What this report is about

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

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

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

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

Audit findings

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

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

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

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

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

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

Read the PDF report

What this report is about 

This report assesses how effectively SafeWork NSW, a part of the Department of Customer Service (DCS), has performed its regulatory compliance functions for work health and safety in New South Wales. 

The report includes a case study examining SafeWork NSW's management of a project to develop a realtime monitoring device for airborne silica in workplaces. 

Findings 

There is limited transparency about SafeWork NSW's effectiveness as a regulator. The limited performance information that is available is either subsumed within DCS reporting (or other sources) and is focused on activity, not outcomes. 

As a work health and safety (WHS) regulator, SafeWork NSW lacks an effective strategic and data-driven approach to respond to emerging WHS risks. 

It was slow to respond to the risk of respirable crystalline silica in manufactured stone. 

SafeWork NSW is constrained by an information management system that is over 20 years old and has passed its effective useful life. 

While it has invested effort into ensuring consistent regulatory decisions, SafeWork NSW needs to maintain a focus on this objective, including by ensuring that there is a comprehensive approach to quality assurance. 

SafeWork NSW's engagement of a commercial partner to develop a real-time silica monitoring device did not comply with key procurement obligations. 

There was ineffective governance and process to address important concerns about the accuracy of the real-time silica monitoring device. 

As such, SafeWork NSW did not adequately manage potential WHS risks. 

Recommendations 

The report recommended that DCS should: 

• ensure there is an independent investigation into the procurement of the research partner for the real-time silica detector 
• embed a formal process to review and set its annual regulatory priorities 
• publish a consolidated performance report 
• set long-term priorities, including for workforce planning and technology uplift 
• improve its use of data, and start work to replace its existing complaints handling system 
• review its risk culture and its risk management framework 
• review the quality assurance measures that support consistent regulatory decisions

Read the PDF report.

Parliamentary reference - Report number #390 - released 27 February 2024
 

What this report is about

Extreme rainfall across eastern Australia in 2021 and 2022 led to a series of major flood events in New South Wales.

This audit assessed how effectively the NSW Government provided emergency accommodation and temporary housing in response to the early 2022 Northern Rivers and late 2022 Central West flood events.

Responsible agencies included in this audit were the Department of Communities and Justice, NSW Reconstruction Authority, the former Department of Planning and Environment, the Department of Regional NSW and the Premier’s Department.

Findings

The Department of Communities and Justice rapidly provided emergency accommodation to displaced persons immediately following these flood events.

There was no plan in place to guide a temporary housing response and agencies did not have agency-level plans for implementing their responsibilities.

The NSW Government rapidly procured and constructed temporary housing villages. However, the amount of temporary housing provided did not meet the demand.

There is an extensive waitlist for temporary housing and the remaining demand in the Northern Rivers is unlikely to be met. The NSW Reconstruction Authority has not reviewed this list to confirm its accuracy.

Demobilisation plans for the temporary housing villages have been developed, but there are no long-term plans in place for the transition of tenants out of the temporary housing.

Agencies are in the process of evaluating the provision of emergency accommodation and temporary housing.

The findings from the 2022 State-wide lessons process largely relate to response activities.

Audit recommendations

The NSW Reconstruction Authority should:

• Develop a plan for the provision of temporary housing.
• Review the temporary housing waitlist.
• Determine a timeline for demobilising the temporary housing villages.
• Develop a strategy to manage the transition of people into long-term accommodation.
• Develop a process for state-wide recovery lessons learned.

All audited agencies should:

• Finalise evaluations of their role in the provision of emergency accommodation and temporary housing.
• Develop internal plans for implementing their roles under state-wide plans.

Read the PDF report

Parliamentary reference - Report number #389 - released 22 February 2024

What this report is about

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

The audit found

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

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

The key audit issues were 

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

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

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

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

Thirty per cent of reported issues were repeat issues. 

The audit recommended 

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

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

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

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

• financial reporting
• audit observations.

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

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

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

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

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

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

What this report is about

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

The audit found

Unqualified audit opinions were issued for all Transport portfolio agencies.

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

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

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

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

The key audit issues were

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

High-risk findings include:

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

Recommendations were made to address the identified deficiencies.

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

• financial reporting
• audit observations.

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

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

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

Appendix one – Misstatements in financial statements submitted for audit 

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting 

Appendix four – Financial data 

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

What this report is about

The report assesses whether the Department of Customer Service (the department) complied with legislation and NSW government policy when it directly negotiated with Duncan Solutions to procure backend services relating to the Park'nPay app.

The Park'nPay app, developed by the department, enables users to locate and pay for parking remotely using their smart mobile device.

The audit found

The department failed to establish the grounds for entering a direct negotiation procurement strategy, without any competitive tendering, for services for the Park'nPay app. It rushed a decision to trial the app in The Rocks, without considering how this might affect its procurement obligations.

There is no evidence that the procurement achieved value for money. Despite being required by legislation, as well as mandatory NSW government policy, the department did not consider how it would ensure value for money, nor did it demonstrate an adequate understanding of what is meant by value for money on this occasion.

The department failed to implement key probity requirements. There was no effective management of conflicts of interest. Key decisions were not documented. There was a lack of clarity, transparency, and oversight of the relationship between the Minister's office and staff in the department.

The audit made recommendations about

1. making and retaining complete and accurate records, particularly on decisions to commit or expend public money
2. ensuring department staff understand how to exercise their financial delegations and procurement processes
3. ensuring that only staff with appropriate delegations are committing or approving the spending of public money
4. consistency with the contract extension provisions of the NSW Government Procurement Policy Framework, particularly regarding ensuring value for money
5. protocols to guide the interactions between department staff and Minister and Minister's staff
6. the need for proper management and oversight of contingent workers, such as contractors.

On 27 February 2019 the then Minister for Finance, Services and Property announced the commencement of a Park’nPay app trial in The Rocks precinct of Sydney.

The app was intended to enable users to locate and pay for parking remotely, using their smart mobile device such as a phone or tablet, rather than needing to physically be at a parking meter.

In July 2019, following a direct negotiation procurement conducted by the then Department of Finance, Services and Innovation, a contract was executed with Duncan Solutions for an estimated value of $1,260,600 over three-years, with three single-year options to extend. The contract required Duncan Solutions to provide development services to link the Park'nPay app to its Parking Enterprise Management System platform and to provide ongoing software support services.

This audit assessed whether the department complied with the procurement obligations that applied at the time it procured these services from Duncan Solutions.

This audit focussed on the department's processes and decision-making relating to:

• the direct negotiation with Duncan Solutions at the exclusion of any other potential supplier
• the negotiation, execution and management of the contract with Duncan Solutions.

As this audit focusses on the department's procurement and contract management processes, it does not comment on the activities of Duncan Solutions. The detailed audit objective, criteria and audit approach are in Appendix three.

The auditee is the Department of Customer Service. As a result of machinery of government changes, the Department of Finance, Services, and Innovation became the Department of Customer Service from 1 July 2019. To avoid confusion, this report simply uses ‘the department’ to refer to either. Where the report refers to the Minister, it relates to the former Minister in office at the time.

Appendix one – Response from auditee

Appendix two – Key requirements of the department's procurement manual 

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 #387 - released 14 December 2023

What this report is about

This report assesses compliance of claims made by members of the NSW Parliament during the 2022–23 financial year with certain requirements outlined in the Parliamentary Remuneration Tribunal’s Determination (the determination).

What we found

The audit selected a sample of members’ claims. The audit does not test every claim made by members. The audit identified 33 departures from the determination. In addition, we identified seven instances where members did not submit their annual loyalty scheme declarations by the date specified in the Department of Parliamentary Services’ (the department) administrative requirements.

What we recommended

The Parliamentary Remuneration Tribunal should provide greater clarity on current processes and implications of departures from the guidelines to members. The department should work with members to provide them additional training or education to better help them comply with the determination.

The department should continue to work with presiding officers, members, the clerk of the Parliaments and the clerk of the Legislative Assembly to enhance reporting of members’ expenditure.

The Auditor-General has reviewed the compliance of the members of the NSW Parliament (members) with certain requirements outlined in the Parliamentary Remuneration Tribunal’s Determination (the determination) for the year ended 30 June 2023.

The Auditor-General’s review analyses claims made by members during the 2022–23 financial year. We use data analytics to select a sample of members’ claims and focus on claims that our data analysis identifies as being at higher risk. We do not test every claim made by members. Our sample consisted of 70 claims submitted by 64 of 135 Members.

Results

Our audit procedures identified 33 departures from the determination. In addition, we identified seven instances where members did not submit their annual loyalty scheme declarations by the date specified in Department of Parliamentary Services’ (the department) administrative requirements.

Such departures have been consistently identified in the past years and indicate greater clarity is needed in the current processes and where training or education for members is required. These departures were as follows:

• 22 members did not submit their claims for payment within 60 days of receipt of invoice or incurring the expense (2022: 12 members’ claims)
• 4 members submitted their Sydney Allowance reconciliations after the due date (2022: six members’ reconciliations)
• 2 members had claimed for publications under the Communications Allowance but not made the required authorisations and attributions upon publication (2022: four member’s publications)
• 1 member made a claim for a Communication Allowance during the blackout period
• 4 members did not submit their annual loyalty/ incentive scheme declarations (2022: two members)
• 7 members submitted their annual loyalty/ incentive scheme declarations after the date specified in the department’s administrative requirements (2022: 16 declarations).

Background

The Parliamentary Remuneration Tribunal (the tribunal) determines the salary and additional entitlements of the members, details of which are set out in the tribunal’s annual determination. The NSW Parliament, through the department, administers payments of additional entitlements to members. An overview is presented below:

Twenty-two members did not submit their claims for payment within 60 days of receipt of invoice or incurring the expense

The determination requires members to submit expense claims to the department within 60 days of receipt of invoice or incurring the expense. Our audit procedures identified 22 instances where members submitted their claims between three and 284 days late. This includes 18 members who currently sit in the Legislative Assembly or Council.

Four members submitted their Sydney Allowance reconciliations after the due date

At the start of each financial year, a member can choose to receive the Sydney Allowance as either an annual fixed amount paid monthly with their salary, or at a daily rate for each required overnight stay. Members who choose to receive an annual fixed amount must submit reconciliations twice a year to the department and return any excess of the allowance over actual expenses incurred by 30 September each year. Three members were late filing their mid-year reconciliations and one member was late filing their annual reconciliation (includes three sitting members). None of the members who filed late reconciliations needed to refund any unspent portion of their allowance to the department.

Greater clarity in current processes and training or education to members is required to address departures from the determination

There is an increase in the number of departures from the determination reported in our Auditor-General’s Report to Parliament on members’ additional entitlements since 2021–22. There is a need for greater clarity in current processes and guidance including increased training or education to help support members comply with the determination. We recommend the tribunal provides greater clarity on current processes and implications of departures from the guidelines to members. We recommend the department works with members to provide them additional training or education to better help them comply with the determination.

Open prior period recommendations

Enhanced public reporting

In 2016, the Auditor-General’s Report to Parliament recommended the tribunal consider requiring the department to regularly publish full details of members’ expenditure claims on its website in an accessible and searchable format. The tribunal had developed a plan requiring greater public reporting of members’ additional expenditure from 1 July 2019 but it does not have the power to require the department to facilitate this. This matter has been raised every year since 2016 and it continues to remain an open recommendation in 2023.

The Annual Reports of the Legislative Assembly and the Legislative Council, published on the Parliament’s website, currently list the total amount claimed during the year by each member for each allowance. However, transparency around members’ claims would be enhanced if information was more extensively and regularly published on the Parliament’s website. The department should continue to work with the presiding officers, members, the clerk of the Parliaments and the clerk of the Legislative Assembly to enhance reporting of members’ expenditure.

Appendix one – Response from Department of Parliamentary Services

© 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 this report is about

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

What we found

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

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

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

What the key issues were

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

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

What we recommended

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

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

• financial reporting
• audit observations.

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

This chapter outlines our audit observations related to the financial reporting of agencies in the Enterprise, Investment and Trade portfolio of agencies (the portfolio) for 2023.

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

This chapter outlines our observations and insights from our financial statement audits of agencies in the Enterprise, Investment and Trade portfolio.

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

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

What this report is about

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

What we found

Unqualified audit opinions were issued for all Premier and Cabinet portfolio agencies.

What the key issues were

The Administrative Arrangements Orders, effective 1 July 2023, changed the name of the Department of Premier and Cabinet to the Premier's Department and transferred parts of Department of Premier and Cabinet to The Cabinet Office.

The number of monetary misstatements identified in our audits decreased from 15 in 2021–22 to 12 in 2022–23.

The total number of management letter findings across the portfolio of agencies increased from ten in 2021–22 to 20 in 2022–23.

Thirty per cent of all issues were repeat issues. The most common repeat issues related to deficiencies in controls over financial reporting.

What we recommended

Portfolio agencies should:

• ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards
• prioritise and address internal control deficiencies identified in Audit Office management letters.

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

• financial reporting
• audit observations.

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

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

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 portfolio.

Appendix one – Early close procedures

© 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 this report is about

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

What we found

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

What the key issues were

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

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

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

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

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

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

Recommendations were made to address these deficiencies.

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

• financial reporting
• audit observations.

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

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

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

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

Appendix one – Misstatements in financial statements submitted for audit 

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

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