Reports
Actions for Cyber security in local government
Cyber security in local government
What this report is about
NSW local councils provide a wide range of essential services and infrastructure to their communities and are increasingly reliant on digital technologies.
Councils need to manage cyber security risks to ensure their information, data and systems are appropriately safeguarded. Councils also need to be prepared to detect, respond and recover when a cyber security incident occurs.
The audit assessed how effectively three selected councils identified and managed cyber security risks.
The audit also included the Department of Planning, Housing and Infrastructure (Office of Local Government) and Department of Customer Service (Cyber Security NSW), due to their roles in providing guidance and support to local councils.
Audit findings
The audit found that the selected councils are not effectively identifying and managing cyber security risks. Each of the councils undertook activities to improve their cyber security during the audit period, but this audit found significant gaps in their cyber security risk management and cyber security processes.
Such gaps result in unmitigated risks to the security of information and assets which, if compromised, could impact their local communities, service delivery and public infrastructure.
Cyber Security NSW and the Office of Local Government recommend that councils adopt requirements in the Cyber Security Guidelines for Local Government, but could do more to monitor whether the Guidelines are enabling better cyber security risk management in the sector.
Audit recommendations
In summary, the councils should:
- integrate assessment and monitoring of cyber security risks into corporate governance processes
- self-assess their performance against Cyber Security NSW's guidelines for local government
- develop and implement a risk-based cyber security improvement plan and program of activities
- develop, implement and test a cyber incident response plan.
Cyber Security NSW and the Office of Local Government should regularly consult on cyber security risks facing local government, and review the effectiveness of guidelines and related resources for the sector.
While this report focuses on the performance of the selected councils, the findings and recommendations should be considered by all councils to better understand their risks and challenges relevant to managing cyber security risks.
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Parliamentary reference - Report number #392- released 26 March 2024
Actions for Local Government 2023
Local Government 2023
What this report is about
Results of the local government sector financial statement audits for the year ended 30 June 2023.
Findings
Unqualified audit opinions were issued for 85 councils, eight county councils and 12 joint organisations.
Qualified audit opinions were issued for 36 councils due to non-recognition of rural firefighting equipment vested under section 119(2) of the Rural Fires Act 1997.
The audits of seven councils, one county council and one joint organisation remain in progress at the date of this report due to significant accounting issues.
Fifty councils, county councils and joint organisations missed the statutory deadline of submitting their financial statements to the Office of Local Government, within the Department of Planning, Housing and Infrastructure, by 31 October.
Audit management letters included 1,131 findings with 40% being repeat findings and 91 findings being high-risk. Governance, asset management and information technology continue to represent 65% of the key areas for improvement.
Fifty councils do not have basic governance and internal controls to manage cyber security.
Recommendations
To improve quality and timeliness of financial reporting, councils should:
- adopt early financial reporting procedures, including asset valuations
- ensure integrity and completeness of asset source records
- perform procedures to confirm completeness, accuracy and condition of vested rural firefighting equipment.
To improve internal controls, councils should:
- track progress of implementing audit recommendations, and prioritise high-risk repeat issues
- continue to focus on cyber security governance and controls.
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Actions for Regulation insights
Regulation insights
What this report is about
In this report, we present findings and recommendations relevant to regulation from selected reports between 2018 and 2024.
This analysis includes performance audits, compliance audits and the outcomes of financial audits.
Effective regulation is necessary to ensure compliance with the law as well as to promote positive social and economic outcomes and minimise risks with certain activities.
The report is a resource for public sector leaders. It provides insights into the challenges and opportunities for more effective regulation.
Audit findings
The analysis of findings and recommendations is structured around four key themes related to effective regulation:
- governance and accountability
- processes and procedures
- data and information management
- support and guidance.
The report draws from this analysis to present insights for agencies to promote effective regulation. It also includes relevant examples from recent audit reports.
In this report, we also draw out insights for agencies that provide a public sector stewardship role.
The report highlights the need for agencies to communicate a clear regulatory approach. It also emphasises the need to have a consistent regulatory approach, supported by robust information about risks and accompanied with timely and proportionate responses.
The report highlights the need to provide relevant support to regulated parties to facilitate compliance and the importance of transparency through reporting of meaningful regulatory information.
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Actions for Driver vehicle system
Driver vehicle system
What this report is about
Transport for NSW (TfNSW) uses the Driver vehicle System (DRIVES) to support its regulatory functions. The system covers over 6.2 million driver licences and over seven million vehicle registrations.
DRIVES first went live in 1991 and has been significantly extended and updated since, though is still based around the same core system. The system is at end of life but has become an important service for Service NSW and the NSW Police Force.
DRIVES now includes some services to other parts of government and non-government entities which have little or no connection to transport. There are 141 users of DRIVES in total, including commercial insurers, national regulators, and individual citizens.
This audit assessed whether TfNSW is effectively managing DRIVES and planning to transition it to a modernised system.
Audit findings
TfNSW has not effectively planned the replacement of DRIVES.
It is now working on its third business case for a replacement system but has failed to learn lessons from its past attempts.
In the meantime, TfNSW has not taken a strategic approach to managing DRIVES’ growth.
TfNSW has been slow to reduce the risk of misuse of personal information held in DRIVES. With its delivery partner Service NSW, TfNSW has also been slow to develop and implement automatic monitoring of access.
TfNSW uses recognised processes for managing most aspects of DRIVES, but has not kept the system consistently available for users. TfNSW has lacked accurate service availability information since June 2022, when it changed its technology support provider.
TfNSW needs to significantly prioritise cyber security improvements to DRIVES. TfNSW is seeking to lift DRIVES’ cyber defences, but it will not achieve its stated target safeguard level until December 2025.
Even then, one of the target safeguards will not be achieved in full until DRIVES is modernised.
Audit recommendations
TfNSW should:
- implement a service management framework including insight into the views of DRIVES users, and ensuring users can influence the service
- ensure it can accurately and cost effectively calculate when DRIVES is unavailable due to unplanned downtime
- ensure implementation of a capability to automatically detect anomalous patterns of access to DRIVES
- ensure that DRIVES has appropriate cyber security and resilience safeguards in place as a matter of priority
- develop a clear statement of the future role in whole of government service delivery for the system
- resolve key issues currently faced by the DRIVES replacement program including by:
- clearly setting out a strategy and design for the replacement
- preparing a specific business case for replacement.
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Parliamentary reference - Report number #388 - released 20 February 2024
Actions for Transport 2023
Transport 2023
What this report is about
Result of the Transport portfolio of agencies' financial statement audits for the year ended 30 June 2023.
The audit found
Unqualified audit opinions were issued for all Transport portfolio agencies.
An 'emphasis of matter' paragraph was included in the Transport Asset Holding Entity of New South Wales' (TAHE) independent auditor's report, which draws attention to management's disclosure regarding proposed changes to TAHE's operating model.
Government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE's assets.
Transport for NSW's valuation of roads and bridges resulted in a net increase to its asset value by $15.7 billion.
Transport for NSW and Sydney Metro have capitalised over $300 million of tender bid costs paid to unsuccessful tender bidders relating to significant infrastructure projects. Whilst NSW Treasury policy provides clarity on the reimbursement of unsuccessful bidders' costs, clearer guidance on how to account for these costs in agency's financial statements is required.
The key audit issues were
The number of issues reported to management decreased from 53 in 2021–22 to 49 in 2022–23.
High-risk findings include:
- gaps in how Sydney Metro manages its contractors and how conflicts of interest are recorded and managed
- future financial reporting implications to account for government's proposed changes to TAHE's future operating model, including asset valuations and control assessments of assets and operations
- Parramatta Park Trust's tree assets' valuation methodology needs to be addressed.
Recommendations were made to address the identified deficiencies.
This report provides Parliament and other users of the Transport 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 Transport portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all the portfolio agencies’ 30 June 2023 financial statements.
- An 'Emphasis of Matter' paragraph was included in the Transport Asset Holding Entity of New South Wales’ (TAHE) Independent Auditor's Report to draw attention to management's disclosure regarding the proposed changes to TAHE's future operating model.
- The total number of errors (including corrected and uncorrected) in the financial statements increased by 59% compared to the prior year.
- The recent government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE’s assets.
- Transport for NSW needs to further improve its quality assurance processes over comprehensive valuations, in particular, ensuring key inputs used in the valuations are properly supported and verified.
- Transport for NSW and Sydney Metro capitalised over $300 million of bid costs paid to unsuccessful bidders. NSW Treasury’s Bid Cost Contributions Policy does not contemplate how these costs should be recognised in agency’s financial statements. Transport agencies should work with NSW Treasury to develop an accounting policy for the bid cost contributions to ensure consistent application across the sector.
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 Transport portfolio.
Section highlights
- The 2022–23 audits identified four high risks and 28 moderate risk issues across the portfolio. Thirty-nine per cent of issues were repeat findings.
- Four high risk findings include:
- TAHE’s asset valuations (new)
- TAHE’s control of assets and operations (new)
- Sydney Metro’s management of contractors and conflicts of interest (new)
- Parramatta Park Trust’s valuation of trees (repeat).
- The total number of findings decreased from 53 in 2021–22 to 49 in 2022–23. Many repeat findings related to control weaknesses over the asset valuation, payroll processes, conflicts of interest and information technology user access administration.
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.
Actions for Planning and Environment 2023
Planning and Environment 2023
What this report is about
Results of the Planning and Environment portfolio financial statement audits for the year ended 30 June 2023.
The audit found
Unqualified audit opinions were issued for all completed Planning and Environment portfolio agencies. Seven audits are ongoing.
The Catholic Metropolitan Cemeteries Trust (CMCT) did not comply with its obligations under the Government Sector Finance Act 2018 (GSF Act) to prepare and submit financial statements for audit.
The Department of Planning and Environment (the department) has not yet provided their assessment of the financial reporting requirements for the 579 Category 2 Statutory Land Managers (SLMs) for 2022–23.
One-hundred-and-nineteen Commons Trusts are non-compliant with the GSF Act as they have not submitted their financial statements for audit.
We issued unqualified opinions on the Water Administration Ministerial Corporation's 2020–21, 2021–22 and 2022–23 financial statements.
The number of monetary misstatements identified in our audits decreased from 59 in 2021–22 to 51 in 2022–23, however the gross value of misstatements increased.
The key audit issues were
The former Resilience NSW and NSW Reconstruction Authority (the Authority) re-assessed the accounting implications arising from contractual agreements relating to temporary housing assets associated with the Northern Rivers Temporary Homes Program. This resulted in adjustments to recognise the associated assets and liabilities.
We continue to identify significant deficiencies in NSW Crown land information records.
The department has not been effective in addressing the differing practices for the financial reporting of rural firefighting equipment vested to councils under section 119 (2) of the Rural Fires Act 1997.
The number of findings across the portfolio reported to management increased from 132 in 2021–22 to 140 in 2022–23. Thirty per cent of issues were repeated from the prior year.
Seven high-risk issues were identified. These related to the findings outlined above, deficiencies in quality reviews of asset valuations, internal control processes and IT general controls.
The audit recommended
Recommendations were made to the department and portfolio agencies to address these deficiencies.
This report provides Parliament and other users of the Planning and Environment portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
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financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Planning and Environment portfolio of agencies (the portfolio) for 2023.
Section highlights
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Unqualified audit opinions were issued on all completed 30 June 2023 financial statements audits of portfolio agencies. Seven audits are ongoing.
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We have been unable to commence audits of the Catholic Metropolitan Cemeteries Trust (CMCT). NSW Treasury's position remains that the Catholic CMCT is a controlled entity of the State for financial reporting purposes. This means CMCT is a Government Sector Finance (GSF) agency and is obliged under Section 7.6 of the Government Sector Finance Act 2018 (GSF Act) to prepare financial statements and submit them to the Auditor-General for audit. To date, CMCT has not met its statutory obligations under the GSF Act.
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The Department of Planning and Environment has not yet provided their assessment against the reporting exemption requirements in the Government Sector Finance Regulation 2018 (GSF Regulation) for the estimated 579 Category 2 Statutory Land Managers (SLMs) or 119 Commons Trusts for 2022–23 and no Category 2 SLM or Commons Trust has submitted its 2022–23
financial statements for audit. Consequently, the lack of compliance with reporting requirements by these 698 agencies presents a challenge to obtaining reliable financial data for these agencies for the purposes of consolidation to the Total State Sector Accounts.
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The audits of the Water Administration Ministerial Corporation's (WAMC) financial statements for the years ended 30 June 2021 and 30 June 2022 were completed in June 2023 and unqualified audit opinions issued. The 30 June 2023 audit was completed and an unqualified audit opinion was issued on 12 October 2023.
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The number of reported corrected misstatements decreased from 46 in 2021–22 to 36, however the gross value of misstatements increased from $73 million in 2021–22 to $491.8 million in 2022–23.
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Portfolio agencies met the statutory deadline for submitting their 2022–23 early close financial statements and other mandatory procedures.
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A change to the NSW paid parental leave scheme, effective October 2023, created a new legal obligation that needed to be recognised by impacted government agencies. Impact to the agencies' financial statements were not material.
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 portfolio.
Section highlights
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The number of findings across the portfolio reported to management increased from 132 in 2021–22 to 140 in 2022–23 and 30% were repeat issues (34% in 2021–22).
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The 2022–23 audits identified seven high-risk and 76 moderate risk issues across the portfolio. Four of the high-risk issues were repeat issues, one was a repeat issue with the risk rating reassessed to high-risk in the current year and two were new findings in 2022–23.
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The former Resilience NSW and NSW Reconstruction Authority had previously assessed that they did not control the temporary housing assets associated with the administration of the Northern Rivers Temporary Homes Program, under relevant accounting standards. A re-assessment of the agreements was made subsequent to the submission of the Authority’s 2022–23 financial statements for audit, which determined that the Authority was the appropriate NSW Government agency to recognise these assets and associated liabilities not previously recognised by the Authority or the former Resilience NSW.
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There continues to be significant deficiencies in Crown land records. The department should continue to implement their data strategy and action plan to ensure the Crown land database is complete and accurate.
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Since 2017, the Audit Office has recommended that the department, through OLG should address the differing practices for the financial reporting of rural firefighting equipment vested to councils under section 119 (2) of the Rural Fires Act 1997. The department has not been effective in resolving this issue. In 2023, twenty-six of 108 completed audits of councils received qualified audit opinions on their 2023 financial statements (43 of 146 completed audits in 2022). Six councils had their qualifications for not recognising vested rural firefighting equipment removed in 2022–23.
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.
Actions for Regional NSW 2023
Regional NSW 2023
What this report is about
Results of the Regional NSW financial statements audits for the year ended 30 June 2023.
What we found
Unqualified audit opinions were issued on all completed audits in the Regional NSW portfolio agencies.
The number of monetary misstatements identified in our audits increased from 28 in 2021–22 to 30 in 2022–23.
What the key issues were
Effective 1 July 2023, staff employed in the Northern Rivers Reconstruction Corporation Division of the Department of Regional NSW transferred to the NSW Reconstruction Authority Staff Agency.
The Regional NSW portfolio agencies were migrated into a new government wide enterprise resourcing planning system.
The total number of audit management letter findings across the portfolio of agencies decreased from 36 to 23.
A high risk matter was raised for the NSW Food Authority to improve the internal controls in the information technology environment including monitoring and managing privilege user access.
What we recommended
Local Land Services should prioritise completing all mandatory early close procedures.
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 management letters.
This report provides Parliament and other users of the Regional NSW 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 Regional NSW portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all completed 30 June 2023 financial statements audits of the portfolio agencies. Two audits are ongoing.
- The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
- Portfolio agencies met the statutory deadline for submitting their 2022–23 early close financial statements and other mandatory procedures.
- Portfolio agencies continue to provide financial assistance to communities affected by natural disasters.
- A change to the NSW paid parental leave scheme, effective October 2023, created a new legal obligation that needed to be recognised by impacted government agencies. Impact to the agencies' financial statements were not material.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Regional NSW portfolio.
Section highlights
- The 2022–23 audits identified one high risk and nine moderate risk issues across the portfolio. Of these, one was a moderate risk repeat issue.
- The total number of findings decreased from 36 to 23 which mainly related to deficiencies in internal controls.
- The high risk matter relates to the monitoring and managing of privilege user access at NSW Food Authority.
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.
Actions for Local Government 2022
Local Government 2022
This report is about
Results of the local government sector financial statement audits for the year ended 30 June 2022.
What we found
Unqualified audit opinions were issued for 83 councils, 11 joint organisations and nine county councils' financial statements.
The financial audits for two councils and two joint organisations are in progress due to accounting issues.
Fifty-seven councils and joint organisations (2021: 41) required extensions to submit their financial statements to the Office of Local Government (OLG), within the Department of Planning and Environment (the department).
The audit opinion on Kiama Municipal Council's 30 June 2021 financial statements was disclaimed due to deficient books and records.
Qualified audit opinions were issued on 43 councils' financial statements due to non-recognition of rural firefighting equipment vested under section 119 (2) of the Rural Fires Act 1997. Forty-seven councils appropriately recognised this equipment.
What we recommended
Consistent with the NSW Government's accounting position and the department's role of assessing councils' compliance with legislative responsibilities, standards or guidelines, the department should intervene where councils do not recognise vested rural firefighting equipment.
The key issues
There were 1,045 audit findings reported to councils in audit management letters, with 52% being unresolved from prior years.
What we recommended
Councils need to track progress of implementing audit recommendations, giving priority to high-risk and repeat issues.
Ninety-three high-risk matters were identified across the sector mainly relating to asset management, information technology, financial accounting and council governance procedures.
Asset valuations
Audit management letters reported 267 findings relating to asset management. Fifty-three councils had deficiencies in processes that ensure assets are fairly stated.
What we recommended
Councils need to complete timely asset valuations (repeat recommendation).
Integrity and completeness of asset source records
Fifty-two councils had weak processes over the integrity of fixed asset registers.
What we recommended
Councils need to improve controls that ensure integrity of asset records (repeat recommendation).
Cybersecurity
Our audits found that 47% of councils did not have a cyber security plan.
What we recommended
All councils need to prioritise creation of a cyber security plan to ensure data and assets are safeguarded.
Pursuant to the Local Government Act 1993 I am pleased to present my Auditor-General's report on Local Government 2022. My report provides the results of the 2021–22 financial audits of 126 councils, 11 joint organisations and nine county councils. The audits for two councils and two joint organisations are in progress due to significant accounting issues.
Unqualified audit opinions were issued for 83 councils, 11 joint organisations and nine county councils' 2021–22 financial statements. The statements for 43 councils were qualified due to non-recognition of rural firefighting equipment vested under section 119 (2) of the Rural Fires Act 1997. And the audit opinion on Kiama Municipal Council's 30 June 2021 financial statements was disclaimed due to deficiencies in books and records.
This year has again been challenging for many New South Wales local councils still recovering from the impact of emergency events and facing cost and resourcing pressures. We appreciate the efforts of council staff and management in meeting their financial reporting obligations. We share a mutual interest in raising the standard of financial management in this sector, and the importance of accurate and transparent reporting.
Disappointingly, accounting for the value of rural firefighting equipment vested in councils continued to be an unnecessary distraction and resulted in 43 councils having their financial statements qualified. We continue to recommend that the Office of Local Government should intervene where councils fail to comply with Australian Accounting Standards by not recognising assets vested to them under section 119(2) of the Rural Fires Act 1997.
Sound financial management is critical to councils' ability to instil trust and properly serve their communities. The recommendations in this report are intended to further improve their financial management and reporting capability, and encourage sound governance arrangements and cyber resilience. I am committed to continuing this work with councils in the 2022–23 year and beyond.
Margaret Crawford PSM
Auditor-General for New South Wales
Financial reporting is an important element of good governance. Confidence in and transparency of public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines audit observations related to the financial reporting audit results of councils and joint organisations.
Section highlights
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A strong system of internal controls enables councils to operate effectively and efficiently, produce reliable financial reports, comply with laws and regulations, and support ethical government.
This chapter outlines the overall trends in governance and internal controls across councils and joint organisations in 2021–22.
Financial audits focus on key governance matters and internal controls supporting the preparation of councils’ financial statements. Breakdowns and weaknesses in internal controls increase the risk of fraud and error. Deficiencies in internal controls, matters of governance interest and unresolved issues are reported to management and those charged with governance through audit management letters. These letters include our observations, related implications, recommendations and risk ratings.
Section highlights
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Total number of findings reported in audit management letters decreased
The following shows the overall findings of the 2021–22 audits reported in management letters compared with the previous year.
Appendix two – Status of audits
Appendix three – Councils received qualified audit opinions
Appendix four – Common reasons for council extensions
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for Natural disasters
Natural disasters
What this report is about
This report draws together the financial impact of natural disasters on agencies integral to the response and impact of natural disasters during 2021–22.
What we found
Over the 2021–22 financial year $1.4 billion from a budget of $1.9 billion was spent by the NSW Government in response to natural disasters.
Total expenses were less than the budget due to underspend in the following areas:
- clean-up assistance, including council grants
- anticipated temporary accommodation support
- payments relating to the Northern Rivers Business Support scheme for small businesses.
Natural disaster events damaged council assets such as roads, bridges, waste collection centres and other facilities used to provide essential services. Additional staff, contractors and experts were engaged to restore and repair damaged assets and minimise disruption to service delivery.
At 30 June 2022, the estimated damage to council infrastructure assets totalled $349 million.
Over the first half of the 2022–23 financial year, councils experienced further damage to infrastructure assets due to natural disasters. NSW Government spending on natural disasters continued with a further $1.1 billion spent over this period.
Thirty-six councils did not identify climate change or natural disaster as a strategic risk despite 22 of these having at least one natural disaster during 2021–22.
Section highlights
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Section highlights
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Actions for Universities 2022
Universities 2022
What this report is about
Results of the financial statement audits of the public universities in NSW for the year ended 31 December 2022.
What we found
Unmodified audit opinions were issued for all ten universities.
Nine universities reported net deficits in 2022, and all showed a decline from their 2021 results.
Results were impacted by a decline in investment income and government grants.
Wage remediation provisions across the universities increased by 116% to $110 million at 31 December 2022.
Expenditure increased as universities transitioned back to face-to-face teaching with the lifting of most COVID-19 restrictions.
Revenue from overseas students decreased by 0.5% overall in 2022, although not all universities were impacted equally.
Nearly 42% of fees and charges revenue came from overseas student revenue from three countries of origin (43% in 2021).
What the key issues were
We reported 88 findings to universities on internal control deficiencies (105 in 2021).
Six high risk findings were identified (four in 2021), relating to:
- IT control deficiencies in monitoring privileged user access
- password configuration
- cyber security process improvements
- lack of security over access to EFT payment files
- the status of a university's work in assessing its liability for underpayment of staff
- inadequate review of contracts leading to incorrect accounting treatments.
Two out of 13 entities reported financial losses from cyber incidents in 2022.
Retention policies on personally identifiable information (PII) vary and universities can further reduce their PII exposure risk from cyber attack.
What we recommended
Universities should:
- conduct a comprehensive assessment of their employment agreements and historical pay practices to identify potential underpayments
- prioritise actions to address repeat findings on internal control deficiencies in a timely manner
- review their PII retention policies to ensure PII stored is limited to the entity's needs, held only for the minimum duration it is legally and operationally required, and access is strictly limited.
This report provides Parliament with the results of our financial audits of universities in New South Wales and their controlled entities in 2022, including our analysis, observations and recommendations in the following areas:
- financial reporting
- internal controls and governance
- teaching and research.
Financial reporting is an important element of good governance. Confidence and transparency in university sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of universities in NSW for 2022.
Section highlights
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Appropriate financial controls help to ensure the efficient and effective use of resources and administration of policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of NSW universities.
Our audits do not review all aspects of internal controls and governance every year. The more significant issues and risks are included in this chapter. These, along with the less significant matters, are reported to universities for management to address.
Section highlights
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Universities' primary objectives are teaching and research. They invest most of their resources aiming to achieve quality outcomes in academia and student experience. Universities have committed to achieving certain government targets and compete to advance their reputation and their standing in international and Australian rankings.
This chapter outlines teaching and research outcomes for universities in NSW for 2022.
Section highlights
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Appendix one – List of 2022 recommendations
Appendix two – Status of 2021 recommendations
Appendix three – Universities' controlled entities
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.