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Appendix one – Misstatements in financial statements submitted for audit

© 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.

29 November 2023

Published

Regional NSW 2023

Industry

Environment

Planning

Whole of Government

Asset valuation

Compliance

Cyber security

Financial reporting

Fraud

Information technology

Infrastructure

Procurement

Regulation

Risk

Service delivery

Shared services and collaboration

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 – Responses from agencies
Appendix two – About the audit
Appendix three – Performance auditing

22 June 2023

Published

Regulation of public native forestry

Environment

Industry

Compliance

Management and administration

Regulation

Risk

What this report is about

The Forestry Corporation of NSW (FCNSW) is a state-owned corporation that manages over two million hectares of public native forests and plantations supplying timber to sawmills across NSW.

The NSW Environment Protection Authority (EPA) is responsible for regulating the native forestry industry in NSW.

FCNSW must comply with Integrated Forestry Operations Approvals (IFOAs), which set out rules for how timber harvesting may occur.

Most harvesting is undertaken under the Coastal IFOA, which commenced in 2018.

This audit assessed how effectively Forestry Corporation of NSW manages its public native forestry activities to ensure compliance, and how effectively the Environment Protection Authority regulates these activities.

What we found

Forestry Corporation of NSW (FCNSW) clearly articulates its compliance obligations.

While FCNSW undertakes monitoring of its contractors, it does not do so consistently and does not target its monitoring activities on a risk basis.

FCNSW has largely fulfilled mandatory Coastal IFOA training requirements, but has not yet trained other staff who would also benefit from the training.

Contractor compliance appears to be improving, but there are gaps and inconsistencies in FCNSW's documentation of this.

FCNSW is not measuring its overall compliance to determine how it is tracking against its target.

The EPA undertakes proactive inspections of Coastal IFOA harvesting operations on a risk basis. However, it does not assess the risk at harvest sites covered by other IFOAs.

Most EPA compliance staff have received basic training, but few have received more advanced training required to effectively undertake forestry inspections.

Some EPA offices do not have the necessary equipment to undertake forestry inspections.

The EPA and FCNSW are not implementing all elements of a Memorandum of Understanding that aims to promote a cooperative relationship between the agencies.

What we recommended

The report made recommendations to FCNSW which aim to improve:

staff training
consistency of compliance reviews and data capture
targeting of compliance activities
measurement of performance.

The report made recommendations to the EPA which aim to improve:

risk-assessments
staff training
staff equipment.

The report also recommended that FCNSW and EPA should fully implement their Memorandum of Understanding.

The Forestry Corporation of NSW (FCNSW) is a state-owned corporation that supplies timber to sawmills in New South Wales, including timber harvested from public native forests. FCNSW is responsible for the management of around two million hectares of public native forests and plantations. Around half the area of native forests is permanently set aside for conservation.

Public native forestry is regulated through the Forestry Act 2012, Biodiversity Conservation Act 2016, Protection of the Environment Operations Act 1997 and associated regulations. Under the Forestry Act 2012, the objectives of FCNSW include, where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development contained in section 6(2) of the Protection of the Environment Administration Act 1991. This involves the integration of social, economic and environmental considerations in decision-making processes.

In undertaking its native forestry operations, FCNSW must comply with Integrated Forestry Operations Approvals (IFOA), issued jointly by the Minister for the Environment and the Minister for Agriculture, which set out rules to protect species and ecosystems where timber harvesting is occurring, and aim to ensure forests are managed in an ecologically sustainable way. FCNSW must also ensure that its contractors undertake forestry operations in line with IFOAs. The Coastal IFOA, developed in 2018, consolidated the four IFOAs for the Eden, Southern, Upper and Lower North East coastal regions of New South Wales into a single IFOA. The other three current IFOAs are Brigalow Nandewar, South Western Cypress and Riverina Redgum (the Western IFOAs).

The NSW Environment Protection Authority (EPA) is responsible for regulating native forestry in New South Wales. Under the Protection of the Environment Administration Act 1991, one of the objectives of the EPA is to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development. This includes monitoring FCNSW’s compliance with IFOA conditions, including by maintaining and enforcing a compliance program.

The Coastal IFOA also introduced a new structure and regulatory approach for IFOAs, establishing outcomes, conditions and protocols. The conditions set mandatory actions and controls intended to protect threatened plants, animals, habitats, soils and water. The protocols, referenced in the conditions, set out additional enforceable actions and controls intended to support the effective implementation of the conditions.

Public native forestry is the largest component of hardwood supply in New South Wales. The 2019–20 bushfires had a major impact on regional communities, and large areas of native forest. This heightened environmental risks and challenges in public native forestry. Five million hectares of New South Wales was impacted, including more than 890,000 hectares of native State Forests. This is over 40% of the coastal and tablelands native State Forests in New South Wales.

In addition to effective compliance activities, the success of the regulatory approach to public native forestry operations depends on how wood supply yields are modelled, and ensuring that harvested volumes do not exceed these yields. This is of particular importance in areas where forests have been severely damaged by fire. This audit did not consider sustainable yields. Recent reviews of this include an independent review of the FCNSW sustainable yield model and a Natural Resources Commission review in 2021.

Conclusion

Forestry Corporation of NSW (FCNSW) clearly articulates its compliance obligations at the corporate level and for each harvest site. However, there are deficiencies in FCNSW’s compliance approach. While FCNSW undertakes monitoring of its contractors in a number of ways, it does not consistently monitor compliance across its contractors and does not target its monitoring activities on a risk basis. This increases the risk that non-compliant practices will not be identified, potentially leading to environmental harm.

FCNSW has a compliance strategy and program that sets out its compliance obligations and how they will be managed. FCNSW’s Compliance Policy outlines compliance requirements, actions to ensure compliance, and responsibilities for staff, supervisors, senior management and board members. FCNSW also has a compliance monitoring system manual that outlines its monitoring program, and its risk-assessment and incident reporting procedures. These corporate documents set out FCNSW’s overall approach to managing compliance.

Harvesting in State Forests is undertaken by contractors or sub-contractors. FCNSW provides training to its staff and contractors and undertakes monitoring to identify contractor compliance with relevant requirements through a variety of means, including its quality assurance assessment (QAA) program. FCNSW also communicates compliance obligations to contractors in harvest plans.

FCNSW is not undertaking its monitoring activities on a risk basis. The frequency of contractor supervision is inconsistent and is not tied to the contractor’s past performance, meaning that monitoring resources are not necessarily being targeted at the areas of highest -risk.

FCNSW also does not target its QAAs on a risk basis. FCNSW does not have procedures for how QAAs should occur outside the North Coast region. QAAs are conducted inconsistently, with some reviews occurring in only part of the harvest site while others cover the whole harvest site. In addition, some QAAs do not meet FCNSW’s minimum standards. FCNSW’s record keeping of QAAs is also inconsistent, making it difficult to determine true levels of compliance and the cause of identified potential non-compliances.

In addition, FCNSW does not collate and analyse the results of its compliance monitoring to target its compliance audits. Undertaking these audits on a risk basis would allow FCNSW to apply its resources to the highest-risk harvest sites and contractors.

The EPA identifies native forestry as a high priority regulatory activity and undertakes proactive inspections of Coastal IFOA harvest sites on a risk basis. However, the EPA does not assess the risk at Western IFOA harvest sites, leaving a significant gap in its inspection regime. This means that the EPA may not be inspecting all high-risk harvest sites to ensure compliance with regulations across those sites. The EPA has started to train more of its staff in conducting forestry inspections, but it currently has a limited number of trained and experienced staff to undertake this work.

The EPA has developed a Regulatory and Compliance Priorities Statement 2022–23 which identifies native forestry as a key risk. This statement identifies that forestry is a priority area for its compliance activities because of the increased environmental risk and sensitivity in forests following the 2019–20 bushfires. A divisional plan for its regulatory operations contains specific actions for forestry, including ensuring that the EPA has a consistent approach to recording regulatory actions undertaken and identifying priority areas for assurance over State Forests.

As part of its compliance activities, the EPA responds to complaints received, or reports of non-compliance, across all four IFOA areas and also carries out proactive inspections in the Coastal IFOA area. To guide these inspections, the EPA determines the level of risk posed by each harvest site in the Coastal IFOA area using information it gathers from FCNSW. The EPA prioritises inspections of sites rated as high and medium-risk, but the EPA has not undertaken risk-assessments for the three Western IFOAs. By not determining the risks in these areas, the EPA does not have assurance that it is checking FCNSW compliance with regulations across all high-risk sites.

Most EPA staff have basic training in forestry matters, but few staff have the more advanced training required to effectively undertake forestry inspections. In addition, not all EPA officers have access to the technology required to undertake forestry inspections, such as internet-enabled tablets and specialised tapes for measuring tree diameter. This limits the EPA’s ability to determine the level of compliance with regulations and respond effectively to instances of environmental harm in relation to public native forestry.

The Coastal IFOA does not contain provisions which allow the EPA to unilaterally restrict forestry activities in the aftermath of a catastrophic event such as the 2019–20 bushfires. Following the bushfires, FCNSW approached the EPA and asked for additional site-specific operating conditions (SSOC) at some locations to assist it in maintaining compliance. The SSOCs were issued by the EPA and FCNSW was required to carry out forestry operations in accordance with the SSOCs at relevant harvest sites. These SSOCs were in place for 12 months. After a year, FCNSW decided not to renew this approach with the EPA, but implemented its own voluntary measures during harvesting operations. Unlike the SSOCs, the EPA was unable to undertake enforcement activities for breaches of voluntary measures.

Parliamentary reference - Report number #382 - released 22 June 2023

15 December 2022

Published

Planning and Environment 2022

Environment

Industry

Local Government

Planning

Asset valuation

Compliance

Financial reporting

Information technology

Infrastructure

Internal controls and governance

Management and administration

Risk

What the report is about

Result of the Planning and Environment cluster agencies' financial statements audits for the year ended 30 June 2022.

What we found

Unmodified audit opinions were issued for all completed 30 June 2022 financial statements audits of cluster agencies. Seven audits are ongoing.

Disclaimed audit opinions were issued for the 2010–11 to 2015–16 financial statements of the Water Administration Ministerial Corporation (WAMC), as management was unable to certify that the financial statements exhibit a true and fair view of WAMC's financial position and financial performance.

Qualified audit opinions were issued for WAMC's 2016–17 and 2017–18 financial statements due to insufficient evidence to support the completeness and valuation of water meters infrastructure assets, the impairment of water meters, and the completeness of buildings at Nimmie Caira.

Unqualified audit opinions were issued for WAMC's 2018–19 and 2019–20 financial statements.

The Department of Planning and Environment (the department) assessed 45 Category 2 Statutory Land Managers (SLM) did not meet the reporting exemption criteria and therefore were required to prepare 2021–22 financial statements. None of these 45 Category 2 SLMs prepared and submitted their 30 June 2022 financial statements by the statutory reporting deadline.

All 119 Commons Trusts have never submitted their financial statements for audit as required by the Government Sector Finance Act 2018 (GSF Act).

NSW Treasury has confirmed that the Catholic Metropolitan Cemeteries Trust (CMCT) is a controlled entity of the State. To date, CMCT has not met its obligations to prepare financial statements under the GSF Act and it has not submitted financial statements to the Auditor-General for audit.

What the key issues were

Since 2017, the Audit Office has recommended the department address the different practices across the local government sector in accounting for rural firefighting equipment. Despite repeated recommendations, the department did little to resolve this issue. At the time of writing, 32 of 118 completed council audits received qualified audit opinions on their 30 June 2022 financial statements.

There continues to be significant deficiencies in Crown land records. The department uses the Crown Land Information Database (CLID) to record key information relating to Crown land in New South Wales that is managed and controlled by the department and land managers. The CLID system was not designed to facilitate financial reporting, and the department is required to conduct extensive adjustments and reconciliations to produce accurate information for the financial statements.

The department implemented the CrownTracker system as a replacement for CLID. The project was finalised in June 2022, but it has not achieved the intended outcomes.

Nine high-risk issues were identified across the cluster related to the findings outlined above and weaknesses in IT general controls, financial reporting, governance processes and internal controls.

Recommendations were made to address these deficiencies.

This report provides Parliament and other users of the Planning and Environment cluster’s financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:

financial reporting
audit observations.

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

This chapter outlines our audit observations related to the financial reporting of agencies in the Planning and Environment cluster (the cluster) for 2022.

Section highlights

Unqualified audit opinions were issued for all completed 30 June 2022 financial statements audits of cluster agencies. Seven audits are ongoing. The audit of the Catholic Metropolitan Cemeteries Trust(CMCT) has not been able to commence, despite repeated requests to do so.
The audits of the Water Administration Ministerial Corporation's (WAMC) financial statements for the years ended 30 June 2011 to 30 June 2020 were completed in November 2022. These audits had been long outstanding due to insufficient records and evidence to support the transactions and balances of WAMC, particularly for the earlier years. In recent years, management commenced actions to improve WAMC's governance and financial management, and finalise the outstanding audits.

Disclaimed audit opinions were issued on the 2010–11 to 2015–16 financial statements as management was unable to certify that the financial statements exhibit a true and fair view of WAMC's financial position and financial performance.

Qualified audit opinions were issued for the 2016–17 and 2017–18 financial statements due to insufficient evidence to support the completeness and valuation of water meters infrastructure assets, the impairment of water meters, and the completeness of buildings at Nimmie Caira.

Unqualified audit opinions were issued for the 2018–19 and 2019–20 financial statements.

The 2020–21 and 2021–22 WAMC audits are in progress.
The Department of Planning and Environment (the department) assessed 45 Category 2 Statutory Land Managers (SLM) did not meet the reporting exemption criteria and therefore were required to prepare 2021–22 financial statements. None of these 45 Category 2 SLMs prepared and submitted their 30 June 2022 financial statements by the statutory reporting deadline.

All 119 Commons Trusts have never submitted their financial statements for audit as required by the Government Sector Finance Act 2018 (GSF Act).

The department needs to do more to ensure Category 2 SLMs and Commons Trusts meet their statutory reporting obligations.

The department and Category 2 SLMs should finalise their reporting exemption assessments earlier to allow sufficient time for the non-exempted SLMs to prepare and submit annual financial statements by the statutory reporting deadline.
NSW Treasury has met with the Catholic Metropolitan Cemeteries Trust (CMCT) to consider their perspective as part of confirming CMCT is a controlled entity of the State for the purposes of financial reporting. NSW Treasury has confirmed that the CMCT is a controlled entity of the State. This means that the CMCT is statutorily obliged under section 7.6 of the GSF Act to prepare financial statements in accordance with the GSF Act and Treasurer's Directions, and give them to the Auditor-General for audit pursuant to the Government Sector Audit Act 1983 (GSA Act). Section 34 of the GSA Act requires the Auditor-General to furnish an audit report on these financial statements.

The department wrote to CMCT to request it work with, and offer full assistance to, the Auditor-General in the exercise of her duties. To date, the CMCT has not met its obligations to prepare financial statements under the GSF Act as it has not submitted its financial statements to the Auditor-General for audit despite repeated requests, and has not provided access to its books and records for the purposes of a financial audit. The CMCT contends that they are not a GSF agency as defined by the GSF Act and therefore not a controlled entity of the State.
Six agencies required to perform early close procedures did not complete a total of 11 mandatory procedures. Incomplete procedures included the delayed resolution of matters raised in prior years and two agencies did not record movements in the fair value of physical assets in the financial statements.

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 Planning and Environment cluster.

Section highlights

Since 2017, the Audit Office of New South Wales has recommended that the Department of Planning and Environment (the department) address the different practices across the local government sector in accounting for rural firefighting equipment. Despite repeated recommendations, the department did little to resolve this issue, and in 2022, 32 of 118 completed audits of councils received qualified audit opinions on their 2022 financial statements.
Consistent with the department’s role to assess councils' compliance with legislative responsibilities, standards or guidelines, the department should intervene where councils do not recognise rural firefighting equipment.
There continues to be significant deficiencies in Crown land records. The department should implement an action plan to ensure the Crown land database is complete and accurate.
The number of findings reported to management decreased from 161 in 2020–21 to 132 in 2021–22. Eight high-risk findings were identified during 2021–22, of which six were repeat issues. One new high-risk finding related to deficiencies in governance processes and internal controls identified as a part of the Water Administration Ministerial Corporation's 2011–2020 financial statements audits.
The department and NSW Treasury did not comply with section 35 of the Energy and Utilities Administration Act 1987 (EUA Act). However, complying with the EUA Act could create non-compliance with other pieces of legislation. Amendments to the EUA Act have been made to resolve this inconsistency. The amendment took effect from April 1999.

Appendix one – Misstatements in financial statements submitted for audit

Appendix five – Councils received qualified audit opinions

Copyright notice

8 December 2022

Published

Regional NSW 2022

Environment

Industry

Planning

Asset valuation

Compliance

Financial reporting

Fraud

Information technology

Infrastructure

Internal controls and governance

Management and administration

Regulation

Risk

Shared services and collaboration

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

Unqualified audit opinions were issued on the financial statements of cluster agencies. Two audits are ongoing.
Cluster agencies completed all required early close procedures.
Changes to accommodation arrangements managed by Property NSW on behalf of the department and cluster agencies resulted in the collective derecognition of approximately $100.6 million in right-of-use assets and corresponding lease liabilities totalling $110.4 million from the balance sheets of these agencies.
Cluster agencies continue to provide financial assistance to communities affected by natural disasters.

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

The 2021–22 audits identified five moderate issues across the cluster. 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.
Of the four newly identified moderate rated issues, one related to internal control deficiencies and improvements and three related to financial reporting.
The number of findings reported to management has decreased from 36 in 2020–21 to 14 in 2021–22.

Appendix one – Misstatements in financial statements submitted for audit

Appendix one – Included reports, 2018–2022

30 June 2022

Published

Audit Insights 2018-2022

Community Services

Education

Environment

Finance

Health

Industry

Justice

Local Government

Premier and Cabinet

Planning

Transport

Treasury

Universities

Whole of Government

Asset valuation

Cross-agency collaboration

Compliance

Cyber security

Financial reporting

Fraud

Information technology

Infrastructure

Internal controls and governance

Management and administration

Procurement

Project management

Regulation

Risk

Service delivery

Shared services and collaboration

Workforce and capability

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.

picture of Margaret Crawford Auditor-General for New South Wales in black dress with city skyline as background 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.

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 two – About this report

Copyright notice

21 June 2022

Published

NSW planning portal

Planning

Industry

Environment

Local Government

Information technology

Project management

Risk

What the report is about

Using the portal, relevant planning activities can be carried out online, including all stages of development applications.

The portal has been developed under three separate business cases in 2013, 2014 and 2020.

In late 2019, the government mandated the use of the portal for all development applications. This decision took effect across 2020–21.

This audit assessed the effectiveness of the department's implementation, governance and stakeholder engagement in delivering the NSW planning portal.

What we found

Shortcomings in the department's initial planning and management of the program led to a significant time overrun. It has taken the department longer and cost significantly more to implement the portal than first anticipated.

In recent years the department has improved the planning, implementation and governance of the ePlanning program, resulting in improved delivery of the portal’s core functions.

The department now has a clear view of the scope necessary to finalise the program, but has not yet published the services it plans to implement in 2022 and 2023.

Mandating the use of the portal for all development applications changed the program's strategic risk environment and required the department to work more closely with a cohort of stakeholders, many of whom did not want to adopt the portal.

Despite this change, the department kept its overall delivery approach the same.

While implementation of the portal has delivered financial benefits, the department has overestimated their value.

The Department has only reported benefits since 2019 and has not independently assured the calculation of benefits.

What we recommended

By December 2022, the department should:

publish a roadmap of the services it expects to release on the portal across 2022 and 2023
update its ePlanning program assumptions, benefits targets and change management approach to reflect the government's decision to mandate the use of the portal for all stages of a development application
independently assure and report publicly the correct calculation of ePlanning program benefits.

Fast facts

10 years taken to implement the portal when completed
3 years longer than initially planned to implement the portal
$146m capital expenditure on the portal when completed
$38.5m more spent than planned in the business cases.

The ePlanning program is an initiative of the Department of Planning and Environment (the department) to deliver a digital planning service for New South Wales through the NSW planning portal (the portal, or the planning portal). The department defines the portal as an online environment where community, industry and government can work together to better understand and meet their obligations under the Environmental Planning and Assessment Act 1979 (NSW). Using the portal, relevant planning activities can be carried out online throughout New South Wales. This includes, but is not limited to:

applying for and gaining planning approval
applying for and gaining approval for building works, sub-dividing land and similar activities
issuing occupancy and other certificates.

The portal has been developed under three separate business cases. The first business case in 2013 led to the creation of a central portal, which made planning information available to view by planning applicants and allowed some planning applications to be lodged and tracked online.

Under a second business case prepared in 2014, the department set out to improve and widen the functions available via the portal. The department prepared a third business case in 2020 to fund further improvements to the portal over the period July 2020 to June 2023. The third business case also extended the portal's functions to support the building and occupation stages of the planning cycle.

In late 2019, the government mandated the use of the portal for all stages of development applications. This decision took effect across 2020–21 and applied to all councils as well as certifiers and others involved in the planning process.

The objective of this performance audit was to assess the effectiveness of the department's implementation, governance and stakeholder engagement in delivering the NSW planning portal. We investigated whether:

delivery of the NSW planning portal was planned effectively
sound governance arrangements are in place to ensure effective implementation of the program
users of the NSW planning portal are supported effectively to adopt and use the system.

Conclusion

Since implementation commenced in 2013, the NSW planning portal has progressively achieved its objectives to provide citizens with access to consolidated planning information and allow them to prepare and submit development applications online. Implementation was initially hindered by deficiencies in planning and it has taken the department significantly longer and cost significantly more to implement the portal than first anticipated. While the portal's implementation has delivered financial benefits, the department has overestimated their value. As a result, the department cannot yet demonstrate that the portal has achieved overall financial benefits, relative to its costs.

In the first two years of the ePlanning program, the department delivered a portal that allowed planners, developers, certifiers and the public to view important planning information. However, the department found the delivery of a second, transactional version of the portal in 2017 to be much more challenging. This version was intended to offer more integrated information and allow development applications to be submitted and managed online. The department did not rollout this version after a pilot showed significant weaknesses with the portal's performance. A subsequent review found that this was partly because the department did not have a clear view of the portal’s role or the best way to implement it. In recent years the department has improved the planning, implementation and governance of the ePlanning program resulting in improved delivery of the portal’s core functions.

By the time the program reaches its scheduled completion in 2023, it will have taken the department ten years and around $146 million in capital expenditure to implement the portal. This will be significantly longer and more expensive than the department originally expected. This overrun is partly due to an increased scope of services delivered through the portal and an initial under-appreciation of what is involved in creating a standard, central resource such as the portal. The department also experienced some significant implementation difficulties – which saw the transactional portal discontinued after it was found to be not fit for purpose. Following this, the department re-set the program in 2017–18 and re-planned much of the portal's subsequent development.

In November 2019, the New South Wales Government decided to mandate the use of the portal for all stages of development applications by the end of 2020–21. The department had previously planned that the portal would be progressively adopted by all councils and other stakeholders over the five years to 2025. The decision to mandate the portal's use for all development applications brought forward many of the portal's benefits as well as the challenges of its implementation. The department did not change its overall delivery approach in response to the changed risks associated with the government's decision to mandate use of the portal.

The current version of the portal has given the department more timely and comprehensive planning information and has helped New South Wales to provide continuous planning services during COVID-19 lockdowns, which interrupted many other public functions. The portal has also delivered financial benefits, however the department has not independently assured benefits calculations carried out by its consultant, and the reported benefits are overstated. In addition, some stakeholders report that the portal is a net cost to their organisation. This has included some certifiers and some councils which had implemented or had started to implement their own ePlanning reforms when use of the portal was mandated in 2019. The department now needs to address the issues faced by these stakeholders while continuing to deliver the remaining improvements and enhancements to the portal. Over the remaining year of the program, it will be critical that the department focuses on the agreed program scope and carefully evaluates any opportunities to further develop the portal to support future planning reforms.

This part of the report sets out how:

the ePlanning program has been planned and delivered
users of the portal have been supported
the program has been governed.

This part of the report sets out the ePlanning program's:

expected and reported financial benefits
calculation of financial benefits.

In 2019, the department increased its expectations for net financial benefits

The department's three ePlanning business cases each forecast substantial financial benefits from the implementation of the planning portal. The department expected that most financial benefits would flow to planning applicants due to a quicker and more consistent planning process. It also expected that government agencies and councils would benefit from the portal.

Exhibit 6: Summary of the financial benefits originally expected
	Business case 1 ($ million)	Business case 2 ($ million)	Business case 3 ($ million)	Total ($ million)
Benefits	90.0	44.3	270.9	405.2
Costs	43.3	29.4	89.8	162.5
Net benefits	46.7	15.0	181.1	242.7

Note: Benefits and costs are incremental. All amounts are calculated over ten years. Amounts for business case 1, 2 and 3 amounts are expressed in 2013, 2015 and 2019 dollars respectively. All amounts are discounted at seven per cent to show their value at the time when they were calculated. Amounts may not add due to rounding.
Source: Audit Office analysis of data provided by the Department of Planning and Environment.

In 2019 the department commissioned a review to explore opportunities to better identify, monitor and realise the benefits of the ePlanning program. Using this work, the department updated the expected benefits for business cases 1 and 2 to take account of:

errors and miscalculations in the original benefits calculations
slower delivery of the portal and changes to the take-up of portal services by councils
changes to the services supported by the portal.

Exhibit 7: Summary of the financial benefits expected for business case 1 and 2 after the 2019 update
	Original business case 1 and 2 (combined) ($ million)	New business case 1 and 2 (combined) ($ million)
Benefits	134.3	210.6
Costs	72.7	96.3
Net benefits	61.7	114.3

Note: Benefits and costs are incremental. All amounts are calculated over ten years. Amounts for the original business case 1 and 2 are expressed in 2013 and 2015 dollars respectively. The new combined amount is expressed in 2019 dollars. All amounts are discounted or inflated at seven per cent to show their value at the time when they were calculated. Amounts may not add due to rounding.
Source: Audit Office analysis of data provided by the Department of Planning and Environment.

Reported benefits significantly exceed the current targets

In September 2021, the department reported that the program had achieved $334 million of benefits over the three financial years up to June 2021 plus the first two months of 2021–22. These reported benefits were significantly higher than expected.

Exhibit 8: Reported financial benefits from the ePlanning program
	2018–19 ($ million)	2019–20 ($ million)	2020–21 ($ million)	July to August 2021 ($ million)	Total ($ million)
Benefits	5.2	68.8	214.7	45.1	333.8
Target	2.5	14.4	56.7	19.2	92.8
Amount and per cent above target	2.7 108%	54.4 378%	158 279%	25.9 135%	241 260%

Source: Audit Office analysis of data provided by the Department of Planning and Environment.

The department attributes the higher-than-expected financial benefits to the following:

benefit targets have not been updated to reflect the impact of the 2019 decision to mandate the use of the portal for all development applications. This decision brought forward the expected benefits as well as potential costs of the program. However, the department did not update its third business case which was draft at the time. The business case was subsequently approved in July 2020
one-off cost savings for agencies not having to develop their own systems
public exhibitions of planning proposals continuing to be available online during 2020 when some newspapers stopping printing due to COVID-19.

The calculation of benefits is overstated

The department reported $334 million of benefits in September 2021 due to the ePlanning program. This calculation is overstated because:

a proportion of reported benefits is likely to be due to other planning reforms
the calculation of the largest single benefit is incorrect
the reported benefits may not fully account for dis-benefits reported by some stakeholders.

The program’s benefits are calculated primarily from changes in planning performance data, such as the time it takes to determine a planning development application. The department currently attributes the benefits from shorter planning cycles entirely to the effect of the ePlanning program. However, planning cycles are impacted by many other factors such as the complexity of planning regulations and the availability of planning professionals. Planning cycles may also be impacted by other departmental initiatives which are designed to improve the time that it takes for a planning application to be evaluated. The Introduction describes some of these initiatives.

The largest contribution to the department’s September 2021 benefit report was an estimated saving of $151 million for developers due to lower costs associated with holding their investment for a shorter time. However, the department’s calculation of this benefit assumes a high baseline for the time to determine a development application. It also assumes that all development applications except for additions or alterations to existing properties will incur financing costs. However, a small but material number of these applications will be self-financed. The calculation also includes several data errors in spreadsheets.

The calculation of some benefits relies upon an extrapolation of the benefits experienced by a small number of early-adopter councils, including lower printing and scanning costs, fewer forms and quicker processing times. However, some councils report that their costs have increased following the introduction of the portal, primarily because aspects of the portal duplicate work that they carry out in their own systems. The portal has also required some councils to re-engineer aspects of their own systems, such as the integration of their planning systems with other council systems such as finance or property and rating systems. It has also required councils to create new ways of integrating council information systems with the planning portal.

The department has published information to help councils and certifiers to automatically integrate their systems with the planning portal. This approach uses application programming interfaces (or APIs) which are an industry-standard way for systems to share information. In April and May 2021, the government granted $4.8 million to 96 regional councils to assist with the cost of developing, implementing and maintaining APIs. The maximum amount of funding for each council was $50,000. The department is closely monitoring the implementation of APIs by councils and other portal users. Once they are fully implemented the department expects APIs to reduce costs incurred by stakeholders.

The department has not yet measured stakeholder costs. It was beyond the scope of this audit to validate these costs.

The department has not independently assured the calculation of reported benefits

In 2020 the department appointed an external provider to calculate the benefits achieved by the ePlanning program. The department advised that it chose to outsource the calculation of benefits because the provider had the required expertise and because it wanted an independent calculation of the benefits. The process involves:

extraction and verification of planning performance data by the department
population of data input sheets by the department
calculation of benefits by the external provider using the data input
confirmation by the department that the calculation includes all expected benefit sources.

The department does not have access to the benefits calculation model which is owned and operated by the external provider. The department trusts that the provider correctly calculates the benefits and does not verify the reported benefit numbers. However, as the benefits model involves many linked spreadsheets and approximately 300 individual data points, there is a risk that the calculation model contains errors beyond those discussed in this audit.

The reported benefits have only been calculated since 2019

The department originally intended to track benefits from October 2014. However, it only started to track benefits in 2019 when it appointed an external provider to calculate the benefits achieved by the portal. Any benefits or dis-benefits between the introduction of the portal and 2019 are unknown and not included in the department’s calculation of benefits.

Appendix one – Response from agency

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

Parliamentary reference - Report number #366 - released 21 June 2022

17 December 2021

Published

Planning, Industry and Environment 2021

Environment

Industry

Local Government

Planning

Asset valuation

Financial reporting

Information technology

Internal controls and governance

Risk

This report analyses the results of our audits of the Planning, Industry and Environment cluster agencies for the year ended 30 June 2021.

Our preferred approach is to table the ‘Report on State Finances’ in Parliament before any other cluster report. This is because the 'Report on State Finances' focuses on the audit results and observations relating to the Total State Sector Accounts, in effect a consolidation of all government agencies. This year the 'Report on State Finances' has been delayed due to significant accounting issues being considered in the Total State Sector Accounts and which may impact the Treasury and Transport clusters.

As there are no outstanding matters relating to audits in the Planning, Industry and Environment cluster impacting the Total State Sector Accounts we have decided to break with normal practice and table this cluster report ahead of the ‘Report on State Finances’.

What the report is about

The results of the Planning, Industry and Environment cluster agencies' financial statements audits for the year ended 30 June 2021.

What we found

Unmodified audit opinions were issued for all completed 30 June 2021 financial statements audits of cluster agencies. Three audits are ongoing.

An 'Other Matter' paragraph was included in the Independent Planning Commission's (the IPC) audit opinion because the prior year comparative figures were not audited. Prior to 2020–21, the IPC was not required to prepare separate financial statements under the Public Finance and Audit Act 1983 (PF&A Act). The financial reporting provisions of the Government Sector Finance Act 2018 now require the IPC to prepare financial statements.

The number of identified misstatements increased from 51 in 2019–20 to 54 in 2020–21.

The 2010–11 to 2019–20 audits of the Water Administration Ministerial Corporation’s (the Corporation) financial statements are incomplete due to insufficient records and evidence to support the transactions of the Corporation, particularly for the earlier years. Management has commenced actions to improve the governance and financial management of the Corporation. These audits are currently in progress and the 2020–21 audit will commence shortly.

There are 609 State controlled Crown land managers (CLMs) across New South Wales that predominantly manage small parcels of Crown land.

Eight CLMs prepared and submitted 2019–20 financial statements by the revised deadline of 30 June 2021. A further 24 CLMs did not prepare financial statements in accordance with the PF&A Act. The remaining CLMs were not required to prepare 2019–20 financial statements as they met NSW Treasury's financial reporting exemption criteria.

The Department of Planning, Industry and Environment's (the department) preliminary assessment indicates that 60 CLMs are required to prepare financial statements in 2020–21. To date, no CLMs have prepared and submitted financial statements for audit in 2020–21.

There are also 120 common trusts that have never submitted financial statements for audit. Common trusts are responsible for the care, control and management of land that has been set aside for specific use in a certain locality, such as grazing, camping or bushwalking.

What the key issues were

The number of matters we reported to management increased from 135 in 2019–20 to 180 in 2020–21, of which 40 per cent were repeat findings.

Seven high-risk issues were identified in 2020–21:

system control deficiencies at the department relating to user access to HR and payroll management systems, vendor master data management and journal processing, which require manual reviews to mitigate risks
deficiencies related to the Centennial Park and Moore Park Trust's tree assets valuation methodology
the Lord Howe Island Board did not regularly review and monitor privileged user access rights to key information systems
the Natural Resources Access Regulator identified and adjusted three prior period errors retrospectively, which indicate deficiencies within the financial reporting processes
deficiencies relating to the Parramatta Park Trust's tree assets valuation methodology
lease arrangements have not been confirmed between the Planning Ministerial Corporation and Office of Sport regarding the Sydney International Regatta Centre
the Wentworth Park Sporting Complex land manager (the land manager) has a $6.5 million loan with Greyhound Racing NSW (GRNSW). GRNSW requested the land manager to repay the loan. However, the land manager subsequently requested GRNSW to convert the loan to a grant. Should this request be denied, the land manager would not be able to continue as a going concern without financial support. This matter remains unresolved for many years.

There continues to be significant deficiencies in Crown land records. The department uses the Crown Land Information Database (CLID) to record key information relating to Crown land in New South Wales that are managed and controlled by the department and land managers (including councils and land managers controlled by the state). The CLID system was not designed to facilitate financial reporting and the department is required to conduct extensive adjustments and reconciliations to produce accurate information for the financial statements.

The department is implementing a new system to record Crown land (the CrownTracker project). The department advised that the project completion date will be confirmed by June 2022.

What we recommended

The department should ensure CLMs and common trusts meet their statutory reporting obligations.

Cluster agencies should prioritise and action recommendations to address internal control deficiencies, with a focus on addressing high-risk and repeat issues.

The department should prioritise action to ensure the Crown land database is complete and accurate. This will allow the department and CLMs to be better informed about the Crown land they control.

Fast facts

The Planning, Industry and Environment cluster aims to make the lives of people in New South Wales better by developing well-connected communities, preserving the environment, supporting industries and contributing to a strong economy.

There are 54 agencies, 609 State controlled Crown land managers that predominantly manage small parcels of Crown land and 120 common trusts in the cluster.

42% of the area of NSW is Crown land
$33.2b water and electricity infrastructure as at 30 June 2021
100% unqualified audit opinions were issued for all completed 30 June 2021 financial statements audits
7 high-risk management letter findings were identified
54 monetary misstatements were reported in 2020–21
40% of reported issues were repeat issues

This report provides parliament and other users of the Planning, Industry and Environment cluster (the cluster) agencies’ financial statements with the results of our audits, our observations, 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, Industry and Environment cluster (the cluster) for 2021.

Section highlights

Unmodified audit opinions were issued for all completed 30 June 2021 financial statements audits of cluster agencies. Three audits are ongoing.
An 'Other Matter' paragraph was included in the Independent Planning Commission’s (the IPC) audit opinion because the prior year comparative figures were not audited. Prior to 2020–21, the IPC was not required to prepare separate financial statements under the Public Finance and Audit Act 1983. From 2020–21, the IPC is required to prepare financial statements under the Government Sector Finance Act 2018.
The 2010–11 to 2019–20 audits of the Water Administration Ministerial Corporation’s (the Corporation) financial statements were incomplete due to insufficient records and evidence to support the transactions of the Corporation, particularly for the earlier years. These audits are currently underway, and the 2020–21 audit will commence shortly.
The Department of Planning, Industry and Environment's (the department) preliminary assessment indicates that 60 State controlled Crown land managers (CLMs) are required to prepare financial statements in 2020–21. To date, no CLMs have prepared and submitted financial statements for audit in 2020–21. All 120 common trusts have never submitted their financial statements for audit. The department needs to do more to ensure that the CLMs and common trusts meet their statutory reporting obligations.
Nine agencies that were required to perform early close procedures did not complete a total of 20 mandatory procedures. The most common incomplete early close procedures include the revaluation of property, plant and equipment, documenting all significant management judgments and assumptions, and the implementation of new and updated accounting standards.

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 statements audits of agencies in the Planning, Industry and Environment cluster.

Section highlights

The number of findings reported to management has increased from 135 in 2019–20 to 180 in 2020–21, and 40 per cent were repeat issues.
Seven high-risk issues were identified in 2020–21, and three high-risk findings were repeat issues.
There continues to be significant deficiencies in Crown land records. The department should prioritise action to ensure the Crown land database is complete and accurate.

Appendix one - Misstatements in financial statements submitted for audit