Report snapshot

Objective

This audit assessed the efficiency and effectiveness of NSW Health’s oversight and assurance of arrangements to engage and accurately remunerate Visiting Medical Officers (VMOs).

Key findings

NSW Health does not provide coordinated statewide governance of VMO engagement and remuneration

While there are established policies for VMO engagement and remuneration, these do not operate as an integrated governance framework across each stage. System stewardship elements including statewide oversight, monitoring, reporting and assurance are not in place.

NSW Health does not assess the long-term financial or workforce impacts of VMO use

There is an absence of statewide workforce planning or value for money criteria to guide Local Health Districts (LHDs) on when and how VMOs should be used. District decisions on VMO engagement are largely driven by short-term service needs.

LHDs do not have effective internal controls over VMO payments

There are significant and persistent weaknesses in NSW Health’s payment controls. These include failures to segregate claims checking from claims payment duties, limited oversight of higher-risk arrangements and insufficient monitoring of excessive hours or potential double billing. These weaknesses increase the risk of error, inappropriate payments and fraud.

Weaknesses in IT systems and data controls undermine compliance with policy

NSW Health practices for processing VMO claims undermine the accuracy and integrity of payments, including extensive use of ‘miscellaneous’ claim categories, lack of validation against Medicare item codes and inconsistent application of aged-claim discounting.

NSW Health does not monitor or report on VMO arrangements 

There is a lack of routine, system-wide monitoring of VMO arrangements, including expenditure, compliance and emerging risks. NSW Health has limited visibility over the effectiveness of controls operating within LHDs. Decision making is not informed by consistent, reliable or comprehensive information.

Assurance methods are reactive and fail to quickly identify and address system-wide risks

NSW Health relies on LHDs to undertake assurance activities at the district level and has not routinely analysed or aggregated results across the state. This limits the timely identification and resolution of system-wide risks. Governance reforms are at an early stage of implementation and have not yet delivered effective system-wide assurance.

NSW Health is strengthening its system-wide oversight of the use of VMOs

NSW Health has recently undertaken work to improve assurance, monitoring and reporting for VMO engagement and remuneration. This includes an internal audit and legal review which are in the early stages of completion.

Recommendations

The report makes 3 recommendations targeted at strengthening system-wide governance, assurance, value for money consideration and controls for VMO engagement and remuneration.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

Objective

This audit assessed whether Transport for NSW (TfNSW) is effectively administering the $334 million Regional Roads Fund (RRF). 

To date, $320.4 million has been allocated from the fund, comprising: 

• $215 million for 10 projects led by TfNSW 
• $105.4 million to 11 local councils to deliver 19 projects. 

Most of the RRF projects are election commitments.

Key findings

Projects led by TfNSW are being managed within the existing TfNSW governance framework

TfNSW manages RRF projects using established delegations and governance processes. Internal budget approvals and reporting are consistent with these delegations, and they are overseen and monitored by internal committees. 

TfNSW has also responded to government expectations to accelerate the delivery of its RRF projects.

TfNSW did not provide detailed evidence to support the allocation of additional project funding

At the time additional funding was approved, TfNSW had not completed project business cases or short form assessments to inform project assumptions, expected benefits and estimated project costs.

TfNSW projects are not following typical assurance lifecycles, increasing risk

TfNSW sought and released funding for some TfNSW-led projects earlier than is typical in its project development and delivery lifecycle, and approved contingency funding amounts above indicated levels in its policies. This increases project and budget risks.

TfNSW did not comply with some aspects of the Grants Administration Guide

TfNSW did not put in place practices and procedures to comply with the Grants Administration Guide when developing and issuing funding agreements to local councils. It also did not comply with other mandatory requirements of the Guide.

TfNSW has not defined outcomes to guide the administration of the RRF

TfNSW has not documented the expected outcomes of the expenditure to guide administration of the fund. This includes prioritisation of funding for project variations and new projects. 

Recommendations

The audit recommends that TfNSW: 

• strengthen documentation to support funding decisions 
• clearly define RRF outcomes 
• design and implement a process for one-off and ad hoc grants to ensure compliance with the Grants Administration Guide.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

Objective

This audit assessed whether Corrective Services NSW, Fire and Rescue NSW and NSW Ambulance are effectively and efficiently managing unplanned leave and overtime.

Key findings

The agencies have clear policies and procedures to monitor the use of sick and carers leave 

The agencies require evidence like medical certificates when leave exceeds set limits. Managers monitor usage and meet with staff when thresholds are reached, ensuring leave is taken appropriately. 

There are clear procedures to manage overtime but for some staff this is still significant 

The agencies have clear, fair procedures for offering overtime shifts when this is operationally necessary. While this promotes transparency and helps prevent excessive hours for most staff, some employees, particularly those with specialist skills or in high-demand roles, still work significant overtime hours. 

The agencies monitor trends in unplanned leave and overtime 

The agencies have systems for tracking staff attendance, with executive oversight. They regularly compare unplanned leave and overtime rates across workgroups, monitoring trends over time. Agencies are also creating dashboards to give managers and executives real-time access to attendance and overtime data.

Condensed roster patterns limit opportunity for recovery between shifts 

The agencies use roster patterns with long hours and clustered workdays, giving staff more days off between shifts. SafeWork NSW highlights that longer hours and condensed shifts raise fatigue risks, which must then be managed. Extra overtime hours can add to these risks, especially in emergency services and custodial roles. 

The agencies are reviewing the factors that most impact staff availability 

For Corrective Services NSW, higher workers compensation rates are a key factor. Fire and Rescue NSW faces ongoing shortages of on-call firefighters. NSW Ambulance is seeing steady changes in the workforce gender balance.  

The agencies generally have enough staff for planned leave, but rising use of workers compensation and parental leave means current staffing formulas are falling behind. This leads to greater reliance on overtime to fill shifts.

The agencies are implementing tailored initiatives to target the causes of overtime 

The agencies are developing targeted initiatives to address overtime. Progress is slower where extra funding or increased staffing is required. Agencies are actively monitoring and evaluating the effectiveness of these measures. 

Recommendations

Recommendations have been made to each of the 3 agencies to consistently apply sick leave policies, review rostering and shift arrangements, update staffing formulas and relief staffing rates, and implement stronger monitoring and evaluation of workforce initiatives.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

^{1 Fire and Rescue NSW overtime expenses includes payments made to on-call firefighters who fill staffing gaps at a station other than their own.
2 Unplanned leave includes sick leave, personal/carers leave, family and community services leave, compassionate leave, and workers compensation leave.}

Objective

The audit assessed whether the Racing for the Regions program is being administered and delivered effectively to meet government objectives. This included assessing oversight and management of the program by the Department of Creative Industries, Tourism, Hospitality and Sport (the Department), and Racing NSW’s compliance with the requirements of the funding deed.

Key findings

The terms of the funding deed do not enable effective oversight by the Department

The funding deed did not include delivery timelines or scopes of work for individual projects and did not specify an overall end date for the program.

The Department did not ask Racing NSW for updated project delivery dates and plans before finalising the funding deed. As a result, the project information in the funding deed was almost 2 years out of date.

Three projects were completed before the funding deed was signed. The deed stated that funding was for ‘upcoming projects’.

The funding deed does not require Racing NSW to assess whether the program is delivering the benefits set out in the business case.

The Department is not actively overseeing project delivery

The Department did not identify delivery risks or assess the adequacy of Racing NSW’s governance, probity or capability to deliver the projects.

The Department has not kept complete records of its grants administration activities. Less than half of its governance meetings were documented and it does not have any records for one of the projects.

Racing NSW has provided regular reporting on project progress since 2024, when construction started on some projects.

Grant payments were made in compliance with most of the required financial controls

The Department has used a consistent process to manage grant payments to Racing NSW since 2024. This includes a consistent acquittal process and approval by authorised delegates. However, payments for projects completed before the funding deed was signed did not fully comply with the requirement for expert certification of work completed.

Recommendations

The audit made 3 recommendations intended to improve the Department’s oversight and evaluation of the Racing for the Regions program and future programs.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

Objective

This audit assessed whether the Office of Local Government (OLG) administered the Local Government Recovery Grants program in line with the Grants Administration Guide and the Program Guideline.

The Local Government Recovery Grants program provided grant funding to local councils following the August and September 2022 flood events.

Key findings

Funding was administered in line with the Grants Administration Guide and the Program Guideline

The OLG administered grant funding in line with the mandatory requirements of the Grants Administration Guide, however it did not document:

• the reasons for all eligibility decisions as part of the assessment process
• fraud controls
• processes to manage conflicts of interest.

Some of the monitoring and reporting requirements were not implemented

The OLG collects quarterly financial progress reports from councils. However, the OLG has not implemented Program Guideline requirements relating to the establishment of performance measures and monitoring of project outcomes by local councils.

There is no clear plan to finalise the program

The OLG has approved a detailed program of works for 37 councils. This is yet to occur for 9 councils.

The OLG has not yet confirmed final reporting and acquittal processes for the program.

Roles and responsibilities have not been defined

The OLG and the NSW Reconstruction Authority have not documented their respective roles for the Program. This has limited the accountability for some aspects of Program administration and has impacted timely delivery.

Recommendations

Three recommendations were made for the OLG to improve practices in line with the Grants Administration Guide. One recommendation was made for the OLG and the NSW Reconstruction Authority to improve clarity of roles and responsibilities.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

Objective

This report focuses on 9 major capital projects across the total state sector and provides insights into transparency, costs and governance arrangements. 

For the purposes of this report, we have defined a major capital project as an infrastructure project identified in the NSW Budget with total estimated costs greater than $100 million.

Key findings

There is limited public reporting of major capital project budgets, costs and timelines

There is limited public information on estimated total costs, delivery timelines, and changes to costs and timeframes for all major capital projects. 

Over 75% of transport projects did not have an estimated total cost in the NSW Budget Papers.

The estimated total costs of some projects have increased significantly

Sydney Metro’s estimated total cost for the Metro City & Southwest and Metro West projects is significantly higher than originally estimated. Sydney Metro advises this is due to increases in material and building costs, scope changes, industrial action, condition of legacy assets, and additional requirements in the Sydney CBD as part of the ongoing tunnelling and excavation. 

There is limited public information on the total costs of completed projects

There is no explicit requirement to publish the total costs of completed major capital projects. Publishing information on actual costs against budget is essential to promote transparency and accountability. 

The State wrote off $907 million of capital project costs over the past 3 years

The written off costs of capital projects represent expenditure that, for various reasons, will not result in a usable physical asset or improved service delivery. These write offs typically occur when projects are cancelled, significantly rescoped or discontinued after substantial planning and development costs have already been incurred.

There is limited integration of risk oversight at the enterprise level in multi-agency led projects 

In several cases, significant project risks were only recorded in the risk registers of the delivery agency and not reflected in the enterprise risk registers of the agencies that will ultimately own or operate the asset. This creates potential governance and accountability gaps, particularly for operational or asset performance risks that extend beyond the construction phase.

Infrastructure NSW (INSW) applies an investor assurance framework to provide scrutiny over capital projects

By embedding independent scrutiny into the lifecycle of major capital projects, the INSW Investor Assurance Framework seeks to reduce the risks of cost overruns, delays and project failure.

Recommendations

This report makes 5 recommendations for state agencies and NSW Treasury to implement to improve transparency and accountability, and to enhance project management for future capital projects.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

Objective

This audit examined whether Corrective Services NSW and Youth Justice NSW (the agencies) provide effective and efficient support and programs for First Nations peoples in custody and after release to reduce reoffending.

Key findings

The agencies have invested in support for First Nations peoples

The agencies have developed strategies aimed at reducing over-representation of First Nations peoples in custody, aligned with the National Agreement on Closing the Gap 2020 (Closing the Gap), and have invested in programs and initiatives to support First Nations peoples.

The agencies have not operationalised systemic and structural transformation

The agencies have not embedded formal partnerships and shared decision-making, or established a healing framework and therapeutic model of care for First Nations peoples, as required by Closing the Gap and the NSW Government’s Aboriginal Affairs Plan, OCHRE.

The agencies do not monitor, evaluate or report on expenditure and outcomes for First Nations peoples

Since 2019, the agencies have had 5 strategies in place at different times to reduce First Nations over-representation in custody. However, they did not track spending or outcomes, and public data shows they failed to meet their targets.

The agencies have not established governance and accountability arrangements to support their targets

Both agencies identify failure to reduce over-representation of First Nations peoples in custody as a strategic risk, but effective governance and accountability mechanisms have not been established to mitigate this risk.

The agencies’ assessment tools disproportionately impact First Nations peoples

First Nations peoples are disproportionately classified as high-risk in NSW custodial settings, reducing their access to reintegration programs and increasing the risk of institutional barriers that contribute to reoffending.

The agencies have not identified culturally appropriate post-release services

The agencies do not have a referral framework to systematically support First Nations peoples exiting custody, including an endorsed list of culturally appropriate services in community.

The agencies have not taken sufficient steps to adapt their systems to growth in remand 

The agencies have not sufficiently addressed the needs of First Nations peoples on remand, or highlighted the practices contributing to significant growth in remand population.

Recommendations

That the agencies establish governance and accountability in line with Closing the Gap and OCHRE; co-design a First Nations Healing Framework; establish formal partnerships; and review their assessment tools.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

This report presents key findings and recommendations from financial audits of local councils, joint organisations and county councils for the year ended 30 June 2025.

It also comments on the sector’s financial sustainability, internal controls and governance, major capital projects, artificial intelligence (AI) and cyber security.

Key findings

Unmodified audit opinions were issued for the financial statements of 125 councils, 8 county councils and 11 joint organisations. Three council audits were in progress at the time of this report.

Financial reporting quality has improved

The number and value of errors in the financial statements declined from the previous year, and fewer versions of financial statements were submitted for audit, indicating improving financial reporting processes.

Financial sustainability continues to be a concern for some councils

Seventeen councils reported operating losses this year and 19 had insufficient cash (not subject to external restrictions) to cover 3 months of general expenses. Six of the 19 councils identified as being the least liquid also incurred operating losses.

Appendix 2 lists 11 councils with heightened financial sustainability risk due to various combinations of operating losses, insufficient cash, declining populations and low capacity to generate own source revenue.

Water supply infrastructure needs $1 billion to ensure access to safe and secure water

Two regional and 13 rural councils that supply water made operating losses. Even when operating costs can be covered, it is unlikely they will recover enough, based on council estimates, to enable infrastructure upgrades to agreed service levels.

Councils held $5.4 billion in local infrastructure contributions (LIC), but spending was low for some

There were 14 councils that held more than half of LIC funds. Of these, 10 spent less than 20% of their balance in the 2024–25 financial year. Delays between collecting and spending LIC funds may indicate that infrastructure planning and delivery processes are not operating effectively. The current LIC system is particularly complex for councils experiencing significant population growth.

Capital project guidance is outdated and inadequate

Of the 29 major capital projects reviewed, 14 were delayed by more than 6 months, and 6 were more than 10% over budget. Current guidelines are more than 15 years old and do not reflect the complexity and risks of modern infrastructure delivery.

Internal controls and governance processes had deficiencies

Deficiencies in internal controls and governance were identified at most councils, mainly associated with asset management, information technology (IT) and fraud control.

Most councils lack AI strategy and governance

Councils are in the early stages of adopting AI. Fewer than half have a strategy or governance framework, limiting oversight and opportunities to leverage benefits and mitigate AI risks.

Significant cyber security control deficiencies exist

Councils have critical weaknesses in managing supply chain risks. Policies and processes for assessing the cyber security exposure of technology assets are inadequate, and monitoring of cyber security investments and their associated benefits is limited.

Recommendations

The report makes 5 recommendations (see Executive summary for full details).

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

This audit assessed whether NSW Health is effectively safeguarding clinical systems, required to support healthcare delivery in Local Health Districts, from cyber threats.

Conclusion 

NSW Health is not effectively managing cyber security risks to clinical systems that support healthcare delivery in Local Health Districts. In addition, Local Health Districts have not met the minimum NSW Government cyber security requirements that have been outlined in NSW Cyber Security Policy since 2019. 

Local Health Districts are not adequately prepared to respond effectively to cyber security incidents. Systemic non-compliance with NSW Government cyber security requirements, including maintaining adequate cyber security response plans, business continuity planning and disaster recovery for cyber security incidents, means that Local Health Districts could not demonstrate that they are prepared for, or resilient to, cyber threats. This exposes the risk that a preventable cyber security incident could disrupt access to healthcare services and compromise the security of sensitive patient information.

eHealth NSW has not clearly defined or communicated its roles and the expected roles of Local Health Districts regarding cyber security. This has led to confusion amongst Local Health Districts on the cyber security risks they manage, including for crown jewel assets (the ICT assets regarded as valuable or operationally vital for service delivery), and identifying and mitigating critical vulnerabilities, threats and risks. Local Health District management of cyber security is hampered by a lack of support, coordination and oversight from eHealth NSW in cyber security matters. 

Recommendations 

The audit recommended that: 

• The Ministry of Health collate and validate information on compliance with the NSW Cyber Security Policy
• The Ministry of Health finalise and communicate cyber security roles and responsibilities within the NSW Health system
• eHealth NSW develops clear guidance to Local Health Districts on balancing need to deliver clinical services while meeting cyber security requirements and supports Local Health Districts to improve cyber security capability
• Local Health Districts design and implement a fit for purpose cyber security risk management framework.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.

This report summarises the 2024–25 consolidated financial statements of the New South Wales General Government Sector (GGS) and Total State Sector (TSS). Together these comprise the Total State Sector Accounts (TSSA).

The report comments on key findings from the TSSA audit and highlights significant factors that have contributed to the State’s financial outcomes for the year ended 30 June 2025. The report also identifies areas of focus for future audits.

Key findings

The audit opinion on the TSSA was unqualified.

The GGS deficit was $1.4 billion higher than originally budgeted

The GGS reported a deficit of $5.1 billion for the 2024–25 financial year. This was higher than the original budgeted deficit of $3.6 billion, and $86 million higher than the revised budget deficit of $5 billion estimated during the 2024–25 half yearly review.

Since 2022–23, the GGS’s revenue growth has exceeded expense growth

This reversed a trend from previous years when expenses rose faster than revenue due to the Government’s response to COVID–19 and natural disasters.

The GGS’s interest expense increased by $3.1 million per day

In 2024–25, the GGS’s interest expense increased by $1.1 billion to $7.1 billion, mainly due to a $11.7 billion increase in the GGS’s borrowings. Interest is costing the GGS $19.6 million per day ($16.5 million last year).

The GGS reported borrowings of $165.2 billion at 30 June 2025.

The State maintained its credit ratings, however, S&P Global has indicated a risk of downgrade still exists

Both Moody’s and Fitch maintained the State’s credit rating at triple-A with a stable outlook in September 2025.

In November 2025, S&P Global reaffirmed its AA+ rating and maintained its negative long-term outlook. The negative outlook signifies a risk that the State's financial management or budgetary performance could weaken over the next two years.

Recommendations

All recommendations from our State finances 2024 report were addressed by NSW Treasury in 2024–25. No additional recommendations are made for 2024–25, apart from those made to agencies in the State agencies 2025 report.

Further information

Please contact Renee O'Kane, Chief of Staff, on 9275 7347 or by email.