What the report is about

The Government Advertising Act 2011 requires the Auditor General to conduct a performance audit on government advertising activities each financial year.

This audit looked at whether three campaigns run by Destination NSW (DNSW) during 2020–21 were carried out in an effective, economical and efficient manner:

• Love Sydney (comprising two sub campaigns being ‘Sydney - Love It Like You Mean It’ and ‘Get Your Sydney On’)
• Love NSW
• Road Trips. 

What we found

DNSW complied with section 6 of the Government Advertising Act 2011 (the Act), prohibiting political content.

The Act requires the head of an agency to sign a compliance certificate that certifies that the campaign complies with the Act and is an efficient and cost effective means of achieving its public purpose. 

When the Acting Chief Executive of DNSW signed DNSW’s compliance certificate, evidence to support this certification was not available.

The Act requires a peer review and cost benefit analysis for campaigns over $1.0 million. DNSW did not complete the peer review or cost-benefit analysis for the audited advertising campaigns before they had concluded. 

The Department of Customer Service (DCS), which manages the peer review process, did not escalate the issue of the outstanding peer review documentation to senior DNSW staff. 

DNSW did not set targets for all measures established for the campaigns. This limits the ability to assess their effectiveness.

The impact of the COVID-19 pandemic likely contributed to the campaigns not meeting a substantial proportion of established outcome and impact targets.

None of the audited campaigns met the minimum requirement of 7.5 per cent for the allocation of the media budget for communications with Culturally and Linguistically Diverse and Aboriginal audiences.

What we recommended

DNSW should:

• implement processes for planning and delivering advertising campaigns delivered in urgent circumstances to bring them in line with NSW Government practice
• ensure that it establishes measurements and targets for outcomes and impacts of its advertising campaigns consistent with NSW Government evaluation frameworks and guidance.

The Department of Customer Service should:

• establish a policy and procedure for ensuring that campaign documentation is completed in a timely manner in the case of urgent campaigns, including establishing expectations around timeframes for the completion of peer review
• establish a procedure for escalating issues of outstanding documentation to ensure that the peer review is completed in line with reasonable expectations and timeframes.

The Government Advertising Act 2011 (the Act) requires the Auditor-General to conduct a performance audit on the activities of one or more government agencies in relation to government advertising campaigns in each financial year. The performance audit assesses whether a government agency or agencies have carried out activities in relation to government advertising in an effective, economical and efficient manner and in compliance with the Act, the regulations, other laws and the Government Advertising Guidelines (the Guidelines). This audit examined three campaigns run by Destination NSW during the 2020–21 financial year:

• Love Sydney (comprising two sub-campaigns being ‘Sydney - Love It Like You Mean It’ and ‘Get Your Sydney On’), focussing on increasing visitor activity in Sydney
• Love NSW, focussing on increasing visitor activity in regional New South Wales
• Road Trips, focussing on encouraging visitor activity on iconic road trips in regional New South Wales.

Section 6 of the Act prohibits political advertising. Under this section, material that is part of a government advertising campaign must not contain the name, voice or image of a minister, member of Parliament or a candidate nominated for election to Parliament or the name, logo or any slogan of a political party. Further, a campaign must not be designed to influence (directly or indirectly) support for a political party.

The Act and associated regulations and the Guidelines also establish an accountability and compliance framework around the investment in advertising by NSW Government agencies.

The government's operating circumstances at the commencement of the 2020–21 financial year were highly challenging, with the 2019–20 bushfires being followed by the COVID-19 pandemic. This created new demands across a range of government services, and without any clear view on the severity of the pandemic and when it would end. This was the case for Destination NSW, which had to plan for its advertising activities in the context of an uncertain future for national border closures (impacting international in-bound travel) and lockdowns across Australia, including in New South Wales (impacting domestic travel). Further, the sudden nature of outbreaks and lockdowns meant that Destination NSW often was required to change the targeting of its campaigns and, in some situations, had to cease particular advertising activities until specific lockdowns had ended.

Campaign materials we reviewed did not contain political content

The audit team reviewed campaign materials developed as part of each of the paid advertising campaigns including radio transcripts, digital videos and display. See Appendix two for examples of campaign materials for this campaign.

Section 6 of the Act prohibits political advertising as part of a government advertising campaign. A government advertising campaign must not:

• be designed to influence (directly or indirectly) support for a political party
• contain the name, voice or image of a minister, a member of parliament or a candidate nominated for election to parliament
• contain the name, logo, slogan or any other reference to a political party.

The audit found no breaches of section 6 of the Act in the campaign material reviewed.

All reviewed campaigns were for purposes permitted by section 1.2 of the Guidelines

Section 4 of the Act states that government advertising campaigns are 'the dissemination to members of the public of information about a government program, policy or initiative, or about any public health or safety or other matter'. To support this, section 1.2 of the NSW Government Advertising Guidelines states that government advertising campaigns may only be used to achieve certain objectives. One of these objectives is to encourage changed behaviours or attitudes that will lead to improved public health and safety or quality of life.

The audit team considers that each of the reviewed advertising campaigns was consistent with this objective. This reflects the intent of each of the campaigns to increase economic activity driven by tourism activity in New South Wales, that contributes to improved quality of life for New South Wales residents.

The Acting Chief Executive signed Destination NSW's compliance certificate without supporting evidence

The Acting Chief Executive of Destination NSW signed a single compliance certificate for all Destination NSW campaigns for 2020–21 (including the three campaigns that are considered by this audit) on 28 February 2020. Evidence was not available at this date to support the statements included in the compliance certificate for the campaigns that were considered by this audit.

The compliance certificate is required by section 8 of the Act and states that the head of the agency confirms that a proposed government advertising campaign:

• complies with the Act, the regulations and the Guidelines, and
• contains accurate information, and
• is necessary to achieve a public purpose and is supported by analysis and research, and
• is an efficient and cost-effective means of achieving that public purpose.

At the time of signing the certificate in February 2020, Destination NSW had not conceived, designed or planned any of the campaigns that are considered by this audit, nor had it developed the relevant supporting information that would enable the agency to support these statements. As noted above, peer review had not commenced prior to this date. Further, Destination NSW had not completed a cost-benefit analysis or equivalent analysis.

Without any form of cost-benefit analysis or other evaluation for any of the campaigns prior to the date of signing of the compliance certificate, the Acting Chief Executive had no evidence that could support the certification that the campaigns were 'an efficient and effective means of achieving the public purpose'. The absence of peer review or a cost-benefit analysis also means that the Acting Chief Executive could not certify that the campaigns complied with the Act, the regulations or the Guidelines, nor that the campaign was supported by analysis and research.

Destination NSW did not complete peer reviews for the advertising campaigns before they ended, limiting assurance over campaign effectiveness, efficiency and economy

As all the campaigns subject to this audit were valued at over $250,000, each campaign was required to undergo peer review. The peer review is an independent review of the need for the proposed advertising campaign, the creative and media strategy (including objectives and target audiences) and how the agency will manage the campaign. Ordinarily, a peer review would be completed prior to a campaign commencing, however section 7(4) of the Act permits agencies to carry out a peer review after the advertising campaign commences 'if the head of the government agency concerned is satisfied that the campaign relates to an urgent public health or safety matter or is required in other urgent circumstances'.

DCS supported Destination NSW's assessment that these were urgent campaigns and that it would accept consideration of peer review components in parallel with the roll-out of the advertising campaigns, given the urgency of the need to generate economic activity, initially after the 2019–20 bushfires and then after the challenging circumstances brought on by the COVID-19 pandemic. This is in line with section 7(4) of the Act.

Destination NSW presented and obtained clearance on creative materials and media planning on a timely basis for two of the three campaigns (but not for the Road Trips campaign), which would ordinarily form part of peer review. However, for all campaigns, the peer reviews were not completed or signed off by DCS prior to the completion of advertising campaigns. In particular, Destination NSW did not submit material related to the accountability for campaign effectiveness, including the campaign objectives and measures before the end of the campaigns.

The absence of peer review of much of the material prior to completion of the campaigns reduces the ability of the agency and government to be confident that the advertising expenditure was consistent with NSW Government requirements, or represented efficient, effective and economical use of funds.

Destination NSW noted that section 7(4) of the Act allows the peer review to be completed after the commencement of a campaign in urgent circumstances but places no requirement on it to be completed before the end of the campaign. The audit has determined that for the peer review to meet its intended purpose, being to inform the design and delivery of the advertising campaign, it needs to be completed prior to the end of the campaign, even in urgent circumstances. DCS has supported this intent of the framework.

By the end of September 2021, DCS advised Destination NSW that it would not consider any further material for peer review related to the 2020–21 advertising campaigns. At this time, DCS closed the peer review for the Love NSW and Road Trips campaigns and assessed them as incomplete. DCS assessed the Love Sydney peer review as complete, despite noting that the campaign evaluation was not complete and with no details or confirmation of meeting culturally and linguistically diverse (CALD) advertising requirements, including for Aboriginal communities.

DCS did not escalate the issue of outstanding peer review materials

DCS worked at officer level to remind Destination NSW that peer review material was outstanding during the year. While this is appropriate as an initial point of escalation, at no time was the issue of non-compliance escalated to higher levels of management. DCS also never sent formal correspondence requesting the materials needed to ensure the completion of peer review.

DCS does not have a process for ensuring the timely completion of peer review in situations where urgency exemptions are used. There is an opportunity to formalise this process to ensure that there are appropriate escalation points and to ensure that compliance obligations are fulfilled in future.

Destination NSW did not meet the minimum requirement for allocation of the media budget for communications with CALD and Aboriginal audiences

The NSW Government 'CALD and Aboriginal Advertising Policy' stipulates that at least 7.5 per cent of an advertising campaign media budget is to be spent on direct communications to multicultural and Aboriginal audiences. Spend may be on media or non-media communication activities (e.g. events, participation at cultural festivals, direct mail, competitions and websites).

Destination NSW spent only 1.6 per cent of its media spend on culturally and linguistically diverse specific media placement on the 'Sydney - Love It Like You Mean It' campaign and none of its media placement for the other audited campaigns. This level of expenditure is substantially below the requirement.

Destination NSW could not demonstrate how its campaign designs or media placements effectively supported the cultural needs and issues of culturally and linguistically diverse populations. In connection with the 'Sydney - Love It Like You Mean It' campaign, it was noted that timeframes and production issues limited the ability to incorporate culturally diverse individuals in imagery.

Destination NSW advised that it believes the application of a 7.5 per cent threshold for specific audiences is not an effective way to reach these audiences. Destination NSW advised that its advertising was targeted at audiences with a propensity to travel, which did not necessarily include culturally diverse audiences, and its media channel research influenced its decision not to target specific CALD-focussed media channels.

None of the above factors negate Destination NSW's responsibility to ensure that the 'CALD and Aboriginal Advertising Policy' requirements are met.

In addition, Destination NSW also noted a number of non-media activities that supported culturally and linguistically diverse audiences, including translations on the sydney.com website, capturing of culturally and linguistically diverse audiences in production shooting and the production of a range of other collateral for culturally and linguistically diverse audiences. Despite these non-media activities, which Destination NSW did not quantify, the requirement for minimum expenditure in the reviewed campaigns for CALD audiences was not met by Destination NSW.

Destination NSW advised that it believes that the 7.5 per cent requirement does not apply to advertising outside of New South Wales, which the 'Get Your Sydney On', Love NSW and Road Trips campaigns targeted in whole or in part. The 'CALD and Aboriginal Advertising Policy' does not specifically limit its application to advertising for New South Wales residents.

Appendix one – Response to Destination NSW

Appendix two – Response from agencies

Appendix three – About the campaigns

Appendix four – About the audit

Appendix five – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #360 - released (23 December 2021).

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.

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.

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.

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 notice

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

This report analyses the results of our audits of the Customer Service 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 Customer Service 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 Customer Service cluster agencies' financial statement audits for the year ended 30 June 2021.

What we found

Unmodified audit opinions were issued for all Customer Service cluster agencies.

The number of monetary misstatements decreased from 48 in 2019–20 to 46 in 2020–21.

Seven out of eight agencies did not complete all mandatory early close procedures.

What the key issues were

Upon the implementation of AASB 1059 'Service Concession Arrangements: Grantors', the Department of Customer Service (the department) recognised a service concession asset, the land titling database, totalling $845 million for the first time at 1 July 2019.

The department reported several retrospective corrections of prior period errors.

The 2020–21 audits identified three high-risk and 59 moderate risk issues across the cluster. The high-risk issues were related to:

• the Department of Customer Service – internal control qualifications and control deviations in GovConnect service providers
• the Department of Customer Service – significant control deficiencies in information technology change management controls
• Rental Bond Board – uncertainties in the accounting treatment of rental bonds.

The percentage of repeat issues we report to management and those charged with governance in management letters increased from 29 per cent in prior year to 42 per cent in 2020–21 while the number of items decreased from 94 to 93.

The magnitude and number of internal control exceptions in GovConnect service providers increased resulting in additional audit procedures to address the risks of fraud and errors in the financial statements.

What we recommended

The department should improve the validation process of key valuation assumptions and inputs provided by the private operator NSW Land Registry Services. It should revisit its accounting treatment of new land titling records.

The department should ensure GovConnect service providers prioritise the remediation of control deficiencies in information technology services.

The department should continue to improve controls in cyber security management.

Cyber Security NSW and NSW Government agencies need to prioritise improvements to their cyber security resilience as a matter of urgency.

The New South Wales Government Telecommunications Authority should improve its fixed assets management and financial reporting process to accommodate its growing fixed assets profile.

This report provides Parliament and other users of the Customer Service cluster’s 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 Customer Service cluster (the cluster) for 2021.

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.

Findings reported to management

Forty-two per cent of findings reported to management were repeat issues

Breakdowns and weaknesses in internal controls increase the risk of fraud and error. Deficiencies in internal controls, matters of governance interest and unresolved issues were reported to management and those charged with governance of agencies. The Audit Office does this through management letters, which include observations, related implications, recommendations and risk ratings.

In 2020–21, there were 93 findings raised across the cluster (94 in 2019–20). Forty-two per cent of all issues were repeat issues (29 per cent in 2019–20).

The most common repeat issues related to weaknesses in controls over information technology user access administration.

A delay in implementing audit recommendations increases the risk of intentional and accidental errors in processing information, producing management reports and generating financial statements. This can impair decision-making, affect service delivery and expose agencies to fraud, financial loss and reputational damage. Poor controls may also mean agency staff are less likely to follow internal policies, inadvertently causing the agency not to comply with legislation, regulation and central agency policies.

The table below describes the common issues identified across the cluster by category and risk rating. 

2020–21 audits identified three high-risk findings

High-risk findings, including repeat findings, were reported at the following cluster agencies. One of the 2019–20 high-risk findings were not resolved.

The number of moderate risk findings increased from prior year

Fifty-nine moderate risk findings were reported in 2020–21, which was a 11.3 per cent increase from 2019–20. Of these, 26 were repeat findings, and 33 were new issues.

Moderate risk findings include:

• weaknesses in user access management, such as untimely access removal for terminated staff, and a lack of periodic user access review
• accounting for leases such as the review of extension options, assessing indicators of impairment and reviewing the lease reports for completeness and accuracy
• formalising arrangements between agencies including corporate service arrangements, funding arrangements, leases, use of SAP system and computer assets
• use of purchasing cards where our data analytics performed indicated potential gaps and controls and non-compliance with government policies.

The magnitude and number of internal control exceptions in GovConnect service providers have increased

In 2015, the NSW Government selected Unisys Australia Pty Limited’s (Unisys) as an information technology (IT) outsourced service provider and Infosys Limited (Infosys) as a business process outsourced service provider. The outsourced services arrangement was branded GovConnect NSW (GovConnect). The Department of Customer Service (the department) is the contract authority for the NSW Government. In 2019, the NSW Government transitioned a number of Unisys’ IT services progressively to the department and ceased all Unisys's IT services in May 2021. In 2020-21, Infosys, Unisys and the Department were co-providers of business processes and information technology services that constitute the GovConnect environment.

The role of the department has changed significantly from a coordinating agency on behalf of GovConnect customers to a GovConnect IT service provider. The department is responsible for the remediation of control deficiencies and continuous improvement in GovConnect internal control environment.

The department leads the project management of GovConnect services, including the arrangement to provide internal control assurance reports to customers in 2020–21. It engages an independent service auditor (service auditor) from the private sector to perform annual assurance reviews of controls at GovConnect service providers in accordance with Australian Standard on Assurance Engagements 3402 'Assurance Reports on Controls at a Service Organisation' (ASAE 3402). The service auditor reports on the internal controls at a service organisation, which are relevant to a user entity's internal control environment.

The service auditor issued eight ASAE 3402 reports covering business processes controls and information technology general controls (ITGC) provided by the service providers. Four out of eight reports were qualified, a significant increase from previous years.

The table below shows the service auditor's ASAE 3402 opinions issued in various business processes and information technology services provided by service providers for the last five years.

In 2020–21, the information technology services controls reports issued to the department, Infosys and Unisys were qualified. Infosys' accounts receivable business process controls report was also qualified. The audit qualifications were because:

• the service auditor did not get access to the complete set of records processed during the financial year for several ITGC controls. The system that stored these records was hosted at Unisys. From December 2019 to 28 May 2021, the services at Unisys were progressively migrated to the department's IT environment but this system could not be migrated to the department in the required format, resulting in audit scope limitation for service auditors
• of the deviations identified during sample testing of ITGC controls
• the monthly follow up of outstanding receivables was not performed regularly, which was the only key control to address the timely collection of accounts receivable.

Internal control exceptions in GovConnect information and technology services require urgent remediations

The relevant controls over user access, system changes and password controls failed in all three ASAE 3402 GovConnect ITGC reports. These control failures can lead to unauthorised system access, system and configuration changes (workflow approvals, three-way match, etc.) and modifications to key reports. It increases the risk of:

• fraud and error in the financial statements
• ineffective segregation of duties controls
• accuracy and completeness of system generated reports for the agencies using the SAPConnect system.

The table shows the number of ITGC control deviations compared to prior year:

Most of these deviations were not mitigated or sufficiently mitigated to address the risk of unauthorised user access.

The service auditor identified significant areas for remediation:

• governance arrangement of the IT services
• user access management controls
• SAP database controls
• logical access
• incident management.

In response to the internal control qualifications, the audit teams performed data analytics over payroll and accounts payable. The data analytics identified several terminated employees that were paid long after their termination dates which resulted in salary overpayments during 2020–21. While management had put processes in place to recover these overpayments, the payroll processing controls need to be improved to prevent such overpayments.

The Department of Customer Service advised that it established a ‘Control Reframe Project’ (the project) to address the internal control exceptions at GovConnect service providers. The objective of the project is to ensure the GovConnect assurance model is aligned with clear lines of responsibility and remediation actions are in place to support the delivery of services and achieve an improved outcome for future years.

The NSW Public Sector's cyber security resilience needs urgent attention

The 2020 'Central Agencies' Report to Parliament highlighted the need for Cyber Security NSW, a business unit within the Department of Customer Service, and NSW Government agencies to prioritise improvements to their cyber security resilience as a matter of urgency. A status update of the 2020 recommendation is included in Appendix five of this report.

The Audit Office's Annual Work Program identifies cyber security as a focus area for the Audit Office in 2021–24. It outlines a three-pronged approach to auditing cyber security in this period:

• considering how agencies are responding to the risks associated with cyber security across our financial audits across the NSW public sector
• examining the effectiveness of cyber security planning and governance arrangements for large NSW state government agencies for our Internal Controls and Governance report
• conducting deep-dive performance audits of the effectiveness of specific agency activities in preparing for, and responding to cyber security risks.

A performance audit 'Managing cyber risks' was tabled in Parliament in July 2021. The audit made several recommendations to audited agencies to uplift their cyber security management. It also recommended the Department of Customer Service to:

• clarify the requirement of the NSW Cyber Security Policy (CSP) reporting to all systems
• require agencies to report the target level of maturity for each mandatory requirement.

A compliance audit 'Compliance with the NSW Cyber Security Policy' was tabled in October 2021. The audit examined whether agencies are complying with the NSW Cyber Security Policy to ensure all NSW Government departments and public service agencies are managing cyber security risks to their information and systems.

The report found that key elements to strengthen cyber security governance, controls and culture are not sufficiently robust and not consistently applied. There has been insufficient progress to improve cyber security safeguards across NSW Government agencies. The poor levels of cyber security maturity are a significant concern. Improvement requires dedicated leadership and resourcing. To comply with some elements of the government’s policy agencies will have to invest in technical uplift and some measures may take time to implement. However, other elements of the policy do not require any investment in technology. They simply require leadership and management commitment to improve cyber literacy and culture. And they require accountability and transparency. Transparent reporting of performance is a key means to improve performance.

The report noted that the CSP was not achieving the objective of improved cyber governance, controls and culture. The compliance audit made several recommendations to Cyber Security NSW and other NSW Government agencies.

The 2021 maturity self-assessment results against the Australian Cyber Security Centre Essential 8 for the 25 largest NSW State Government agencies are reported in the 2021 'Internal Control and Governance' Report to Parliament.

Management of cyber security risk

Our 2020-21 financial audit assessed whether cyber security risks represent a risk of material misstatement to the department's own financial statements. A request performance audit 'Service NSW's handling of personal information' was tabled on 18 December 2020. The audit followed two cyber security incidents that resulted in data breaches of customer information. As part of our audit procedures, we obtained an understanding of the controls the department has in place to address the risk of cyber security incidents and respond to any incidences which may have occurred during the year, including its impact on the audit.

Our assessment of the department’s own cyber risk management shows that:

• an approved security incident response plan was not in place during the reporting period. There was a lack of testing over incident detection and monitoring process
• a formal process over patch management that includes assessment, determining relevance and priority, timely rollout and escalation and reporting of long outstanding patches to senior management is being established.

The department provides information security services including cyber security management to cluster agencies. We found that there were insufficient communications within the Customer Service cluster over the controls and assurance over cyber security risk management. Some cluster agencies had put in place limited controls over cyber security risk management.

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 – Status of 2020 recommendations

Copyright notice

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

What the report is about

The term ‘machinery of government’ refers to the way government functions and responsibilities are organised.

The decision to make machinery of government changes is made by the Premier. Changes may be made for a range of reasons, including to support the policy and/or political objectives of the government of the day.

Larger machinery of government changes typically occur after an election or a change of Premier.

This report assessed how effectively the Department of Planning, Industry and Environment (DPIE) and the Department of Regional NSW (DRNSW) managed their 2019 and 2020 machinery of government changes, respectively. It also considered the role of the Department of Premier and Cabinet (DPC) and NSW Treasury in overseeing machinery of government changes.

What we found

The anticipated benefits of the changes were not articulated in sufficient detail and the achievement of benefits has not been monitored. The costs of the changes were not tracked or reported.

DPC and NSW Treasury provided principles to guide implementation but did not require departments to collect or report information about the benefits or costs of the changes.

The implementation of the machinery of government changes was completed within the set timeframes, and operations for the new departments commenced as scheduled.

Major implementation challenges included negotiation about the allocation of corporate support staff and the integration of complex corporate and ICT systems.

What we recommended

DPC and NSW Treasury should:

• consolidate existing guidance on machinery of government changes into a single document that is available to all departments and agencies
• provide guidance for departments and agencies to use when negotiating corporate services staff transfers as a part of machinery of government changes, including a standard rate for calculating corporate services requirements
• progress work to develop and implement common processes and systems for corporate services in order to support more efficient movement of staff between departments and agencies.

The term ‘machinery of government’ refers to the way government functions and responsibilities are allocated and structured across government departments and agencies. A machinery of government change is the reorganisation of these structures. This can involve establishing, merging or abolishing departments and agencies and transferring functions and responsibilities from one department or agency to another.

The decision to make machinery of government changes is made by the Premier. These changes may be made for a range of reasons, including to support the policy and/or political objectives of the government of the day. Machinery of government changes are formally set out in Administrative Arrangements Orders, which are prepared by the Department of Premier and Cabinet, as instructed by the Premier, and issued as legislative instruments under the Constitution Act 1902.

The heads of agencies subject to machinery of government changes are responsible for implementing them. For more complex changes, central agencies are also involved in providing guidance and monitoring progress.

The NSW Government announced major machinery of government changes after the 2019 state government election. These changes took place between April and June 2019 and involved abolishing five departments (Industry; Planning and Environment; Family and Community Services; Justice; and Finance, Services and Innovation) and creating three new departments (Planning, Industry and Environment; Communities and Justice; and Customer Service). This also resulted in changes to the 'clusters' associated with departments. The NSW Government uses clusters to group certain agencies and entities with related departments for administrative and financial management. Clusters do not have legal status. Most other departments that were not abolished had some functions added or removed as a part of these machinery of government changes. For example, the functions relating to regional policy and service delivery in the Department of Premier and Cabinet were moved to the new Department of Planning, Industry and Environment.

Our Report on State Finances 2019, tabled in October 2019, outlined these changes and identified several issues that can arise from machinery of government changes if risks are not identified early and properly managed. These include: challenges measuring the costs and benefits of machinery of government changes; disruption to services due to unclear roles and responsibilities; and disruption to control environments due to staff, system and process changes.

In April 2020, the Department of Regional NSW was created in a separate machinery of government change. This involved moving functions and agencies related to regional policy and service delivery from the Department of Planning, Industry and Environment into a standalone department.

This audit assessed how effectively the Department of Planning, Industry and Environment (DPIE) and the Department of Regional NSW (DRNSW) managed their 2019 and 2020 machinery of government changes, respectively. It also considered the role of the Department of Premier and Cabinet and NSW Treasury in overseeing machinery of government changes. The audit investigated whether:

• DPIE and DRNSW have integrated new responsibilities and functions in an effective and timely manner
• DPIE and DRNSW can demonstrate the costs of the machinery of government changes
• The machinery of government changes have achieved or are achieving intended outcomes and benefits.

Appendix one – Response from agencies

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #359 - released (17 December 2021).

This report analyses the results of our audits of the Stronger Communities 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 Stronger Communities 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 Stronger Communities cluster agencies' financial statement audits for the year ended 30 June 2021.

What we found

Unqualified audit opinions were issued for all 30 June 2021 financial statements of cluster agencies.

Eleven of the 15 cluster agencies required to submit 2020–21 early close financial statements and other mandatory procedures did not meet the statutory deadline. Five agencies did not perform all mandatory procedures.

The implementation of AASB 1059 'Service Concession Arrangements: Grantors' had a significant impact on the Department of Communities and Justice's (the department) 2020–21 financial statements. The department applied a modified retrospective approach upon initial adoption at 1 July 2020 and recognised service concession assets and liabilities of $1.0 billion and $1.2 billion respectively (relating to three correctional centres with private sector operators).

The department was, this year for the first time, able to reliably measure Incurred But Not Reported (IBNR) claims relating to its Victims Support Scheme. The department recorded a liability of $200 million at 30 June 2021. Liabilities for Child Sexual Assault IBNR claim continue to be not recorded on the basis they are unable to be reliably measured.

The number of monetary misstatements identified during the audit of the financial statements for the cluster increased from 61 in 2019–20 to 72 in 2020–21.

What the key issues were

The number of issues reported to management decreased from 191 in 2019–20 to 172 in 2020–21. However, 45 per cent were repeat issues related to information technology, governance and oversight controls.

Seven high risk issues were identified in 2020–21, an increase of five compared to last year. High risk issues related to deficiencies in IT access controls at Sydney Cricket and Sports Ground Trust; a lack of a formal agreement between the Office of Sport and Planning Ministerial Corporation over the management of a sporting venue; asset revaluations at both Fire and Rescue NSW and the Trustees of the Anzac Memorial Building; and three issues related to revenue recognition control deficiencies at New South Wales Aboriginal Land Council and two of its subsidiaries.

What we recommended

Cluster agencies should ensure all applicable mandatory early close procedures are completed and the outcomes provided to the audit team in accordance with the deadlines set by NSW Treasury.

We recommend cluster agencies action recommendations to address internal control weaknesses promptly. Focus should be given to addressing high risk and repeat issues.

This report provides Parliament and other users of the Stronger Communities cluster’s 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 Stronger Communities cluster (the cluster) for 2021.

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 Stronger Communities cluster.

Findings reported to management

The overall number of findings has decreased, but the level of repeat issues increased

Breakdowns and weaknesses in internal controls increase the risk of fraud and error. Deficiencies in internal controls, matters of governance interest and unresolved issues were reported to management and those charged with governance of agencies. The Audit Office does this through management letters, which include observations, related implications, recommendations and risk ratings.

In 2020–21, there were 172 findings raised across the cluster (191 in 2019–20). 45 per cent of all issues were repeat issues (32 per cent in 2019–20).

Repeat issues largely related to weaknesses in controls over information technology (IT), governance and oversight.

A delay in implementing audit recommendations increases the risk of intentional and accidental errors in processing information, producing management reports and generating financial statements. This can impair decision‑making, affect service delivery and expose agencies to fraud, financial loss and reputational damage. Poor controls may also mean agency staff are less likely to follow internal policies, inadvertently causing the agency not to comply with legislation, regulation and central agency policies.

2020–21 audits identified seven high risk findings

High risk findings were reported at the following cluster agencies. Two high risk findings reported in 2019–20 were resolved.

The table below describes issues commonly identified across the cluster by category and risk rating.

The number of moderate risk findings decreased from prior year

Seventy‑eight moderate risk findings were reported in 2020–21, representing a 22 per cent decrease from 2019–20. Of these, 43 were repeat findings, and 35 were new issues.

Moderate risk findings reported in 2020–21 include:

• weaknesses in governance arrangements, including outdated policies and procedures and arrangements that do not align with NSW Government guidelines, such as the NSW Government Procurement Policy Framework and NSW Cyber Security Policy
• weaknesses in user access administration including:
  • user access reviews
  • monitoring of privileged user access and activities
  • password policy configuration
• cyber security improvements including:
  • implementation and update of governance arrangements
  • monitoring of third‑party system access
  • patch management improvement
• outdated instruments of financial delegation and non‑compliance with established financial delegations
• weaknesses in supplier and employee masterfile maintenance.

 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 notice

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

This report analyses the results of our audits of the Premier and Cabinet 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 Premier and Cabinet 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 Premier and Cabinet cluster (the cluster) agencies' financial statement audits for the year ended 30 June 2021.

What we found

Unmodified audit opinions were issued for all Premier and Cabinet cluster agencies.

The number of monetary misstatements decreased from 49 in 2019–20 to 38 in 2020–21.

The Library Council of New South Wales corrected a prior period error of $325 million. In 2017, the council split its collection assets into six asset classes, but not the related asset revaluation reserves. To correct this error, some revaluation decrements previously recognised in asset revaluation reserves were reclassified to accumulated funds.

Eight agencies did not complete all of the mandatory early close procedures.

What the key issues were

The Premier and Cabinet cluster was impacted by three Machinery of Government (MoG) changes during 2020–21.

The changes resulted in the transfer of activities and functions in and out of the cluster and the creation of a new entity - Investment NSW.

The transferor entities continued to provide services to Investment NSW subsequent to 30 June 2021. There were no formal service level agreements in place for the provision of these services.

The New South Wales Electoral Commission (the Commission) and Sydney Opera House Trust obtained letters of financial support from their relevant Minister and/or NSW Treasury in 2020–21. The postponement of local government elections impacted the Commission's operations due to increased planned expenditure to support a COVID-safe election. Sydney Opera House Trust's ability to generate revenue was impacted due to the closure of the Concert Hall partly due to COVID-19 and planned renovations.

The number of repeated audit issues raised with management and those charged with governance increased from 22 in 2019–20 to 24 in 2020–21.

There were 47 moderate risk and 28 low risk findings identified. Of the total findings there were 24 repeat issues.

What we recommended

Investment NSW should ensure services received from other agencies are governed by service level agreements.

This report provides Parliament and other users of the Premier and Cabinet’s 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 Premier and Cabinet cluster (the cluster) for 2021.

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 Premier and Cabinet cluster.

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 notice

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

This report analyses the results of our audits of the Regional NSW 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 Regional NSW 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 Regional NSW cluster (the cluster) agencies’ financial statement audits for the year ended 30 June 2021.

What we found

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

The number of misstatements identified in the financial statements of cluster agencies decreased from 27 in 2019–20 to seven in 2020–21.

The Department corrected an understatement of $82.2 million in prepaid income related to the Bushfire Clean-up Program.

What the key issues were

Local Land Services (LLS) undertook a comprehensive revaluation of asset improvements on land reserves used for moving stock (travelling stock reserves).

The revaluation process identified that improvements on land reserves, with a value of $93.0 million, had not been previously recognised in the financial statements. LLS corrected this error by restating the 2019–20 comparative balances in its 2020–21 financial statements.

The Forestry Corporation of NSW revalued its biological assets that comprise approximately 225,000 hectares of softwood plantations and 34,000 hectares of hardwood forests. The current year valuation resulted in $71.4 million decrement in the total biological assets from $824.9 million in 2019–20 to $753.5 million in 2020–21.

The number of matters reported to management decreased from 36 in 2019–20 to 19 in 2020–21. Twelve moderate risk issues were identified and 47 per cent of reported issues were repeat issues.

What we recommended

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

This report provides Parliament and other users of the Regional NSW 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 Regional NSW cluster for 2021.

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.

Appendix one - Misstatements in financial statements submitted for audit

Appendix two - Early close procedures

Appendix three - Financial data

Copyright notice

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

What the report is about

This audit assessed whether adults in custody have effective access to health services. The audit examined the activities of Justice Health and Corrective Services NSW.

What we found

The majority of custodial patients receive timely health care, but a small proportion of patients are not receiving care within target timeframes.

Eleven per cent of scheduled health appointments are not attended, and agencies can do more to understand the reasons for non-attendance.

Demand for mental health care exceeds service capacity and some patients are held in environments not appropriate for their needs.

Justice Health's information systems do not support the effective transfer of medical records as patients move around the prison network.

Not all patients are released from custody with a discharge plan.

Justice Health's system managers do not receive sufficiently detailed reports to understand strategic risks or opportunities to improve access to health services.

Public and private prison health operators do not report against consistent performance measures.

Justice Health is mandated to assess health services in private prisons. This conflicts with its role as a contracted provider of health services in the private prison system.

What we recommended

Enhanced reporting on patient access to health services, to identify risks and challenges across key service areas.

Identification and implementation of the improvements required for information to be shared across the custodial network and with external health providers.

Development of a framework to govern and monitor costs for patient health escorts and movements.

Development of a framework to govern responsibilities for mental health services.

Progression of infrastructure plans that address the lack of specialist accommodation for mental health patients and aged and frail patients.

Collaboration to align the performance measures to enable benchmarking between public and private prison health services.

Action to remediate the conflicting monitoring arrangements of public and private prison health operators.

Access to health services in custody

This audit examined whether adults in the New South Wales public prison system have effective access to health services. In making this assessment, we considered whether Justice Health and Corrective Services NSW effectively cooperate and coordinate so that patients have timely access to health services, systems and practices support continuity of care, and access to health services is monitored and reviewed.

As part of this audit, we assessed actions undertaken by Justice Health and Corrective Services NSW in managing the first COVID-19 outbreak in 2020. However, due to the timing of this audit report, this audit does not report on the agencies’ response to managing the current outbreak of COVID-19 in September 2021.

Health services in New South Wales prisons are delivered by both public and private operators. The public prison system is made up of 33 correctional centres and the Long Bay Hospital. All health services in the public prison system are delivered by the Justice Health and Forensic Mental Health Network (Justice Health).

In the public prison system, Justice Health is responsible for the clinical care of patients with physical and mental illnesses. Clinicians provide health assessments, treatments, medication management, and some counselling services in prison health clinics. Patients are triaged by primary health nurses and if they require treatments or medication, they are referred to prison‑based doctors including specialists or other clinicians. Patients requiring complex or emergency care are transferred to hospitals or other specialty services outside the prison complex.

Private operators deliver health services in three private prisons through contract arrangements with Corrective Services NSW. Justice Health delivers health care at one correctional centre via a contract arrangement with Corrective Services NSW. In total, contracted health service operators deliver health care to approximately 25 per cent of the New South Wales prison population.

Justice Health is required by law to monitor the performance of contracted health service providers in New South Wales prisons, including services provided at the John Morony Correctional Centre. The Auditor‑General’s mandate does not permit a direct examination of information held by private sector entities, however this audit does assess the effectiveness of Justice Health's role in monitoring health services in private prisons.

Corrective Services NSW is responsible for security in public prisons, including the facilitation of patient access to health care at prison health clinics and the transfer of patients to hospitals and other health services outside of the prison environment. Corrective Services NSW also delivers behaviour‑based psychology services. Some are delivered as behaviour modification courses that aim to reduce criminal and offending activity amongst the prison population. These programs may be linked to parole or other custodial conditions. Other psychology services include counselling for people with self‑harming or suicidal behaviours.

Research from the Australian Institute of Health and Welfare indicates that people in custody are more likely than the general population to be affected by chronic and acute illnesses, including higher rates of mental illness and communicable diseases¹. In March 2021, there were 13,063 adults in custody in New South Wales.

The objective of this performance audit was to assess whether adults in the public prison system have effective access to health services. In making this assessment, we considered whether Justice Health and Corrective Services NSW effectively cooperate and coordinate so that:

• patients have timely access to health services
• systems and practices support the continuity of health care
• access to health services is monitored, reviewed, and reported across the network. 

1. Key findings

The majority of custodial patients receive timely health care, but a small proportion of patients with priority appointments are not receiving care within target timeframes

Approximately half of all health care provided by Justice Health is immediate. It is delivered to 'walk‑in' patients as soon as they present at prison health clinics. Most of these patients are receiving daily medications, while a small proportion require urgent or immediate care for injuries or illnesses. The other half of prison health care is delivered via scheduled appointments. Patients waiting for health appointments are given a priority rating according to the time within which they should be seen by a clinician.

Patients requiring the most time‑critical care are given a Priority 1 rating. These patients should receive treatment within one to three days. In December 2020, the average wait time for Priority 1 treatment was five and a half days, almost double the target. This is an improvement on wait times in June 2019, when the average wait time was just over 13 days. Justice Health does not assess or measure the impacts of delayed care on these patients.

According to Justice Health, the high numbers of ‘walk‑ins’ contribute to increased wait times for medical appointments. In addition, some specialty health clinics operate weekly, which means that patients cannot be seen by specialists within a one to three‑day timeline. Security events such as prison lockdowns can also contribute to increased wait times, as they limit the access that patients have to prison health clinics during out‑of‑cell hours.

If patients need emergency medical treatment, they are transferred to hospitals in line with Justice Health's policy. In 2020, just over 1,000 patients were transferred to hospital for emergency medical care.

A significant proportion of prison health appointments are not attended, and not enough is being done to understand the reasons, or to improve attendance rates

In 2020, 11 per cent of all scheduled health appointments in prison clinics were not attended. This amounts to approximately 60,000 appointments over the year. Non‑attended appointments have flow‑on impacts on wait times and backlogs for scheduled health appointments. Understanding why they occur is necessary to improve efficiencies in scheduling and patient access to health services.

In 2020, the most common reason for non‑attended health appointments was: 'patient unable to attend'. Justice Health clinicians use this when patients do not arrive at the prison health clinic at the scheduled time, and clinicians lack any other information to explain the non‑attendance.

The second most common recorded reason for non‑attended appointments was: 'cancelled by Corrective Services NSW'. These cancellations are due to operational or security reasons, including prison lockdowns. Data from Justice Health indicates that in 2020, there were an average of 12 lockdowns per week across New South Wales prisons.

A range of factors can impact on patient attendance at appointments, some of which are unavoidable. That said, more can be done to understand and reduce non‑attendance. For example, there is potential for Corrective Services NSW to implement tighter protocols to update information about patient availability on the daily movement lists. This might include checking whether patients are willing to attend appointments. Similarly, there is potential for Justice Health clinicians to implement tighter protocols to check patient lists ahead of scheduled appointments, and to re‑schedule appointments where patients are unavailable.

Demand for mental health care exceeds service capacity and some patients are held in environments that are not appropriate for their needs

There is a high demand for mental health services in New South Wales prisons. In March 2021, at least 143 mental health patients were waiting for access to an acute or sub‑acute mental health unit across the New South Wales prison system. The average wait time for a mental health facility was 43 days. Seventeen patients had wait times of over 100 days. Patients waiting for sub‑acute mental health services had longer wait times than those waiting for acute mental health services.

There are limited mental health beds for women across the New South Wales prison network. There are ten allocated beds for women at the Mental Health Screening Unit at Silverwater Correctional Complex, and no allocated beds for women at Long Bay Hospital.

A lack of bed availability in the Forensic Hospital means that, as of February 2021, 63 forensic patients were being held in mental health facilities in mainstream prisons, when they should have been accommodated in the Forensic Hospital. Some of these forensic patients have been held in mainstream prison facilities for decades.

Cross‑agency co‑operation and planning is required to identify and build infrastructure that will reduce wait times for mental health beds. Over several years, Justice Health has developed, reviewed, and worked to progress a strategic plan for NSW Forensic Mental Health that includes enhanced mental health bed capacity across the NSW system. The latest version of this strategic plan remains in draft and has yet to be approved by the NSW Ministry of Health.

In 2016, Corrective Services NSW commenced a Prison Bed Capacity Program. It was focussed on enhancing capacity across the prison system and did not include specialist health beds. More recently, Corrective Services NSW has been developing a business case to improve the provision of specialist health care facilities across the network, including mental health facilities.

Justice Health's clinical information systems do not support the effective transfer of health appointments or medication records as patients are moved to new prison locations

Justice Health's clinical information systems are multiple and complex. There are five health information systems that include a mix of electronic and paper‑based records. Information management systems contain clinical records, appointment information, medication records, dental records, and specialist health information. Corrective Services NSW maintain separate information systems relating to prison records and psychology treatment information.

The transfer of people across different correctional centres is a frequent occurrence. In 2020, there were over 41,000 movements between correctional centres. People are transferred for a range of reasons including for security purposes, or to be located closer to hospitals or specialist health services.

Justice Health receives a list of patient transfers one day prior to transfer. Nurses are required to prepare medications and clinical handovers for patients with complex health conditions. These handovers are verbal, however short timeframes mean that handover is not always possible.

While each patient's electronic health records are available across the network, transfer of appointment waitlists must be done manually. There is no automatic alert within the information systems to tell staff that a patient has been moved to another prison. There is a risk that if appointment records are not manually updated, or if staff at destination clinics are not contacted, then appointments will be overlooked.

Justice Health is working with eHealth NSW to develop an improved Electronic Medication Management (EMM) program with expected delivery in late 2021. The EMM has potential to improve the transfer of patient medication records, but it will not fully remediate all inefficiencies of the current systems.

Corrective Services NSW and Justice Health do not engage in sufficient joint planning to improve efficiencies in transports or escorts to health services

Corrective Services NSW and Justice Health do not engage in joint system‑level planning to mitigate the risks and the costs associated with transferring patients to health clinics in prisons, or non‑prison‑based health care. There are no protocols, and limited sharing of information to improve efficiencies in planning and coordinating patient transfers.

Corrective Services NSW does not collate or report on the costs of transporting patients to hospitals and specialist care. While there is data on the overall cost of medical escorts, estimated to be $19.9 million in 2020, Corrective Services NSW is not able to disaggregate this data to determine the reasons for transfers or the system‑level costs. For example, Corrective Services NSW does not know how many prison lockdowns occur when hospital transfers are required.

Medical escorts to specialist health services and hospitals increase the costs to the prison system and contribute to risks in prison management. Medical escorts contributed to 16 per cent of metropolitan prison lockdowns at the peak in 2018, though escort numbers have since been declining. Some Local Health Districts report significant concerns around safety incidents and assaults on staff during medical escorts to hospital.

Corrective Services NSW does not know if transport costs have increased since the 2016 Prison Bed Capacity Program which expanded prison beds in regional New South Wales. To date, there has been no assessment of the cost of taking patients to tertiary hospitals or specialist services. Corrective Services NSW has identified this as an area for improvement.

Justice Health's system managers do not receive sufficiently detailed reports on wait times for health care, to understand strategic risks or opportunities for system improvement

Justice Health's senior executives receive monthly reports on patient wait times for services in prison health clinics. These reports contain headline data about the numbers of days that patients wait for scheduled health appointments by their allocated priority level. Wait time data are averaged across all New South Wales prison health clinics. With some exceptions, almost all executive level reports describe system‑wide appointment wait times without offering further specific detail. For example, there is limited information which would allow managers to understand the performance of specialty health groups, or to make any comparative analysis of the performance of different prison facilities.

Executive reports are also not detailed enough to indicate whether prisons with particular security classifications offer greater or lesser access to health services. It is not possible to assess whether patients in metropolitan or regional prisons have different levels of health service access. This prevents managers from identifying strategic risks across the prison network, targeting resources to the areas of greatest risk, and making strategic improvements in system performance.

Trend data on wait times for the different health specialty areas is also required to enable senior managers to compare wait times across prison facilities, security classifications, and localities.

In response to the preliminary findings of this audit, Justice Health has made some improvements to its executive‑level wait time reports. This includes additional detail on health appointment wait times by prison facilities and wait times by health specialty areas.

It is not possible to compare or benchmark the performance of public and private prison health operators or to compare prison health against community health standards

It is not possible to compare or benchmark the performance of the public and private prison health operators in New South Wales using the current Key Performance Indicator (KPI) data. KPI data do not correlate across the public and private systems.

Justice Health reports to the Ministry of Health on 44 prison health KPIs. The 44 KPIs for the public prison system do not align with the seven KPIs the private health operators report against in their contracts with Corrective Services NSW. This means that public and private operators focus on different service areas. For example, private operators have a performance measure for ensuring that custodial patients are provided with release plans. Justice Health does not have a similar measure.

The KPI specifications for the private prison health system were developed by Corrective Services NSW with input from the Ministry of Health. The KPI specifications for the public prison health system were developed by the Ministry of Health in collaboration with Justice Health. There is no rationale for the difference in performance indicators across the public and private systems.

Private providers currently deliver prison services to 25 per cent of the prison population of New South Wales. This proportion has been increasing since 2016. Public and private health operators deliver comparable health services so there is scope to compare performance across the systems.

Justice Health aligns its standard for prison health services with a 'community’ standard of health care access. However, with existing health monitoring measures, it is not possible to assess how well Justice Health is tracking against community health standards with available data from most health specialties.

There is an inherent conflict of interest in Justice Health's monitoring role of health services in private prisons, as Justice Health is also a provider of health services in a private prison

There is a legislated requirement for Justice Health to monitor the performance of private health operators in New South Wales prisons. This monitoring role is described in the Crimes (Administration of Sentences) Act 1999.

Justice Health's monitoring role includes the collection and analysis of health performance data from private health operators, and periodic site visits to assess health service performance. Justice Health reports the findings of monitoring activities to Corrective Services NSW, the contract manager for private prisons.

Justice Health's monitoring role commenced in the late 1990s. In recent years, this role has expanded as the NSW Government has increased the number of privately managed prisons across the state. Justice Health now monitors health services in four private prisons, accounting for approximately one quarter of all custodial patients in the New South Wales prison system.

In 2018, Justice Health was awarded a contract to provide health services at the John Morony Correctional Centre. Justice Health also monitors the health services this Correctional Centre. The timing of the 1999 legislation did not anticipate that Justice Health would be a provider of the services it is required to monitor.

Justice Health has taken steps to maintain independence and transparency in its monitoring role by establishing a number of arms‑length governance arrangements. Justice Health set up a Commissioning Unit that operates independently from its service delivery operations. Justice Health also established an alternative reporting chain via a Board subcommittee to oversee the performance of health providers in private prisons.

Despite all actions to establish independence, the monitoring role confers dual responsibilities on the Chief Executive of Justice Health as both an operational manager of health services in a private prison and as a manager responsible for monitoring these same services. As a result, the Chief Executive of Justice Health has access to information about the overall performance of the private prison health system in New South Wales.

As a competitor for the provision of health services in privately operated prisons, Justice Health has access to information to which other private health providers do not. This potentially gives Justice Health a competitive advantage over other private health operators.

2. Recommendations

By December 2022, Justice Health should:

1. enhance reporting on patient access to health services to ensure that system managers can identify risks, challenges, and system improvements across key areas of its service profile

2. in collaboration with the NSW Ministry of Health, identify and implement the required improvements to its health information management systems that will enable effective transfers of patient clinical records and appointment information across the custodial network and with external health providers.

By December 2022, Justice Health and Corrective Services NSW should:

3. develop a joint framework to govern and monitor the costs of their common and connected responsibilities for patient health movements across the prison network and to external health services

4. develop a joint framework to govern their common and connected responsibilities for mental health services.

By December 2022, Justice Health and Corrective Services NSW, in collaboration with the NSW Ministry of Health, should:

5. progress infrastructure plans and projects that address the lack of specialist accommodation for mental health patients and aged and frail patients

6. standardise and align the key performance indicators that monitor the performance of health operators in public and private prisons so that system‑wide benchmarking is possible.

By December 2022, the NSW Ministry of Health should:

7. take action to remediate the conflicting monitoring arrangements of public and private prison health operators.

Appendix one – Response from agencies

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #356 - released (23 September 2021).

What the report is about

This report assessed how effectively the Department of Planning, Industry and Environment (DPIE) and NSW Treasury have supported state agencies to manage climate risks to their assets and services.

Climate risks that can impact on state agencies' assets and services include flooding, bushfires, and extreme temperatures. Impacts can include damage to transport, communications and energy infrastructure, increases in hospital admissions, and making social housing or school buildings unsuitable.

NSW Treasury estimates these risks could have significant costs.

What we found

DPIE and NSW Treasury’s support to agencies to manage climate risks to their assets and services has been insufficient.

In 2021, key agencies with critical assets and services have not conducted climate risk assessments, and most lack adaptation plans.

DPIE has not delivered on the NSW Government commitment to develop a state-wide climate change adaptation action plan. This was to be complete in 2017.

There is also no adaptation strategy for the state. These have been released in all other Australian jurisdictions. The NSW Government’s draft strategic plan for its Climate Change Fund was also never finalised.

DPIE’s approach to developing climate projections is robust, but it hasn’t effectively educated agencies in how to use this information to assess climate risk.

NSW Treasury did not consistently apply dedicated resourcing to support agencies' climate risk management until late 2019.

In March 2021, DPIE and NSW Treasury released the Climate Risk Ready NSW Guide and Course. These are designed to improve support to agencies.

What we recommended

DPIE and NSW Treasury should, in partnership:

• enhance the coordination of climate risk management across agencies
• implement climate risk management across their clusters.

DPIE should:

• update information and strengthen education to agencies, and monitor progress
• review relevant land-use planning, development and building guidance
• deliver a climate change adaptation action plan for the state.

NSW Treasury should:

• strengthen climate risk-related guidance to agencies
• coordinate guidance on resilience in infrastructure planning
• review how climate risks have been assured in agencies’ asset management plans.

According to the Intergovernmental Panel on Climate Change in 2021, each of the last four decades has been successively warmer and surface temperatures will continue to increase until at least the mid-century. The Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Bureau of Meteorology (BoM) have reported that extreme weather across Australia is more frequent and intense, and there have been longer-term changes to weather patterns. They also report sea levels are rising around Australia increasing the risk of inundation and damage to coastal infrastructure and communities.

According to the Department of Planning, Industry and Environment (the department), in New South Wales the impacts of a changing climate, and the risks associated with it, will be felt differently across regions, populations and economic sectors. The department's climate projections indicate the number of hot days will increase, rainfall will vary across the state, and the number of severe fire days will increase.

The NSW Government is a provider of essential services, such as health care, education and public transport. It also owns and manages around $365 billion in physical assets (as at June 2020). More than $180 billion of its assets are in major infrastructure such as roads and railway lines.

In NSW, climate risks that could directly impact on state agencies' assets and services include flooding, bushfires, and extreme temperatures. In recent years, natural hazards exacerbated by climate change have damaged and disrupted government transport, communications and energy infrastructure. As climate risks eventuate, they can also increase hospital admissions when people are affected by poorer air quality, and make social housing dwellings or schools unsafe and unusable during heatwaves. The physical impacts of a changing climate also have significant financial costs. Taking into account projected economic growth, NSW Treasury has estimated that the fiscal and economic costs associated with natural disasters due to climate change will more than triple per year by 2061.

The department and NSW Treasury advise that leading practice in climate risk management includes a process that explicitly identifies climate risks and integrates these into existing risk management, monitoring and reporting systems. This is in line with international risk management and climate adaptation standards. For agencies to manage the physical risks of climate change to their assets and services, leading practice identified by the department means that they need to:

• use robust climate projection information to understand the potential climate impacts
• undertake sound climate risk assessments, within an enterprise risk management framework
• implement adaptation plans that reduce these risks, and harness opportunities.

Adaptation responses that could be planned for include: controlling development in flood-prone locations; ensuring demand for health services can be met during heatwaves; improving thermal comfort in schools to support student engagement; proactive asset maintenance to reduce disruption of essential services, and safeguarding infrastructure from more frequent and intense natural disasters.

According to NSW Treasury policy, agencies are individually responsible for risk management systems appropriate to their context. The department and NSW Treasury have key roles in ensuring that agencies are supported with robust information and timely, relevant guidance to help manage risks to assets and services effectively, especially for emerging risks that require coordinated responses, such as those posed by climate change.

This audit assessed whether the department and NSW Treasury are effectively supporting NSW Government agencies to manage climate risks to their assets and services. It focused on the management of physical risks to assets and services associated with climate change.

Appendix one – Response from agencies

Appendix two – Timeline of key activities 

Appendix three – About the audit 

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #355 - released (7 September 2021).

What the report is about

This report examines the effectiveness of the Fast-tracked Assessment Program, administered by the Department of Planning, Industry and Environment (DPIE) between April 2020 and October 2020. 

The program aimed to support the construction industry during the COVID-19 crisis by accelerating the final assessment stages for planning proposals and development applications. 

DPIE selected projects and planning proposals for fast tracked assessment that demonstrated the potential to:

• deliver jobs
• progress to the next stage of development within six months of determination
• deliver public benefit.

The audit assessed whether the Fast-tracked Assessment Program achieved its objectives while complying with planning controls.

What we found

Through tranches three to six of the program, DPIE successfully accelerated the final stages of 53 assessments. DPIE reported that 89 per cent of these proceeded to the next stage of development within six months.

Assessment of projects and planning proposals was compliant with legislation and other requirements. However, the audit found gaps in DPIE's management of conflicts of interest.

DPIE has not evaluated or costed the program and is not able to demonstrate the extent to which it provided support to the construction industry during COVID-19. 

Aspects of the program have been incorporated into longer term reforms to create a new level of transparency over the progress and status of planning assessments. 

What we recommended

DPIE should:

• strengthen controls over conflicts of interest 
• evaluate the Fast-tracked Assessment Program.

In April 2020, the Department of Planning, Industry and Environment (DPIE) introduced programs aimed at providing immediate support to the construction industry during the COVID-19 crisis. One of these was the Fast-tracked Assessment Program. This program identified planning proposals and development applications (DAs), across six tranches, that were partially-assessed and could be accelerated to determination.

In accordance with the program objectives, the planning proposals and DAs selected for fast-tracked assessment had to:

• deliver jobs – particularly in the construction industry
• be capable of progressing to the next stage of development within six months of determination
• deliver public benefit.

At the same time, the Fast-tracked Assessment Program was to lay a foundation for future reform of the planning system by piloting changes in the assessment process that could be adopted in the medium to long term.

This audit assessed whether the Fast-tracked Assessment Program achieved its objectives while complying with planning controls. The audit focused on tranches three to six of the program, which were determined between July 2020 and October 2020. The rationale for focusing on these four tranches was that the program design had been slightly modified after the first two tranches to address identified risks.

Appendix one – Response from agency

Appendix two – Planning determination pathways

Appendix three – About the audit

Appendix four – Performance auditing

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

Parliamentary reference - Report number #354 - released (27 July 2021).