Reports
Actions for Flood housing response
Flood housing response
What this report is about
Extreme rainfall across eastern Australia in 2021 and 2022 led to a series of major flood events in New South Wales.
This audit assessed how effectively the NSW Government provided emergency accommodation and temporary housing in response to the early 2022 Northern Rivers and late 2022 Central West flood events.
Responsible agencies included in this audit were the Department of Communities and Justice, NSW Reconstruction Authority, the former Department of Planning and Environment, the Department of Regional NSW and the Premier’s Department.
Findings
The Department of Communities and Justice rapidly provided emergency accommodation to displaced persons immediately following these flood events.
There was no plan in place to guide a temporary housing response and agencies did not have agency-level plans for implementing their responsibilities.
The NSW Government rapidly procured and constructed temporary housing villages. However, the amount of temporary housing provided did not meet the demand.
There is an extensive waitlist for temporary housing and the remaining demand in the Northern Rivers is unlikely to be met. The NSW Reconstruction Authority has not reviewed this list to confirm its accuracy.
Demobilisation plans for the temporary housing villages have been developed, but there are no long-term plans in place for the transition of tenants out of the temporary housing.
Agencies are in the process of evaluating the provision of emergency accommodation and temporary housing.
The findings from the 2022 State-wide lessons process largely relate to response activities.
Audit recommendations
The NSW Reconstruction Authority should:
- Develop a plan for the provision of temporary housing.
- Review the temporary housing waitlist.
- Determine a timeline for demobilising the temporary housing villages.
- Develop a strategy to manage the transition of people into long-term accommodation.
- Develop a process for state-wide recovery lessons learned.
All audited agencies should:
- Finalise evaluations of their role in the provision of emergency accommodation and temporary housing.
- Develop internal plans for implementing their roles under state-wide plans.
Read the PDF report
Parliamentary reference - Report number #389 - released 22 February 2024
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:
-
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 Planning and managing bushfire equipment
Planning and managing bushfire equipment
What the report is about
This audit assessed the effectiveness of the NSW Rural Fire Service (RFS) and local councils in planning and managing equipment for bushfire prevention, mitigation, and suppression.
What we found
The RFS has focused its fleet development activity on modernising and improving the safety of its firefighting fleet, and on the purchase of new firefighting aircraft.
There is limited evidence that the RFS has undertaken strategic fleet planning or assessment of the capability of the firefighting fleet to respond to current bushfire events or emerging fire risks.
The RFS does not have an overarching strategy to guide its planning, procurement, or distribution of the firefighting fleet.
The RFS does not have effective oversight of fleet maintenance activity across the State, and is not ensuring the accuracy of District Service Agreements with local councils, where maintenance responsibilities are described.
What we recommended
- Develop a fleet enhancement framework and strategy that is informed by an assessment of current fleet capability, and research into appropriate technologies to respond to emerging fire risks.
- Develop performance measures to assess the performance and capabilities of the fleet in each RFS District by recording and publicly reporting on fire response times, fire response outcomes, and completions of fire hazard reduction works.
- Report annually on fleet allocations to RFS Districts, and identify the ways in which fleet resources align with district-level fire risks.
- Develop a strategy to ensure that local brigade volunteers are adequate in numbers and appropriately trained to operate fleet appliances in RFS Districts where they are required.
- Establish a fleet maintenance framework to ensure regular update of District Service Agreements with local councils.
- Review and improve processes for timely recording of fleet asset movements, locations, and maintenance status.
This audit assessed how effectively the NSW Rural Fire Service (the RFS) plans and manages the firefighting equipment needed to prevent, mitigate, and suppress bushfires. This audit also examined the role of local councils in managing bushfire equipment fleet assets. Local councils have vested legal ownership of the majority of the land-based firefighting fleet, including a range of legislated responsibilities to carry out fleet maintenance and repairs. The RFS has responsibilities to plan and purchase firefighting fleet assets, and ensure they are ready for use in response to fires and other emergencies.
This report describes the challenges in planning and managing the firefighting fleet, including a confusion of roles and responsibilities between the RFS and local councils in relation to managing certain land-based rural firefighting fleet – a point that has been made in our Local Government financial audits over several years. This role confusion is further demonstrated in the responses of the RFS and local councils to this audit report – included at Appendix one.
The lack of cohesion in roles and responsibilities for managing rural firefighting vehicles increases the risk that these firefighting assets are not properly maintained and managed, and introduces a risk that this could affect their readiness to be mobilised when needed.
While the audit findings and recommendations address some of the operational and organisational inefficiencies in relation to rural firefighting equipment management, they do not question the legislative arrangements that govern them. This is a matter for the NSW Government to consider in ensuring the fleet arrangements are fit for purpose, and are clearly understood by the relevant agencies.
The NSW Rural Fire Service (hereafter the RFS) is the lead combat agency for bushfires in New South Wales, and has the power to take charge of bushfire prevention and response operations anywhere in the State. The RFS has responsibilities to prevent, mitigate and suppress bushfires across 95% of the State, predominantly in the non-metropolitan areas of New South Wales. Fire and Rescue NSW is responsible for fire response activity in the cities and large townships that make up the remaining five per cent of the State.
The RFS bushfire fleet is an integral part of the agency's overall bushfire risk management. The RFS also uses this fleet to respond to other emergencies such as floods and storms, motor vehicle accidents, and structural fires. Fleet planning and management is one of a number of activities that is necessary for fire mitigation and suppression.
The Rural Fires Act 1997 (Rural Fires Act) imposes obligations on all landowners and land managers to prevent the occurrence of bushfires and reduce the risk of bushfires from spreading. Local councils have fire prevention responsibilities within their local government areas, principally to reduce fire hazards near council owned or managed assets, and minor roads.
The RFS is led by a Commissioner and is comprised of both paid employees and volunteer rural firefighters. Its functions are prescribed in the Rural Fires Act and related legislation such as the State Emergency Rescue Management Act 1989. The RFS functions are also described in Bush Fire Risk Management Plans, the State Emergency Management Plan, District Service Agreements, and RFS procedural documents. Some of the core responsibilities of the RFS include:
- preventing, mitigating, and suppressing fires across New South Wales
- recruiting and managing volunteer firefighters in rural fire brigades
- purchasing and allocating firefighting fleet assets to local councils
- establishing District Service Agreements with local councils to give the RFS permissions to use the fleet assets that are vested with local councils
- carrying out fleet maintenance and repairs when authorised to do so by local councils
- inspecting the firefighting fleet
- supporting land managers and private property owners with fire prevention activity.
In order to carry out its legislated firefighting functions, the RFS relies on land-based vehicles, marine craft, and aircraft. These different firefighting appliance types are referred to in this report as the firefighting fleet or fleet assets.
RFS records show that in 2021 there were 6,345 firefighting fleet assets across NSW. Most of the land-based appliances commonly associated with firefighting, such as water pumpers and water tankers, are purchased by the RFS and vested with local councils under the Rural Fires Act. The vesting of firefighting assets with local councils means that the assets are legally owned by the council for which the asset has been purchased. The RFS is able to use the firefighting assets through District Service Agreements with local councils or groups of councils.
In addition to the land-based firefighting fleet, the RFS owns a fleet of aircraft with capabilities for fire mitigation, suppression, and reconnaissance during fire events. The RFS hires a fleet of different appliances to assist with fire prevention and hazard reduction works. These include aircraft for firefighting and fire reconnaissance, and heavy plant equipment such as graders and bulldozers for hazard reduction. Hazard reduction works include the clearance of bush and grasslands around major roads and protected assets, and the creation and maintenance of fire trails and fire corridors to assist with fire response activity.
The RFS is organised into 44 RFS Districts and seven Area Commands. The RFS relies on volunteer firefighters to assist in carrying out most of its firefighting functions. These functions may include the operation of the fleet during fire response activities and training exercises, and the routine inspection of the fleet to ensure it is maintained according to fleet service standards. Volunteer fleet inspections are supervised by the RFS Fire Control Officer.
In 2021 there were approximately 73,000 volunteers located in 1,993 rural fire brigades across the State, making the RFS the largest volunteer fire emergency service in Australia. In addition to brigade volunteers, the RFS has approximately 1,100 salaried staff who occupy leadership and administrative roles at RFS headquarters and in the 44 RFS Districts.
Local councils have legislative responsibilities relating to bushfire planning and management. Some of the core responsibilities of local councils include:
- establishing and equipping rural fire brigades
- contributing to the Rural Fire Fighting Fund
- vested ownership of land-based rural firefighting equipment
- carrying out firefighting fleet maintenance and repairs
- conducting bushfire prevention and hazard reduction activity.
The objective of this audit was to assess the effectiveness of the RFS and local councils in planning and managing equipment for bushfire prevention, mitigation, and suppression. From the period of 2017 to 2022 inclusive, we addressed the audit objective by examining whether the NSW RFS and local councils effectively:
- plan for current and future bushfire fleet requirements
- manage and maintain the fleet required to prevent, mitigate, and suppress bushfires in NSW.
This audit did not assess:
- the operational effectiveness of the RFS bushfire response
- the effectiveness of personal protective equipment and clothing
- the process of vesting of rural firefighting equipment with local councils
- activities of any other statutory authorities responsible for managing bushfires in NSW.
As the lead combat agency for the bushfire response in NSW, the RFS has primary responsibility for bushfire prevention, mitigation, and suppression.
Three local councils were selected as case studies for this audit, Hawkesbury City Council, Wagga Wagga City Council and Uralla Shire Council. These case studies highlight the ways in which the RFS and local councils collaborate and communicate in rural fire districts.
Conclusion
The RFS has focused its fleet development activity on modernising and improving the safety of its land-based firefighting fleet, and on the purchase of new firefighting aircraft
The RFS has reduced the average age of the firefighting fleet from approximately 21 years in 2017, to approximately 16 years in 2022. The RFS has also enhanced the aerial fleet with the addition of six new aircraft to add to the existing three aircraft.
Recommendations from inquiries into the 2019–20 bushfires have driven significant levels of fleet improvement activity, mainly focused on the addition of safety features to existing fleet appliances. The RFS has dedicated most of its efforts to purchasing and refurbishing firefighting appliances of the same type and in the same volumes year on year.
However, the RFS is unable to demonstrate how the composition, size, or the locations of the NSW firefighting fleet is linked to current fire prevention, mitigation, and suppression requirements, or future fire risks.
There is limited evidence that the RFS has undertaken strategic fleet planning or assessment of the capability of the firefighting fleet to respond to current bushfire events or emerging fire risks
The RFS has not established a methodology to assess the composition or volumes of the firefighting fleet against fire activity and fire risks in the 44 NSW Rural Fire Districts. The RFS has not developed performance measures or targets to assess or report on fire response times in each of its districts, nor has it developed measures to assess the effectiveness of responses according to fire sizes and fire types. Similarly, the RFS has limited performance measures to assess fire prevention activity, or to assess fuel load reduction works, so it is not possible to assess whether its fleet capabilities are fit for these purposes.
The RFS does not have an overarching strategy to guide its planning, procurement, or distribution of the firefighting fleet
RFS fleet planning and fleet allocations are based on historical fleet sizes and compositions, and distributed to locations where there are appropriately trained brigade volunteers.
The RFS takes an asset protection approach to bushfire prevention and planning that is based on the Australian and New Zealand Standard for Risk Management. This approach requires that the RFS identify assets at risk of fire, and develop treatment plans to protect these assets. However, fleet requirements are not linked to NSW asset protection plans, meaning that fleet is not allocated according to the identified risks in these plans. Further, the RFS does not develop fire prevention plans for areas where there are no identified assets.
The RFS has not conducted future-focused fleet research or planning into technologies that match fleet capabilities to emerging or future fire risks. Since the significant fire events of 2019–2020, the RFS has not changed its approach to planning for, or assessing, the operational capabilities of the fleet. The RFS advises it is scoping a project to match resources to risk, which it plans to commence in 2023.
The RFS does not have effective oversight of fleet maintenance activity across the State, and is not ensuring the accuracy of District Service Agreements where maintenance responsibilities are described
The RFS does not have a framework to ensure that District Service Agreements with local councils are accurate. Almost two thirds of service agreements have not been reviewed in the last ten years, and some do not reflect actual maintenance practices. There is no formalised process to ensure communication occurs between the RFS and local councils for fleet management and maintenance.
RFS fleet management systems at the central level are not integrated with RFS district-level databases to indicate when fleet assets are in workshops being maintained and serviced. The RFS has a new centralised Computer Aided Dispatch System that relies on accurate fleet locations and fleet condition information in order to dispatch vehicles to incidents and fires. A lack of interface between the district-level fleet systems and the centralised RFS fleet dispatch system, may impact on operational responses to bushfires.
The RFS has not made significant changes to the size or composition of the firefighting fleet in the past five years and does not have an overarching strategy to drive fleet development
Since 2017, the RFS has made minimal changes to its firefighting fleet volumes or vehicle types. The RFS is taking a fleet renewal approach to fleet planning, with a focus on refurbishing and replacing ageing firefighting assets with newer appliances and vehicles of the same classification and type. While the RFS has adopted a fleet renewal approach, driven by its Appliance Replacement Program Guide, it does not have a strategy or framework to guide its future-focused fleet development. There is no document that identifies and analyses bushfire events and risks in NSW, and matches fleet resources and fleet technologies to meet those risks. The RFS does not have fleet performance measures or targets to assess whether the size and composition of the fleet is meeting current or emerging bushfire climate hazards, or fuel load risks across its 44 NSW Fire Districts.
The RFS fleet currently comprises approximately 4,000 frontline, operational firefighting assets such as tankers, pumpers, and air and marine craft, and approximately 2,300 logistical vehicles, such as personnel transport vehicles and specialist support vehicles. Of the land-based firefighting vehicles, the RFS has maintained a steady number of approximately 3,800 tankers and 65 pumpers, year on year, for the past five years. This appliance type is an essential component of the RFS land-based, firefighting fleet with capabilities to suppress and extinguish fires.
Since 2017, most RFS fleet enhancement activity has been directed to upgrades and the modernisation of older fleet assets with new safety features. There is limited evidence of research into new fleet technologies for modern firefighting. The RFS fleet volumes and fleet types have remained relatively static since 2017, with the exception of the aerial firefighting fleet. Since 2017, the RFS has planned for, and purchased, six additional aircraft to add to the existing three aircraft in its permanent fleet.
While the RFS has made minimal changes to its fleet since 2017, in 2016 it reduced the overall number of smaller transport vehicles, by purchasing larger vehicles with increased capacity for personnel transport. The consolidation of logistical and transport vehicles accounts for an attrition in fleet numbers from 7,058 in 2016, to 6,315 in 2017 as shown in Exhibit 2.
The firefighting fleet management system is not always updated in a timely manner due to insufficient RFS personnel with permissions to make changes in the system
The RFS uses a fleet management system known as SAP EAM to record the location and status of firefighting fleet assets. The system holds information about the condition of the firefighting fleet, the home location of each fleet asset, and the maintenance, servicing, and inspection records of all assets. The RFS uses the system for almost all functions related to the firefighting fleet, including the location of vehicles so that they can be dispatched during operational exercises or fire responses.
Staff at RFS Headquarters are responsible for creating and maintaining asset records in the fleet management system. RFS District staff have limited permissions in relation to SAP EAM. They are able to raise work orders for repairs and maintenance, upload evidence to show that work has been done, and close actions in the system.
RFS District staff are not able to enter or update some fleet information in the system, such as the location of vehicles. When an RFS District receives a fleet appliance, it cannot be allocated to a brigade until the location of the asset is accurately recorded in the system. The location of the asset must be updated in the SAP EAM system by staff at RFS Headquarters. District staff can request system support from staff at RFS Headquarters to enter this information. At the time of writing, the position responsible for updating the fleet management system at RFS Headquarters was vacant, and RFS District personnel reported significant wait times in response to their service requests.
The RFS conducts annual audits of SAP EAM system information to ensure data is accurate and complete. RFS staff are currently doing data cleansing work to ensure that fleet allocations are recorded correctly in the system.
Communication between brigades, local councils and the RFS needs improvement to ensure that fleet information is promptly updated in the fleet management system
RFS brigade volunteers do not have access to the fleet management system. When fleet assets are used or moved, volunteers report information about the location and condition of the fleet to RFS District staff using a paper-based form, or by email or phone. Information such as vehicle mileage, engine hours, and defects are all captured by volunteers in a logbook which is scanned and sent to RFS District staff. RFS District staff then enter the relevant information into the fleet management system, or raise a service ticket with RFS Headquarters to enter the information.
Brigade volunteers move fleet assets for a range of reasons, including for fire practice exercises. If volunteers are unable to report the movement of assets to RFS District staff in a timely manner, this can lead to system inaccuracies. Lapses and backlogs in record keeping can occur when RFS staff at district offices or at Headquarters are not available to update records at the times that volunteers report information. A lack of accurate record keeping can potentially impact on RFS operational activities, including fire response activity.
Brigade volunteers notify RFS District staff when fleet appliances are defective, or if they have not been repaired properly. District staff then enter the information into the fleet management system. The inability of volunteers to enter information into the system means they have no visibility over their requests, including whether they have been approved, actioned, or rejected.
Local councils are responsible for servicing and maintaining the firefighting fleet according to the Rural Fires Act, but this responsibility can be transferred to the RFS through arrangements described in local service agreements. Council staff record all fleet servicing and maintenance information in their local systems. The types of fleet information that is captured in local council records can vary between councils. RFS staff described the level of council reporting, and the effectiveness of this process, as 'mixed'.
Councils use different databases and systems to record fleet assets, and some councils are better resourced for this activity than others
Firefighting fleet information is recorded in different asset management systems across NSW. Each council uses its own asset management system to record details about the vested fleet assets. All three councils that were interviewed for this audit had different systems to record information about the fleet. In addition, the type of information captured by the three councils was varied.
System | Hawkesbury City Council | Uralla Shire Council | Wagga Wagga City Council |
---|---|---|---|
Financial asset management system | TechnologyOne | Civica | Assetic |
Asset management system | TechnologyOne | Manual | MEX |
Local councils have varying levels of resources and capabilities to manage the administrative tasks associated with the firefighting fleet. Some of the factors that impact on the ability of councils to manage administrative tasks include: the size of the council; the capabilities of the information management systems, the size of the staff team, and the levels of staff training in asset management.
Uralla Shire Council is a small rural council in northern NSW. This council uses financial software to record information about the firefighting fleet. While staff record information about the condition of the asset, its replacement value, and its depreciation, staff do not record the age of the asset, or its location. Staff manually enter fleet maintenance information into their systems. Uralla Shire Council would like to purchase asset maintenance software that generates work orders for fleet repairs and maintenance. However, the council does not have trained staff in the use of asset management software, and the small size of the fleet may not make it financially worthwhile.
The Hawkesbury City Council uses a single system to capture financial and asset information associated with the firefighting fleet. Hawkesbury is a large metropolitan council located north-west of Sydney, with a relatively large staff team in comparison with Uralla Shire Council. The Hawkesbury City Council has given RFS District staff access to their fleet information system. RFS District staff can directly raise work orders for fleet repairs and maintenance through the council system, and receive automated notifications when the work is complete.
Two of the three audited councils report that they conduct annual reviews of fleet assets to assess whether the information they hold is accurate and up-to-date.
More than half of the fleet maintenance service agreements between the RFS and local councils have not been reviewed in ten years, and some do not reflect local practices
Local councils have a legislated responsibility to service, repair, and maintain the firefighting fleet to service standards set by the RFS. Councils may transfer this responsibility to the RFS through District Service Agreements. The RFS Districts are responsible for ensuring that the service agreements are current and effective.
The RFS does not have monitoring and quality control processes to ensure that service agreements with local councils are reviewed regularly. The RFS has 73 service agreements with local councils or groups of councils. Sixty-three per cent of service agreements had not been reviewed in the last ten years. Only four service agreements specify an end date and, of those, one agreement expired in 2010 and had not been reviewed at the time of this audit.
The RFS does not have a framework to ensure that service agreements with local councils reflect actual practices. Of the three councils selected for audit, one agreement does not describe the actual arrangements for fleet maintenance practices in RFS Districts. The service agreement with Hawkesbury City Council specifies that the RFS will maintain the firefighting fleet on behalf of council when, in fact, council maintains the firefighting fleet. The current agreement commenced in 2012, and at the time of writing had not been updated to reflect local maintenance practices.
When District Service Agreements are not reviewed periodically, there is a risk that neither local councils nor the RFS have clear oversight of the status of fleet servicing, maintenance, and repairs.
RFS District Service Agreements set out a requirement that RFS and local councils establish a liaison committee. Liaison committees typically include council staff, RFS District staff, and RFS brigade volunteers. While service agreements state that liaison committees must meet periodically to monitor and review the performance of the service agreement, committee members determine when and how often the committee meets.
RFS District staff and staff at the three audited councils are not meeting routinely to review or update their service agreements. At Wagga Wagga City Council, staff meet with RFS District staff each year to report on activity to fulfil service agreement requirements. Uralla Shire Council staff did not meet routinely with RFS District staff before 2021. When liaison committees do not meet regularly, there is a risk that the RFS and local councils have incorrect or outdated information about the location, status, or condition of the firefighting fleet. Given that councils lack systems to track and monitor fleet locations, regular communication between the RFS and local councils is essential.
The RFS has not established processes to ensure that local councils and RFS District personnel meet and exchange information about the fleet. Of the three councils selected for this audit, one council had not received information about the number, type, or status of the fleet for at least five years, and did not receive an updated list of appliances until there was a change in RFS District personnel. This has impacted on the accuracy of council record keeping. Councils do not always receive notification about new assets or information about the location of assets from the RFS, and therefore cannot reflect this information in their accounting and reporting.
RFS area commands audit system records to ensure fleet inspections occur as planned, but central systems are not always updated, creating operational risks
RFS District staff are required by the Rural Fires Act to ensure the firefighting fleet is inspected at least once a year. Regular inspections of the fleet are vital to ensure that vehicles are fit-for-purpose and safe for brigade volunteers. Inspections are also fundamental to the operational readiness and capability of RFS to respond to fire incidents.
RFS Area Command personnel conduct audits of fleet maintenance data to ensure that fleet inspections are occurring as planned. These inspections provide the RFS with assurance that the fleet is being maintained and serviced by local council workshops, or third-party maintenance contractors.
Some RFS Districts run their own fleet management systems outside of the central management system. They do this to manage their fleet inspection activity effectively. Annual fleet inspection dates are programmed by staff at RFS Headquarters. Most of the inspection dates generated by RFS Headquarters are clustered together and RFS Districts need to separate inspection times to manage workloads over the year. Spreading inspection dates is necessary to avoid exceeding the capacity of local council workshops or third party contractors, and to ensure that fleet are available during the bushfire season.
The fleet inspection records at RFS Headquarters are not always updated in a timely manner to reflect actual inspection and service dates of vehicles. District staff are not able to change fleet inspection and service dates in the central management system because they do not have the necessary permissions to access the system. The usual practice is for RFS District staff to notify staff at RFS Headquarters, and ask them to retrospectively update the system. As there is a lag in updating the central database, at a point in time, the actual inspection and service dates of vehicles can be different to the dates entered in the central fleet management system.
Fleet inspection and maintenance records must be accurately recorded in the central RFS management system for operational reasons. RFS Headquarters personnel need to know the location and maintenance status of fleet vehicles at all times in order to dispatch vehicles to incidents and fires. The RFS fleet management system is integrated with a new Computer Aided Dispatch System. The Computer Aided Dispatch System assigns the nearest and most appropriate vehicles to fire incidents. The system relies on accurate fleet locations and fleet condition information in order to dispatch these vehicles.
There is a risk that RFS Headquarters' systems do not contain accurate information about the location and status of vehicles. Some may be in workshops for servicing and repair, while the system may record them as available for dispatch. As there are many thousands of fleet vehicles, all requiring an annual service and inspection, a lack of accurate record keeping has wide implications for State fire operations.
RFS is currently exploring ways to improve the ways in which fleet inspections are programmed into the fleet management system.
RFS provides funds to councils to assist with maintaining the firefighting fleet, but does not receive fleet maintenance cost information from all local councils
Each year the RFS provides local councils with a lump sum to assist with the cost of repairing and maintaining the firefighting fleet. This lump sum funding is also used for meeting the costs of maintaining brigade stations, utilities, and other miscellaneous matters associated with RFS business.
In 2020–21, the RFS provided NSW local councils with approximately $23 million for maintenance and repairs of appliances, buildings, and utilities. Ninety councils were provided with lump sum funding in 2021, receiving on average $257,000. The amounts received by individual councils ranged from $56,200 to $1,029,884.
Some councils provide itemised repairs and maintenance reports to RFS District staff, showing the work completed and the cost of that work. However, not all councils collect this information or provide it to the RFS. Local councils collect fleet maintenance information in their local council systems. In some cases, the responsibility for fleet maintenance is shared across a group of councils, and not all councils have oversight of this process.
The RFS has not taken steps to require local councils to provide itemised maintenance costings for the firefighting fleet. Thus, the RFS does not have a clear understanding of how local councils are spending their annual fleet maintenance funding allocations. The RFS does not know if the funding allocations are keeping pace with the actual cost of repairing and maintaining the fleet.
RFS District staff report that funding shortfalls are impacting on the prioritisation of fleet servicing and maintenance works in some council areas. When fleet servicing and maintenance is not completed routinely or effectively, there is a risk that it can negatively impact the overall condition and lifespan of the vehicle. Poor processes in relation to fleet maintenance and repair risk impacting on the operational capabilities of the fleet during fire events.
The timeliness and effectiveness of fleet servicing and maintenance is affected by resource levels in RFS Districts and local councils
Local councils have a legislated responsibility to service and maintain the firefighting fleet to the service standards set by the RFS. Fleet maintenance is usually done by the entity with the appropriate workshops and resources, and the maintenance arrangements are described in District Service Agreements. RFS District staff conduct annual inspections to ensure that the firefighting fleet has been serviced and maintained appropriately, and is safe for use by brigade volunteers. If the fleet has not been maintained to RFS service standards or timelines, RFS District staff may work with local councils to support or remediate these works.
The effectiveness of this quality control activity is dependent on relationships and communication between the RFS Districts and local councils. While some RFS staff reported having positive relationships with local councils, others said they struggled to get fleet maintenance work done in a timely manner. Some councils reported that funding shortfalls for fleet maintenance activity was impacting on the prioritisation of RFS fleet maintenance works. When fleet maintenance work is not completed routinely or effectively, it can negatively impact on the overall condition and lifespan of the vehicle. It can also reduce the capacity of the RFS to respond to fire events.
Fleet quality control activities are carried out by RFS District staff. In some of the smaller RFS Districts, one person is responsible for liaising with local councils and brigade volunteers about fleet maintenance and repairs. In the regions where resources are limited, there is less ability to maintain ongoing communication. This is impacting on fleet service and maintenance timelines and the timeliness of fleet monitoring activity.
The RFS has mutual support arrangements with agencies in NSW and interstate, though shared fleet levels are yet to be quantified
The RFS has arrangements with state, federal, and international fire authorities to provide mutual support during fire incidents. In NSW, the RFS has agreements with the three statutory authorities – Fire and Rescue NSW, the Forestry Corporation of NSW, and the NSW National Parks and Wildlife Service. The agreement with Fire and Rescue NSW provides a framework for cooperation and joint operations between the agencies. The agreements with the Forestry Corporation of NSW and the NSW National Parks and Wildlife Service describe the control and coordination arrangements for bush and grass fires across NSW. These arrangements are set out in legislation and incorporated into local Bush Fire Risk Management Plans.
The RFS has agreements with fire authorities in three of the four Australian states and territories that share a border with NSW – the Australian Capital Territory, Queensland, and South Australia. Each agreement sets out the arrangements for mutual assistance and joint operations, including arrangements for sharing aircraft. The agreement between the RFS and Victoria had lapsed. The RFS told the NSW Bushfire Inquiry that the agreement with Victoria would be finalised by June 2020. In June 2022, the RFS reported that the agreement was in the process of being finalised.
The arrangements for mutual aid from Western Australia, Northern Territory and Tasmania, are managed by the National Resource Sharing Centre. These agreements set out the arrangements for interstate assistance between Australian fire services, emergency services, and land management agencies in those states and territories.
These mutual support arrangements may assist during state-based fire events. However, when there are competing demands for resources, such as during the bushfires of 2019–2020, there can be limits on fleet availability. During the 2019–2020 fires, resources were stretched in all jurisdictions as these fires affected NSW, Victoria, and Queensland.
There are opportunities for the RFS and other NSW agencies to quantify fleet resources across the State and identify assets that can be mobilised for different fire activities. This form of fleet planning may be used to enhance surge capabilities during times of high fire activity. There are also opportunities for the RFS and other agencies to match the levels of shared assets to projected bushfire risks.
Appendix one – Responses from agencies
Appendix two – About the audit
Appendix three – Performance auditing
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 #376 - released 27 February 2023
Actions for Regional NSW 2022
Regional NSW 2022
What the report is about
Result of the Regional NSW cluster agencies' financial statement audits for the year ended 30 June 2022.
What we found
Unmodified audit opinions were issued for Regional NSW cluster agencies. Two audits are ongoing.
What the key issues were
The Department of Regional NSW (the department) and Local Land Services (LLS) accepted changes to their office leasing arrangements managed by Property NSW.
These changes resulted in the collective derecognition of $100.6 million of rights-of-use-assets and $110.4 million of lease liabilities.
In 2021–22, the cluster agencies continued to assist communities in their recovery from recent weather emergencies, including significant flooding in New South Wales.
The Northern Rivers Reconstruction Corporation was established in May 2022 to rebuild communities in the Lismore and Northern Rivers region impacted by floods.
The number of matters reported to management decreased from 36 in 2020–21 to 14 in 2021–22.
Five moderate risk issues were identified and 14% of reported issues were repeat issues.
One moderate risk issue was a repeat issue related to Local Land Services' annual fair value assessment of the asset improvements on land reserves used for moving stock.
This report provides Parliament and other users of the Regional NSW cluster 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 cluster (the cluster) for 2022.
Section highlights
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Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Regional NSW cluster.
Section highlights
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Actions for Audit Insights 2018-2022
Audit Insights 2018-2022
What the report is about
In this report, we have analysed the key findings and recommendations from our audit reports over the past four years.
This analysis includes financial audits, performance audits, and compliance audits of state and local government entities that were tabled in NSW Parliament between July 2018 and February 2022.
The report is framed by recognition that the past four years have seen significant challenges and emergency events.
The scale of government responses to these events has been wide-ranging, involving emergency response coordination, service delivery, governance and policy.
The report is a resource to support public sector agencies and local government to improve future programs and activities.
What we found
Our analysis of findings and recommendations is structured around six key themes:
- Integrity and transparency
- Performance and monitoring
- Governance and oversight
- Cyber security and data
- System planning for disruption
- Resource management.
The report draws from this analysis to present recommendations for elements of good practice that government agencies should consider in relation to these themes. It also includes relevant examples from recent audit reports.
In this report we particularly call out threats to the integrity of government systems, processes and governance arrangements.
The report highlights the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit.
A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.
Fast facts
- 72 audits included in the Audit Insights 2018–2022 analysis
- 4 years of audits tabled by the Auditor-General for New South Wales
- 6 key themes for Audit Insights 2018–2022.
I am pleased to present the Audit Insights 2018–2022 report. This report describes key findings, trends and lessons learned from the last four years of audit. It seeks to inform the New South Wales Parliament of key risks identified and to provide insights and suggestions to the agencies we audit to improve performance across the public sector.
The report is framed by a very clear recognition that governments have been responding to significant events, in number, character and scale, over recent years. Further, it acknowledges that public servants at both state and council levels generally bring their best selves to work and diligently strive to deliver great outcomes for citizens and communities. The role of audit in this context is to provide necessary assurance over government spending, programs and services, and make suggestions for continuous improvement.
A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.
However, in this report we particularly call out threats to the integrity of government systems, processes and governance arrangements. We highlight the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit. Arguably, these considerations are never more important than in an increasingly complex environment and in the face of significant emergency events and they will be key areas of focus in our future audit program.
While we have acknowledged the challenges of the last few years have required rapid responses to address the short-term impacts of emergency events, there is much to be learned to improve future programs. I trust that the insights developed in this report provide a helpful resource to public sector agencies and local government across New South Wales. I would be pleased to receive any feedback you may wish to offer.
Margaret Crawford
Auditor-General for New South Wales
Integrity and transparency | Performance and monitoring | Governance and oversight | Cyber security and data | System planning | Resource management |
Insufficient documentation of decisions reduces the ability to identify, or rule out, misconduct or corruption. | Failure to apply lessons learned risks mistakes being repeated and undermines future decisions on the use of public funds. | The control environment should be risk-based and keep pace with changes in the quantum and diversity of agency work. | Building effective cyber resilience requires leadership and committed executive management, along with dedicated resourcing to build improvements in cyber security and culture. | Priorities to meet forecast demand should incorporate regular assessment of need and any emerging risks or trends. Absence of an overarching strategy to guide decision-making results in project-by-project decisions lacking coordination. | Governments must weigh up the cost of reliance on consultants at the expense of internal capability, and actively manage contracts and conflicts of interest. |
Government entities should report to the public at both system and project level for transparency and accountability. | Government activities benefit from a clear statement of objectives and associated performance measures to support systematic monitoring and reporting on outcomes and impact. | Management of risk should include mechanisms to escalate risks, and action plans to mitigate risks with effective controls. | In implementing strategies to mitigate cyber risk, agencies must set target cyber maturity levels, and document their acceptance of cyber risks consistent with their risk appetite. | Service planning should establish future service offerings and service levels relative to current capacity, address risks to avoid or mitigate disruption of business and service delivery, and coordinate across other relevant plans and stakeholders. | Negotiations on outsourced services and major transactions must maintain focus on integrity and seeking value for public funds. |
Entities must provide balanced advice to decision-makers on the benefits and risks of investments. | Benefits realisation should identify responsibility for benefits management, set baselines and targets for benefits, review during delivery, and evaluate costs and benefits post-delivery. | Active review of policies and procedures in line with current business activities supports more effective risk management. | Governments hold repositories of valuable data and data capabilities that should be leveraged and shared across government and non-government entities to improve strategic planning and forecasting. | Formal structures and systems to facilitate coordination between agencies is critical to more efficient allocation of resources and to facilitate a timely response to unexpected events. | Transformation programs can be improved by resourcing a program management office. |
Clear guidelines and transparency of decisions are critical in distributing grant funding. | Quality assurance should underpin key inputs that support performance monitoring and accounting judgements. | Governance arrangements can enable input into key decisions from both government and non-government partners, and those with direct experience of complex issues. | Workforce planning should consider service continuity and ensure that specialist and targeted roles can be resourced and allocated to meet community need. | ||
Governments must ensure timely and complete provision of information to support governance, integrity and audit processes. | |||||
Read more | Read more | Read more | Read more | Read more | Read more |
This report brings together a summary of key findings arising from NSW Audit Office reports tabled in the New South Wales Parliament between July 2018 and February 2022. This includes analysis of financial audits, performance audits, and compliance audits tabled over this period.
- Financial audits provide an independent opinion on the financial statements of NSW Government entities, universities and councils and identify whether they comply with accounting standards, relevant laws, regulations, and government directions.
- Performance audits determine whether government entities carry out their activities effectively, are doing so economically and efficiently, and in accordance with relevant laws. The activities examined by a performance audit may include a selected program or service, all or part of an entity, or more than one government entity. Performance audits can consider issues which affect the whole state and/or the local government sectors.
- Compliance audits and other assurance reviews are audits that assess whether specific legislation, directions, and regulations have been adhered to.
This report follows our earlier edition titled 'Performance Audit Insights: key findings from 2014–2018'. That report sought to highlight issues and themes emerging from performance audit findings, and to share lessons common across government. In this report, we have analysed the key findings and recommendations from our reports over the past four years. The full list of reports is included in Appendix 1. The analysis included findings and recommendations from 58 performance audits, as well as selected financial and compliance reports tabled between July 2018 and February 2022. The number of recommendations and key findings made across different areas of activity and the top issues are summarised at Exhibit 1.
The past four years have seen unprecedented challenges and several emergency events, and the scale of government responses to these events has been wide-ranging involving emergency response coordination, service delivery, governance and policy. While these emergencies are having a significant impact today, they are also likely to continue to have an impact into the future. There is much to learn from the response to those events that will help the government sector to prepare for and respond to future disruption. The following chapters bring together our recommendations for core elements of good practice across a number of areas of government activity, along with relevant examples from recent audit reports.
This 'Audit Insights 2018–2022' report does not make comparative analysis of trends in public sector performance since our 2018 Insights report, but instead highlights areas where government continues to face challenges, as well as new issues that our audits have identified since our 2018 report. We will continue to use the findings of our Insights analysis to shape our future audit priorities, in line with our purpose to help Parliament hold government accountable for its use of public resources in New South Wales.
Appendix one – Included reports, 2018–2022
Appendix two – About this report
Copyright notice
© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.
Actions for Report on Local Government 2019
Report on Local Government 2019
I am pleased to present my third report to the Parliament on the 2019 audits of local government councils in New South Wales.
This report notes that unqualified audit opinions were issued on the 2018–19 financial statements of 134 councils and 11 joint organisations. The opinion for one council was disclaimed and three audits are yet to complete.
The report also highlights improvements I have seen in financial reporting and governance arrangements across councils. Fewer errors were identified. More councils have audit, risk and improvement committees and internal audit functions. Risk management practices, including fraud control systems, have also improved.
These are very pleasing indicators of the gradual strengthening of governance and financial oversight of the sector. I want to acknowledge the investment councils have made in working with the Audit Office to improve consistency of practice and accountability generally.
Of course there is more work to do, particularly to prepare for new accounting standards and to strengthen controls over information technology and cyber security management. Asset management practices can also be improved. This report provides some guidance to council on these matters and we will continue to partner with the Office of Local Government in the Department of Planning, Industry and Environment to support good practice.
Auditor-General
5 March 2020
This report focuses on key observations and findings from the 2018–19 financial audits of councils and joint organisations.
Unqualified audit opinions were issued on the financial statements for 134 councils and 11 joint organisations. The audit opinion for Bayside’s 2017–18 and 2018–19 financial statements were disclaimed. Three audits are still in progress and will be included in next year’s report.
The report highlights a number of areas where there has been improvement. There was a reduction in errors identified in council financial statements and high risk issues reported in audit management letters. More councils have audit, risk and improvement committees and internal audit functions. Risk management practices and fraud control systems have also improved.
The report also found that councils could do more to be better prepared for the new accounting standards, asset management practices could be strengthened, and information technology controls and cyber security management could be improved.
The Auditor-General recommended that the Office of Local Government within the Department of Planning, Industry and Environment develop a cyber security policy by 30 June 2021 to ensure a consistent response to cyber security risks across councils.
Financial reporting is an important element of good governance. Confidence in and transparency of public sector decision making is enhanced when financial reporting is accurate and timely. Strong financial performance provides the platform for councils to deliver services and respond to community needs.
This chapter outlines our audit observations on the financial reporting and performance of councils and joint organisations.
Section highlights
- There was a reduction in the number and dollar value of errors identified in councils' financial statements.
- We continue to identify prior period errors, which are predominantly asset-related.
- Unqualified audit opinions were issued for 99 per cent of completed audits for councils and joint organisations.
- Three audits remain outstanding, with the outcomes to be reported in next year's Report to Parliament.
- Seventy-nine per cent of councils and joint organisations lodged their financial reports by 31 October 2019.
- Councils that performed some early reporting procedures achieved better outcomes in terms of the quality and timeliness of financial reporting.
- Councils are at various levels of preparedness to implement the new accounting standards for the 2019–20 financial year. Some have made the necessary modifications to systems and processes, but others are still assessing impacts.
- Most councils met the prescribed benchmarks for the liquidity and working capital performance measures over the past three years.
- More councils reported negative operating performance compared with the prior year, meaning their operating expenditure exceeded their operating revenue.
Strong governance systems and internal controls help 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 related to governance and internal control issues across councils and joint organisations for 2018–19.
Section highlights
- While the total number of issues reported in our management letters increased compared with the prior year, the total number of high risk issues have decreased. Of the high-risk issues, 41 per cent were deficiencies in information technology controls.
- More councils have established audit, risk and improvement committees and internal audit functions.
- Councils have improved risk management practices, with over 75 per cent of councils now having a risk management policy and register.
- While most councils have policies and processes to manage gifts and benefits, we identified some instances of non-compliance with the Model Code of Conduct.
- Most councils have policies and processes to manage the use of credit cards.
- Councils can strengthen policies and practices for managing fraud controls and legislative compliance.
- There are further opportunities for councils to improve internal controls over revenue, purchasing, payroll, cash, financial accounting and governance processes.
Councils rely on information technology (IT) to deliver services and manage information. While IT delivers considerable benefits, it also presents risks that council needs to address.
In prior years, we reported that councils need to improve IT governance and controls to manage key financial systems. This chapter outlines the progress made by councils in the management of key IT risks and controls, with an added focus on cyber security.
Section highlights
- We continue to report deficiencies in information technology controls, particularly around user access management. These controls are key to ensuring IT systems are protected from inappropriate access and misuse.
- Many councils do not have IT policies and procedures and others do not identify, monitor or report on IT risks.
- Cyber security management requires improvement, with some basic elements of governance not yet in place for many councils.
Councils are responsible for managing a significant range of assets to deliver services on behalf of the community.
This chapter outlines our asset management observations across councils and joint organisations.
Section highlights
- There was an increase in the total number of issues reported in our management letters for asset management processes.
- There were less high-risk issues reported compared to the previous year.
- We continue to identify discrepancies between the council's Crown land asset records and the Crown Land Information Database (CLID) managed by the former Department of Industry (DOI).
- Inconsistent practices remain across the Local Government sector in accounting for landfill sites.
Appendix one – Response from the Office of Local Government within the Department of Planning, Industry and Environment
Appendix two – Status of 2018 recommendations
Appendix three – Status of audits
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 Shared services in local government
Shared services in local government
Local councils need to properly assess the performance of their current services before considering whether to enter into arrangements with other councils to jointly manage back-office functions or services for their communities. This is one of the recommended practices for councils in a report released today by the Auditor-General for New South Wales, Margaret Crawford. ‘When councils have decided to jointly provide services, they do not always have a strong business case, which clearly identifies the expected costs, benefits and risks of shared service arrangements’, said the Auditor-General.
Councils provide a range of services to meet the needs of their communities. It is important that they consider the most effective and efficient way to deliver them. Many councils work together to share knowledge, resources and services. When done well, councils can save money and improve access to services. This audit assessed how efficiently and effectively councils engage in shared service arrangements. We define ‘shared services’ as two or more councils jointly managing activities to deliver services to communities or perform back-office functions.
The information we gathered for this audit included a survey of all general-purpose councils in NSW. In total 67 councils (52 per cent) responded to the survey from 128 invited to participate. Appendix two outlines in more detail some of the results from our survey.
First, not all surveyed councils are assessing the performance of their current services before deciding on the best service delivery model. Where they have decided that sharing services is the best way to deliver services, they do not always build a business case which outlines the costs, benefits and risks of the proposed shared service arrangement before entering into it.
The Office of Local Government should, by April 2019:
Develop guidance which outlines the risks and opportunities of governance models that councils can use to share services. This should include advice on legal requirements, transparency in decisions, and accountability for effective use of public resources.
Appendix one – Response from agency
Appendix two – Survey findings
Appendix three – About the audit
Appendix four – Performance auditing
Parliamentary reference - Report number #302 - released 21 June 2018
Actions for 2016 - An overview
2016 - An overview
This report focuses on key observations and findings from 2016 audits and highlights key areas of focus for financial and performance audits in 2017.
Financial reporting | |
Observation | Conclusion |
Only one qualified audit opinion was issued on the 2015–16 financial statements of NSW public sector agencies, compared to two in 2014–15. | The quality of financial reporting continued to improve across the NSW public sector. |
More 2015–16 financial statements and audit opinions were signed within three months of the year end. | Timely financial reporting was facilitated by more agencies resolving significant accounting issues early, completing asset valuations on time and compiling sufficient evidence to support financial statement balances. |
NSW Treasury’s early close procedures in 2015–16 were again successful in improving the quality and timeliness of financial reporting, largely facilitated by the early resolution of accounting issues. For 2016–17, NSW Treasury has narrowed the scope of mandatory early close procedures. |
The narrowed scope of mandatory early close procedures may diminish the good performance in ensuring the quality and timeliness of financial reporting achieved in recent years. To mitigate this risk, NSW Treasury has mandated that agencies perform non-financial asset valuations and prepare proforma financial statements in their early close procedures. It also encourages them to continue with the good practices embedded in recent years. |
Although most agencies complied with NSW Treasury’s early close asset revaluation procedures we identified areas where they can improve. | Asset revaluations need to commence early enough to ensure all assets are identified and the results are analysed, recorded and reflected accurately in the early close financial statements. |
Number of misstatements | |||||
Year ended 30 June | 2015-16 | 2014-15 | 2013-14 | 2012-13 | 2011-12 |
Total reported misstatements | 298 | 396 | 459 | 661 | 1,077 |
All material misstatements identified by agencies and audit teams were corrected before the financial statements and audit opinions were signed. A material misstatement relates to an incorrect amount, classification, presentation or disclosure in the financial statements that could reasonably be expected to influence the economic decisions of users.
Significant matters reported to the portfolio Minister, Treasurer and Agency Head
In 2015–16, we reported the following significant matters to the portfolio Minister, Treasurer and agency head in our Statutory Audit Reports:
Appropriate financial controls help ensure the efficient and effective use of resources and the implementation and administration of agency policies. They are essential for quality and timely decision making.
In 2015–16, our audit teams made the following key observations on the financial controls of NSW public sector agencies.
Financial controls | |
Observation | Conclusion |
More needs to be done to implement audit recommendations on a timely basis. We found 212 internal control issues identified in previous audits had not been adequately addressed by 30 June 2016. |
Delays in implementing audit recommendations can impact the quality of financial information and the effectiveness of decision making. Agencies need to ensure they have action plans, timeframes and assigned responsibilities to address recommendations in a timely manner. |
Agencies continue to face challenges managing information security. Most information technology issues we identified related to poor IT user administration in areas like password controls and inappropriate access. | Agencies should review the design and effectiveness of information security controls to ensure data is adequately protected. |
We found shared service provider agreements did not always adequately address information security requirements. |
Where agencies use shared service providers they should consider whether the service level arrangements adequately address information security. |
Thirteen of 108 agencies required to attest to having a minimum set of information security controls did not do so in their 2015 annual reports. | The 'NSW Government Digital Information Security Policy' recognises the growing need for effective information security. With cyber security threats continuing to increase as digital services expand we plan to look at cyber security as part of our 2017–18 performance audit program. |
We identified instances where service level agreements with shared service providers were outdated, signed too late or did not exist. | Corporate and shared service arrangements are more effective when service level arrangements are negotiated and signed in time, clearly detail rights and responsibilities and include meaningful KPIs, fee arrangements and dispute resolution processes. |
Internal controls at GovConnect, the private sector provider of transactional and information technology services to many NSW public sector agencies were ineffective in 2015–16. We found mitigating actions taken to manage transition risks from ServiceFirst to GovConnect were ineffective in ensuring effective control over client transactions and data. | The Department of Finance, Services and Innovation should ensure GovConnect addresses the control deficiencies. It should also examine the breakdowns in the transition of the shared service arrangements and apply the learnings to other services being transitioned to the private sector. |
Maintenance backlogs exist in several NSW public sector agencies, including Roads and Maritime Services, Sydney Trains, NSW Health, the Department of Education and the Department of Justice. | To address backlog maintenance it is important for agencies to have asset lifecycle planning strategies that ensure newly built and existing assets are funded and maintained to a desired service level. |
Actions for Assessing major development applications
Assessing major development applications
The Planning Assessment Commission (the Commission) has improved its decision-making processes for major development applications in recent years. The Commission has improved how it consults the public and manages conflicts of interest, and now also publishes records of its meetings with applicants and stakeholders.
The Planning Assessment Commission (the Commission) is an independent body established in 2008 under the Environmental Planning and Assessment Act 1979 (the EP&A Act). It makes decisions on major development applications in New South Wales. Along with the Department of Planning and Environment (the Department) and the Land and Environment Court, it is one of three bodies that have a role in making decisions on these applications.
The Department refers development applications to the Commission where 25 or more objections have been received from the community, a local council objects to the proposal, or the applicant has donated to a political party.
These applications are often complex and controversial, and can attract a high level of public interest. This may mean that, regardless of the process, not all stakeholders are satisfied with the outcome.
The Commission is required to take into account section 79C of the EP&A Act when making decisions. Section 79C includes consideration of the likely environmental, social and economic impacts of the development.
This audit assessed the extent to which the Commission’s decisions on major development applications are made in a consistent and transparent manner. To assist us in making this assessment, we asked whether the Commission:
- has sound processes in place to help it make decisions on major development applications that are informed and made in a consistent manner
- ensures its decisions are free from bias and transparent to stakeholders and the public.
Conclusion
Over the last two years, the Commission has improved its decision-making process. It has improved how it consults the public and manages conflicts of interest, and now also publishes records of its meetings with applicants and stakeholders.
However, there are still some vital issues to be addressed to ensure it makes decisions in a consistent and transparent manner. Most importantly, the Commission was not able to show in every decision we reviewed how it met its statutory obligation to consider the matters in section 79C of the EP&A Act.
Despite improved probity measures put in place by the Commission, there is a perception among some stakeholders that it is not independent of the Department. The reasons for some of these concerns are outside of the Commission’s control. For example, the Commission becomes involved after the Department has prepared an assessment report which recommends whether a development should proceed. This creates the perception that the Commission is acting on the recommendation of the Department. The Department’s assessment report should state whether an application meets relevant legislative and policy requirements, but not recommend whether a development should be approved or not.
More can also be done to improve transparency in decision-making and the public’s perception of the independence of Commissioners. The Commission should continue to improve how it communicates the reasons for its decisions and also publish on its website a summary of Commissioners’ conflict of interest declarations for each development application.
Decision-making processes have improved but some key aspects need to be addressed
Although not articulated in one document, there is a framework in place to assist Commissioners make decisions on major development applications. This includes setting out the information to be considered, who to consult, and that a report is to be prepared. The Commission has recently improved how it conducts public meetings and the level of support provided to Commissioners to ensure they understand the decision-making process. The Commissioners we interviewed all showed a good understanding of their role.
As a consent authority, the Commission is required to consider the matters in section 79C of the EP&A Act when making a decision. However, it was not able to show how it met this requirement in every decision we reviewed. We found some evidence of these considerations in six of the nine cases we reviewed, for example in meeting notes or in its report on a decision. Of these six cases, the degree to which the Commission considered all matters under section 79C varied considerably. The larger, more complex applications were more likely to address these considerations. To demonstrate compliance with the EP&A Act, the Commission must be able to show how it considers all matters in section 79C for each decision it makes.
We found that the Commission has access to relevant information to make a decision and consults stakeholders for their views of the development. The level of consultation depends on the size and complexity of an application. If Commissioners decide they need more information to make a decision, they consult local councils, the community, other government agencies and experts as needed.
The Commission’s public meetings are a valuable part of the decision-making process, where new perspectives or issues are often raised. However, some aspects could be improved. For example, many stakeholders thought the five minutes allowed for individual speakers was insufficient. The Commission could be more flexible with this timeframe. Identifying new ways to notify the public of its meetings, other than advertisements on its website and in newspapers, would also ensure it reaches as many interested parties as possible.
Improved transparency and probity but the Commission is not seen by some as impartial
The Commission has sound processes in place to ensure that its decisions are impartial and transparent to the community. It has improved its probity measures over the last two years, following a review by the NSW Ombudsman in 2014. We found that the Commission:
- has probity policies and procedures which are available on its website
- has improved its record keeping of some processes, such as meetings with applicants and stakeholders
- publishes its decision and supporting documentation, such as meeting notes, on its website.
Conflicts of interest are a significant risk for the Commission because they could lead to corruption, abuse of public office, and affect the public’s view of its independence. The Commission manages this risk well. It has a policy in place to address potential, perceived or actual conflicts. Commissioners update their conflicts of interest records annually, and declare any conflicts when the Commission assigns them to a development application. Unlike the Commission’s probity polices, Commissioners’ conflict of interest declarations are not available on its website. Providing a summary of this information on its website when Commissioners are allocated to a development application would further improve transparency around conflicts of interest.
The Commission has been improving how it communicates its decisions to the public. It now produces fact sheets for its decisions on matters that attract a high level of public interest. Its reports on decisions for complex applications also discuss issues raised by the community. However, the level of detail varied in the decisions we reviewed, and it was not always clear how conditions placed on a development would resolve identified issues. Similarly, the reports did not clearly address the matters under section 79C of the EP&A Act. Reporting this would further improve the transparency of its decisions, and clearly demonstrate compliance with the EP&A Act.
While we did not find any issues that would make us question the integrity or independence of Commissioners, there remains a perception among some stakeholders that the Commission is not impartial. Some of these concerns are within the Commission’s control to fix, such as allowing individual speakers at public meetings extra time to discuss their issues, therefore avoiding perceptions of bias.
Other perceptions, such as the Commission being part of the Department and not an independent decision making authority, are outside the Commission’s immediate control. For example, the Commission receives applications at the end of the assessment process, after the Department has prepared an assessment report recommending whether the application should be approved. This means there are effectively two reports on an application; the Department’s assessment report and the Commission’s report on its decision. However, there is only one decision-maker: the Commission. This may cause community confusion about the roles of the Department and the Commission in the decision-making process. Clearer separation of their roles in assessing applications and preparing reports is needed.
To minimise the perception that the Commission is simply ‘rubber stamping’ the Department’s recommendations, assessment reports should not recommend whether or not a project be approved. Instead, they should provide the Department’s views on whether a project meets relevant legislative and policy requirements. The Commission should also be involved earlier in the process, so it can establish key facts and identify relevant issues sooner. It should request that the Department’s assessment report covers matters Commissioners consider particularly important when assessing projects under section 79C. Earlier referral of applications should also help the Commission to plan its work in assessing applications, and may reduce the time taken to reach a decision.
Unless these issues are addressed, stakeholders will continue to believe the Commission does not act in a transparent and impartial manner, which could erode public confidence in the Commission.
The Planning Assessment Commission
The Planning Assessment Commission (the Commission) is a planning authority established in 2008 under the Environmental Planning and Assessment Act 1979 (the EP&A Act). One of its functions is to make decisions on major development applications.
The Commission is independent of the Department of Planning and Environment (the Department) and the Minister for Planning. This means its decisions are not subject to the direction or control of the Department or the Minister.
The Department refers applications for major development to the Commission, including state significant development and infrastructure applications. These projects are generally initiated by the private sector. Applications are referred to the Commission when one or more of the following criteria are met:
- more than 25 objections are received about the proposal
- the local council objects to the proposal
- the applicant has donated $1,000 or more to a political party or member of parliament.
These applications are often controversial and may attract a high level of public interest. Of the 29 development applications the Commission received in 2015–16, almost 40 per cent were in the mining and energy sectors, and another 40 per cent related to urban development.
Section 79C of the EP&A Act outlines the matters the Commission must consider when making decisions about major development applications. These include:
- any relevant environmental and planning instruments
- likely environmental, social and economic impacts of the development
- suitability of the site for the development
- submissions received about the application
- the public interest.
In addition to making decisions about major development applications, the Commission also reviews major developments as part of the planning process, and provides independent expert advice to the government on planning and development matters. Since the Commission’s inception, it has provided advice on 76 matters, conducted 39 reviews, and made 444 decisions on development applications.
Process for approving major development applications
The Commission is one of three bodies that have a role in the planning and approval process for major development applications in New South Wales, as seen in Exhibit 1. The other two bodies are the Department of Planning and Environment, and the Land and Environment Court.
The Department determines the outcomes of major development applications. When an application meets one of the criteria listed above, it refers these to the Commission to make the decision. In certain circumstances, the Land and Environment Court hears appeals against decisions made by either the Department or the Commission.
A Memorandum of Understanding between the Commission and the Department sets out timeframes the Commission must meet when making a decision, specifically:
- two weeks where no stakeholder meetings are required
- three weeks where stakeholder meetings are required
- six weeks when a public meeting is required.
Parliamentary reference - Report number #279 - released 19 January 2017