Unqualified audit opinions were issued on the above corporations’ 30 June 2013 financial statements. During the year, Treasury issued TC 13/01 ‘Mandatory early close procedures for 2013’. This Circular aimed to improve the quality and timeliness of agencies’ annual financial statements. In 2012-13, application of the circular was made mandatory for State owned corporations. As a result, the port corporations were required to perform the early close procedures. All the port corporations were successful in performing the procedures, which helped them submit financial statements by an earlier due date. The early close procedures also resulted in general improvements to the quality of most financial statements.

The report recommends all transport entities should do more to reduce excessive annual leave balances to ensure they will comply with new targets set by the Premier, RailCorp, Sydney Trains and NSW Trains should minimise the amount of overtime bonuses paid to train drivers and that Transport for NSW should set targets to measure the overall satisfaction of train users.

Unqualified audit opinions were issued on the NSW Government controlled insurance and compensation entities’ 30 June 2013 financial statements, except the NSW Self Insurance Corporation (SICorp). SICorp’s audit opinion was qualified due to non-compliance with Australian Accounting Standards applicable to general insurance contracts. The auditor’s reports drew attention to the significant uncertainty in estimating outstanding claims liabilities of $14.0 billion in the Workers’ Compensation Nominal Insurer and $2.1 billion in the Lifetime Care and Support Authority. The audit of the Building Insurers’ Guarantee Corporation was not complete at the time of this report and is excluded from this commentary. 

The NSW Government does not estimate or report the total cost of alcohol abuse. The Audit Office of New South Wales’ sponsored research estimates it costs the government over $1 billion a year, or around $416 from each NSW household.

Parliamentary reference - Report number #235 - released 6 August 2013

This overview summarises the significant findings included in my 2012 financial audit report, volumes three to eleven, and highlights NSW agencies’ overall achievements and challenges. The overview summarises key themes and messages arising from these audits to help readers understand common findings. Agencies and their audit and risk committees can use the overview to self-assess and identify issues that may be relevant to their organisations.

It found more than 85 per cent of the recommendations in my 2011 financial audit reports to Parliament were implemented in 2012. Whilst this is less than 100 per cent, NSW government agencies clearly acted on my significant recommendations. However, NSW government agencies need to do more to follow up more detailed recommendations that are made directly to management.

We issued unqualified audit opinions on the transport entities’ 30 June 2012 financial statements.

Some of the findings of the report include:

• government funding to the public transport operators totalled $4.4 billion in 2011-12 ($3.7 billion in 2010-11)

• passenger services revenue only covered 20 per cent of RailCorp's operating costs

• Transport for NSW has formalised a protocol to mitigate the risk of potential conflicts of interests

• At present, no sustainability framework exists for the transport agencies around environment and sustainability. Transport for NSW should complete its Environment and Sustainability Policy Framework by June 2013 and should publicly report its results annually

• Transport patronage continued to grow with 510 million journeys on train, bus and ferry services

• CityRail had two peak hour periods where only 36 per cent and 39 per cent of services were on time

• On-time running performance for Sydney Ferries was above the NSW 2021 plan target of 98.5 per cent for most routes in 2011-12

• Customer surveys by transport agencies no longer specifically address crowding on public transport. Transport for NSW should observe and report on crowding on all transport modes

• Over 2,500 transport staff, or 8.3 per cent of the workforce, have excessive leave balances. All transport entities should do more to reduce excessive annual leave balances to ensure they will comply with new targets set by the Premier.

The NSW Government’s defined benefit superannuation funds have had positive returns for the last three years. However, the returns fell significantly in 2011-12. Global economic conditions led to substantial volatility and uncertainty in markets creating challenges for superannuation funds’ trustees.

Overtime is a significant cost for RailCorp and Roads and Maritime Services, adding about ten per cent to the cost of regular salaries. RailCorp’s overtime cost was $133.7 million in 2010–11, and at Roads and Maritime Services it cost $49.3 million.

Parliamentary reference - Report number #223 - released 20 June 2012

The following overview of audits from 2011 found agency restructures significantly impacted agency financial reporting processes, agencies are having difficulty establishing and enforcing compliance with their own policies and procedures, agencies experienced problems complying with regulations and providing adequate documentation to support their financial statements, the poor quality of some financial statements with 1,256 misstatements identified, 540 so significant they had to be corrected, deficiencies in information security exist across many agencies, computer system disaster recovery plans for financial systems not existing or outdated, do not align with agencies’ business recovery requirements, do not properly identify and assess critical systems and processes and testing is incomplete.

Neither agency (NSW Ministry of Health and NSW Police Force) demonstrated that they continued to get value for money over the life of these long term contracts or that they had effectively managed all critical elements of the three contracts we reviewed post award. This is because both agencies treated contract extensions or renewals as simply continuing previous contractual arrangements, rather than as establishing a new contract and financial commitment. Consequently, there was not a robust analysis of the continuing need for the mix and quantity of services being provided or an assessment of value for money in terms of the prices being paid.

Parliamentary reference - Report number #220 - released 1 February 2012

NSW public sector sick leave is higher than other States. The NSW public sector has the highest reported public sector sick leave in Australia. Public sector efforts to reduce sick leave over the last five years has seen a fall of a quarter of a day since 2004-05, less than its target of one day. On average, public sector workers take just over eight days sick leave annually. Recent surveys of public and private sector organisations show that sick leave in the public sector is higher than the private sector.

Parliamentary reference - Report number #209 - released 8 December 2010