are fit-for-purpose and safe for brigade volunteers. Inspections are also fundamental to the operational readiness and capability of RFS to respond to fire incidents.

RFS Area Command personnel conduct audits of fleet maintenance data to ensure that fleet inspections are occurring as planned. These inspections provide the RFS with assurance that the fleet is being maintained and serviced by local council workshops, or third-party maintenance contractors.

Some RFS Districts run their own fleet management systems outside of the central management system. They do this to manage their fleet inspection activity effectively. Annual fleet inspection dates are programmed by staff at RFS Headquarters. Most of the inspection dates generated by RFS Headquarters are clustered together and RFS Districts need to separate inspection times to manage workloads over the year. Spreading inspection dates is necessary to avoid exceeding the capacity of local council workshops or third party contractors, and to ensure that fleet are available during the bushfire season.

The fleet inspection records at RFS Headquarters are not always updated in a timely manner to reflect actual inspection and service dates of vehicles. District staff are not able to change fleet inspection and service dates in the central management system because they do not have the necessary permissions to access the system. The usual practice is for RFS District staff to notify staff at RFS Headquarters, and ask them to retrospectively update the system. As there is a lag in updating the central database, at a point in time, the actual inspection and service dates of vehicles can be different to the dates entered in the central fleet management system.

Fleet inspection and maintenance records must be accurately recorded in the central RFS management system for operational reasons. RFS Headquarters personnel need to know the location and maintenance status of fleet vehicles at all times in order to dispatch vehicles to incidents and fires. The RFS fleet management system is integrated with a new Computer Aided Dispatch System. The Computer Aided Dispatch System assigns the nearest and most appropriate vehicles to fire incidents. The system relies on accurate fleet locations and fleet condition information in order to dispatch these vehicles.

There is a risk that RFS Headquarters' systems do not contain accurate information about the location and status of vehicles. Some may be in workshops for servicing and repair, while the system may record them as available for dispatch. As there are many thousands of fleet vehicles, all requiring an annual service and inspection, a lack of accurate record keeping has wide implications for State fire operations.

RFS is currently exploring ways to improve the ways in which fleet inspections are programmed into the fleet management system.

RFS provides funds to councils to assist with maintaining the firefighting fleet, but does not receive fleet maintenance cost information from all local councils

Each year the RFS provides local councils with a lump sum to assist with the cost of repairing and maintaining the firefighting fleet. This lump sum funding is also used for meeting the costs of maintaining brigade stations, utilities, and other miscellaneous matters associated with RFS business.

In 2020–21, the RFS provided NSW local councils with approximately $23 million for maintenance and repairs of appliances, buildings, and utilities. Ninety councils were provided with lump sum funding in 2021, receiving on average $257,000. The amounts received by individual councils ranged from $56,200 to $1,029,884.

Some councils provide itemised repairs and maintenance reports to RFS District staff, showing the work completed and the cost of that work. However, not all councils collect this information or provide it to the RFS. Local councils collect fleet maintenance information in their local council systems. In some cases, the responsibility for fleet maintenance is shared across a group of councils, and not all councils have oversight of this process.

The RFS has not taken steps to require local councils to provide itemised maintenance costings for the firefighting fleet. Thus, the RFS does not have a clear understanding of how local councils are spending their annual fleet maintenance funding allocations. The RFS does not know if the funding allocations are keeping pace with the actual cost of repairing and maintaining the fleet.

RFS District staff report that funding shortfalls are impacting on the prioritisation of fleet servicing and maintenance works in some council areas. When fleet servicing and maintenance is not completed routinely or effectively, there is a risk that it can negatively impact the overall condition and lifespan of the vehicle. Poor processes in relation to fleet maintenance and repair risk impacting on the operational capabilities of the fleet during fire events.

The timeliness and effectiveness of fleet servicing and maintenance is affected by resource levels in RFS Districts and local councils

Local councils have a legislated responsibility to service and maintain the firefighting fleet to the service standards set by the RFS. Fleet maintenance is usually done by the entity with the appropriate workshops and resources, and the maintenance arrangements are described in District Service Agreements. RFS District staff conduct annual inspections to ensure that the firefighting fleet has been serviced and maintained appropriately, and is safe for use by brigade volunteers. If the fleet has not been maintained to RFS service standards or timelines, RFS District staff may work with local councils to support or remediate these works.

The effectiveness of this quality control activity is dependent on relationships and communication between the RFS Districts and local councils. While some RFS staff reported having positive relationships with local councils, others said they struggled to get fleet maintenance work done in a timely manner. Some councils reported that funding shortfalls for fleet maintenance activity was impacting on the prioritisation of RFS fleet maintenance works. When fleet maintenance work is not completed routinely or effectively, it can negatively impact on the overall condition and lifespan of the vehicle. It can also reduce the capacity of the RFS to respond to fire events.

Fleet quality control activities are carried out by RFS District staff. In some of the smaller RFS Districts, one person is responsible for liaising with local councils and brigade volunteers about fleet maintenance and repairs. In the regions where resources are limited, there is less ability to maintain ongoing communication. This is impacting on fleet service and maintenance timelines and the timeliness of fleet monitoring activity.

The RFS has mutual support arrangements with agencies in NSW and interstate, though shared fleet levels are yet to be quantified

The RFS has arrangements with state, federal, and international fire authorities to provide mutual support during fire incidents. In NSW, the RFS has agreements with the three statutory authorities – Fire and Rescue NSW, the Forestry Corporation of NSW, and the NSW National Parks and Wildlife Service. The agreement with Fire and Rescue NSW provides a framework for cooperation and joint operations between the agencies. The agreements with the Forestry Corporation of NSW and the NSW National Parks and Wildlife Service describe the control and coordination arrangements for bush and grass fires across NSW. These arrangements are set out in legislation and incorporated into local Bush Fire Risk Management Plans.

The RFS has agreements with fire authorities in three of the four Australian states and territories that share a border with NSW – the Australian Capital Territory, Queensland, and South Australia. Each agreement sets out the arrangements for mutual assistance and joint operations, including arrangements for sharing aircraft. The agreement between the RFS and Victoria had lapsed. The RFS told the NSW Bushfire Inquiry that the agreement with Victoria would be finalised by June 2020. In June 2022, the RFS reported that the agreement was in the process of being finalised.

The arrangements for mutual aid from Western Australia, Northern Territory and Tasmania, are managed by the National Resource Sharing Centre. These agreements set out the arrangements for interstate assistance between Australian fire services, emergency services, and land management agencies in those states and territories.

These mutual support arrangements may assist during state-based fire events. However, when there are competing demands for resources, such as during the bushfires of 2019–2020, there can be limits on fleet availability. During the 2019–2020 fires, resources were stretched in all jurisdictions as these fires affected NSW, Victoria, and Queensland.

There are opportunities for the RFS and other NSW agencies to quantify fleet resources across the State and identify assets that can be mobilised for different fire activities. This form of fleet planning may be used to enhance surge capabilities during times of high fire activity. There are also opportunities for the RFS and other agencies to match the levels of shared assets to projected bushfire risks.

Appendix one – Responses from agencies 

Appendix two – About the audit 

Appendix three – Performance auditing

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Parliamentary reference - Report number #376 - released 27 February 2023

What the report is about

Result of Health cluster (the cluster) agencies' financial statement audits for the year ended 30 June 2022.

What we found

Unmodified audit opinions were issued for the financial statements for all Health cluster agencies.

The COVID-19 pandemic continued to increase the complexity and number of accounting matters faced by the cluster. The total gross value of corrected misstatements in 2021–22 was $353.3 million, of which $186.7 million related to an increase in the impairment provision for Rapid Antigen Tests (RATs).

A qualified audit opinion was issued on the Annual Prudential Compliance Statement related to five residential aged care facilities. There were 20 instances (19 in 2020–21) of non-compliance with the prudential responsibilities within the Aged Care Act 1997.

What the key issues were

The total number of matters we reported to management across the cluster decreased from 116 in 2020–21 to 67 in 2021–22. Of the 67 issues raised, four were high risk (three in 2020-21) and 37 were moderate risk (57 in 2020–21). Nearly half of all control deficiencies reported in 2021–22 were repeat issues.

Three unresolved high-risk issues were:

• COVID-19 inventories impairment – we continued to identify issues relating to management’s impairment model which relies on anticipated future consumption patterns. RATs had not been assessed for impairment.

• Asset capitalisation threshold – management has not reviewed the appropriateness of the asset capitalisation threshold since 2006.

• Forced-finalisation of HealthRoster time records – we continued to observe unapproved rosters being finalised by system administrators so payroll can be processed on time. 2.6 million time records were processed in this way in 2021–22.

What we recommended

• COVID-19 inventories impairment – ensure consumption patterns are supported by relevant data and plans.

• Assets capitalisation threshold – undertake further review of the appropriateness of applying a $10,000 threshold before capitalising expenditure on property, plant and equipment.

• Forced-finalisation of HealthRoster time records – develop a methodology to quantify the potential monetary value of unapproved rosters being finalised.

This report provides Parliament and other users of Health cluster (the cluster) 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 Health cluster (the cluster) for 2022.

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 cluster.

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

Copyright notice

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

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.

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

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

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This report focuses on how Transport for NSW and Sydney Trains manage crowding at selected metropolitan train stations.

The audit found that while Sydney Trains has identified platform crowding as a key strategic risk, it does not have an overarching strategy to manage crowding in the short to medium term. Sydney Trains 'do not have sufficient oversight to know if crowding is being effectively managed’, the Auditor-General said.

Sydney Trains' operational response to crowding involves restricting customer access to platforms or station entries before crowding reaches unsafe levels or when it impacts on-time running. Assuming rail patronage increases, it is likely that Sydney Trains will restrict more customers from accessing platforms or station entries, causing customer delay. ‘Restricting customer access to platforms or station entries is not a sustainable approach to manage station crowding’, said the Auditor-General.

The Auditor-General made seven recommendations to improve Transport for NSW and Sydney Trains' management of station crowding. Transport for NSW have accepted these recommendations on behalf of the Transport cluster.

Public transport patronage has been impacted by COVID-19. This audit was conducted before these impacts occurred.

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Sydney Trains patronage has increased by close to 34 per cent over the last five years, and Transport for NSW (TfNSW) expects the growth in patronage to continue over the next 30 years. As patronage increases there are more passengers entering and exiting stations, moving within stations to change services, and waiting on platforms. As a result, some Sydney metropolitan train stations are becoming increasingly crowded.

There are three main causes of station crowding:

• patronage growth exceeding the current capacity limits of the rail network
• service disruptions
• special events.

Crowds can inhibit movement, cause discomfort and can lead to increased health and safety risks to customers. In the context of a train service, unmanaged crowds can affect service operation as trains spend longer at platforms waiting for customers to alight and board services which can cause service delays. Crowding can also prevent customers from accessing services.

Our 2017 performance audit, ‘Passenger Rail Punctuality’, found that rail agencies would find it hard to maintain train punctuality after 2019 unless they significantly increased the capacity of the network to carry trains and people. TfNSW and Sydney Trains have plans to improve the network to move more passengers. These plans are set out in strategies such as More Trains, More Services and in the continued implementation of new infrastructure such as the Sydney Metro. Since 2017, TfNSW and Sydney Trains have introduced 1,500 more weekly services to increase capacity. Additional network capacity improvements are in progress for delivery from 2022 onwards.

In the meantime, TfNSW and Sydney Trains need to use other ways of managing crowding at train stations until increased capacity comes on line.

This audit examined how effectively TfNSW and Sydney Trains are managing crowding at selected metropolitan train stations in the short and medium term. In doing so, the audit examined how TfNSW and Sydney Trains know whether there is a crowding problem at stations and how they manage that crowding.

TfNSW is the lead agency for transport in NSW. TfNSW is responsible for setting the standard working timetable that Sydney Trains must implement. Sydney Trains is responsible for operating and maintaining the Sydney metropolitan heavy rail passenger service. This includes operating, staffing and maintaining most metropolitan stations. Sydney Trains’ overall responsibility is to run a safe rail network to timetable.

Appendix one – Response from agency

Appendix two – Sydney rail network

Appendix three – Rail services contract

Appendix four – Crowding pedestrian modelling

Appendix five – Airport Link stations case study

Appendix six – About the audit

Appendix seven – Performance auditing

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© 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 #333 - released 30 April 2020

This report outlines the results of audits of the financial statements of agencies now grouped in the NSW Planning, Industry and Environment cluster.

Unqualified audit opinions were issued for 56 of the 66 cluster agencies’ 30 June 2019 financial statements. Ten audits remain incomplete. The cluster agencies need to improve the timeliness of financial reporting. 

The Audit Office continued to identify issues regarding unprocessed Aboriginal land claims and the recognition of Crown land. ‘Auditor-General’s reports to parliament have recommended action to reduce the level of unprocessed land claims since 2007. However, the number of unprocessed claims continued to increase’, Margaret Crawford said.

One in five internal control findings were repeat issues. Key themes included information technology, asset management and improvements required to expense and payroll controls.

The report makes several recommendations including:

• Property NSW should urgently address the deficiencies in the lease data used to calculate the impact of the new leasing standard effective from 1 July 2019
• the Department of Planning, Industry and Environment should prioritise action to reduce unprocessed Aboriginal land claims
• the Department of Planning, Industry and Environment should ensure the Crown land database is complete and accurate so state agencies and local government councils are better informed about the Crown land they control.

This report analyses the results of our audits of financial statements of the Planning, Industry and Environment cluster agencies for the year ended 30 June 2019. The table below summarises our key observations.

1. Machinery of Government changes

2. Financial reporting

3. Audit observations

This report provides parliament and other users of the Planning, Industry and Environment cluster agencies 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 created by the Machinery of Government changes on 1 July 2019. This report is focused on agencies in the Planning, Industry and Environment cluster from 1 July 2019. However, these agencies were all in other clusters during 2018–19. Please refer to the section on Machinery of Government changes for more details.

Machinery of Government (MoG) refers to how the government organises the structures and functions of the public service. MoG changes are where the government reorganises these structures and functions that are given effect by Administrative orders.

The MoG changes, announced following the NSW State election on 23 March 2019, created the Planning, Industry and Environment (PIE) cluster. The Administrative Changes Orders issued on 2 April 2019, 1 May 2019 and 28 June 2019 gave effect to these changes. These orders became effective on 1 July 2019.

Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.

This chapter outlines our audit observations related to the financial reporting of agencies in the Planning, Industry and Environment (PIE) cluster for 2019. In this chapter, the Department of Planning, Industry and Environment is referred to as DPIE, the former Department of Planning and Environment as DPE, and the former Department of Industry as DOI.

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 audit observations and insights from our financial statement audits of agencies in the Planning, Industry and Environment (PIE) cluster for 2019. In this chapter, the Department of Planning, Industry and Environment is referred to as DPIE, the former Department of Planning and Environment as DPE, and the former Department of Industry as DOI.

Appendix one – List of 2019 recommendations

Appendix two – Status of 2018 recommendations

Appendix three – Cluster agencies

Appendix four – Financial data

Appendix five – Management letter findings

Appendix six – Timeliness of financial reporting

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.