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Published

Actions for Regulation insights

Regulation insights

Environment
Finance
Health
Local Government
Planning
Whole of Government
Compliance
Cyber security
Internal controls and governance
Management and administration
Procurement
Regulation
Risk

What this report is about

In this report, we present findings and recommendations relevant to regulation from selected reports between 2018 and 2024.

This analysis includes performance audits, compliance audits and the outcomes of financial audits.

Effective regulation is necessary to ensure compliance with the law as well as to promote positive social and economic outcomes and minimise risks with certain activities.

The report is a resource for public sector leaders. It provides insights into the challenges and opportunities for more effective regulation.

Audit findings

The analysis of findings and recommendations is structured around four key themes related to effective regulation:

  • governance and accountability
  • processes and procedures
  • data and information management
  • support and guidance.

The report draws from this analysis to present insights for agencies to promote effective regulation. It also includes relevant examples from recent audit reports.

In this report, we also draw out insights for agencies that provide a public sector stewardship role.

The report highlights the need for agencies to communicate a clear regulatory approach. It also emphasises the need to have a consistent regulatory approach, supported by robust information about risks and accompanied with timely and proportionate responses.

The report highlights the need to provide relevant support to regulated parties to facilitate compliance and the importance of transparency through reporting of meaningful regulatory information.

 

Read the PDF report

Published

Actions for Driver vehicle system

Driver vehicle system

Transport
Finance
Cyber security
Information technology
Internal controls and governance
Project management
Service delivery

What this report is about

Transport for NSW (TfNSW) uses the Driver vehicle System (DRIVES) to support its regulatory functions. The system covers over 6.2 million driver licences and over seven million vehicle registrations.

DRIVES first went live in 1991 and has been significantly extended and updated since, though is still based around the same core system. The system is at end of life but has become an important service for Service NSW and the NSW Police Force.

DRIVES now includes some services to other parts of government and non-government entities which have little or no connection to transport. There are 141 users of DRIVES in total, including commercial insurers, national regulators, and individual citizens.

This audit assessed whether TfNSW is effectively managing DRIVES and planning to transition it to a modernised system.

Audit findings

TfNSW has not effectively planned the replacement of DRIVES.

It is now working on its third business case for a replacement system but has failed to learn lessons from its past attempts.

In the meantime, TfNSW has not taken a strategic approach to managing DRIVES’ growth.

TfNSW has been slow to reduce the risk of misuse of personal information held in DRIVES. With its delivery partner Service NSW, TfNSW has also been slow to develop and implement automatic monitoring of access.

TfNSW uses recognised processes for managing most aspects of DRIVES, but has not kept the system consistently available for users. TfNSW has lacked accurate service availability information since June 2022, when it changed its technology support provider.

TfNSW needs to significantly prioritise cyber security improvements to DRIVES. TfNSW is seeking to lift DRIVES’ cyber defences, but it will not achieve its stated target safeguard level until December 2025.

Even then, one of the target safeguards will not be achieved in full until DRIVES is modernised.

Audit recommendations

TfNSW should:

  • implement a service management framework including insight into the views of DRIVES users, and ensuring users can influence the service
  • ensure it can accurately and cost effectively calculate when DRIVES is unavailable due to unplanned downtime
  • ensure implementation of a capability to automatically detect anomalous patterns of access to DRIVES
  • ensure that DRIVES has appropriate cyber security and resilience safeguards in place as a matter of priority
  • develop a clear statement of the future role in whole of government service delivery for the system
  • resolve key issues currently faced by the DRIVES replacement program including by:
    • clearly setting out a strategy and design for the replacement
    • preparing a specific business case for replacement.

Read the PDF report

Parliamentary reference - Report number #388 - released 20 February 2024

Published

Actions for State Finances 2023

State Finances 2023

Treasury
Whole of Government
Asset valuation
Compliance
Cyber security
Financial reporting
Infrastructure
Internal controls and governance
Management and administration
Regulation

What this report is about

Results of the audit of the Consolidated State Financial Statements of the New South Wales General Government Sector (GGS) and Total State Sector (TSS) for the year ended 30 June 2023.

Findings

The audit opinion on the 2022–23 Consolidated State Financial Statements was qualified in relation to two issues and included an emphasis of matter.

The first qualification matter is a continuation of the prior year limitation of scope on the audit relating to the Catholic Metropolitan Cemeteries Trust (CMCT), a controlled state entity, who continued to deny access to its management, books and records for the purposes of a financial audit. As a result, the Audit Office was unable to obtain sufficient appropriate audit evidence to support the assets, liabilities, income and expenses relating to CMCT recorded in the TSS and the equity investment recognised in the GGS relating to the net assets of CMCT.

The second qualification matter relates to the limitations on the accuracy and reliability of financial information relating to Statutory Land Managers (SLMs) and Common Trust entities (CTs) controlled by the State and were either exempted from requirements to prepare financial reports, or who were required to submit financial reports and have not done so. The Audit Office was unable to obtain sufficient appropriate audit evidence to determine the impact on the value of non-land assets and liabilities, income and expenses that should be recognised in the 2022–23 Consolidated State Financial Statements and which have not been recorded in the Consolidated State Financial Statements.

The independent audit opinion also includes an emphasis of matter drawing attention to key decisions made by the NSW Government regarding the future of the Transport Asset Holding Entity of New South Wales (TAHE).

Recommendations

The report includes recommendations for NSW Treasury to address several high-risk findings, including:

  • ensuring accurate and reliable financial information is available to recognise the non-land balances of SLMs and CTs
  • ensuring the CMCT, SLMs and CTs meet their statutory reporting obligations
  • conducting a broader review of the financial reporting exemption framework
  • continued monitoring of TAHE's control over its assets
  • providing timely guidance to the sector relating to legislative or policy changes that impact financial reporting
  • developing an accounting policy for the reimbursement of unsuccessful tender bid cost contributions.

 

Read the PDF report

Published

Actions for Treasury 2023

Treasury 2023

Treasury
Compliance
Cyber security
Financial reporting
Information technology
Internal controls and governance
Management and administration
Procurement
Regulation
Risk
Service delivery
Shared services and collaboration

What this report is about

Result of the Treasury portfolio of agencies’ financial statement audits for the year ended 30 June 2023.

The results of the audit of the NSW Government’s consolidated Total State Sector Accounts (TSSA), which are prepared by NSW Treasury, will be reported separately in our report on ‘State Finances 2023’.

The audit found

Unqualified audit opinions were issued on all general purpose financial statement audits.

Qualified audit opinions were issued on two of the 24 other engagements prepared by portfolio agencies. These related to payments made from Special Deposit Accounts that did not comply with the relevant legislation.

The number of monetary misstatements identified in our audits increased from 29 in 2021–22 to 39 in 2022–23.

The new parental leave policy impacted agencies across all portfolios. NSW Treasury should perform annual assessments to identify changes in legislation and regulation and provide timely guidance to the sector.

Transport for NSW and Sydney Metro have capitalised over $300 million of tender bid costs paid to unsuccessful tender bidders relating to significant infrastructure projects. Whilst NSW Treasury policy provides clarity on the reimbursement of unsuccessful bidders’ costs, clearer guidance on how to account for these costs in agencies’ financial statements is required.

The key audit issues were

Five high-risk issues were reported in 2022–23. Three were new findings on contract management, accounting treatments for workers compensation renewal premium adjustments and the management and oversight of a Special Deposit Account. Two repeat issues referred to the need to improve quality review processes over financial reporting and the timely approval of administration costs.

Portfolio agencies should prioritise and action recommendations to address internal control deficiencies.

 

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

Section highlights

  • Unqualified audit opinions were issued on all Treasury portfolio agencies’ 2022–23 financial statements.
  • Two qualified audit opinions were issued on special purpose financial reports, relating to whether payments from the Electricity Retained Interest Corporation – Ausgrid (ERIC-A) Fund and the Electricity Retained Interest Corporation – Endeavour (ERIC-E) Fund, complied with the relevant legislation.
  • The total number of errors (both corrected and uncorrected) in the financial statements increased from 29 in 2021–22 to 39 in 2022–23.
    Reported corrected misstatements increased from 15 in 2021–22 to 25 with a gross value of $7.1 billion in 2022–23. Reported uncorrected misstatements increased from 13 in 2021–22 to 14 in 2022–23, with a gross value of $277.6 million in 2022–23.

Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.

This chapter outlines our observations and insights from our financial statement audits of agencies in the Treasury portfolio.

Section highlights

  • Five high-risk issues were reported in 2022–23. Three were new findings on contract management, accounting treatments for workers compensation renewal premium adjustments and the management and oversight of a Special Deposit Account.
  • A further 35 moderate risk findings were reported in 2022–23, of which ten were repeat findings.
  • Some agencies have again spent monies without an authorised delegation.
  • The quality of information provided for audit purposes needs to improve.

 

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

Appendix five – Acquittals and other opinions

 

© 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.

Published

Actions for Health 2023

Health 2023

Health
Whole of Government
Asset valuation
Compliance
Financial reporting
Information technology
Internal controls and governance
Project management
Regulation
Risk
Shared services and collaboration
Workforce and capability

What this report is about

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

The audit found

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

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

The key audit issues were 

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

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

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

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

Thirty per cent of reported issues were repeat issues. 

The audit recommended 

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

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

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

 

This report provides Parliament and other users of the Health portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:

  • financial reporting
  • audit observations.

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

This chapter outlines our audit observations related to the financial reporting of agencies in the Health portfolio of agencies (the portfolio) for 2023.

Section highlights

  • Unqualified audit opinions were issued for all portfolio agencies required to prepare general purpose financial statements.
  • The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
  • The Ministry of Health retrospectively corrected an $18.9 million adjustment in its financial statements relating to long service leave entitlements for certain employees.
  • Graythwaite Charitable Trust retrospectively corrected a $4.2 million adjustment in its financial statements related to prior period valuations. 

Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.

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

 Section highlights 

  • The 2022–23 audits identified one high-risk and 57 moderate risk issues across the portfolio.
  • The high-risk matter related to the forced-finalisation of time records.
  • The total number of findings increased from 67 to 111 in 2022–23.
  • Thirty per cent of the issues were repeat issues. Most repeat issues related to internal control deficiencies or non-compliance with key legislation and/or central agency policies.
  • Forced-finalisation of time records, accounting for the new paid parental leave provision and user access review deficiencies were the most commonly reported issues.
  • Qualified Assurance Practitioner's reports were issued on:
    • the design and operation of controls as documented by HealthShare NSW
    • the Ministry's Annual Prudential Compliance Statements in relation to residential aged care facilities.

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.

 

 

Published

Actions for Transport 2023

Transport 2023

Transport
Whole of Government
Asset valuation
Compliance
Financial reporting
Information technology
Infrastructure
Internal controls and governance
Management and administration
Procurement
Risk

What this report is about

Result of the Transport portfolio of agencies' financial statement audits for the year ended 30 June 2023.

The audit found

Unqualified audit opinions were issued for all Transport portfolio agencies.

An 'emphasis of matter' paragraph was included in the Transport Asset Holding Entity of New South Wales' (TAHE) independent auditor's report, which draws attention to management's disclosure regarding proposed changes to TAHE's operating model.

Government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE's assets.

Transport for NSW's valuation of roads and bridges resulted in a net increase to its asset value by $15.7 billion.

Transport for NSW and Sydney Metro have capitalised over $300 million of tender bid costs paid to unsuccessful tender bidders relating to significant infrastructure projects. Whilst NSW Treasury policy provides clarity on the reimbursement of unsuccessful bidders' costs, clearer guidance on how to account for these costs in agency's financial statements is required.

The key audit issues were

The number of issues reported to management decreased from 53 in 2021–22 to 49 in 2022–23.

High-risk findings include:

  • gaps in how Sydney Metro manages its contractors and how conflicts of interest are recorded and managed
  • future financial reporting implications to account for government's proposed changes to TAHE's future operating model, including asset valuations and control assessments of assets and operations
  • Parramatta Park Trust's tree assets' valuation methodology needs to be addressed.

Recommendations were made to address the identified deficiencies.

This report provides Parliament and other users of the Transport portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:

  • financial reporting
  • audit observations.

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

This chapter outlines our audit observations related to the financial reporting of agencies in the Transport portfolio of agencies (the portfolio) for 2023.

Section highlights

  • Unqualified audit opinions were issued on all the portfolio agencies’ 30 June 2023 financial statements.
  • An 'Emphasis of Matter' paragraph was included in the Transport Asset Holding Entity of New South Wales’ (TAHE) Independent Auditor's Report to draw attention to management's disclosure regarding the proposed changes to TAHE's future operating model.
  • The total number of errors (including corrected and uncorrected) in the financial statements increased by 59% compared to the prior year.
  • The recent government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE’s assets.
  • Transport for NSW needs to further improve its quality assurance processes over comprehensive valuations, in particular, ensuring key inputs used in the valuations are properly supported and verified.
  • Transport for NSW and Sydney Metro capitalised over $300 million of bid costs paid to unsuccessful bidders. NSW Treasury’s Bid Cost Contributions Policy does not contemplate how these costs should be recognised in agency’s financial statements. Transport agencies should work with NSW Treasury to develop an accounting policy for the bid cost contributions to ensure consistent application across the sector.

Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Transport portfolio.

Section highlights

  • The 2022–23 audits identified four high risks and 28 moderate risk issues across the portfolio. Thirty-nine per cent of issues were repeat findings.
  • Four high risk findings include:
    • TAHE’s asset valuations (new)
    • TAHE’s control of assets and operations (new)
    • Sydney Metro’s management of contractors and conflicts of interest (new)
    • Parramatta Park Trust’s valuation of trees (repeat).
  • The total number of findings decreased from 53 in 2021–22 to 49 in 2022–23. Many repeat findings related to control weaknesses over the asset valuation, payroll processes, conflicts of interest and information technology user access administration.


Appendix one – Misstatements in financial statements submitted for audit 

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting 

Appendix four – Financial data 

 

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

Published

Actions for Enterprise, Investment and Trade 2023

Enterprise, Investment and Trade 2023

Finance
Asset valuation
Compliance
Cyber security
Financial reporting
Information technology
Infrastructure
Internal controls and governance
Management and administration
Procurement
Project management
Regulation
Risk

What this report is about

Results of the Enterprise, Investment and Trade portfolio of financial statement audits for the year ended 30 June 2023.

What we found

Unqualified audit opinions were issued for all completed Enterprise, Investment and Trade portfolio agencies.

An 'other matter' paragraph was included in the Jobs for NSW Fund's 30 June 2022 independent auditor's report to reflect the non-compliance with the Jobs for NSW Act 2015 (the Act). The Act requires the board to consist of seven members that include the Secretary of the Treasury, the Secretary of the Premier's Department, and five ministerial appointments. The board has consisted of two secretaries since 24 May 2019 when the independent members resigned. The remaining five members have not been appointed by the ministers as required by section 5(2) of the Act.

Financial statements were not prepared for the Responsible Gambling Fund, a special deposit account. Financial statements should be prepared unless NSW Treasury releases a Treasurer's Direction under section 7.8 of the GSF Act that will exempt the SDA from financial reporting requirements.

What the key issues were

The number of issues reported to management decreased from 65 in 2021–22 to 44 in 2022–23. Forty-six per cent of issues were repeated from the prior year.

Two high-risk issues were identified across the portfolio. One was a repeat issue where the Jobs for NSW Fund did not comply with legislation. The other high-risk issue was first identified in 2022–23 when the Department for Enterprise, Investment and Trade incorrectly recorded grants that did not meet the requirements of Australian Accounting Standards.

What we recommended

The Department should develop a robust model to ensure it only provides for grants that meet the eligibility criteria.

This report provides Parliament and other users of the Enterprise, Investment and Trade 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 Enterprise, Investment and Trade portfolio of agencies (the portfolio) for 2023.

Section highlights

  • Unqualified audit opinions were issued on all completed portfolio agencies’ 2022–23 financial statements.
  • An ‘other matter’ paragraph was included for the Jobs for NSW Fund’s 30 June 2022 financial report to reflect non-compliance with the Jobs for NSW Act 2015.
  • The Act requires the board to consist of seven members that include the Secretary of the Treasury, the Secretary of the Department of Premier and Cabinet (or their nominees) and five ministerial appointments, one of whom is to be appointed as Chair of the board. The board has consisted of the two secretaries since 24 May 2019 when the independent members resigned. The remaining five members have not been appointed by the ministers as required by section 5(2) of the Act.
  • An ‘emphasis of matter’ paragraph was included in the Jobs for NSW Fund’s 30 June 2022 financial report to draw attention to the financial report being prepared for the purpose of fulfilling the Jobs for NSW Fund’s financial reporting responsibilities as requested by the Treasurer’s delegate.
  • The total number of errors (including corrected and uncorrected) in the financial statements increased by 12% compared to the prior year.
  • The Responsible Gambling Fund (Special Deposit Account) did not prepare financial statements for the year ended 30 June 2023. Financial statements should be prepared unless NSW Treasury releases a Treasurer’s Direction under section 7.8 of the GSF Act that will exempt the Fund from financial reporting requirements. 

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 Enterprise, Investment and Trade portfolio.

Section highlights

  • The audits identified two high-risk and 20 moderate risk issues across the portfolio. Of these, one was a high-risk repeat issue and ten were moderate-risk repeat issues.
  • One of the high-risk matters related to the Jobs for NSW Fund audit for the year ended 30 June 2022.
  • The other high-risk matter related to overstating grants relating to the Jobs Plus Program as the criteria to pay the grant was not met at 30 June 2023.
  • The total number of findings decreased from 65 to 44 with 2022–23 findings mainly related to deficiencies in accounting for property, plant and equipment and agencies having outdated policies. 

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.

Published

Actions for Education 2023

Education 2023

Education
Whole of Government
Asset valuation
Compliance
Cyber security
Financial reporting
Information technology
Internal controls and governance
Procurement
Project management
Risk

What this report is about

Results of the Education portfolio of agencies’ financial statements audits for the year ended 30 June 2023.

What we found

Unqualified audit opinions were issued for all Education portfolio agencies.

An ‘other matter’ paragraph was included in the TAFE Commission’s independent auditor’s report as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.

What the key issues were

Comprehensive valuations of buildings at the Department of Education (the department) and at the TAFE Commission found that certain assumptions applied in previous years needed to be updated, resulting in prior period restatements.

The department prepaid a building contractor for early works on a project and some of the prepayment is in legal dispute.

The department duplicated a claim for project funding from Restart NSW in 2021.

New parental leave legislation increased employee liabilities for portfolio agencies. The department and the NSW Education Standards Authority (the Authority) updated their financial statements to record parental leave liabilities.

A high risk matter was raised for the Authority to improve the quality and timeliness of information to support their financial statement close process.

What we recommended

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

The department should:

  • improve processes to ensure project claims are not duplicated
  • assess the risks associated with providing prepayments to contractors.

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

Section highlights

  • Unqualified audit opinions were issued on all the portfolio agencies 2022–23 financial statements.
  • An ‘other matter’ paragraph was included in the independent auditor’s report for the Technical and Further Education Commission (the TAFE Commission) as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.
  • Comprehensive valuations of buildings in the current year identified that certain assumptions applied in previous years were incorrect. The effects of these corrections are disclosed as prior period errors in the financial statements of the Department of Education (the department) and the TAFE Commission.
  • The department made corrections to its financial statements to reflect increases to NSW teachers’ wages announced post balance date. This impacted amounts recorded as liabilities for a range of employee benefits and entitlements totalling $225.4 million, of which $147.9 million is accepted by the Crown and $77.5 million is borne by the department.
  • A change to the NSW paid parental leave scheme, effective October 2022, created a new legal obligation that needed to be recognised by impacted government agencies. Of the three affected portfolio agencies, only the department and the NSW Education Standards Authority recognised a liability to account for this change. The aggregated unrecorded liabilities of other agencies in the portfolio totalled $2.4 million. The errors within the individual agencies’ financial statements were not material.
  • The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
  • The NSW Childcare and Economic Opportunity Fund should prepare financial statements unless NSW Treasury releases a Treasurer’s Direction under section 7.8 of the GSF Act that will exempt the SDA from financial reporting requirements. 

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 Education portfolio.

Section highlights

  • The 2022–23 audits identified one high risk and 20 moderate risk issues across the portfolio. Of these, one was a high risk repeat issue and four were moderate risk repeat issues.
  • The total number of findings increased from 29 to 36, which mainly related to deficiencies in financial reporting, information technology, payroll and purchasing controls.
  • The high risk matter relates to the lack of quality and timely information to support the financial statement close process at the NSW Education Standards Authority. 

Appendix one – Early close procedures

Appendix two – 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.

Published

Actions for Customer Service 2023

Customer Service 2023

Finance
Asset valuation
Compliance
Financial reporting
Information technology
Internal controls and governance
Management and administration
Regulation
Risk
Service delivery
Shared services and collaboration

What this report is about

Result of the Customer Service portfolio agencies' financial statement audits for the year ended 30 June 2023.

What we found

Unmodified audit opinions were issued for all completed 30 June 2023 financial statements audits of Customer Service portfolio agencies. Two audits are ongoing.

What the key issues were

The total number of misstatements in the financial statements and findings reported to management decreased compared to the prior year.

For the first time since its establishment in 2015, GovConnect NSW received unqualified audit opinions for business process internal controls and information technology general controls managed by service providers.

The department controls Finance Co Trust (Fin Co), a special purpose trust created as part of its project to replace flammable cladding for eligible residential apartment buildings. Fin Co did not prepare financial statements which is a breach of the Government Sector Finance Act 2018 (GSF Act).

The department's land titling database was overstated by $42.5 million due to errors in the valuation model.

The New South Wales Government Telecommunications Authority corrected a prior period error of $10.2 million overstatement of property, plant and equipment.

A high-risk finding was reported to Service NSW regarding gaps in policies, systems and processes for administering and financial reporting on grant programs.

Recommendations were made to address these deficiencies.

This report provides Parliament and other users of the Customer Service 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 Customer Service 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 decreased compared to the prior year.
  • Financial statements were not prepared for Finance Co Trust (Fin Co), a special purpose trust created by the department as part of its project to replace flammable cladding for eligible residential apartment buildings. This is a breach of the Government Sector Finance Act 2018 (GSF Act).
  • The department overstated the value of its land titling database, a service concession asset by $42.5 million. This was due to errors in the valuation data and calculation errors in the valuation model.
  • Service NSW’s late resolution of the accounting assessment of grant programs funding resulted in delays to financial reporting and audit.
  • The New South Wales Government Telecommunications Authority (the authority) corrected a prior period error retrospectively to write off assets that could not be physically verified. 

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 Customer Service portfolio.

Section highlights

  • The 2022–23 audits identified one high risk and 26 moderate risk issues across the portfolio.
  • The high-risk matter was related to Service NSW’s revenue assessment of its grant programs.
  • The total number of findings decreased from 64 to 41, which mainly related to deficiencies in financial reporting, information technology, payroll and purchasing controls.
  • Fifty-one per cent of the issues were repeat issues. Many repeat issues related to weakness in information technology (IT) controls around access to systems and data and disaster recovery testing.
  • For the first time since its establishment in 2015, GovConnect NSW received unqualified audit opinions for business processes internal controls and information technology general controls managed by service providers. 

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.

Published

Actions for Regional, rural and remote education

Regional, rural and remote education

Education
Management and administration
Project management
Service delivery

What this report is about

Students in rural and remote areas of NSW face greater challenges compared to their metropolitan peers.

This report examined how the NSW Department of Education (the department) is ensuring that rural and remote students have access to the same quality of early childhood, school education, and skills pathways as metropolitan students.

What we found

A decade since the previous (2013) strategy to address educational disadvantage, there remain considerable gaps in access and outcomes between rural and remote students and metropolitan students.

The Rural and Remote Education Strategy (2021–24) is unlikely to address these longstanding and known issues of educational disadvantage in rural and remote areas.

Key enabling factors such as resourcing a dedicated team, setting performance measures, and establishing suitable governance arrangements were not put in place to support effective implementation of the 2021 strategy.

The department has programs aimed at addressing remoteness challenges, but does not know if these initiatives improve access or outcomes.

The department does not monitor or report on student access or outcomes according to geographic location.

What we recommended

The Department of Education should:

  • develop a new strategy that addresses disadvantage in regional, rural and remote education
  • establish and report publicly on regional, rural and remote key performance indicators
  • improve data collection by using a standard remoteness classification
  • improve governance arrangements for regional, rural and remote education
  • review the resources provided for regional, rural and remote areas that recognises the additional costs
  • develop an approach that ensures all students can access best practice modes of delivery.

In February 2021, the department of Education (the department) released the ‘Rural and Remote Education Strategy (2021–2024)’. The strategy sets a vision that ‘every child in regional New South Wales has access to the same quality of education as their metropolitan peers’. It recognises that students in rural and remote areas of New South Wales face greater challenges compared to students in metropolitan locations. These challenges contribute to regional, rural and remote students underperforming on major educational indicators compared to their metropolitan peers.

In recent years, regional, rural and remote communities experienced a series of natural disasters as well as the COVID-19 pandemic. In response to the pandemic and subsequent school closures, the department introduced new initiatives aimed at minimising the disruption to children including online learning and small group tuition.

The department established a regional, rural and remote education policy unit in 2021 to support delivery of the strategy and its vision.

The objective of this audit was to assess the effectiveness of the department’s activities to ensure that regional, rural and remote students have access to the same quality of early childhood, school education, and skills pathways as their metropolitan peers.

In making this assessment, the audit examined whether:

  • The department developed and implemented a strategy that enables regional, rural and remote students to access the same quality of early childhood education, school education, and skills pathways as students in metropolitan New South Wales.
  • The department has been addressing the complexities and needs of regional, rural and remote early childhood education, school education, and skills pathways.
Conclusion

The department's rural and remote education strategy is unlikely to achieve its vision that every child in regional New South Wales has access to the same quality of education as their metropolitan peers. Shortcomings in the design and implementation of the strategy have meant there is little to report on its impact after more than two years since its release.

The department did not take on board lessons learned from the previous strategy. The department did not provide additional resources to meet the strategy aims, establish strong central coordination, set timeframes, set measures of success, or identify new programs to address gaps in regional and remote access and outcomes. Instead, the department relied on matching existing programs and activities across its business areas to meet the stated actions and goals of the strategy.

There was not enough work put in to plan for successful implementation. A changeover in staff responsible for coordinating implementation of the strategy and lack of fit-for-purpose governance arrangements slowed its momentum. The department took one year to recruit a central team and almost two years to set up governance that gives relevant department executives oversight of the strategy. This was not fast enough to support a four-year strategy with an ambitious vision.

The department did not establish a program logic model, set baseline measures or develop an evaluation plan to assess the impact of the strategy. Consequently, it has not adequately monitored changes in access or outcomes for regional, rural and remote students. Two years after its release, there has not been any public reporting against the actions or outcomes of the strategy.

The department is not addressing the complexities of delivering regional, rural and remote early childhood, school education and skills pathways. There are a range of programs targeted to overcoming challenges of remoteness, but the department does not monitor data to determine whether these programs are sufficient to close the persistent gaps in access and outcomes for regional, rural and remote students.

A decade after the Rural and Remote Education Blueprint was launched in 2013, there remain considerable gaps in access and outcomes between metropolitan and regional, rural and remote areas. The department identifies 'equity' as a key value in its strategic plan but does not monitor or report on performance against key indicators according to geographic location. Data produced in response to our requests for this report demonstrate that previously identified gaps in access and outcomes remain.

Different areas of the department recognise the challenges of delivering services in regional, rural and remote locations and have developed specific programs or approaches aimed at addressing these challenges. The department does not know whether these interventions are sufficient to close the gaps in access or outcomes. Schools we spoke with as part of the audit reported significant ongoing challenges with attracting and retaining staff, providing a full curriculum and accessing support services when needed. 

This chapter examines the process to develop the Rural and Remote Education Strategy (2021–2024). It considers whether there was a comprehensive program of stakeholder consultation, whether relevant research and evidence was incorporated and whether an effective performance monitoring system was established.

The department made genuine efforts to consult with stakeholders on the new strategy

The department had a clear process to engage and obtain feedback from key stakeholders during the development of the new strategy. It developed a range of documents to support the consultation process including a stakeholder engagement plan, communications plan, and presentation. The department used the International Association for Public Participation (IAP2) Spectrum of Public Participation principles to help ensure that relevant stakeholders were included in the planning and decision-making process.

In late 2019, the department began its first phase of consultations with internal and external stakeholders to get their views on rural and remote education. It consulted internally with department directors, advisory groups, and learning communities, and externally with government agencies, service providers, non-government schools, and universities.

In March 2020, the department developed a stakeholder engagement paper to test the key issues from stakeholder consultations. Four focus areas were identified and included in a consultation paper that went out to key stakeholders for the second round of consultations in May 2020.

In the third consultation phase, the department conducted a workshop with stakeholders to review the earlier feedback, prioritise issues, identify gaps, and provide further input.

This consultation process enabled the department to identify issues and challenges to inform the new strategy. However, it was already aware that the blueprint was having limited success, and had already identified potential focus areas, following the evaluation of the blueprint in 2019.

The department did not consider recent research when developing the new strategy

The department's guidance materials promote the importance of considering research during policymaking. The guidelines describe the need to understand a topic, consult with stakeholders, identify gaps in existing knowledge, and ensure future work is informed by current literature.

In 2013, the department published a literature review on rural and remote education to inform the blueprint. The literature review found that students in rural and remote schools were not performing as well as their metropolitan peers, and that this performance gap was widening. The review attributed this to the higher number of children from low socio-economic backgrounds attending rural and remote schools. The review also identified several other factors that could negatively impact performance outcomes for rural and remote students. The department used the findings of the literature review to develop the key focus areas in the 2013 blueprint.

When the department began developing the new rural and remote education strategy in 2019, it recognised the need to review the literature on recent international initiatives. However, it has not yet released this review. This means that the department could have missed important new developments since it last examined the literature in 2013. Incorporating up-to-date research is important where past strategies have not met all their intended outcomes.

A national review into rural and remote education in 2018 examined Australian and international literature to inform its findings. The review made 11 recommendations to the Australian and state governments. While the NSW Government was not required to formally respond to the review, it could have considered the work done by that review when developing the new strategy. Several review recommendations are addressed in the strategy, while several others are only partly addressed. Gaps between review recommendations and specific strategy actions include improving the availability of quality accommodation, substantially reducing the waiting times for specialist assessments of students with learning difficulties and disabilities and increasing access to high quality distance education.

In 2019, the department commissioned a rural and remote project to contribute a research and evidence base to the new strategy. The main aim of the project was to help the department understand how it could better support rural and remote schools to increase educational outcomes. There was not enough time for this review to be completed prior to the release of the strategy. As of June 2023, the research project had not yet been released.

The strategy did not address all findings and recommendations from a recent evaluation

In 2020, the department's Centre for Education Statistics and Evaluation (CESE) published an evaluation of the blueprint. The evaluation examined how the actions in the blueprint were implemented. It recommended that a new strategy be developed, and made recommendations for things that should be incorporated into the strategy.

The blueprint aimed to ensure students in rural and remote areas could access the same quality of education as their metropolitan peers. The blueprint identified four focus areas to meet that aim:

  • quality early childhood education
  • great teachers and school leaders
  • curriculum access for all
  • effective partnerships and connections.

The department developed several initiatives to help meet the objectives of each of the four focus areas. These initiatives are described in Exhibit 5 below.

Exhibit 5: Key initiatives in the Rural and Remote Education Blueprint (2013)
Key focus area Initiative
Quality early childhood education
  • Funding model to help vulnerable and disadvantaged children access preschool.
Great teachers and school leaders
  • Rental subsidy to help attract and retain teachers.
Curriculum access for all
  • Virtual school to provide a varied curriculum for high potential and gifted students.
Effective partnerships and connections
  • Education networks for teachers and school leaders to access expert advice to support student learning.
  • Networked specialist centres to bring together services to support student health and wellbeing.

Source: Department of Education, Rural and remote education: A blueprint for action 2013.

The evaluation found that initiatives in two of the four focus areas – Quality early childhood education and Curriculum access for all – had performed well. However, the evaluation found that initiatives in the other two focus areas – Great teachers and school leaders and Effective partnerships and connections – did not achieve intended outcomes.

On the whole, the evaluation found that the 'remoteness gap' between rural and remote students and metropolitan students had not reduced since the blueprint was introduced. It recommended that the department continue its focus on rural and remote education by developing a new evidence-based strategy that focused on student outcomes and clear measures of success.

Objectives and actions in the new strategy were similar to those in the blueprint

The 2021 strategy sets an overall vision that 'every child in regional New South Wales has access to the same quality of education as their metropolitan peers'. It also states that the department 'is committed to ensuring all rural and remote students have equitable access to educational opportunities'.

Exhibit 6: Comparison of objectives in the blueprint and the new strategy
Rural and Remote Education Blueprint (2013) Rural and Remote Education Strategy (2021–24)
Provide more children with access to quality early child education in the year before school. Ensure all students have access to quality preschool in the year before school.
Ensure rural and remote schools have greater capacity to attract and retain quality teachers and leaders. Increase supply of high-quality educators in rural and remote communities.
Build the capacity of teachers and leaders in rural and remote schools. Better develop rural and remote teachers to deliver quality learning opportunities.
Address wellbeing needs through effective partnerships and connections. Address wellbeing needs through connections with local communities.
Develop partnerships so that rural and remote students have access to quality pathways into further education, training, or employment. Build partnerships to increase student access to post-school opportunities.

Source: Audit Office summary of Department of Education information.

Four areas in the blueprint remained a focus in the new strategy – early childhood education, teacher recruitment and retention, curriculum, and student wellbeing support services. Each focus area identifies a goal, as well as the aims and actions that contribute to those goals.

While this shows the department identified that these areas required continued attention, most actions were to 'increase', 'expand' or 'improve' existing programs and resources. The new strategy did not propose any new ideas or solutions, despite the blueprint achieving limited success in improving outcomes for rural and remote students.

There were no baseline or target measures set to monitor progress of the new strategy

The blueprint evaluation recommended that the department develop a new evidence-based strategy which focused on improving student outcomes. It also recommended the department use a program logic methodology to ensure there was a clear definition of success, adequate measures of success, and continual monitoring to ensure success.

Program logic models are a visual representation of the various components of a program. They can be used to illustrate program priorities, inputs, activities, outputs, outcomes, and assumptions. Logic models are used to explain how a proposed solution will address a specific problem. They are important because they can help test assumptions, build business cases, and identify potential enablers or barriers that could impact the project.

The department did not complete a program logic model during development of the new strategy, nor did it define measures to monitor whether the strategy's overall vision for quality education or the commitment to equitable access was on track to be achieved.

The department has not comprehensively monitored changes in educational outcomes in regional, rural and remote areas since the evaluation of the blueprint in 2020. This evaluation had seven indicators of educational outcomes by remoteness. The measures used in the evaluation could have provided a starting point given the similarity in focus areas between the blueprint and the new strategy. Not addressing past review recommendations increases risks that issues will be repeated.

The policy unit advised it has plans to set up a dashboard to monitor performance across the department's business plan measures by remoteness. This is intended to identify areas where system-wide improvements are required. This is not a comprehensive account of the strategy outcomes because the business plan measures don't capture all the goals of the strategy.

There were no timeframes or resources identified for implementing new strategy actions

The strategy has an overall timeframe of 2021–2024 but does not clarify when it expects the vision, goals, or aims to be achieved, or actions to be implemented.

The department's guidance on policymaking sets out how projects should be transitioned between the policy and implementation teams. This guidance is intended to help ensure the policy intent and scope of the project are not lost during the delivery of the project. The guidance highlights that the policy team should establish clear project implementation timeframes. It is important to have clear timeframes because it enables teams to measure progress, manage resources, and prioritise actions to ensure project outcomes are achieved.

The strategy states that there is a further $1 billion of investment planned over the next three years for rural and remote education but does not identify how this is allocated across its focus areas. It is important to identify the resources required to support the implementation of a program so that program objectives are met in a timely and cost-effective manner. The previous blueprint identified much lower funding of $80 million but more clearly showed how it would be allocated for identified actions across the four focus areas.

In response to our requests, the department separately identified $1.286 billion in expenditure for regional, rural and remote schools referenced in the strategy. Most of this expenditure related to existing department programs and activities rather than new initiatives. The total amount included:

  • $576.9 million for new and upgraded schools
  • $365.8 million for upgraded information technology equipment and resources
  • $120 million for school facility upgrades to be co-funded by schools
  • $60 million to replace school roofs
  • $60 million for the COVID Intensive Learning Support Program
  • $32 million for the Early Action for Success program
  • $29.7 million for staffing incentives
  • $21.7 million for literacy and numeracy interventions
  • $18.8 million in school location allowances
  • $1.45 million for the Rural Learning Exchange Pilot
  • $0.4 million for Rural and Remote Network initiatives.

This chapter examines the arrangements in place to implement the strategy. It considers whether effective governance arrangements are in place and how progress is monitored and reported.

This chapter considers the effectiveness of arrangements to ensure regional, rural and remote students have access to quality early childhood education, school education, and post‑school transitions.

This chapter considers the department's arrangements to monitor educational and wellbeing outcomes of students by remoteness. It reports on differences in outcomes between students in metropolitan areas and those in regional, rural and remote areas.

Those living in regional, rural and remote areas can have greater difficulty in accessing government services, often needing to travel long distances, or facing lower service levels than provided in major cities. This context is important when considering educational and wellbeing outcomes, given the disruptive effects of waiting or missing out on important services.

The rest of this chapter details key measures in the department's outcome and business plan.

Appendix one – Response from agency

Appendix two – About the audit

Appendix three – Performance auditing

 

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Parliamentary reference - Report number #385 - released 10 August 2023