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Reports

19 December 2017

Published

Planning and Environment 2017

Planning

Environment

Asset valuation

Information technology

Internal controls and governance

Management and administration

Project management

The following report highlights results of financial audits of agencies in the Planning and Environment cluster. The report focuses on key observations and findings from the most recent audits of these agencies.

The audits were completed for most agencies in the cluster and unqualified audit opinions issued. Issues identified during the financial statement audits of seven small agencies delayed their finalisation beyond the statutory deadline, and six of these remain incomplete. Apart from these small agencies, the quality of financial reporting across the cluster remained at a high standard.

1. Financial reporting and controls

Financial reporting	Unqualified audit opinions were issued for 39 of the 45 cluster agencies. Issues identified during the financial statement audits of seven small agencies delayed their finalisation beyond the statutory deadline. Six of these audits remain incomplete at the date of this report.
	Agencies completed early close procedures mandated by the Treasury. We noted opportunities for agencies to improve the effectiveness of these procedures.
Internal Controls	One in six internal control weaknesses identified during the financial audits were repeat issues. Agencies should action audit recommendations promptly.
	User administration over financial systems needs to be strengthened to prevent inappropriate access to financial information.

2. Service Delivery

Housing completions	Australian Bureau of Statistics data indicates the Department of Planning and Environment achieved the Premier's priority for housing completions in 2016–17.
Increasing housing supply	Australian Bureau of Statistics data shows the Department of Planning and Environment achieved the annual target of delivering over 50,000 housing approvals over the past three years.
Major project assessment	Progress against the State priority target to reduce time taken to assess planning applications for State significant developments is difficult to determine as the measure is unclear.
Litter management	The Environment Protection Authority's data indicates that progress towards the Premier's priority target for litter reduction slowed in 2016–17.
Cultural participation	The Department of Planning and Environment’s data indicates overall attendance at cultural venues and events in New South Wales increased by 16 per cent in 2015–16.

This report provides Parliament and others with the audit results, observations and recommendations for Planning and Environment cluster agencies. The report has been structured into two chapters focussing on financial reporting and controls and service delivery.

The Planning and Environment cluster plays a role in ensuring each community across New South Wales receives the services and infrastructure it needs.

This chapter outlines our audit observations and recommendations related to financial reporting and controls of Planning and Environment cluster agencies for 2016–17.

Observation	Conclusion or recommendation
2.1 Quality of financial reporting
Unqualified audit opinions were issued for 39 of the 45 cluster agencies' financial statements.	Issues identified during the financial statement audits of seven smaller agencies delayed their completion. Six audits remain incomplete at the date of this report. Apart from these seven small agency audits, the quality of financial reporting across the cluster remained at a high standard.
2.2 Timeliness of financial reporting
Seven agencies' financial statement audits were not completed by the statutory deadline with six audits incomplete at the date of this report.	Issues identified during the financial statement audits of seven smaller agencies delayed their finalisation beyond the statutory deadline. These agencies would benefit from performing additional early close procedures in future reporting periods.
2.3 Financial and sustainability analysis
Water and Electricity utility agencies continue to operate with low liquidity ratios.	A liquidity ratio below one is an indicator that an entity may not be able to pay its debts as and when they fall due. Whilst liquidity ratios were below one, utility agencies demonstrated they can continue to support ongoing operations due to: access to regulated revenue streams assets with long useful lives to generate revenue debt funding limits approved by the NSW Treasurer under the Public Authorities (Financial Arrangements) Act 1987.
2.5 Internal controls
One in six internal control weaknesses reported in 2016–17 were repeat issues.	Delays in implementing audit recommendations can prolong the risk of fraud and error. Recommendation (repeat issue): anagement letter recommendations to address internal control weaknesses should be actioned promptly, with a focus on addressing repeat issues.
Nine of these internal control weaknesses related to the creation, modification, deletion and review of user access to financial systems.	These control weaknesses may compromise the integrity and security of financial data. Recommendation (repeat issue): Management of user administration over financial systems should be strengthened to prevent inappropriate access to financial information.

This chapter outlines our audit observations, conclusions and recommendations relating to service delivery for 2016–17.

Observation	Conclusion or recommendation
3.1 Premier's and State priorities
The Planning and Environment cluster is responsible for delivering five Premier's and State priorities.	One priority target was achieved in 2016–17, two targets are on track to be achieved and progress towards one target slowed. Progress against one target cannot be determined.
3.2 Planning
Housing Completion
There were 63,506 housing completions in 2016–17. This was 4.1 per cent above the Premier’s priority target of delivering 61,000 housing completions per year.	The Australian Bureau of Statistics data shows the housing completions target was achieved in 2016–17.
Housing supply
The number of approvals for new houses in 2016–17 was 72,472 against the State priority target of more than 50,000 approvals per year.	The Australian Bureau of Statistics data indicates the housing approvals target was achieved in 2016–17.
Major project assessment
State significant developments are not clearly defined for the purposes of reporting against the State priority target.	The Department of Planning and Environment will clarify with the Department of Premier and Cabinet which developments are captured by the State priority target.
The Department of Planning and Environment’s data shows the time taken to assess complex State significant developments increased by 16 per cent in 2016–17 while the time taken to assess less complex developments reduced by 20 per cent.	The Department of Planning and Environment considers it is on track to meet the State priority target of halving the time taken to assess State significant developments, despite uncertainty over the target measure.
Housing acceleration fund
Program business cases were not developed for projects in Housing Acceleration Fund Rounds 1 to 4. The Department advised a program business case will be developed for Housing Acceleration Fund Round 5 projects.	A program business case is necessary to ensure related projects are evaluated, managed and coordinated effectively.
A benefit realisation review process has not yet been approved for Housing Acceleration Fund projects. The Department of Planning and Environment advised it is developing a benefit realisation review process.	A benefit realisation review process is necessary to determine whether funded projects achieved intended outcomes.
Greater Sydney Commission
The Greater Sydney Commission forecasts a further 725,000 dwellings in the greater Sydney region will be required up to 2036 to meet housing demand.	In response to population growth, the Commission has set a five-year housing supply target of 189,100 houses across the five Greater Sydney Commission districts.
ePlanning system
The Department of Planning and Environment did not perform a benefit realisation review for phase one of the ePlanning project. It has committed to performing a benefit realisation review after completion of phase two in 2018.	It cannot be determined if phase one of the project delivered expected outcomes as a benefit realisation review was not performed.
3.3. Environment and Heritage
Litter volume in New South Wales was 6.6 litres per 1,000 square metres in 2016–17, an increase of 16 per cent from the prior year. This is above the Premier's priority litter volume target of 4.2 litres per 1,000 square metres by 2020.	The Environment Protection Authority's data indicates the progress towards the target of reducing the volume of litter by 40 per cent by 2020 has slowed.
The NSW Government plans to invest $240 million to facilitate strategic biodiversity conservation on private land.	Performance measures have not yet been developed for the private land conservation program.
3.4 Water
IPART reduced water usage charges for most Sydney Water Corporation customers in 2016–17.	Water usage prices in New South Wales compare favourably to larger water utilities in other jurisdictions.
Hunter Water Corporation's water recycling and water conservation performance has been stable over recent years. The volume of Sydney Water Corporation’s recycled water reduced by 12 per cent in 2016–17 compared to the previous year.	Sydney Water Corporation experienced reduced industry demand for recycled water. Several large industrial customers relocated away from Sydney.
3.5 Arts and culture
A State priority target is to increase overall attendance at cultural venues and events in New South Wales by 15 per cent from 2014–15 levels by 2019.	The Department of Planning and Environment's data indicates overall attendance increased by 16 per cent in 2015–16, although attendance fluctuated across individual venues and events. This indicates progress towards achieving the overall target by 2019.