Reports
Actions for Health 2020
Health 2020
This report analyses the results of our audits of financial statements of the Health cluster for the year ended 30 June 2020. The table below summarises our key observations.
1. Financial reporting
Financial reporting |
Unqualified financial audit opinions The financial statements of NSW Health and its 25 controlled entities received unqualified opinions. The number of corrected and uncorrected misstatements increased from the prior year. Misstatements related predominantly to the implementation of new accounting standards, asset revaluations and accounting for new revenue streams to cover the cost of HSW Health’s response to the COVID-19 pandemic. Qualified compliance audit opinion We issued a qualified audit opinion for the Ministry of Health’s Annual Prudential Compliance Statement for aged care facilities operated by NSW Health. We identified 18 instances of material non-compliance with the Fees and Payments Principles 2014 (No. 2) (the Principles) in 2019–20 (30 in 2018–19). |
Financial performance |
NSW Health received an additional $3.3 billion in funding to cover costs associated with its response to the COVID-19 pandemic. The impacts of the COVID-19 pandemic on the cluster were significant for health entities and included changes to operations, increased revenues, expenditure, assets and liabilities. Cancellation of elective surgery and decreased emergency department presentations meant that despite the pandemic, activity levels at many health entities decreased. Health Pathology and HealthShare were notable exceptions. In the period to the 30 June 2020, NSW Health reported that over 900,000 COVID-19 tests were conducted. Health Pathology conducted over 500,000 of these tests. Health Pathology's surge requirements were enhanced through arrangements with 13 private sector providers. HealthShare purchased $864.2 million of personal protective equipment. Overall, NSW Health recorded an operating surplus of $3.1 billion in 2019–20, an increase of $2.0 billion from 2018–19. As in previous years, the surplus largely resulted from additional revenue received to fund capital projects including the construction of new facilities, upgrades and redevelopments. In 2019–20 additional Commonwealth and State funding for the purchase and stockpiling of personal protective equipment also contributed to the operating surplus. |
Overtime payments | The Ambulance Service of NSW’s (NSW Ambulance) reduced their overtime payments to $79.7 million in 2019–20 ($83.1 million in 2018–19). Overtime payments in 2019–20 included $6.8 million related to the response to the 2019–20 bushfire season. NSW Ambulance overtime payments represent 16.8 per cent of total overtime payments in the cluster. |
2. Audit observations
Internal control deficiencies |
We identified more internal control deficiencies in 2019–20. The number of repeat issues from prior years also remains high. NSW Health addressed 18 out of the 25 information system control deficiencies during the year. Several key agreements lacked formal documentation. This included agreements between the Ministry and health entities, between health entities and agencies in other clusters and between the Ministry and health departments in other jurisdictions. |
Infrastructure delivery | NSW Health had 44 ongoing major capital projects at 30 June 2020 with a total revised budget of $12.3 billion. The revised total budget of $12.3 billion is $2.0 billion more than the original budget. NSW Health revises budgets when it combines project stages. |
This report provides parliament and other users of the Health cluster’s financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
The impacts of the COVID-19 pandemic on the cluster were significant and included changes to the operations of the health entities and increased revenue, expenditure, assets and liabilities.
As a part of this year's audits of health entities, we have considered:
- financial implications of the COVID-19 emergency at both health entity and cluster levels
- changes to agencies' operating models
- agencies' access to technology and the maturity of systems and controls to prevent unauthorised and fraudulent access to data.
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.
The response to the COVID-19 pandemic primarily impacted the financial reporting of NSW Health through:
- additional revenue from the State government in the form of grants and stimulus payments
- additional revenue from the Commonwealth government under the National Partnership Agreement for COVID-19 to cover part of the cost of responding to the COVID-19 pandemic
- increased expenses, largely due to increased payments to private health operators to maintain their viability during the COVID-19 pandemic and later to assist with public patient elective surgery waitlists and increased cleaning costs
- increased purchases of personal protective equipment.
Chapter one outlines the impacts of NSW Health’s response to the COVID-19 pandemic. This chapter outlines our other audit observations related to the financial reporting of agencies in the Health cluster for 2020.
Section highlights
- Unqualified audit opinions were issued for all health entities’ financial statements, although more misstatements were identified than last year.
- NSW Health recorded an operating surplus of $3.1 billion, an increase of $2.0 billion from 2018–19. This is largely due to additional capital grants for new facilities, upgrades and redevelopments and additional Commonwealth and State funding for the purchase of personal protective equipment.
- NSW Health’s expenses increased by 5.5 per cent in 2019–20 (7.0 per cent in 2018–19) despite the impact of the COVID-19 pandemic. The primary causes for the growth in expenses are increases in:
- employee related expenses due to higher employee numbers, increased overtime and a 2.5 per cent award increase
- payments to private health operators to maintain their viability during the COVID-19 pandemic and later to assist with public patient elective surgery waitlists
- payments to private health operators due to the first full year of operation of the Northern Beaches hospital.
- The Ambulance Service of NSW (NSW Ambulance) continued to report higher overtime payments than other health entities. However, despite the response to the 2019–20 bushfire season, their overtime payments were lower than last year. NSW Ambulance paid $79.7 million in overtime payments in 2019–20 ($83.1 million in 2018–19).
- A qualified audit opinion was issued for the Ministry of Health’s Annual Prudential Compliance Statement for aged care facilities operated by NSW Health. There were 18 instances of material non-compliance with the Fees and Payments Principles 2014 (No. 2) (the Principles) in 2019–20 (30 in 2018–19)
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.
The primary impact of the COVID-19 pandemic on the effectiveness of the internal controls of NSW Health and health entities relates to the effectiveness of controls implemented by HealthShare relating to the stocktake of personal protective equipment inventories. Inventory managed by HealthShare increased by 2,746 per cent during 2019–20. HealthShare’s inventory controls did not maintain pace with the sudden, significant increase.
The impacts of NSW Health’s response to the COVID-19 pandemic are outlined in chapter one. This chapter outlines other observations and insights from our financial statement audits of agencies in the Health cluster.
Section highlights
- The number of internal control deficiencies has increased since 2018–19. More than a third of control deficiencies are repeat issues.
- Control deficiencies that relate to managing employees’ leave and employee’s time recording continue to be difficult for entities to resolve, particularly during the ongoing response to the COVID-19 pandemic.
- Several key agreements were undocumented. These included agreements between the Ministry and the health entities, between health entities, and between the Ministry and entities in other clusters and jurisdictions. These related to:
- a loan arrangement between the Ministry and HealthShare for $319 million.
- Northern Sydney Local Health District's use of land and buildings owned by the Graythwaite Charitable Trust
- agreements for the treatment of New South Wales residents while they are interstate, and interstate residents receiving treatment while they are in New South Wales from Queensland, Victoria, South Australia and the ACT for both 2019–20 and 2018–19.
- NSW Health reported that they completed nine major capital projects during 2019–20. As at 30 June 2020 there were 44 ongoing major capital health projects in NSW. The revised capital budget for these projects in total was $2.0 billion more than the original budget of $10.3 billion. NSW Health reported the budget revisions are largely the result of combining project stages.
Appendix one – List of 2020 recommendations
Appendix two – Status of 2019 recommendations
Appendix three – Financial data
Appendix four – Analysis of financial indicators
Appendix five – Analysis of performance against budget
Copyright notice
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Auditor-General’s Report to Parliament
Health 2020
11 December 2020
This corrigendum has been prepared to amend the following text within the Auditor-General’s Report to Parliament on Health 2020, dated 10 December 2020.
NSW Health emergency department treatment times
On page five the original text was as follows:
NSW Health also measures the percentage of patients whose clinical care in emergency departments is completed within four hours. The measure is used as an indicator of accessibility to public hospital services.
NSW Health aims to complete clinical care in the emergency department for 81 per cent of patients within four hours. In 2019–20 NSW Health reports it completed clinical care within four hours for 72.1 per cent of patients (a 7.3 per cent decrease from 2018–19).
At Western Sydney Local Health District, 59 per cent of patients were treated within the targeted timeframe. NSW Health attribute this to the profile of patients presenting in emergency departments and additional time taken processing COVID-19 patients to ensure staff safety.
The original text has now been changed to:
NSW Health also measures the percentage of patients with total time in the emergency department of four hours or less for each local health district. The measure is used as an indicator of accessibility to public hospital services.
Local Health Districts | Target % (2019–20) | Actual % (2019–20) |
Central Coast | 77.0 | 59.9 |
Far West | 90.2 | 86.6 |
Hunter New England | 81.0 | 72.5 |
Illawarra Shoalhaven | 79.0 | 60.2 |
Mid North Coast | 82.0 | 76.7 |
Murrumbidgee | 85.3 | 81.9 |
Nepean Blue Mountains | 79.0 | 65.5 |
Northern NSW | 81.0 | 78.2 |
Northern Sydney | 79.0 | 73.9 |
South Eastern Sydney | 78.0 | 70.3 |
South Western Sydney | 78.0 | 61.2 |
Southern NSW | 85.0 | 83.0 |
Sydney | 76.0 | 70.9 |
Sydney Children’s Hospitals Network | 80.0 | 72.1 |
Western NSW | 85.9 | 81.0 |
Western Sydney | 78.0 | 59.0 |
St Vincent's Health Network* | 75.0 | 65.4 |
The above changes will be reflected in the version of the report published on the Audit Office website and should be considered the true and accurate version.
Actions for Transport 2018
Transport 2018
The Auditor-General for New South Wales, Margaret Crawford released her report today on key observations and findings from the 30 June 2018 financial statement audits of agencies in the Transport cluster. Unqualified audit opinions were issued for all agencies' financial statements. However, assessing the fair value of the broad range of transport related assets creates challenges.
This report analyses the results of our audits of financial statements of the Transport cluster for the year ended 30 June 2018. The table below summarises our key observations.
This report provides Parliament and other users of the Transport 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 Transport cluster for 2018.
Observation | Conclusions and recommendations |
2.1 Quality of financial reporting | |
Unqualified audit opinions were issued for all agencies' financial statements | Sufficient audit evidence was obtained to conclude the financial statements were free of material misstatement. |
2.2 Key accounting issues | |
Valuation of assets continues to create challenges. Although agencies complied with the requirements of the accounting standards and Treasury policies on valuations, we identified some opportunities for improvements at RMS. |
RMS incorporated data from its asset condition assessments for the first time in the valuation methodology which improved the valuation outcome. Overall, we were satisfied with the valuation methodology and key assumptions, but we noted some deficiencies in the asset data in relation to asset component unit rates and old condition data for some components of assets. Also, a bypass and tunnel were incorrectly excluded from RMS records and valuation process since 2013. This resulted in an increase for these assets’ value by $133 million. The valuation inputs for Wetlands and Moorings were revised this year to better reflect the assets' characteristics resulting in a $98.0 million increase. |
2.3 Timeliness of financial reporting | |
Residual Transport Corporation did not submit its financial statements by the statutory reporting deadline. | Residual Transport Corporation remained a dormant entity with no transactions for the year ended 30 June 2018. |
With the exception of Residual Transport Corporation, all agencies completed early close procedures and submitted financial statements within statutory timeframes. | Early close procedures allow financial reporting issues and risks to be addressed early in the reporting and audit process. |
2.4 Financial sustainability | |
NSW Trains and the Chief Investigator of the Office of Transport Safety Investigations reported negative net assets of $75.7 million and $89,000 respectively at 30 June 2018. | NSW Trains and the Chief Investigator of the Office of Transport Safety Investigations continue to require letters of financial support to confirm their ability to pay liabilities as they fall due. |
2.5 Passenger revenue and patronage | |
Transport agencies revenue growth increased at a higher rate than patronage. | Public transport passenger revenue increased by $114 million (8.3 per cent) in 2017–18, and patronage increased by 37.1 million (5.1 per cent) across all modes of transport based on data provided by TfNSW. |
Negative balance Opal Cards resulted in $3.8 million in revenue not collected in 2017–18 and $7.8 million since the introduction of Opal. A total of 1.1 million Opal cards issued since its introduction have negative balances. | Transport for NSW advised it is liaising with the ticketing vendor to implement system changes and are investigating other ways to reduce the occurrences. |
2.6 Cost recovery from public transport users | |
Overall cost recovery from users has decreased. | Overall cost recovery from public transport users (on rail and bus services by STA) decreased from 23.2 per cent to 22.4 per cent between 2016–17 and 2017–18. The main reason for the decrease is due to expenditure increasing at a faster rate than revenue in 2017–18. |
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 cluster for 2018
- the areas of focus identified in the Audit Office annual work program.
The Audit Office Annual Work Program provides a summary of all audits to be conducted within the proposed time period as well as detailed information on the areas of focus for each of the NSW Government clusters.
Observation | Conclusions and recommendations |
3.1 Internal controls | |
There was an increase in findings on internal controls across the Transport cluster. | Key themes related to information technology, employee leave entitlements and asset management. Eighteen per cent of all issues were repeat issues. |
3.2 Audit Office Annual work program | |
The Transport cluster wrote-off over $200 million of assets which were replaced by new assets or technology. |
Majority of this write-off was recognised by RMS, with $199 million relating to the write-off of existing assets which have been replaced during the year. |
RailCorp is expected to convert to TAHE from 1 July 2019. | Several working groups are considering different aspects of the TAHE transition including its status as a for-profit Public Trading Enterprise and which assets to transfer to TAHE. We will continue to monitor developments on TAHE for any impact to the financial statements. |
RMS' estimated maintenance backlog at 30 June 2018 of $3.4 billion is lower than last year. Sydney Trains' estimated maintenance backlog at 30 June 2018 increased by 20.6 per cent to $434 million. TfNSW does not quantify its backlog maintenance. | TfNSW advised it is liaising with Infrastructure NSW to develop a consistent definition of maintenance backlog across all transport service providers. |
Not all agencies monitor unplanned maintenance across the Transport cluster. | Unplanned maintenance can be more expensive than planned maintenance. TfNSW should develop a consistent approach to define, monitor and track unplanned maintenance across the cluster. |
This chapter outlines certain service delivery outcomes for 2017–18. The data on activity levels and performance is provided by Cluster agencies. The Audit Office does not have a specific mandate to audit performance information. Accordingly, the information in this chapter is unaudited.
We report this information on service delivery to provide additional context to understand the operations of the Transport cluster and to collate and present service information for different modes of transport in one report.
In our recent performance audit, Progress and measurement of Premier's Priorities, we identified 12 limitations of performance measurement and performance data. We recommended that the Department of Premier and Cabinet ensure that processes to check and verify data are in place for all agency data sources.
Actions for Volume Eight 2012 focusing on Transport and Ports
Volume Eight 2012 focusing on Transport and Ports
We issued unqualified audit opinions on the transport entities’ 30 June 2012 financial statements.
Some of the findings of the report include:
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government funding to the public transport operators totalled $4.4 billion in 2011-12 ($3.7 billion in 2010-11)
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passenger services revenue only covered 20 per cent of RailCorp's operating costs
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Transport for NSW has formalised a protocol to mitigate the risk of potential conflicts of interests
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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
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Transport patronage continued to grow with 510 million journeys on train, bus and ferry services
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CityRail had two peak hour periods where only 36 per cent and 39 per cent of services were on time
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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
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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
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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.
Actions for Volume One 2012 focusing on themes from 2011
Volume One 2012 focusing on themes from 2011
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.