This report analyses the results of our audits of the financial statements of the Treasury, Premier and Cabinet, Customer Service cluster agencies (central agencies), and the Legislature for the year ended 30 June 2020. The table below summarises our key observations.

1. Financial reporting

2. Audit observations

This report provides Parliament and other users of NSW Government central agencies' financial statements and the Legislature's financial statements with the results of our financial audits, observations, analyses, conclusions and recommendations.

Emergency events, such as bushfires, floods and the COVID-19 pandemic significantly impacted agencies in 2019–20. Our findings on nine agencies that were most impacted by recent emergency events are included throughout this report.

Refer to Appendix one for the names of all central agencies and Appendix four for the nine agencies most impacted by emergency events.

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 on the financial reporting of central agencies and the Legislature for 2020, including the financial implications from recent emergency events.

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 the financial statement audits of agencies in the central agencies and the Legislature
• our assessment of how well agencies adapted their systems, policies, procedures and governance arrangements in response to recent emergencies.

Appendix one – Timeliness of financial reporting by agency

Appendix two – List of 2020 recommendations

Appendix three – Status of 2019 recommendations

Appendix four – Agencies most impacted by recent emergency events

Appendix five – Management letter findings by agency

Appendix six – Financial data

The Auditor-General for New South Wales, Margaret Crawford, released a report today examining NSW Health’s management of health and safety risks to nurses and junior doctors in high demand hospital wards over the past five years, including during the first six months of the 2020 COVID-19 health emergency.

The Auditor-General found that while NSW Health effectively managed most incidents and risks to the physical health and safety of hospital staff during ‘business as usual’ activities, systems and resources are not fully effective to manage staff psychological and wellbeing risks, particularly for nurses.

The Auditor-General found that NSW Health was effective in managing most COVID-19 health and safety risks to hospital staff. Overall effectiveness could have been improved had pandemic preparedness training been delivered across all Local Health Districts. Additionally, state-wide communication systems could have been improved to provide hospital clinicians with access to a ‘single source of truth’ with the latest advice from NSW Health authorities.

NSW Health’s planning and preparation for the supply of Personal Protective Equipment (PPE) was partially effective. At various times, some PPE items could not be sourced from established suppliers. Face masks, goggles and protective gowns were substituted with products that differed in shape, size and fitting from usual items, and in some hospitals, substituted masks were used without being locally fit tested by hospital staff.

The Auditor-General made seven recommendations aimed at enhancing hospital health and safety risk reporting practices, along with a recommendation that NSW Health conduct a post pandemic 'lessons learned' review and make policy and operational recommendations for future pandemic responses.

Over the past decade, there have been increases in the numbers of health and safety incidents affecting nurses and junior doctors in NSW hospitals. These increases have been associated with higher numbers of patients with acute mental health conditions, age-related cognitive impairments, and patients presenting in emergency departments under the influence of drugs and alcohol.  

This audit commenced in August 2019, with a focus on the health, safety and wellbeing of nurses and junior doctors in high demand hospital wards. Our audit focused on emergency departments, mental health wards and aged care wards during 'business as usual’ periods of hospital operations. 

In the early months of 2020, the novel coronavirus (COVID-19) brought new health and safety risks to hospital staff. These risks included the potential for infection amongst health workers, increased staff workloads, and impacts on staff wellbeing.  

In May 2020, we expanded the focus of the audit to assess the effectiveness of NSW Health’s management of the health and safety risks to staff during the COVID-19 health emergency. We assessed the impacts on emergency departments and intensive care units, as these were the wards where staff were most likely to come into contact with COVID-19.  

The Audit Office acknowledges the ongoing health and safety challenges that the pandemic has brought to NSW Health staff – in particular to hospital clinicians and the managers who support them.  

This audit assessed the effectiveness of NSW Health’s:

• systems, forums and workplace cultures to support reporting and generate data about risk
• initiatives to support safe workplaces and effectively respond to health and safety incidents
• actions to continuously improve staff health, safety and wellbeing in hospital environments.

The first three chapters of this report describe the effectiveness of NSW Health’s ‘business as usual’ health and safety risk management. The fourth and fifth chapters describe the effectiveness of NSW Health’s health and safety risk management during the COVID-19 pandemic.  

1. Audit recommendations

By December 2021, NSW Health should:

1. Evaluate the effectiveness of the new incident management system to enable full reporting of health and safety incidents and risks in all hospital wards, including those where incidents and risks are common, and monitor for consistency of reporting over time
2. Expand the categories of hospital incident data reported to Ministry executives in the Work Health and Safety Dashboard reports, including by linking injury data to incident types by hospital ward category, and monitor in conjunction with Local Health Districts for emerging trends and improvement over time
3. Ensure that nurses and junior doctors have regular opportunities to report on risks to their psychological health and wellbeing, and that system managers have access to aggregate data to guide responses to mitigate these risks
4. Develop and implement an evidence-based guiding framework and strategy to support hospital staff in the aftermath of traumatic or unexpected workplace incidents, and monitor implementation
5. At regular intervals, publicly report aggregate Root Cause Analysis data detailing the hospital system factors that contribute to clinical incidents
6. Develop and implement a systemwide platform for sharing research and information about hospital health and safety initiatives across the health system
7. Conduct a post-pandemic 'lessons learned' review focusing on the effectiveness of key strategies deployed in the management of the COVID-19 pandemic and make policy and operational recommendations for future pandemic responses. In particular, ensure:
   • regular scenario-based pandemic training for hospital staff
   • updated policies and protocols for hospital infection controls
   • capability to upscale authoritative communication with frontline health workers at the earliest notification of a health emergency and for the duration of the emergency
   • systems and safeguards to ensure the supply and availability of clinically appropriate personal protective equipment (PPE) during all phases of a pandemic.

Local Health Districts were effective in leading health and safety infection control activity

According the NSW Health Influenza Pandemic Plan (Pandemic Plan), the Chief Executives of Local Health Districts have ultimate responsibility for public health unit preparations during health emergencies. If necessary, they can ‘draw on the support of the State Pandemic Management Team and local emergency management resources’.

During the preparations and early response phases to the COVID-19 pandemic, Local Health Districts were at the forefront of most NSW hospital activity. They took the lead role in developing hospital infection control protocols and guidance about the appropriate uses of Personal Protective Equipment (PPE). Each Local Health District established its own responses to the health emergency, based on the best clinical advice available to them. The localised approach meant that there were some minor differences in infection control practices across the NSW health system.

Throughout February and March 2020, there was limited centralised policy or guidance from the Ministry and its Pillar Health agencies about COVID-19 infection control practices. It was not possible to mandate practices at a time when information about the virus was evolving. Clinical responses were changing as more became known about COVID-19, especially about its patterns of transmission and its impacts on people with the disease.

During February and March 2020, Local Health District executives communicated with hospital staff via a range of methods. Some sent daily e-memos with the latest updates. Some scheduled more regular meetings with hospital clinicians. Some Districts set up extensive staff training sessions and information briefings to keep all personnel updated with the latest advice. Physical distancing made it difficult to bring staff together in large groups, so a range of communications measures were implemented.

Clinical staff also utilised their clinical training and expertise to prepare their wards and train frontline staff in infection control procedures. Some sourced information from national and international colleagues to add to localised knowledge of the virus.

When the first evidence of COVID-19 community transmission was identified in the Northern Sydney Local Health District, hospital staff followed infection control protocols that were based on local guidance and information. With the support from the District executive team and infectious diseases experts, hospital clinicians set up their own infection control protocols and PPE protections. Within a week the District had produced a matrix to guide staff in the uses of PPE during COVID-19 procedures, and had circulated the guidance to all hospital clinicians.

At the end of March 2020, a version of the Northern Sydney PPE matrix was published on the Clinical Excellence Commission’s website and it has now become NSW Health’s standard guideline for PPE during COVID-19 procedures. Once this guideline was published centrally, infection control practices were standardised across NSW hospitals.

This form of District-led policy making is not ‘business as usual’ practice for NSW Health. Policy making processes were somewhat reversed during the early response phases to COVID-19. This flexible policy approach supports the governance arrangements described in the Pandemic Plan, which assigns responsibility for ‘supporting and maintaining quality care across health services and implementing infection control measures as appropriate’ to Local Health Districts.

In non-health emergency situations, clinical policy and protocols are usually initiated and developed by the Ministry and the Clinical Excellence Commission and are subsequently shared across the health system after a quality control process. The localised approach adopted in the months from February to March 2020, allowed for rapid and flexible responses to changing information – to protect the health and safety of the hospital workforce and the wider community.

Hospital staff across NSW would have been better prepared for COVID-19 if pandemic training had been delivered across all Local Health Districts in the past decade

Local Health Districts are responsible for training hospital staff in preparation for public health emergencies. NSW’s policy describing Public Health Emergency Response Preparedness Minimum Standards requires that clinical staff participate in at least one annual emergency training exercise if they hold a position where they are likely to be called upon in an emergency. Staff must participate in an actual response exercise or a relevant training session. The training must also include re-familiarisation with PPE.

Available evidence about emergency response training in NSW indicates that at least two Local Health Districts have delivered pandemic focussed training in the past decade. Our interviews with managers of emergency departments and intensive care units indicates that most other Districts have focused their emergency training on mass patient trauma incidents such as plane crashes, train crashes and terrorist attacks. While the potential for these types of mass trauma events is real, and warrants training and preparation, significant global outbreaks of diseases have also had potential to threaten NSW communities. In previous decades, global health communities have been at risk of diseases such as the Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS).

In the two Districts where pandemic training was provided in NSW, staff participated in community influenza vaccination exercises. These were focused on upskilling staff to follow emergency command structures, manage high volume patient flows, and organise sanitisation logistics during a hospital-based training exercise.

Our interviews with nurse managers in emergency departments and intensive care units indicate that in the majority of other Local Health Districts, key personnel were unaware of the NSW Pandemic Plan. Interviewed staff also reported insufficient scenario-based training in pandemic responses over the last ten years.

The Ministry, the Clinical Excellence Commission and the Health Education and Training Institute (HETI) are responsible for online training and 'state-wide strategies and resources to maintain high levels of compliance with infection control and patient safety recommendations'. The HETI website contains online training modules in infection control and PPE donning and doffing procedures. Other infection control information and research is available on the websites of the Clinical Excellence Commission and the Agency for Clinical Innovation.

Online training modules are effective for upskilling staff in a range of skills, but are not a substitute for real-time, rapid incident response training. Face-to-face training provides opportunities for first responders to test procedures in hospital environments. Incident response training provides opportunities for staff to assess their levels of compliance with protocols and their competence with equipment in scenario situations. It is the responsibility of Local Health Districts to provide this form of training to the health staff in their District.

Two NSW Health policies that govern clinical arrangements during pandemics are outdated

The Ministry had not updated two policies that had the potential to assist emergency departments and intensive care units in aspects of their ward preparation for the COVID-19 pandemic. Both policies were on the NSW Health website, but neither were shared with hospital staff in the planning phases for the pandemic. Both policies are out of date and have not been revised within required timeframes.

The 2010 Influenza Pandemic - Providing Critical Care policy was due for review in May 2015 and was not updated at the time of the COVID-19 health emergency. Similarly, the 2007 policy Hospital Response to Pandemic Influenza Part 1: Emergency Department Response was due for review in June 2012 and has not been updated.

These policies were designed to assist clinical staff to make necessary ward arrangements for infection control. They set out the steps for rapid identification of contingent workforces, isolation procedures, and management of patient flows to separate those with suspected infection from other patient cohorts. They were a potential addendum to the NSW Pandemic Plan which describes the command and control responsibilities of health agencies in health emergencies.

Our interviews with nurse managers from emergency departments and intensive care units indicate that in the absence of pandemic policy, they sought clinical guidance from external sources and Local Health District experts. Interviewees told us that a lack of policy guidance about ward arrangements and infection control practices in a pandemic increased their workloads and hours of overtime in the early response phases to COVID-19. With the support of Local Health Districts, clinical staff made rapid adjustments in order to respond to changing testing requirements and ward arrangements.

The Ministry was slow to establish a centralised communication channel to communicate with frontline staff

NSW Health’s governance and communication arrangements during a pandemic are set out in the Pandemic Plan. The Plan requires that government agencies ‘commence enhanced arrangements, establish communications measures’ and confirm ‘governance arrangements’ when there is evidence of person to person transmission during an influenza outbreak. NSW Health received the first notifications of the novel coronavirus risks in January 2020.

During the preparation and early response phases to COVID-19, the Ministry and its central agencies were slow in establishing a single, authoritative channel through which to communicate consistent messages to frontline staff. Clinical staff required up-to-date information about COVID-19 testing criteria as requirements were changing rapidly, sometimes daily. While there was no expectation for fixed policy at this time, hospital staff required the latest instructions about treatment requirements, and updates on the numbers of COVID-19 infections in their region.

As information about COVID-19 was evolving, information was communicated across the health system via ‘multiple channels and sources’. While the Ministry and its central agencies communicated extensively with Local Health Districts during March 2020, hospital staff reported to us that they weren’t always sure where they could find the latest advice about testing protocols or infection controls.

Frontline staff told audit office staff that they were checking multiple sources and time-stamping advice to ensure they had the most up to date information on a daily basis. While some Local Health Districts managed clear communication links with frontline staff, nurse managers told us that communication was ‘chaotic’ during the early phases of pandemic preparation. Key personnel were not always available outside business hours and nurse managers advise that they spent hours at the end of shifts, seeking and printing the latest advice for weekend and night shift personnel. By the end of March 2020, the Ministry and the Clinical Excellence Commission websites became better organised to communicate with frontline clinicians.

A recommendation to the Ministry of Health after H1N1 swine flu could be equally applied in the COVID-19 context. The NSW Government’s report: Key Recommendations on Pandemic (H1N1) 2009 Influenza recommended the establishment of ‘clear pathways of communication … so that all employees have confidence in where their information will come from and who they should approach if they need additional information.’

NSW Health acknowledges the challenges and the lessons from the early phases of the COVID-19 pandemic. For example, a strategy released in August 2020, sets out NSW Health’s own recommendation for the future management of PPE including: ‘Aligning a single source of truth for PPE education and evidence-based guidance to ensure clarity of information on appropriate use, supported by an influential network of Infection Prevention and Control (IPC) practitioners at the forefront.

Ministry executives advise that communication with health staff has improved since the early phases of the pandemic. The Ministry now sends weekly COVID-19 updates to over 130,000 health staff via email. In addition, NSW Health now has two COVID-19 tabs on its website with current information, including COVID-19 testing advice. According to Ministry executives, these communication channels could be used or replicated if needed for future health emergencies. The Ministry also provides health information and updates via a phone application called Med App. This App is preferred by doctors and is less likely to be used by nurses. As at October 2020, there are 13,000 users of Med App. Push notifications can be made on Med App through SMS alerts.

Personal protective equipment (PPE) was not always available in required sizes and some hospital masks and gowns were substituted with products that differed from the usual items

Since the emergence of COVID-19 in Australia, all clinicians in NSW hospitals have had access to some form of PPE for their clinical requirements. If staff did not have appropriate equipment for each COVID-19 related procedure, they were guided by the formal advice issued to the NSW Health workforce on 11 March 2020 stating that: ‘The safety of NSW Health staff is a priority at all times, especially during COVID-19. Where safe working practices confirm specific PPE (e.g. face shields/masks or other equipment) are required for the protection of staff due to COVID-19, in all circumstances:

• staff are to wear prescribed PPE as instructed
• staff are not to undertake or be required to undertake tasks requiring PPE if the PPE is not available for use. Any such tasks are not to proceed until required PPE is available
• any staff member who is concerned about their safety must raise their concerns immediately to their manager.’

At periods during March and April 2020, some PPE items were not available in the required sizes or the regular brands to which staff were accustomed. HealthShare NSW was not able to source PPE from usual suppliers. HealthShare NSW sourced PPE including N95 masks from non-traditional suppliers. Some PPE items differed in shape and size from the usual hospital equipment. While senior executives from HealthShare NSW advise that all products were approved by the Therapeutic Goods Administration (TGA), in some hospitals, nurse managers advise that staff were not able to ‘fit test’ substituted masks. Fit testing determines the type and the size of the respirator mask that achieves an adequate seal on an individual’s face.

In March and April 2020, ‘duck bill’ (N95) masks were not available in some hospitals. According to stock managers and clinical managers in Local Health Districts, duck bills are the preferred mask for staff with smaller faces, particularly female staff members. The duck bill mask is a standard PPE product, and as such, is fit tested during mandatory PPE training. During the early response phases to COVID-19, most Local Health Districts were provided with substitute N95 masks. Fit testing of the substituted N95 masks was not able to be conducted in all NSW hospitals during the early phases of COVID-19. During the first wave of COVID-19 in March and April 2020, hospital staff told audit staff that there was no time and a lack of equipment to appropriately fit test substituted N95 masks.

Nurse managers in emergency departments advise that in some instances, staff made adaptations to PPE to improve protections, such as doubling masks, adding elastics or bringing their own equipment. These adaptations were not consistent with guidelines. Nurse managers advise that in some cases, adaptations to PPE or ill-fitting masks created pressure sores and contact dermatitis. Just over half of the stock managers of Local Health Districts advised that PPE stock was procured from outside the HealthShare NSW system. Stock managers in some Districts advise that facial shields and goggles sourced from non-traditional suppliers by HealthShare NSW were of a lesser quality than standard equipment. Stock managers and nurse managers reported that the changes in PPE products caused confusion and stress amongst staff.

Local Health Districts were proactive in assisting hospital staff to mitigate risks of COVID-19 infections. Some Local Health Districts assigned ‘tiger teams’ to assist staff with their PPE practices. Tiger teams provide clinical expertise and advice to staff, answer questions about infection control and provide training on PPE practice in hospital ward environments. They assist and support PPE donning and doffing practices to ensure the appropriate sequencing of applying and removing PPE for effective infection control. They provide mask fit checking guidance to assist staff in correct PPE practices.

Districts ran extensive refresher PPE training sessions for clinical staff. Some hospitals ran regular PPE demonstrations so that staff could observe correct PPE procedures at set times during the day. These activities assisted staff to implement appropriate infection control in the period before the Clinical Excellence Commission’s web-based materials and videos became available in late March and early April 2020. These online resources now provide comprehensive guidance to hospital staff in PPE practices.

HealthShare NSW placed limits or caps on some high-demand PPE items that were too low to meet requirements in some Local Health Districts and had to be adjusted to meet actual demand

The NSW Pandemic Plan describes the responsibilities of the Ministry and its central agencies to manage and maintain the State Medical Stockpile of essential PPE supplies and antiviral medications. During a pandemic, HealthShare NSW has responsibility for warehousing, monitoring and distributing health supplies to the health workforce.

Due to a reported global shortage of PPE and limits to the NSW stockpile, HealthShare NSW placed limits on the provision of approximately 100 high-demand items to NSW hospitals. HealthShare NSW advise that the PPE order capping ceilings were implemented ‘to ensure local stockpiling does not occur’. A centralised ordering process was established with Local Health Districts so that PPE product ordering occurred through single hospital locations (214 across the State), rather than at the ward level. Escalation processes were established to allow Districts to request one-off increases to supply, and a process was set up to permanently increase the order cap limit for any PPE item by facility.

According to HealthShare NSW, ‘as incoming central supply has improved, order caps have subsequently increased in line with strong engagement and governance with the Local Health Districts to ensure the appropriate levels of supply are provided’. The original capped levels were determined by assessing PPE usage in wards during the flu season of 2019. As the flu season case numbers of 2019 were relatively low, some Local Health District managers advised that the levels of PPE during 2019 were not comparable to the level of PPE required for the COVID-19 pandemic.

After advocacy from hospital stock managers and clinicians, HealthShare NSW increased capped PPE levels in many Local Health Districts.

Executive members of the State Health Emergency Operations Centre (SHEOC) advise that its PPE supply strategy needs to be carefully developed as there are vast differences in PPE usage rates during 'business as usual' periods and pandemic periods. If NSW Health kept the level of PPE required in planning for a worst-case scenario, this would equate to an extensive surplus of PPE that could not be utilised during business as usual periods. The SHEOC Executive advise that it is not feasible or economical to store this level of PPE. They advise that given the costs of PPE, and the fact that the products have a shelf life, a diversified supply line is a more reliable method for ensuring PPE during surge and non-surge periods.

Early data modelling showed ICU patient numbers at levels not manageable with levels of ventilators and equipment

Early projections of patient numbers requiring acute care for COVID-19, were at levels that would not have been manageable with the equipment and resources of NSW hospitals. Throughout March through to May 2020, government data modelling indicated significant surges of community infections and surges in intensive care patients.

Early estimates were based on overseas trends, and if actual cases had matched projections, NSW hospitals would not have had sufficient ventilators to meet demand. The knowledge of this shortfall caused high levels of anxiety among nursing and medical staff.

While the data was based on the best available information, it had negative implications for the health and safety of the nurse and junior doctor workforce. Managers of intensive care wards and emergency departments reported stress amongst the workforce. Staff concerns were primarily about being faced with ‘the unmanageable’, along with heightened fears about contracting the virus with the knowledge that there was insufficient equipment to treat acute patients.

As it transpired, overall numbers of COVID-19 infections were lower than projected during the early months of the pandemic. The lower infection rates in the general population have meant fewer instances of patients requiring intensive care in NSW hospitals. In addition, HealthShare NSW has been able to increase the numbers of ventilators in NSW hospitals to prepare for future surges in patients requiring acute respiratory care.

SHEOC Executive advise that NSW Health undertook an accelerated procurement strategy in early 2020 to increase its stock of ventilators, and that ventilator capacity has always far-exceeded actual requirements.

NSW Health has developed a strategy to improve the management of PPE for the NSW health workforce

In August 2020, NSW Health released a strategy that sets out its future management and planning approaches to the provision of PPE for the NSW Health workforce. NSW Health’s Personal Protective Equipment (PPE) Strategy describes the learnings and challenges during the COVID-19 pandemic in sourcing and distributing PPE. It sets out the systems and methods for distributing PPE to staff and patients and focuses on how staff are kept informed on the appropriate use of PPE at all times. A supporting communications strategy has been developed to support its implementation.

The strategy contains enhanced transparency measures to regularly inform staff about PPE stock levels and to provide data about PPE usage rates by item types in wards in NSW hospitals. The NSW Health PPE strategy describes a changed approach to ordering, storing and allocating PPE. This includes diversifying the supply lines for PPE products to increase supply options in circumstances where supply lines become disrupted. It includes a centralised system for coordinating the supply of hospital PPE through Local Heath District coordination points and centralised distribution points in large hospitals.

Our interviews with hospital PPE stock managers and nurse managers indicate that staff find the new ordering system to be an improvement upon the previous stock ordering method.

According to the Personal Protective Equipment (PPE) Strategy, NSW health is upgrading its models for monitoring and benchmarking PPE usage across the health system. Systems are being improved for forecasting demand volumes during business as usual periods and during health emergency surges.

Appendix one – Response from agency

Appendix two – Audit methodology

Appendix three – About the audit 

Appendix four – Performance auditing 

Copyright notice

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

Parliamentary reference - Report number #344 - released 9 December 2020

The Auditor-General for New South Wales, Margaret Crawford today released her report on the findings and recommendations from the 2019–20 financial audits that relate to internal controls and governance at 40 of the largest agencies in the NSW public sector.

The bushfire and flood emergencies and the COVID‑19 pandemic continue to have a significant impact on the people and public sector of New South Wales. The scale of the government response to these events has been significant. The report focuses on the effectiveness of internal controls and governance processes, including relevant agencies’ response to the emergencies. In particular, the report focuses on:

• financial and information technology controls
• business continuity and disaster recovery planning arrangements
• procurement, including emergency procurement
• delegations that support timely and effective decision-making.

Due to the ongoing impact of COVID‑19 agencies have not yet returned to a business‑as‑usual environment. ‘Agencies will need to assess their response to the recent emergencies and update their business continuity, disaster recovery and other business resilience frameworks to reflect the lessons learnt from these events’ the Auditor-General said.

The report noted that special procurement provisions were put in place to allow agencies to better respond to the COVID-19 pandemic. The Auditor-General recommended agencies update their procurement policies to reflect the current requirements of the NSW Procurement Framework and the emergency procurement requirements.

Read the PDF report

This report analyses the internal controls and governance of 40 of the largest agencies in the NSW public sector for the year ended 30 June 2020. These 40 agencies constitute an estimated 85 per cent of total expenditure for all NSW public sector agencies.

1. Internal control trends

2. Information technology controls

3. Business continuity and disaster recovery planning

4. Procurement, including emergency procurement

5. Delegations

6. Status of 2019 recommendations

Internal controls are processes, policies and procedures that help agencies to:

• operate effectively and efficiently
• produce reliable financial reports
• comply with laws and regulations
• support ethical government.

This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies we found across agencies. The rest of this report presents this year’s controls and governance findings in more detail.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to manage key financial systems.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency business continuity and disaster recovery planning arrangements.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of procurement agency procurement policies and procurement activity.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency compliance with financial and human resources delegations.

Appendix one – List of 2020 recommendations 

Appendix two – Status of 2019 recommendations

Appendix three – Cluster agencies

Copyright notice

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

The Auditor-General for New South Wales, Margaret Crawford, released a report today examining the effectiveness of the financial arrangements and management practices of four integrity agencies: the Independent Commission Against Corruption, the NSW Electoral Commission, the NSW Ombudsman, and the Law Enforcement Conduct Commission. The audit also included NSW Treasury and the Department of Premier and Cabinet (DPC) because both departments are involved in the processes that lead to decisions about funding for the integrity agencies and managing access to this funding. The Hon. Don Harwin MLC, Special Minister of State, requested this audit under section 27(B)(3)(c) of the Public Finance and Audit Act 1983.

The audit found that the current approach to determining and administering annual funding for the integrity agencies presents threats to their independent status. The approach used by NSW Treasury and DPC is consistent with the legislative and Constitutional framework for financial management in New South Wales, but it does not sufficiently recognise that the roles and functions of the integrity agencies that are the focus of this audit are different to other departments and agencies. Specific mechanisms that present threats to the independence of the integrity agencies include the absence of transparency in decisions about funding for the integrity agencies, the means of applying efficiency dividends and budget savings and reform measures, the process of providing additional funding from DPC to the integrity agencies, and requests for the integrity agencies to report to DPC on their activities and outcomes.

The Auditor-General outlined the principles that inform the report’s recommendations in order to strengthen the financial arrangements for the integrity agencies. These principles are:

• There should be structured oversight by Parliament of the performance and financial management of the integrity agencies.
• Parliament’s role in the budget process should be expanded to ensure Cabinet is provided with more independent advice on the funding requirements for the integrity agencies.
• There should be transparency to Parliament and the relevant agency for decisions made about funding for the integrity agencies.
• The integrity agencies should be required to demonstrate their accountability as prudent managers of their financial resources.

The report also notes that the NSW Parliament should be consulted when considering the report’s recommendations.

Read full report (PDF)

This audit examined the effectiveness of the financial arrangements and management practices of four integrity agencies. It was conducted with reference to the legislative and Constitutional framework that is currently in place for financial management in New South Wales.

This report appropriately recognises that the government of the day is responsible for the prudent and responsible management of the state’s finances. It identifies several areas of ambiguity in the way the current financial arrangements apply to the integrity agencies that are the subject of this audit. It also highlights threats to the independence of the integrity agencies that may arise from the involvement of the Executive Government in the decision making about funding. The report argues these risks are not mitigated sufficiently under the current financial arrangements.

The recommendations in this report outline the principles that should inform the financial arrangements for the integrity agencies. Consistent with the Audit Office of NSW’s role in auditing NSW Government departments and agencies, the recommendations are directed to NSW Treasury and the Department of Premier and Cabinet. However, the report recognises that the current role of these entities in the funding arrangements for the integrity agencies poses a threat to their independence. Consequently, it is important to recognise the important role of the NSW Parliament in determining the appropriate funding model for the integrity agencies. The audited agencies should consult closely with the NSW Parliament when considering these recommendations to ensure the views of Parliament are reflected appropriately in any changes arising from the implementation of these recommendations. This recognises the appropriate role of the NSW Parliament in safeguarding the independence of its integrity agencies.

On 4 November 2019, the Hon. Don Harwin MLC, Special Minister of State, requested this audit under section 27(B)(3)(c) of the Public Finance and Audit Act 1983.

Consistent with the Minister’s request, this audit assessed the effectiveness of the financial arrangements and management practices of four integrity agencies - the Independent Commission Against Corruption (ICAC), the NSW Electoral Commission (NSWEC), the NSW Ombudsman (NSWO) and the Law Enforcement Conduct Commission (LECC). The audit also included NSW Treasury and the Department of Premier and Cabinet (DPC) because both departments are involved in the processes that lead to decisions about funding for the integrity agencies and managing access to this funding.

The NSW Government, through the Treasurer, is responsible to the citizens of New South Wales for the prudent and responsible management of the state’s finances. The annual budget is the primary process that the NSW Government uses for financial management. Decisions about funding for the integrity agencies are made through this budget process. NSW Treasury provides guidance to all government departments and agencies, including the integrity agencies that are the focus of this audit, on the Government’s priorities for the budget. NSW Treasury also reviews and provides advice to the Expenditure Review Committee of Cabinet on proposals for funding through the budget.

The integrity agencies are subject to the application of ‘efficiency dividends’ and ‘budget savings and reform measures’, which limit their access to the full funding that has been approved by Parliament. NSW Treasury and DPC manage the application of these limits to the integrity agencies. The integrity agencies are grouped within the DPC ‘cluster’, which is an administrative arrangement created by the NSW Government. Clusters do not have legal status but are used for administrative and financial management. DPC has provided additional funding during the financial year to some of the integrity agencies in the years covered in this audit. DPC also oversees the involvement of the integrity agencies in developing and reporting on their outcomes. This is a requirement of NSW Treasury’s outcome budgeting reforms, which are currently being implemented.

Each of the integrity agencies is overseen by a parliamentary committee that includes members of both houses of the NSW Parliament. These committees are responsible for reviewing the performance of the integrity agencies that they oversee. They do not have a role in funding decisions. ICAC and LECC each have additional oversight from an Inspector. The Inspector of the ICAC’s role is to oversee the operations and conduct of ICAC to ensure that it complies with the law. The Inspector of the LECC’s role is to oversee the way LECC carries out its functions, with a focus on the legality of LECC’s use of its powers. Neither of these Inspectors has a role in funding decisions.

The Audit Office of NSW is an independent integrity agency that receives some of its revenue through the NSW Government’s budget process and sits within the DPC cluster. We have taken the following actions to preserve our independence and mitigate potential conflicts of interest that could arise in conducting this audit:

• not considering or commenting on the financial arrangements for our office
• requesting a deferral of our office’s evidence to an inquiry by the NSW Legislative Council’s Public Accountability Committee that is considering the budget process for integrity agencies. The inquiry includes the four integrity agencies that are the subject of this audit and our office
• seeking independent legal advice on the framework for the financial arrangements for the integrity agencies
• using additional internal review processes to provide quality assurance to audit conclusions.

On 4 November 2019, the Hon. Don Harwin MLC, Special Minister of State, requested this audit under section 27(B)(3)(c) of the Public Finance and Audit Act 1983.

Consistent with the Minister’s request, this audit assessed the effectiveness of the financial arrangements and management practices of four integrity agencies - the Independent Commission Against Corruption (ICAC), the NSW Electoral Commission (NSWEC), the NSW Ombudsman (NSWO) and the Law Enforcement Conduct Commission (LECC). The audit also included NSW Treasury and the Department of Premier and Cabinet (DPC) because both departments have a role in the financial arrangements for the integrity agencies. NSW Treasury manages the budget process that determines the annual funding for the integrity agencies. DPC has a role in managing access to this funding because the integrity agencies are placed within the DPC ‘cluster’.

The Audit Office of NSW is an independent integrity agency that receives some of its revenue through the NSW Government’s budget process and sits within the DPC cluster. We have taken the following actions to preserve our independence and mitigate potential conflicts of interest that could arise in conducting this audit:

• not considering or commenting on the financial arrangements for our office
• requesting a deferral of our office’s evidence to an inquiry by the NSW Legislative Council’s Public Accountability Committee that is considering the budget process for integrity agencies and the NSW Parliament, including the four integrity agencies in this audit and our office
• seeking independent legal advice on the framework for the financial arrangements of the four integrity agencies in this audit
• using additional internal review processes to provide quality assurance to audit conclusions.

Appendix one – Response from agencies

Appendix two – About the audit

Appendix three – Opinion from the Crown Solicitor’s Office

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.

The Auditor-General for New South Wales, Margaret Crawford, released a report today examining whether the Department of Communities and Justice had effective governance and partnership arrangements in place to deliver ‘Their Futures Matter’.

Their Futures Matter was intended to place vulnerable children and families at the heart of services, and direct investment to where funding and programs deliver the greatest social and economic benefits. It was a four-year whole-of-government reform in response to the 2015 Tune Review of out-of-home care.

The Auditor-General found that while important foundations were put in place, and new programs trialled, the key objective to establish an evidence-based whole-of-government early intervention approach for vulnerable children and families in NSW was not achieved.

Governance and cross-agency partnership arrangements to deliver Their Futures Matter were found to be ineffective. 'Their Futures Matter lacked mechanisms to secure cross portfolio buy‑in and did not have authority to drive reprioritisation of government investment', the Auditor-General said.

At the reform’s close, the majority of around $380 million in investment funding remains tied to existing agency programs, with limited evidence of their comparative effectiveness or alignment with Their Futures Matter policy objectives. The reform concluded on 30 June 2020 without a strategy or plan in place to achieve its intent.

The Auditor-General made four recommendations to the Department of Communities and Justice, aimed at improving implementation of outstanding objectives, revising governance arrangements, and utilising the new human services data set to address the intent of the reform. However, these recommendations respond only in part to the findings of the audit.

According to the Auditor-General, ‘Cross-portfolio leadership and action is required to ensure a whole-of-government response to delivering the objectives of Their Futures Matter to improve outcomes for vulnerable children, young people and their families in New South Wales.’

Read full report (PDF)

In 2016, the NSW Government launched 'Their Futures Matter' (TFM) - a whole-of-government reform aimed at delivering improved outcomes for vulnerable children, young people and their families. TFM was the government's key response to the 2015 Independent Review of Out of Home Care in New South Wales (known as 'the Tune Review').

The Tune Review found that, despite previous child protection reforms, the out of home care system was ineffective and unsustainable. It highlighted that the system was not client-centred and was failing to improve the long-term outcomes for vulnerable children and families. The review found that the greatest proportion of relevant expenditure was made in out of home care service delivery rather than in evidence-based early intervention strategies to support children and families when vulnerabilities first become evident to government services (such as missed school days or presentations to health services).

The then Department of Family and Community Services (FACS) designed the TFM reform initiatives, in consultation with central and human services agencies. A cross-agency board, senior officers group, and a new unit in the FACS cluster were established to drive the implementation of TFM. In the 2016–17 Budget, the government allocated $190 million over four years (2016–17 to 2019–20) to the reform. This resourced the design and commissioning of evidence-based pilots, data analytics work, staffing for the implementation unit and secretariat support for the board and cross-agency collaboration.

As part of the TFM reform, the Department of Premier and Cabinet, NSW Treasury and partnering agencies (NSW Health, Department of Education and Department of Justice) identified various existing programs that targeted vulnerable children and families (such as the preceding whole-of-government ‘Keep Them Safe’ reform coming to an end in June 2020). Funding for these programs, totalling $381 million in 2019–20, was combined to form a nominal ‘investment pool’. The government intended that the TFM Implementation Board would use this pool to direct and prioritise resource allocation to evidence-based interventions for vulnerable children and families in NSW.

This audit assessed whether TFM had effective governance and partnership arrangements in place to enable an evidence-based early intervention investment approach for vulnerable children and families in NSW. We addressed the audit objective with the following audit questions:

• Was the TFM reform driven by effective governance arrangements?
• Was the TFM reform supported by effective cross-agency collaboration?
• Has the TFM reform generated an evidence base to inform a cross-agency investment approach in the future?

The audit did not seek to assess the outcomes for children, young people and families achieved by TFM programs and projects.

Their Futures Matter (TFM) is a whole-of-government reform to deliver improved outcomes for vulnerable children, young people and their families.

Supported by a cross-agency TFM Board, and the TFM Unit in the then Department of Family and Community Services (FACS), the reform aimed to develop whole-of-government evidence-based early intervention investment approaches for vulnerable children and families in NSW.

Governance refers to the structures, systems and practices that an organisation has in place to:

• assign decision-making authorities and establish the organisation's strategic direction
• oversee the delivery of its services, the implementation of its policies, and the monitoring and mitigation of its key risks
• report on its performance in achieving intended results, and drive ongoing improvements.

We examined whether the TFM reform was driven by effective governance arrangements and cross-agency collaboration.

The reform agenda and timeframe set down for Their Futures Matter (TFM) were ambitious. This chapter assesses whether the TFM Board and TFM Unit had the capability, capacity and clout within government to deliver the reform agenda.

Creating a robust evidence base was important for Their Futures Matter, in order to:

• identify effective intervention strategies to improve supports and outcomes for vulnerable children and families
• make efficient use of taxpayer money to assist the maximum number of vulnerable children and families
• inform the investment-based approach for future funding allocation.

This chapter assesses whether the TFM reform has developed an evidence base to inform cross-agency investment decisions.

Appendix one – Response from agency

Appendix two – TFM governance entities

Appendix three – TFM Human Services Data Set

Appendix four – TFM pilot programs

Appendix five – About the audit

Appendix six – 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 #337 - released 24 July 2020

This report focuses on whether Destination NSW (DNSW) can demonstrate that its support for major events achieves value for money.

The audit found that DNSW’s processes for assessing and evaluating the major events it funds are mostly effective, but its public reporting does not provide enough transparency.

DNSW provides clear information to event organisers seeking funding and has a comprehensive methodology for conducting detailed event assessments. However, the reasons for decisions to progress events from the initial assessment to the detailed assessment stage are not documented in sufficient detail.

DNSW does not publish detailed information about the events it funds or the outcomes of these events. This means that members of the public are unable to see whether its activities achieve value for money. However, DNSW’s internal reporting to its key decision‑makers, including the CEO, the Board and the Minister is appropriate.

The Auditor-General made four recommendations to DNSW, aimed at improving the transparency of its activities, improving the documentation of decisions and certain compliance matters, and streamlining its approach to assessing and evaluating events that receive smaller amounts of funding.

Read full report (PDF)

Destination NSW (DNSW) provides funding to attract a range of major events to New South Wales, including high-profile professional sports matches and tournaments, musicals, art and museum exhibitions, and participation-focused events such as festivals and sports events that members of the public can enter. The NSW Government's rationale for providing funding is to encourage event organisers to hold events in New South Wales, and to ensure that events held in New South Wales maximise the potential for attracting overseas and interstate visitors.

This audit assessed whether DNSW can demonstrate that its support for major events achieves value for money. In making this assessment, the audit examined whether:

• DNSW effectively assesses proposals to support major events
• DNSW effectively evaluates the impact of its support for major events.

This audit focused on DNSW's work to attract major events to New South Wales. It did not assess DNSW's tourism promotion or development work, which includes developing tourism strategies, marketing and advertising campaigns, national and international partnerships, and regional programs.

Appendix one – Response from Destination NSW

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 #332 - released 9 April 2020.

The Auditor-General for New South Wales, Margaret Crawford, released her report today on the results of the financial audits of NSW Government central agencies. The report focuses on key observations and findings from the most recent financial statement audits of agencies in the Treasury, Premier and Cabinet, and Finance, Services and Innovation clusters. While clear audit opinions were issued on all agency financial statements, the report notes that some complex accounting requirements caused significant errors in agency financial statements submitted for audit, which were corrected before the financial statements were approved. 

This report analyses the results of our audits of the Treasury, Premier and Cabinet and Finance, Services and Innovation cluster agencies for the year ended 30 June 2018. The table below summarises our key observations.

This report provides parliament and other users of the NSW Government's central agencies and their cluster agencies financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:

• financial reporting
• audit observations
• liquidity risk management
• government financial services.

The central agencies and their key responsibilities are set out below.

A full list of agencies that this report covers by relevant cluster is included in Appendix three.

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 Treasury, Premier and Cabinet and Finance, Services and Innovation clusters for 2018.

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 Treasury, Premier and Cabinet and Finance, Services and Innovation cluster for 2018
• the areas of focus identified in the Audit Office work program.

The Audit Office work program provides a summary of all audits to be conducted within the proposed time period as well as detailed information on the areas of focus for each of the NSW Government clusters.

This chapter outlines our audit observations, conclusions and recommendations specific to NSW Government agencies providing financial services.

Appendix one - List of 2018 recommendations

Appendix two - Status of 2017 recommendations

Appendix three - Cluster agencies

Appendix four - Timeliness of financial reporting and audit reporting

Appendix five - Management letter findings by risk rating

Appendix six – Financial data

The Auditor-General for New South Wales Margaret Crawford found that as NSW state government agencies’ digital footprint increases they need to do more to address new and emerging information technology (IT) risks. This is one of the key findings to emerge from the second stand-alone report on internal controls and governance of the 40 largest NSW state government agencies.

This report analyses the internal controls and governance of the 40 largest agencies in the NSW public sector for the year ended 30 June 2018.

This report covers the findings and recommendations from our 2017–18 financial audits that relate to internal controls and governance at the 40 largest agencies (refer to Appendix three) in the NSW public sector.

This report offers insights into internal controls and governance in the NSW public sector

This is our second report dedicated to internal controls and governance at NSW State Government agencies. The report provides insights into the effectiveness of controls and governance processes in the NSW public sector by:

• highlighting the potential risks posed by weaknesses in controls and governance processes
• helping agencies benchmark the adequacy of their processes against their peers
• focusing on new and emerging risks, and the internal controls and governance processes that might address those risks.

Without strong governance systems and internal controls, agencies increase the risks associated with effectively managing their finances and delivering services to citizens. The way agencies deliver services increasingly relies on contracts and partnerships with the private sector. Many of these arrangements deliver front line services, but others provide less visible back office support. For example, an agency may rely on an IT service provider to manage a key system used to provide services to the community. The contract and service level agreements are only truly effective where they are actively managed to reduce risks to continuous quality service delivery, such as interruptions caused by system outages, cyber security attacks and data security breaches.

Our audits do not review all aspects of internal controls and governance every year. We select a range of measures, and report on those that present heightened risks for agencies to mitigate. This report divides these into the following five areas:

1. Internal control trends
2. Information technology (IT), including IT vendor management
3. Transparency and performance reporting
4. Management of purchasing cards and taxis
5. Fraud and corruption control.

The findings in this report should not be used to draw conclusions on the effectiveness of individual agency control environments and governance arrangements. Specific financial reporting, controls and service delivery comments are included in the individual 2018 cluster financial audit reports, which will be tabled in Parliament from November to December 2018.

The focus of the report has changed since last year

Last year's report topics included asset management, ethics and conduct, and risk management. We are reporting on new topics this year. We plan to introduce new topics and re-visit our previous topics in subsequent reports on a cyclical basis. This will provide a baseline against which to measure the NSW public sectors’ progress in implementing appropriate internal controls and governance processes to mitigate existing, new and emerging risks in the public sector.

Agencies selected for the volume account for 95 per cent of the state's expenditure

While we have covered only 40 agencies in this report, those selected are a large enough group to identify common issues and insights. They represent about 95 per cent of total expenditure for all NSW public sector agencies.

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 findings, level of risk and the most common deficiencies we found across agencies. The rest of this volume presents this year’s controls and governance findings in more detail.

Government agencies’ financial reporting is now heavily reliant on information technology (IT). IT is also increasingly important to the delivery of agency services. These systems often provide the data to help monitor the efficiency and effectiveness of agency processes and services they deliver. Our audits reviewed whether agencies have effective controls in place to manage both key financial systems and IT service contracts.

This chapter outlines our audit observations, conclusions and recommendations from our review of how agencies reported their performance in their 2016–17 annual reports. The Annual Reports (Statutory Bodies) Regulation 2015 and Annual Reports (Departments) Regulation 2015 (annual reports regulation) currently prescribes the minimum requirements for agency annual reports.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency preventative and detective controls over purchasing card and taxi use for 2017–18.

Fraud and corruption control is one of the 17 key elements of our governance lighthouse. Recent reports from ICAC into state agencies and local government councils highlight the need for effective fraud control and ethical frameworks. Effective frameworks can help protect an agency from events that risk serious reputational damage and financial loss.

Our 2016 Fraud Survey found the NSW Government agencies we surveyed reported 1,077 frauds over the three year period to 30 June 2015. For those frauds where an estimate of losses was made, the reported value exceeded $10.0 million. The report also highlighted that the full extent of fraud in the NSW public sector could be higher than reported because:

• unreported frauds in organisations can be almost three times the number of reported frauds
• our 2015 survey did not include all NSW public sector agencies, nor did it include any NSW universities or local councils
• fraud committed by citizens such as fare evasion and fraudulent state tax self-assessments was not within the scope of our 2015 survey
• agencies did not estimate a value for 599 of the 1,077 (56 per cent) reported frauds.

Commissioning and outsourcing of services to the private sector and the advancement of digital technology are changing the fraud and corruption risks agencies face. Fraud risk assessments should be updated regularly and in particular where there are changes in agency business models. NSW Treasury Circular TC18-02 NSW Fraud and Corruption Control Policy now requires agencies develop, implement and maintain a fraud and corruption control framework, effective from 1 July 2018. 

Our Fraud Control Improvement Kit provides guidance and practical advice to help organisations implement an effective fraud control framework. The kit is divided into ten attributes. Three key attributes have been assessed below; prevention, detection and notification systems.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency fraud and corruption controls for 2017–18.

Appendix one - List of 2018 recommendations

Appendix two - Status of 2017 recommendations

Appendix three - Cluster agencies

NSW Government agencies engage consultants to provide professional advice to inform their decision‑making. The spend on consultants is measured and reported in different ways for different purposes and the absence of a consistently applied definition makes quantification difficult.

The NSW Government’s procurement principles aim to help agencies obtain value for money and be fair, ethical and transparent in their procurement activities. All NSW Government agencies, with the exception of State Owned Corporations, must comply with the NSW Procurement Board’s Direction when engaging suppliers of business advisory services. Business advisory services include consultancy services. NSW Government agencies must disclose certain information about their use of consultants in their annual reports. The table below illustrates the detailed procurement and reporting requirements.

We examined how 12 agencies complied with their procurement and reporting obligations for consultancy services between 1 July 2016 and 31 March 2018. Participating agencies are listed in Appendix two. We also examined how NSW Procurement supports the functions of the NSW Procurement Board within the Department of Finance, Services and Innovation.

This audit assessed:

• agency compliance with relevant procurement requirements for their use of consultants
• agency compliance with disclosure requirements about consultancy expenditure in their annual reports 
• the effectiveness of the NSW Procurement Board (the Board) in fulfilling its functions to oversee and support agency procurement of consultancy services. 

Appendix one - Response from agencies

Appendix two - List of selected agencies

Appendix three - Performance auditing

The HealthRoster system is delivering some business benefits but Local Health Districts are yet to use all of its features, according to a report released today by the Auditor-General for New South Wales,  Margaret Crawford. HealthRoster is an IT system designed to more effectively roster staff to meet the needs of Local Health Districts and other NSW health agencies.

The NSW public health system employs over 100,000 people in clinical and non-clinical roles across the state. With increasing demand for services, it is vital that NSW Health effectively rosters staff to ensure high quality and efficient patient care, while maintaining good workplace practices to support staff in demanding roles.

NSW Health is implementing HealthRoster as its single state-wide rostering system to more effectively roster staff according to the demands of each location. Between 2013–14 and 2016–17, our financial audits of individual LHDs had reported issues with rostering and payroll processes and systems.

NSW Health grouped all Local Health Districts (LHDs), and other NSW Health organisations, into four clusters to manage the implementation of HealthRoster over four years. Refer to Exhibit 4 for a list of the NSW Health entities in each cluster.

• Cluster 1 implementation commenced in 2014–15 and was completed in 2015–16.
• Cluster 2 implementation commenced in 2015–16 and was completed in 2016–17.
• Cluster 3 began implementation in 2016–17 and was underway during the conduct of the audit.
• Cluster 4 began planning for implementation in 2017–18.

Full implementation, including capability for centralised data and reporting, is planned for completion in 2019.

This audit assessed the effectiveness of the HealthRoster system in delivering business benefits. In making this assessment, we examined whether:

• expected business benefits of HealthRoster were well-defined
• HealthRoster is achieving business benefits where implemented.

The HealthRoster project has a timespan from 2009 to 2019. We examined the HealthRoster implementation in LHDs, and other NSW Health organisations, focusing on the period from 2014, when eHealth assumed responsibility for project implementation, to early 2018.

Appendix one - Response from agency

Appendix two - About the audit

Appendix three - Performance auditing

Parliamentary reference - Report number #301 - released 7 June 2018