INTRODUCTION | SCOPE OF ACTIVITIES | ORGANISATIONAL STRUCTURE | LEGISLATION ADMINISTERED AND MAJOR DOCUMENTS PRODUCED | HUMAN RESOURCE MANAGEMENT | ASSET MANAGEMENT, RISK MANAGEMENT AND PRICING POLICIES | EXTERNAL AND INTERNAL SCRUTINY | COMMENTARY ON FINANCIAL RESULTS | COMPLIANCE INDEX TO DISCLOSURE REQUIREMENTS
This Annual Report describes the functions and operations of the Tasmanian Audit Office and includes the audited financial statements of the Office for the year ended 30 June 1995. The Report focuses on matters relating to the organisation and management of resources available to the Auditor-General during the year, and is submitted to Parliament in accordance with the annual reporting requirements of the Financial Management and Audit Act 1990 and the Tasmanian State Service Act 1984.
The system of democratic government which Australia enjoys grew in part from a demand by the people that they have some form of control over funds they provide to those who govern them. Our parliamentary form of government requires that the Government of the day, before it collects or spends public moneys, must have the express approval of Parliament, the representatives of the people. Just as importantly, the Government must also account for its handling of the funds entrusted to it.
To assist Parliament in holding the Government to account, the Auditor-General is empowered to examine the accounts of the Treasurer, Government Departments and Public Bodies. As a result of the audits undertaken, and the subsequent reporting process, Members of Parliament are provided with information which assists them to judge whether the Government has spent public funds for the purposes authorised by Parliament and that public resources are used economically and efficiently.
The Auditor-General, therefore, plays an important role in the process by which Tasmanians are governed.
The responsibilities, duties and powers of the Auditor-General are outlined in the Financial Management and Audit Act 1990.
Our Vision is:-
"To be recognised as the auditor of choice for the Tasmanian Public Sector".
Provide independent audit assurance to Parliament concerning the financial statements of the Treasurer, Government Departments and Public Bodies and the economy, efficiency and effectiveness of those entities' operations.
Some of the significant events of the Office in 1994/95 are as follows:-
Report on the audit of the Public Account due 30 September 1994 -
dated 27 September 1994.
Report on the audit of Government Departments and Public Bodies due
31 May 1995 -
dated 30 November 1994.
Annual Report on the operations of the Office in 1993/94 due 30
November 1994 -
dated 28 July 1994.
Performance (VFM) Audit Reports
Administration and Accountability of Grants - dated 26 July 1994.
Regional Health Medical Review - dated 2 August 1994.
Wastewater Management in Local Government - dated 13 October 1994.
Development and training completed for a Performance and Development Review Scheme. Implementation date of the scheme was 1 July 1995.
Finalised negotiations for an Enterprise Agreement for the Office.
General reduction of 1% in real terms in 1994/95 audit fees.
Completed the evaluation of new audit methodology and plans prepared for the implementation of the new methodology in 1995/96.
Completed 75% of 1993/94 financial statement audits (which includes the certification of the statements, the preparation of the management letter and post audit discussion with the management of the entity) by 30 November 1994.
Received in August 1994 the Tasmanian Branch of the Royal Institute of Public Administration's Award for the Best Annual Report for 1992/93.
Industrial Agreement
20th Biennial Australasian Area Auditors-General Conference
This conference was held in Hobart in March 1995 and was attended by Auditors-General and senior staff from all Australian states and territories, the Commonwealth, New Zealand, Papua New Guinea, Fiji, British Columbia and Hong Kong. In addition, an invitation was extended, for the first time, to preparers of financial statements, private sector auditors and the media to attend the first two days of the conference. This move recognises the outward looking vision of Auditors-General and the contribution that auditees and private sector auditors can make to the audit process.
A number of speakers from both Australia and New Zealand addressed a wide variety of topics during the public sessions of the conference.
Both Auditors-General and the public were enthusiastic about this initiative. It was seen as a positive gesture which should be further developed in the future.
Some key issues discussed during the conference were:-
the nature of performance auditing;
the relationship of the Auditor-General's Office to the Executive and to Parliament; and
the implications of changes in the role of government in society.
Some extracts from some of the key papers follow.
"When government takes on a steering and contract role, contractual relationships become basic to the way Government does its business. Compliance audits continue to be necessary, but they are no longer sufficient. For, in addition to being assured about the use of inputs, the government also needs to be assured about the quality of the services provided. The role of the Auditor-General therefore becomes integral to quality assurance." (Don Challen, Department of Treasury and Finance).
"... I would like to see more fundamental research and thought given to two issues - first the methodology appropriate to the audit of non-financial information, such as statements of service performance; - and second, the nature of the 'performance' for which government is accountable ... we are far too relaxed about what we mean by 'government performance'. ...to be reporting on 'government performance' implies that we are reporting on something for which it is legitimate to hold the government accountable". (Ian Ball, New Zealand).
"... an even stronger case can and should be made against claims by executive governments to act as the authority over Audit Offices. The parliamentary system is open enough to allow ministers and concerned officials plenty of opportunity to respond to Audit reports and to put their perspective on the public record. Audit Offices need parliament as a public forum in which community representatives use the results of Audit investigations to test the competing perspective. Our parliaments, in turn, need Audit Offices to provide them with external assessments of government performance. My main conclusion is really a starting point for further discussion: the role of Audit Offices is to equip parliament with disciplined knowledge about the operational performance of government, so that those officially responsible for government operations can be held publicly responsible for their outcomes." (John Uhr, Australian National University).
"It is possible ... to plot a perceptible shift in the orientation of (the Auditor-General's) office. In the first (phase) the predominance of its regulatory function made it look like some instrument of the parliament even though it was intended to enjoy independence from the influence of the political officers of the executive. As that function recedes .. and as the audit function itself is enhanced with the addition of performance auditing, ... the office increasingly can be characterised as providing a service to parliament. But ... I would question the use of 'service' if it carried the implication of the office being a servant of parliament. ... While there is no constitutional imperative that we have an Audit Office providing an ... information service to parliament about the manner of use of public resources, the office we have evolved does seem today to exist, first and foremost, to serve a constitutional purpose. That is .. to facilitate the practice of responsible government ... though it needs to be emphasised that it is the parliament's, not the Auditor-General's, responsibility to exercise control over the executive and administrative arms of government.
I suggest we need to look anew at how we maintain the integrity of the office, abandoning older practices which are no longer compatible with this role, guarding against new pressures which may in future subvert it..." (Paul Finn, Australian National University).
Industrial Agreement
Negotiations were concluded with the Agency Negotiating Team on an industrial agreement (Tasmanian Audit Office State Service Wages Arrangements Agreement) which will come into effect upon registration by the Tasmanian Industrial Commission. Registration is expected to occur before the end of July 1995.
It is understood that the Agreement is the first in the Tasmanian public sector to provide productivity increase payments directly linked to the achievement of performance target outcomes and actual financial results.
Significant productivity improvements are also expected from removal, under the terms of the Agreement, of penalty payments and the introduction of a system of accumulations of time worked at peak periods (outside the ordinary hours of work) to be taken as paid leave at non-peak times, at the rate of time for time. These working arrangements are intended to better fit the work pattern that the auditing process follows thus ensuring that the maximum available work time aligns with the peaks of the audit period and that the taking of accumulated time is at the lowest level of audit demand.
The Agreement, which will apply until 31 January 1997, essentially provides for the sharing between auditees and employees of the financial benefits of a reduction in the time and cost of conducting the work of the Tasmanian Audit Office during the 1994-95 and 1995-96 audit cycles.
Benefits to auditees will be in the form of an aggregate decrease in audit fees of at least 1% p.a. in real terms. The Auditor-General will recommend to the Treasurer that the aggregate level of audit fees paid be such that they would be no higher than those applying in the base year (1993-94) allowing for Tasmanian movements in the CPI and minus 1% for each year after the base year, reduced by an amount at least as great as the amount received by employees if performance targets are met.
Within one month of the date the Agreement comes into force employees will be paid a special distribution of 1.5% of their annual salary. It is estimated that amounts totaling approximately $24 500 will be distributed to employees.
Further payments of benefits to employees are conditional on the Office completing designated percentages of audits by specified target dates, in each of the two audit cycles.
For example, in respect of the 1994-95 cycle:
The amounts of the first and second distributions linked to performance indicators for the 1995-96 audit cycle have not yet been determined but are expected to be of a similar order to that applying to the 1994-95 audit cycle.
The Agreement provides that all performance based distributions to employees in respect of an audit cycle are conditional on the Tasmanian Audit Office achieving an operating surplus in the financial year which ended during that audit cycle. This condition ensures that the productivity gains are real and have not in any sense been notionally derived.
The Corporate and Business plans of the Office set out a number of targets for the next year. Foremost amongst these is the need to settle on the development path for the audit methodology used in financial audits. The Office has made the strategic decision to acquire an audit methodology rather than to build on its own existing approach. This reflects the difficulty in devoting sufficient senior and specialised resources to doing the job in-house and the magnitude of the task in keeping the product up to date and appropriately coupled to computerised working papers. It is a direction that has been taken by most other and larger public sector audit offices. Nevertheless, the decision is conditional on a demonstration that the preferred supplier can deliver a workable version which deals with some of those demands unique to government departments and which is suited to the nature and scale of the Tasmanian public sector. Any final decision will commit the Office to an incremental improvement in the computer hardware needed to run the audit software and total costs from both aspects will be substantial.
Performance audits will continue but the Office intends to change the emphasis. Previous performance audits have been directed where possible at areas that have application to more than a single entity, e.g. the examination of the management of water and waste water by municipalities. Other audits have examined the operation of a specific part of an agency, e.g. student transport. These audits have necessarily been unable to cover every department and statutory authority, let alone every major program in a single agency even over a cycle of several years. The Office believes that it can better contribute towards the management focus on outputs and outcomes and reliable reporting to Parliament if performance audit is largely redirected towards providing assurance about the quality of the performance indicators published by agencies. This approach promises to yield a comprehensive coverage across agencies and it would be relatively objective. It would concentrate on quantitative measures chosen by the agency and increasingly used in the budget process and policy decision making. Performance audits of specific topics would coexist with this program with the balance being determined as experience develops.
These changes will occur at a time when the Office is seeking to increase the quality and efficiency of its service to Parliament and its auditees. The Office is committed to an overall goal of reducing the aggregate cost of financial audits by 1% in real terms in each of the next few years. Efficiencies will come partly from the audit methodology and investment in information technology although it is likely that the investment will be more concerned with quality of output. The Office will achieve the necessary cost reductions to meet the objective by rigorously examining the audit process, market testing and devising a management and administration structure more appropriate to its future needs.
The process of adapting to these new directions and obtaining increased efficiency will require the best efforts of all staff and it is appropriate that success is rewarded. It is therefore pleasing to record the staff have accepted a remuneration package that will deliver benefits to them and auditees proportional to their achievement as part of this Office's enterprise bargaining process.
The activities of the public sector are divided into two main areas, generally referred to as the budget and non-budget sectors:-
The budget sector includes most Government departments. These departments are funded by way of annual appropriations and their financial operations are processed through the central accounting system operated by the Department of Treasury and Finance.
The non-budget sector includes the remaining Government departments and a large number of public bodies, many of which are established by special legislation. These bodies have greater financial autonomy and are not generally funded by parliamentary appropriations, but are required in the main to individually report on their activities to Parliament.
As at 30 June 1995, the Auditor-General had specific responsibility for the audit of auditees as follows:-
Appropriations from the Public Account to His Excellency the Governor's Establishment, Legislative Council, House of Assembly and Legislature-General.
13 Departments including branch offices, schools, technical and further education colleges and courts located throughout Tasmania.
7 Marine Boards
29 Local Government Authorities
3 Regional Health Boards which control public hospitals, and
70 other public bodies including water, trading, registration, superannuation, marketing and other authorities.
The reduction in the in-house audit time for Local Government relates to the inclusion of a number of local government audits in contracting out arrangements in the 1994/95 audit cycle.
In respect of some of the auditees listed above more than one audit report has been issued in cases where other activities were undertaken or different bases of accounting were adopted.
Audit reports issued for the 1993/94 audit cycle totalled 146 (1992/93, 196). In addition 9 (1992/93, 7) reports were issued to the Commonwealth in respect to special purpose grants to the State and 6 (1992/93, 6) reports to the Insurance and Superannuation Commission. Of the total reports issued in the 1993/94 audit cycle 14 (1992/93, 40) were qualified. The variation in the total number of audit reports is due to the local government amalgamation, the non-audit of student hostels, TAFE student residences and drainage trusts.
The qualifications in the main referred to departures from accounting standards.
Number Of Qualified Audit Reports Issued Expressed As A Percentage Of Total Audit Reports Issued
Fees for financial audits which have been contracted out for the 1994/95 audit cycle represent 6.25% of the fees raised for that year (1993/94, 2.75%). Local Government Authorities are progressively being given the option to choose their auditor. Details are shown under the heading "Local Government Audits" in this report. Audits which the Auditor-General contracts out and those which have been contracted out by Councils require the contract auditors to undertake all facets of the audit, subject to review by the Auditor-General. Draft audit reports and draft management letters are prepared by the contract auditor, the final reports are issued by the Auditor-General.
Section 85 of Local Government Act 1993 provides:-
"(1) The accounts and financial reports of a Council are subject to the Financial Management and Audit Act 1990.
(2) The accounts and financial reports of the Council may be audited by private auditors with the approval of, and subject to any terms and conditions determined by the Auditor-General".
In consultation with the Minister for Local Government, terms and conditions were developed for Councils to use private sector auditors. Those terms and conditions included provision for:-
the establishment of a register of interested firms wishing to provide auditing services to councils. To be included in the register, auditors were required to establish that they were:-
registered under the Corporations Law to provide audit services and
possessed a public practice certificate issued by the Australian Society of Certified Practising Accountants or the Institute of Chartered Accountants.
entering into a tripartite contract between Council, the private sector auditor and the Auditor-General. One of the provisions of this contact is that the Council agree to pay to the Auditor-General an amount equal to 15% of the agreed audit fee by way of a supervision and regulatory fee; and
a contract period of 3 years.
A transitional arrangement has been implemented whereby in the three years commencing 1 July 1994, one third of Councils throughout the State have the opportunity to engage private sector auditors.
The position in respect to the first two years of the transitional arrangements is as follows: -
1st year (audits 2nd year (audits
for 1994/95 - for 1995/96 -
1996/97) 1997/98)
Number of Councils 10 10
Audits awarded to the private 7 3
sector
Audits to be conducted by the 3 7
Auditor-General
A further 9 Councils have the opportunity to select their own auditor by June 1996 for the financial years 1996/97 - 1998/99.
Mix Between In-House Effort And Contracts Expressed As A Percentage Based On Fees
The audits awarded to the private sector are the audits awarded by the Auditor-General, and the local government audits to the private sector are awarded by the individual councils via the tendering process. Therefore the private sector in 1994/95 performed 9.95% of the financial audits in the Tasmanian public sector previously performed by the Tasmanian Audit Office, in the previous year the percentage was 4.65%.
At 30 June 1995 the Office operated with 3 field audit sections; the Hobart sections each have two teams whilst the Launceston section (B) has one team. Each of these sections undertakes a portfolio of financial audits. Performance audits in 1994/95 were allocated to specific staff who were provided with resources from field audit sections.
Sections A, B, and D are responsible for the sub-programs financial audits and reporting to Parliament whilst a number of staff have the responsibility for specific projects of the performance audit sub-program.
CORPORATE PLAN 1994/95
The following objectives and tasks were included in the 1994/95 Corporate Plan. Performance indicators and the status of those tasks are as detailed below.
OUTCOME
Improve the quality, efficiency and timeliness of audits and reports to Parliament
OUTPUT
Audits of 1993-94 financial statements and all associated reports to Parliament completed:
in a shorter time-frame than required by legislation and that achieved in previous year, and
within overall budgeted person/hours and costs
Performance Indicators
Certification of all 1993/94 financial statement audits by 31 October 1994
1992/93 1993/94
Goal (Completion Date) 31 October 1993 31 October 1994
Audits not certified by Goal
Represented as a percentage of 35% 31.6%
the total number of audits
Represented as a percentage of 40% 32%
the total allocated hours
Audits not certified one month
after Goal
Represented as a percentage of 7.8% 11.4%
the total number of audits
Represented as a percentage of 8% 7.9%
the total allocated hours
Date the last audit report was 16 June 1994 11 May 1995
issued in respect of the audit
cycle
Reasons for non-certification 1. unresolved 1. unresolved issues
of audits issues 2. late submission of
2. late submission financial statements
of 3. difficulties in first
financial year of
statements local government
contracting.
Complete financial audits within overall allocated hours
Goal Actual Performance
1991/92 105% 112%
1992/93 105% 109%
1993/94 102% 98%
Complete financial audits within overall budgeted costs
Goal Actual Performance
1993/94 100% 90%
Audit reports for the financial statements of the 10 largest audits completed within 10 working days of the signature of Board/Head of Agency.
The average working days between audit reports and signature of Board/Head of Agency was 15 days. Five of the ten largest audits were completed within the 10 working days criteria.
Reports tabled in Parliament by approved timeframe
Statutory Dates Goal Actual
Departmental Annual 30 September 31 July 1994 28 July 1994
Report 1994
Reports on Financial
Audits
Public Account 30 September 30 September 27 September
1994 1994 1994
Government 31 May 1995 30 November 30 November
Departments and 1994 1994
Public Bodies
Productive hours per employee per classification for the audit cycle
1991/1992 1992/1993 1993/1994 1993/1994
Actual Actual Goal Actual
Audit Field Staff 1330 1404 1400 1410
Audit Managers N/A 1150 1000 1044
Senior Audit Managers N/A 732 700 834
Directors N/A 235 300 384
N/A - Not measured in this audit cycle.
OUTPUT
Reports on performance audits undertaken in accordance with Parliamentary funding before the following July
Performance Indicators
Completion of 1993/94 and 1994/95 performance audits in accordance with aggregate and individual approved time-frames, costs and resource budgets
Report by July 1994 on performance audits funded from 1993/94
appropriation
Tabled
Report No 6
Administration and Accountability of Grants 26 July 1994
Report No 7
Regional Health Medical Review 2 August 1994
Report No 8
Wastewater Management in Local Government 13 October 1994
Other Audits
Standards of Annual Reporting by
Authorities (tabled in Financial Audits
Report No 2 'Government Department and 30 November 1994
Public Bodies'
Hobart Institute of TAFE - Benchmarking -
exercise with the Canberra Institute of
Technology - Report published by the
Auditor-General Australian Capital
Territory and tabled in the ACT Parliament
on 21 June 1995.
Assess potential performance audit topics for 1994/95 to enable commencement in November/December and complete the selected audits by July 1995 within funding available from the 1994/95 appropriation.
Performance Audits Estimated Date of Tabling of
Report
Heritage Collection Management August 1995
Asset Management August 1995
Accommodation Management August 1995
Tendered Works October 1995
Nursing Costs in Tasmanian Public November 1995
Hospitals
The Office receives $246 000 from appropriation to fund these performance audits, the total costs of the above audits is estimated at $303 000.
OUTPUT
Ensure audit approach and cost effectiveness are assessed against best practice.
Performance Indicators
An intra-office quality assurance review was conducted by the Auditor-General and Deputy Auditor-General in December 1994/January 1995.
Timeliness standards for the completion of the final phases of audits. The standards set are:
Auditors Report Goal Actual
Days Days
Reviewed by Managers within x days from auditors 7 4.92
report
Reviewed by Director within x days from auditors 9 5.75
report
Audit Report signed by Auditor-General within x
days from auditors report 11 9.38
Total time from the date of Auditors Report to 11 9.38
the issue of the Audit Report on financial
statements
Independent reviews find a satisfactory standard of efficiency and effectiveness.
An independent review of the operations of the Office will be conducted during 1995/96.
The Office has developed a comprehensive staff performance development and review scheme, which officially starts on 1 July 1995.
The Office has undertaken a review of its methodology, and subject to criteria being met by the selected supplier the Office will be acquiring a new methodology. A trial version for evaluation is due to be released in mid-October 1995.
The audit managers under the team based approach are more active in the field, and are taking more of a leadership role than a supervisory role.
The EEO committee during the year performed the following tasks:-
reviewed the office's policy,
communicated with staff on EEO matters via newsletters, and
prepared and issued a statement on Workplace Harassment.
OUTPUT
Ensure staff receive adequate professional development to enable them to carry out tasks in an efficient and professional manner.
Performance Indicators
Staff training expenditures exceed 3% of salary costs.
Professional staff receive at least 8 days training each year and administration staff 3 days.
Auditors receive oral or written advice on new accounting and auditing standards, guidelines and concepts as well as legislation changes that impact on audit work within one month of publication.
Provide staff training that is adequate, timely and equitable across Sections.
Goal Actual
Expenditure on staff training in 1993/94 3% 16.35%
in relation to salary costs
Salary component of training 12.8%
Other costs (incl. course fees and travel 4.2%
costs)
Average days training per employee:-
Auditors, Managers and Directors 8 days 11.8
days
Administration staff 3 days 10.9
days
All audit staff received training on new accounting standards
and audit standards and practice statements within 3 months of
their publication date.
A training plan for 1994/95 was prepared.
Every staff member received 3 days training in relation to the new performance development and review scheme and 2 days training course on the new Word and Excel products which is additional training in relation to previous years.
Encourage staff exchanges with other Audit Offices.
Staff exchanges amount to at least 1 officer for 6 months in a calendar year.
Goal Actual
1993 1 officer for 6 months 1 officer for 12
months
1994 1 officer for 6 months 1 officer for 5 months
1995 1 officer for 6 months No exchanges*
* A planned reciprocal exchange from the New Zealand Audit Office from January 1995 fell through
due to the non-availability of the designated officer.
OUTCOME
To operate in a commercial and efficient manner
OUTPUT
Revised organisational, human resource and contracting structure/strategy.
Performance Indicator
Review by October 1994 the organisational and human resource requirements of the Office following possible loss of audit work through sale of Government business undertakings and decisions by local governments to exercise the discretion available to use private auditors.
Due to retirements and resignations during the first five months of the year, the management structure was reviewed and Corporate Services underwent a minor reorganisation. The human resource requirements of the Office for the 1994/95 audit cycle were reviewed in October 1994.
OUTPUT
Reductions in budget subsidisation with full cost recovery by financial year 1996/97.
Performance Indicators
Achieve a positive operating result after subsidisation.
The Office achieved a positive operating result for 1994/95. The financial statements for the Office are published in this report.
Improve Financial and Management Systems.
The Office acquired two additional modules for the financial system, namely accounts receivable and asset management. These modules will be brought on-line in 1995/96. There were no major enhancements to the Office's management information and planning system this year. The Office is currently implementing an internal human resource management system which includes personnel, payroll and leave management.
Phase-in, over 3 years, the payment of Pay-roll Tax and the Auditor-General's Salary.
The Office has absorbed the past years costs associated with the phase in of the payment of payroll tax and the Auditor-General's salary, and reductions in the budget appropriation.
OUTCOME
Maintain a comprehensive audit mandate
OUTPUT
Increase Contact between Office Management and Auditee Management.
Performance Indicators
Completion of an auditees' satisfaction survey by November 1994.
An auditee survey was not conducted.
All auditees with allocated hours over 300 to be visited by a Director, with an audit strategy document for discussion by February 1995.
The Directors visited auditees with an audit strategy document by 28 February 1995.
OUTCOME
Equitable treatment in sharing efficiency gains between all stakeholders
OUTPUT
A framework (agreement) for measuring and sharing efficiency gains by all stakeholders.
Performance Indicators
Negotiations completed by October 1994.
An industrial agreement was signed by the Minister for Public Sector Management and the Union in July 1995. The agreement is due to be heard by the Tasmanian Industrial Commission the week commencing 17 July 1995. The contents of the agreement are discussed in this report under the title of 'Significant Events this Year'.
Audit fees for the majority of auditees will not increase in real terms in 1994/95 compared to 1993/94.
During the fee determination process this year the Office was able to reduce the 1994/95 audit fees in aggregate by more than 1% in real terms compared to 1993/94.
Financial Management and Audit Act 1990 in so far as it relates to audit except for the office of Auditor-General and the appointment of an auditor to perform an audit of the financial statements relating to the Tasmanian Audit Office.
MAJOR DOCUMENTS PRODUCED Copies Cost
Printed $
Report No 1 of 1994 - September 1994
Report on the audit of the Public Account 135 2053
Report No 2 of 1994 - November 1994
Report on the audit of Government Departments and 300 48 6351
Public Bodies.
Annual Report on the Operations of the Office in 155 14 0221
1993/94
Performance (VFM) Audits
Special Report No. 6 - July 1994 - Administration 155 4842
and Accountability of Grants.
Special Report No. 7 - August 1994 - Regional 155 8162
Health Medical Review
Special Report No. 8 - October 1994 - Wastewater 235 1 4542
Management in Local Government
A limited number of these Reports are available free of charge from the Tasmanian Audit Office, 5th floor, 144-148 Macquarie Street, Hobart.
Note
1 includes costs associated with preparation and printing report
2 includes cost of printing report only, the preparation costs are claimed within Performance Audit appropriation
3 includes cost of printing report only, the preparation costs are included in the audit fee.
Appointments were made to permanent vacant positions from applications during 1994/95, details are as follows:
Total Male Female State Non-State
Service Service
Appointments 7 5 2 6 1
Applications 106 39 67 8 98
All field audit staff appointed to positions in the Office during the year possessed accounting qualifications.
The rate of staff turnover in the Office is always of concern. However, it is recognised that if employees leave the Office and remain in the State Service the benefit of their experience is not lost to the Government. Auditors-General of other States and the Commonwealth have also expressed similar concerns at their high staff turnover rate.
Permanent employment statistics are as follows:-
1990/91 1991/92 1992/93 1993/94 1994/95
Number employed 1 July 66.5 63.5 58 59 47.5
Losses
Redundancy .5 5
Retirements 2 3 2 4 3
Resignations 5 4 3 4 3
Promotions (Other 2 2 2 6 3
Agencies)
Deaths 1 1
-10 -9.5 -8 -19 -9
Gains
State Service 1
Non-State Service 7 4 9 7.5 1.5
Conversion from
Temporary 1
to Permanent
7 4 9 7.5 3.5
Number Employed 30 June 63.5 58 59 47.5* 42*
* In addition, 2 temporary staff were employed at 30 June 1995 (30 June 1994, 2)
Permanent Staff by Category
30 June 30 June 92 30 June 93 30 June 94 30 June 95
91
Executive Management 8 7 7 6 5
Managers 7 7 5 5 5
Audit Staff 42 37 31 31 27
DP Support Staff 1 2 2 2 1
Administration Staff 5.5 5 5 3.5 4
63.5 58 59 47.5 42
Performance and Development Review Schemes
The Office over the past 18 months has been developing a performance development and review scheme. This effort has culminated in the scheme officially commencing on 1 July 1995. During the past twelve months a pilot scheme was conducted over the 3 month period ended 30 November to assess the scheme. After some minor modifications, all staff (except two who were on extended sick leave) attended three days intensive training on the scheme covering such topics as performance schemes in general, the mechanisms of this scheme, supervision, negotiation and feedback.
The Office recognises the need for its staff to have both a clear understanding of the Office's direction and objectives and the necessary skills to contribute to the achievement of these objectives.
It is the skills of the staff which are the essential component for the Office to be successful. The Performance and Development Review process has been introduced specifically to:-
maximise the staff's contribution to the Office's business success through discussions between supervisors and operational staff when:-
defining future work tasks,
setting performance objectives, and
providing feedback on past performance.
provide a basis for identifying staff development needs and preparing training programs for individuals.
generate assessments of job performance so that:-
outstanding performances can be recognised, and
below standard performances can be identified, so assistance and guidance can
be provided.
The benefits for both the staff and management include:-
facilitating two-way communication,
establishing performance standards for each operational level within the Office;
providing a mechanism for regular feedback on performance,
providing an opportunity for input into personal and career development,
identifying employee specific development needs and developing appropriate strategies to ensure these needs are met,
collecting information on training needs which can be used in developing the Office's annual training program,
strengthening the relationship between employee and supervisor by bringing them together to discuss performance,
influencing employee motivation,
checking the effectiveness of other personnel policies,
providing job satisfaction by maintaining regular contact and feedback,
obtaining feedback from employees to improve job design, the working environment, and career path planning, and
providing a means of communicating, personal or work-related problems.
Sick leave taken by staff during 1994/95 totalled 2 237 (1 848 full pay, 0 half pay, 389 no pay) hours, which averaged 48.45 hours (or 6.64 days) per employee.
Total Full Half Pay No Pay Staff
Average Per Employee Sick Pay Sick Sick Nos
Leave Sick Leave Leave FTE'S
(hours) Leave
1994/95 48.45 hrs (6.64 2 237 1 848 0 389 46.17
days)
1993/94 30.1 hrs (4.1 1915 1621 162 132 54.25
days)
1992/93 61.9 hrs (8.4 3788 3472 316 0 61.15
days)
1991/92 27.8 hrs (3.8 1691 1682 7.5 1.5 60.82
days)
Four officers took leave in excess of 100 hours, totalling 1 365 hours (186 days) representing 133 full pay days, 0 half pay days (equivalent to 0 full pay days) and 53 without pay days.
The staff profile of the Office is depicted in the following diagrams. Permanent staff employed at
30 June 1995 totalled 42 and temporary staff employed totalled 2. Average staff for the year was 46.17 FTE's.
% Total Staff By Gender For The Period June 90 To June 95
Number Of Staff By Gender By Salary Range ($'000) - 30 June 1995
Breakdown Of Staff By Age And Gender - 30 June 1995
Length Of Employment With The Office As At 30 June 1995
Details of the statistics on training are provided below.
Training provided to staff in the year comprised:-
specialist in-house courses on the implementation of the performance assessment scheme, changes to accounting concepts and standards and audit standards and practice statements, introduction to general EDP Controls and in the use of specific audit techniques.
external courses sponsored by the accounting profession and other training institutions.
1993/94 External Internal Total
Courses Courses Hours
Auditing, Accounting and Finance 1 272 397 1 669
EDP Auditing 22 0 22
Management and Public 242 22 264
Administration
Human Resource Management 1 0 1
Communications and Personal 297 824 1 121
Development
Information Technology 737 118 855
TOTAL 2 571 1 361 3 932
Workers Compensation
No claims were lodged in 1994/95.
Annual and Long Service Leave
Details of certain employees accrued leave credits as at 30 June 1995 are as follows:-
Annual Leave credits in excess of 40 working days, 7 employees
Long Service Leave credits in excess of 100 working days, 6 employees
The Office is committed to non-discriminatory employment policies and practices. The Office's policy statement reflects these policies and practices (published on this page). A committee of staff have the responsibility to oversight the implementation of the policy, prepare annual plans of issues to be addressed and to act as contact persons if staff have any grievances to raise.
EQUAL EMPLOYMENT OPPORTUNITY POLICY
The Tasmanian Audit Office is committed to employment policies and practices which do not discriminate against individuals on the basis of sex, ethnic origin, marital status, physical disability, religion, political opinion or other characteristic. These policies and practices are based on the view that there is no place for such discrimination in a just society which accords dignity to all its members.
Equal employment opportunity is not a luxury; it is an important element in effective and efficient management. Equal employment opportunity is a means of:
improving efficiency in the Tasmanian Audit Office because, by removing direct and indirect barriers to employment and promotion, it ensures that the best person is available for every job on merit;
improving the motivation and job satisfaction of employees; and
ensuring that a diversity of views, talents and skills is available to the Tasmanian Audit Office and Parliament which it serves.
The Tasmanian Audit Office has a commitment to:
ensure fairness and equity in all employment practices, policies and conditions of service;
ensure that all recruitment, promotion and selection procedures are nondiscriminatory, including the representation of both men and women on selection panels, and the development of position descriptions and selection criteria which canvass the widest possible interpretation of skills and experience relevant to the functions of the Office;
ensure employees, regardless of sex, marital status, ethnic origin and physical disability have equal access to staff development programmes, job rotation, inter-departmental working groups, secondments, work assignments and other procedures which may expand an employee's range of work experience and enhance career prospects; and
ensure all conditions of service are applied fairly and equitably to all employees.
A Consultative Committee was established in October 1992, with the aim of providing a forum for management and staff to exchange ideas and information, and consult on issues concerning both parties.
Membership of the Committee at 30 June 1995 was:-
Auditor-General;
Deputy Auditor-General;
Staff of the Office (5); and
Representatives of the State Public Services Federation Tasmania
One meeting was held to 30 June 1995.
Issues discussed at this meeting included:
Implementation of a Performance Appraisal Scheme
Adequate office equipment for staff
Training
As part of the refurbishment of Head Office, the architect's brief included a requirement to meet lighting, space and other health and safety requirements. No accidents were recorded in the year.
The Freedom of Information Contact Officer for the Office is Mr David Darby telephone 33 2879.
The following information is held by the Office:-
Audit Working Papers and Files
This information is confidential to the Auditor-General. Any information in respect to an auditee should be sought directly from that auditee.
Reports of the Auditor-General
Details are shown on page 27 of this Report of Reports issued by the Auditor-General.
Committees on which staff of the Office have served during the year either as members or in an advisory capacity were as follows:-
Public Sector Accounting Standards Board 1 member University of Tasmania - Faculty of Business 1 member Health Accounting Committee 3 members Australian Society of Certified Practising Accountants National Council 1 member Divisional Council 2 members Branch Council 2 members Public Sector Committee 3 members Membership Committee 1 member Commerce and Industry 1 member Institute of Chartered Accountants Information Technology Chapter 1 member Recruitment Committee 1 member Tasmanian Ingres Users Association Committee 1 member Treasury Accrual Accounting Working Party 2 members Security of Government Information Resources Committee 1 member Forestry Evaluation Committee 2 members Payroll/Personnel Consortium Steering Committee 1 member IT Reference Group 1 member HR Reference Group 1 member Audit Committees 13
In addition, some staff members have participated in a review of the Government Business Enterprises Bill and Treasurer's Instructions of the Financial Management and Audit Act.
The Office occupies Government owned or leased properties (Hobart and Launceston).
One of the Corporate objectives of the Office in 1993/94 was to review staff accommodation. The final result of the rationalisation of accommodation is as follows:-
Head Office
The final cost of the refurbishment of floor 5 of the Tasmanian Government Insurance Office building was $225 000.
Launceston Branch Office
Minor works to ensure the office space in Henty House is functional cost $10 149.
The Office Information Technology (IT) Strategy Plan specifies that the Office will continue to upgrade and improve its IT facilities and equipment. Information technology is an integral component of the Office's administrative and audit activities.
The Office's IT strategic plan covering the period 1992/94 was upgraded with an interim strategic plan for 1994/95. A new IT strategic plan covering the period 1995 to 2000 will be developed when the Office's Business Plan has been completed. The interim plan specified that all personal computers and notebooks will be replaced every two years. The server in the Launceston Office will be replaced with a UNIX server, and the Hobart minicomputer facility will be revised so that audit systems and administrative systems will reside on different minicomputers.
To this end a new minicomputer was acquired at a cost of $27 958 to run all administrative systems; at the present only the personnel/payroll system resides on this minicomputer. The other administration systems will be installed during August 1995. A compatible network solution is currently being evaluated. The Office has three minicomputers, two in Hobart and one in Launceston, and, after the reconfiguration the two minicomputers in Hobart will act as backup for each other.
The Office replaced personal computers and portables with new portables at a cost of $62 048. The Office will be concentrating on IT products which give the staff the portability required to perform their duties.
The major risk exposures for the Office are associated with the conduct of audits. To minimise such risks, audits are conducted in accordance with Australian Auditing Standards and Practice Statements which are issued jointly by the Australian Society of Certified Practising Accountants and the Institute of Chartered Accountants in Australia. These standards and practice statements provide the fundamental benchmarks and quality assurance guidelines which are mandatory for members of the accounting profession to follow.
The Office has taken the following action to minimise this risk.
Revised audit methodology was introduced in the 1992/93 audit cycle.
An evaluation of commercially developed audit methodology has been completed. It is planned to introduce the new audit methodology from the commencement of the 1995/96 audit cycle, subject to the firm demonstrating that modifications to the software make the product applicable for use in the public sector.
In addition to the review function operated within the Office in accordance with the Audit Manual, a quality assurance review by another Audit Office is planned in November - December 1995. This review will focus on working papers and the results of financial audits completed in the 1994/95 audit cycle.
Other risks such as workers compensation are covered by contributions to the State's compensation arrangements administered by the Department of Treasury and Finance, and where appropriate, computer systems components and other equipment are covered for damage and maintenance.
Audit fees charged are determined by the Treasurer after consultation with the Auditor-General in accordance with Section 56 of the Financial Management and Audit Act 1990.
Fees are calculated on the basis of meeting the full cost of operating the Office. Individual fees are determined on a number of criteria which include size, history, risk, complexity, systems in place including internal controls, organisational and accounting changes and location.
Details of audit fees received over the past four financial years compared to recurrent expenditure (cash basis) are as follows:
1991/92 1992/93 1993/94 1994/95
$'000 $'000 $'000 $'000
Audit Fees $2 131 $2 112 $3 451 $2 992
Recurrent Expenditure $2 878 $2 986 $3 009 $3 219
Recurrent Costs 74.0% 70.1% 114.7% 92.9%
Recovered
The fees payable in respect of the 1993/94 audits were raised on completion of those audits and in the main are reflected in the revenue received in 1994/95. The same collection cycle relates to prior years. The increase in fees recovered since 1992/93 is principally due to charging auditees who were previously exempt and the introduction of interim billing.
Audit Fees And Recurrent Expenditure Costs (Cash Basis)
The cost of performance audits and "Whole of Government" type obligations are met from an appropriation by Parliament.
All major recommendations from the external review referred to in previous reports have been implemented.
The Auditors-General of Australasia have agreed to participate in a benchmarking process between their respective organisations.
Benchmarking is a process of comparing, measuring and analysing the products, services or processes of an Office against current best practices of the Offices in order to identify best practice and achieve improved performance.
The Office of the Auditor-General of Western Australia has developed the benchmarking package to be used in the process, and it is to be endorsed at the Australasian Council of Auditors-General meeting in August 1995.
The process is in its infancy, and data for the financial year ended 30 June 1995 will be collected for the process. At this time it is not possible to provide a detailed comparison, however in the future the Office will provide details of its performance against the benchmarking criterion.
An internal audit was undertaken during the year. Action has been taken in respect to all matters raised.
Under Section 45 of the Financial Management and Audit Act 1990, the Governor may appoint an independent Registered Company Auditor to perform an audit of the financial statements of the Tasmanian Audit Office. Deloitte Touche Tohmatsu, Chartered Accountants, Hobart, were appointed for a term of three years expiring on 30 June 1997. Their Audit Report is attached to the financial statements contained in this Report.
T644 Statements of Receipts and Expenditure for the year ended 30 June 1995
The principal source of cash during the year was audit fees. Fees decreased from $3.451 m to $2.992m because the prior year included the receipt of some audit fees related to the 1992-93 audit cycle and a number of Council audits were transferred to the private sector as a result of a tender process. The Parliamentary appropriation decreased by $0.113m due mainly to the Office becoming liable for 50% of the payroll tax on the salaries of staff. The Office earned interest of $42 000 on the balance of the trust account.
The main expenditure was for staff salaries and related costs such as superannuation and payroll tax. The salaries cost decreased substantially due to the reduction in staff from 47.5 equivalent full-time (FTE) to 44 FTE over the year. The superannuation payment is artificially high because it includes a payment of $0.220m referable to the prior year that was held over into this financial year. The remaining expenditures related to travel ($0.065m), information technology ($0.131m), training ($0.066m), accommodation ($0.178m), workers compensation and fringe benefit tax ($0.021m), transport ($0.026m), communication ($0.023m), office requisites ($0.028m), conference ($0.026m), contract payments ($0.127m) and miscellaneous ($0.087m). As a consequence, receipts exceeded expenditure by $0.164m and the balance in the trust account increased to $0.924m.
Supplementary Accrual Financial Statements
These statements are a better indicator of financial performance than the purely cash-based statements.
Revenue from audit fees in these financial statements is recognised as the work is done rather than only recognising cash collections that may take place some months afterwards. Audit fee revenue decreased by $0.129m compared to the prior year due to the factors mentioned above. Revenue from the government appropriation also decreased for the above reasons.
Salaries and related expenses decreased by 15% due to the reduction in staff numbers and a decrease in the employer superannuation contribution rate. Accommodation costs fell due to a reduction in floor space requirements in both Hobart and Launceston. Travel decreased due the loss of some Council audits.
The abnormal decrease of $70 000 in the provision for superannuation resulted from the introduction of the new scheme which reduced the employer's percentage contribution from 13.75% to 11%. Abnormal revenue of $79 000 from the Consolidated Fund related to a commercialisation agreement whereby amounts of annual and long service leave attributable to pre-1 July 1993 service are funded from that source.
The result for the year was a surplus of $0.421m after abnormal items. After allowing for adjustments to opening equity arising from the adoption of the new accounting standard on employee entitlements, equity increased from $1.302m to $1.636m.
Current assets rose from $1.894m to $1.911m due to increases in cash and work in progress while debtors fell. Non-current assets rose slightly due to increased investment in computer equipment and the office equipment required for the refurbished office space.
Current liabilities fell by $0.294m due mainly to the elimination of the provision for superannuation of $0.293m. Under the current superannuation arrangements, the Audit Office pays the employer's contribution to the Consolidated Fund on a fortnightly basis and thus no liability arises.
TASMANIAN AUDIT OFFICE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 1995
CASH STATEMENTS
FOR THE YEAR ENDED
30 JUNE 1995
TASMANIAN AUDIT OFFICE
Consolidated Fund
Summary of Expenditure and Receipts for the year ended 30 June 1995
Expenditure
1993/94 1994/95
Actual Notes Estimate Actual Variation
n
$'000 $'000 $'000 $'000
PROGRAM: 1 AUDIT
Recurrent Expenditure
535 Tasmanian Audit Office - Contributions 2, 5 426 416 (10)
(C225)
110 Salary & Travelling Allowance -
Auditor-General (R007) 113 115 2
$ Total Recurrent Services $539 $531 $(8)
645
$ Total Expenditure $ $531 $(8)
645 539
T644 - TASMANIAN AUDIT OFFICE OPERATING ACCOUNT
STATEMENTS OF RECEIPTS AND EXPENDITURE FOR YEAR ENDED 30 JUNE 1995
Function and Purpose of Account
To record:-
transactions associated with the receipt and disbursement of funds for activities undertaken by the Tasmanian Audit Office.
1993/94 1994/95
Actual
$'000 Actual
$'000
0 Opening Balance 760
Plus Receipts
3 451 Audit Fees 2 992
645 Parliamentary from Consolidated Fund 531
Appropriations
21 Interest 42
1 Balance from Asset Account - T577 0
Management
7 Sale of Equipment 12
0 Miscellaneous Income 31
$4 125 $3 608
Less Expenditure
2 130 Salaries 1 893
104 Superannuation Payments 423
142 Pay-roll Tax 125
5 Fringe Benefits Tax 21
345 Purchase of Equipment & Furniture and Leasehold 225
Improvements
628 Purchase of other Goods & Services 757
11 Purchase of Motor 0
Vehicles
3 365 3 444
$ 760 Closing Balance $924
STATEMENT OF ASSETS
AS AT 30 JUNE 1995
Plant Equipment, Furniture and Vehicles
Notes 1995 1994
$ $
Computer Equipment 4 687 062 609 178
Accumulated Depreciation (438 (381
254) 422)
248 808 227 756
Office Equipment & Furniture 4 248 618 152 959
and Leasehold Improvements
Accumulated Depreciation (53 (8 837)
180)
195 438 144 122
Motor Vehicles 4 80 141 80 141
Accumulated Depreciation (9 399) (3 662)
70 742 76 479
TOTAL $514 $448
988 357
Supplementary Information and Statement of Balances as at 30 June 1995
Cash and Investment Balances
An advance was held of $2 500 for Salaries, Travelling and Petty Cash.
30 June
1995 1994
$ $
Unexpended balance of advance 2 497 2 210
Summary of Debts Due, Doubtful Debts and Write-offs
30 June
1995 1994
$ $
Outstanding Audit Fees * 330 180 504 520
Sundry Debtors 19 404 7 544
Allowance for Doubtful Debts .... ....
Amount Written-Off .... ....
* Includes $323 000 in respect to interim invoices for 1994/95 audits. These invoices were dated 14 June 1995.
Creditors
30 June
1995 1994
$ $
Operating Expenses 37 080 78 124
Employee Entitlements
30 June
NOTES 1995 1994
$ $
Provisions - Sick Leave 3 61 503
RBF 6 0 292 570
Recreation 3 215 215 153
Leave 314
Long Service 3 390 439 498
Leave 272
Accruals - Leave Other 7 12 275 3 732
Salary and 7 67 840 7 680
Related Payments
Notes to the Financial Statements
1. Cash Basis of Accounting
The financial statements have been prepared on a cash basis for those
expenditure items met from Division 15 of the Consolidated Fund
Appropriation Act 1994/95, and the Special Deposits and Trust Fund.
From 1 July 1993 the Office became operational as a commercial entity
and under the commercialisation agreement receives from the
Consolidated Fund a contribution towards the operations of the Office
as detailed in note 2 and pays a proportion of the Auditor-General's
Salary and Travelling Allowances paid. All audit fees were credited
to an operating account in the Special Deposits and Trust Fund and
costs of operating the Office were met from those funds.
The Statements are consistent with the requirements of the Financial
Management and Audit Act 1990.
Fees payable in respect of the audit of 1993/94 accounts were raised
in accordance with the provisions of Section 56 of the Financial
Management and Audit Act 1990 and are reflected in these accounts.
This year interim bills were raised and funds were received in
respect of work completed in relation to the audit of 1994/95
accounts.
All amounts have been rounded off to the nearest thousand dollars.
2. Contributions from Consolidated Fund
Estimate Actual
$ $
Performance Audits 246 000 246 000
Auditor-General's Report 75 000 75 000
Pay-roll Tax 74 000 64 450
Special Investigations in the Public 31 000 31 000
Interest
$ 426 000 $ 416 450
3. Employee Entitlements
Liabilities for employee entitlements in respect of wages and salaries, annual leave, sick leave and other current employee entitlements are accrued at nominal amounts calculated on the basis of current wage and salary rates.
The classification of the liability for long service leave has been completed on the basis that entitlements in respect of service greater than ten years are shown as a current liability.
Amounts shown for annual and long service leave are based on the provisions of the Tasmanian State Service Act and Regulations, the General Conditions of Service Award S085 and the Long Service Leave (State Employees) Act 1994.
Obligations to employees in respect of accumulated leave credits in lieu of overtime are included with employee entitlements.
It was agreed at the time of commercialisation that where the Office incurs additional cost in respect of the accrued liabilities for employee entitlements as at 30 June 1993, the Consolidated Fund would meet a pro-rata proportion of the amount based on the number of years pre and post 30 June 1993 to which the amount relates. The accrued liability for employee entitlements assumes no contribution from the Consolidated Fund in relation to the liability for years prior to 1 July 1993.
The potential pre 30 June 1993 liability for the Consolidated Fund represented in nominal amounts as at 30 June 1995 is:
Annual Leave $165 304
Long Service Leave $487 091
During the 1994-95 financial year the Consolidated Fund assumed the following amounts of the liability in respect of:
Annual Leave $19 404
Long Service Leave $60 043
Change in Accounting Policy
Long Service Leave
In previous years employee entitlements to long service leave were accrued in respect of employees with more than five years service and at current salary rates. The Office now recognises the liability in accordance with AAS30, Accounting for Employee Entitlements. In order to comply with that standard, these entitlements are now accrued in respect of all employees based on estimated future salaries (i.e. using a 3.5% inflation factor), and discounting the entitlement by using the rates applicable to guaranteed government securities.
Sick Leave
This amount is an estimate based on the probability that sick leave entitlements for 30 June 1995 will be used up at the same rate as previous years namely, 5.26 days per employee per annum. This amount is non-vested.
4. Depreciation of Non-Current Assets
All non-current assets having a limited useful life are systematically
depreciated over their useful lives in a manner which reflects the
consumption of their service potential. All computer equipment of
value greater than $1 000 (revised from $300 since 1 July 1993) has
been brought to account. All office equipment of value greater than
$1 000 has been brought into account. The leasehold improvements
completed in June 1994 will be amortised over five years.
Major depreciation rates are:
Basis of Depreciation
Motor Vehicles 7.5% Reducing balance
Office Equipment 25% Reducing balance
Computer Equipment 33-55% Straight line
Leasehold Improvements 20% Straight line
Profits and losses on disposal of motor vehicles, office equipment
and computer equipment are taken into account in determining the
profit for the year.
5. Variations
The Parliamentary Contribution was $9 550 less than the estimate due
to the reduced accrual by the Office in respect to Pay-roll Tax.
6. Superannuation
Employees of the Office contribute to the Retirement Benefits Fund (RBF) Scheme.
The new RBF Scheme is a superannuation scheme which took effect from 1 July 1994 for employees in the Tasmanian public sector. The Office funds the employer contribution of the Scheme as agreed under the terms of the commercialisation agreement from the 1 July 1993. Under the agreement the employer's liability for superannuation prior to 1 July 1993 is unfunded, with the State contributing to this component on an emerging cost basis.
7. Accruals
The accruals include the following:-
$
Salary accrued (including payroll tax and 15 985
superannuation
Industrial agreement (including Payroll Tax and
Superannuation)
Sign on Bonus 28 515
1st Performance Criterion 23 340
$67 840
In Lieu of Overtime 12 275
Certification
The accompanying financial statements of the Tasmanian Audit Office have been prepared in compliance with the provisions of the Financial Management and Audit Act 1990 and are in agreement with the relevant accounts and records so as to present fairly the financial transactions for the year ending 30 June 1995 and such components of financial position which are required in the Treasurer's Instructions to be disclosed in the financial statements.
At the date of signing I am not aware of any circumstances which would render the particulars included in the financial statements misleading or inaccurate.
A J McHugh
AUDITOR-GENERAL
11 July 1995
INDEPENDENT AUDIT REPORT TO THE TREASURER
RE: TASMANIAN AUDIT OFFICE
Scope
We have audited the attached special purpose financial statements of the Tasmanian Audit Office for the year ended 30 June 1995 being a Summary of Expenditure and Receipts (Consolidated Fund) and various supplementary information. The Auditor General is responsible for the preparation and presentation of the financial statements and the information contained therein which has been prepared to fulfil his accountability requirements under the Financial Management and Audit Act 1990. We have conducted an independent audit of those financial statements in order to express an opinion to the Treasurer on their preparation and presentation. No opinion is expressed as to whether the basis of accounting used is appropriate to the needs of the Treasurer.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with the provisions of the Financial Management and Audit Act 1990 and the cash basis of accounting described in note 1 to the financial statements. The financial statements do not comply with applicable Australian Accounting Standards.
The audit opinion expressed in this report has been formed on the above basis.
Audit opinion
In our opinion, the financial statements of the Tasmanian Audit Office present fairly the financial position and transactions for the year ended 30 June 1995 in accordance with the cash basis of accounting described in note 1 to the financial statements and the provisions of the Financial Management and Audit Act 1990.
Hobart, 12 July 1995
SUPPLEMENTARY ACCRUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 1995
TASMANIAN AUDIT OFFICE
SUPPLEMENTARY ACCRUAL FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS FOR THE YEAR ENDED 30 JUNE 1995
ITEM NOTES 1994/95 1993/94
$'000 $'000
REVENUE
Audit Fees 9 $2 856 $2 898
Government Appropriations 11 $531 $645
Other Revenue
Miscellaneous Income 23 0
Sundry Debtors 0 8
Insurance Recovery 3 0
Interest 42 21
Equipment and Motor Vehicles 0 9
Total Other Revenue $68 $38
TOTAL REVENUE $3 455 $3 581
OPERATING EXPENSES
Salaries and Related Expenses 5,6 2 273 2 664
Accommodation Expenses 186 223
Materials and Supplies 51 35
Communications 25 31
Travel 67 92
Transport 27 10
Office Machines and Equipment 1 6
Information Technology 150 108
Recruitment and Other Personnel 67 42
Miscellaneous 65 7
Contract Auditors 108 108
Depreciation 4,14 149 121
TOTAL OPERATING EXPENSES $3 169 $3 447
OPERATING SURPLUS BEFORE ABNORMAL ITEMS $286 $134
ABNORMAL ITEMS
Crediting as Revenue
Reduction in Provision for Superannuation 16 71
Consolidated Fund Contribution - Long Service 16 60
Leave 16 19
- Annual Leave
OPERATING SURPLUS AFTER ABNORMAL ITEMS $436 $134
RETAINED EARNINGS - BEGINNING OF THE PERIOD $134 $0
ADJUSTMENTS TO RETAINED EARNINGS 6,10 $(88) $0
RETAINED EARNINGS - END OF THE PERIOD $482 $134
TASMANIAN AUDIT OFFICE
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 1995
ITEM NOTES 1994/95 1993/94
$'000 $'000 $'000 $'000
Current Assets
Cash on Hand and Deposit 3 2
Bank Account (Trust A/c) 924 760
Work In Progress 9 635 597
Prepayments 11 23
Debtors 9 349 512
$1 922 $1 894
Non-Current Assets
Computer Equipment 4, 13, 14 687 609
Accumulated Depreciation (438) 249 (381) 228
Office Equipment & Furniture 4, 13, 14 248 153
Accumulated Depreciation (53) 195 (9) 144
Motor Vehicles 4, 8, 13, 80 80
14
Accumulated Depreciation (9) 71 (4) 76
TOTAL ASSETS $2 437 $2 342
Current Liabilities
Accrued salaries/related 15 80 11
payment
Revenue Received in Advance 3 3
Creditors 37 78
Provision for R.B.F. 7 0 293
Provision for Annual Leave 6 215 215
Provision for Long Service 6 378 432
Leave
Provision for Sick Leave 6 62 0
$775 $1 032
Non-Current Liabilities
Provision for Long Service 6 12 8
Leave
TOTAL LIABILITIES $787 $1 040
NET ASSETS $1 650 $1 302
EQUITY
Equity on Formation 10 1 168 1168
Retained Earnings 10 482 134
$1 650 $1302
TASMANIAN AUDIT OFFICE
STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 1995
ITEM NOTES 1994/95 1993/94
$'000 $'000
Cash Flows from Operating Activities
Receipts from Auditees
Audit Fees 9 2 992 3 451
Interest Received 42 21
Miscellaneous Income 31
Receipts from Appropriation
Recurrent 11 531 645
Advance Account Reimbursement 0 2
Total Receipts $3 596 $4 119
Payments
Salaries and Related Expenses 2 441 2 381
Goods and Services 18 778 628
Total Payments $3 219 $3 009
Net Cash from Operating Activities 12 $377 $1 110
Cash Flows from Investing Activities
Receipts from Sale of Non-Current Assets 12 7
Payments for Purchase of Non-Current 13 (225) (356)
Assets
Net Cash from Investing Activities $(213) $(349)
Net Increase(Decrease) in Cash Held 164 761
Cash at the beginning of the reporting 762 1
period
Cash at the end of the reporting period $ 926 $762
NOTES TO THE FINANCIAL STATEMENTS
1. Supplementary Financial Statement
Under the commercialisation agreement the Office was substantially removed from the appropriation process, but is required to report to Parliament on a cash basis as prescribed by the Financial Management and Audit Act. These accrual financial statements provide supplementary information.
2. Funding
The Office is funded both by Parliamentary appropriations and revenue earned from the Office performing its mandate. Appropriations are recognised as revenue in the period the Office gains control of the funds. Audit fees were credited to an operating account in the Special Deposits and Trust Fund and costs of operating the Office were met from those funds.
SIGNIFICANT ACCOUNTING POLICIES
3. Basis of Accounting
The 1994/95 Supplementary Financial Statements have been prepared on the accrual basis of accounting in accordance with applicable Australian Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views). The Tasmanian Audit Office is a non tax paying entity.
4. Depreciation of Non-Current Assets
All non-current assets having a limited useful life are systematically depreciated over their useful lives in a manner which reflects the consumption of their service potential. All computer equipment of value greater than $1 000 (revised from $300 since 1 July 1993) has been brought to account. All office equipment of value greater than $1 000 has been brought to account. The leasehold improvements completed in June 1994 will be amortised over five years.
Major depreciation rates are:
Basis of Depreciation
Motor Vehicles 7.5% Reducing balance
Office Equipment 25% Reducing balance
Computer Equipment 33%-50% Straight line
Leasehold Improvements 20% Straight line
Profits and losses on disposal of motor vehicles, office equipment and computer equipment are taken into account in determining the profit for the year.
5. Salaries and Related Payments
Salaries and Related payments include the following:-
1994/95
$'000
Salaries 1 848
Leave Loading 19
Termination Payments 19
Annual Leave 6
Long Service Leave 39
In Lieu of Overtime 5
Payroll Tax 129
Superannuation 208
$2 273
6. Employee Entitlements
Liabilities for employee entitlements in respect of wages and salaries, annual leave, sick leave and other current employee entitlements are accrued at nominal amounts calculated on the basis of current wage and salary rates.
The classification of the liability for long service leave has been completed on the basis that entitlements in respect of service greater than ten years are shown as a current liability.
Amounts shown for annual and long service leave are based on the provisions of the Tasmanian State Service Act and Regulations, the General Conditions of Service Award S085 and the Long Service Leave (State Employees) Act 1994.
Obligations to employees in respect of accumulated leave credits in lieu of overtime are included with employee entitlements.
It was agreed at the time of commercialisation that where the Office incurs additional cost in respect of the accrued liabilities for employee entitlements as at 30 June 1993, the Consolidated Fund would meet a pro-rata proportion of the amount based on the number of years pre and post 30 June 1993 to which the amount relates. The accrued liability for employee entitlements assumes no contribution from the Consolidated Fund in relation to the liability for years prior to 1 July 1993.
The potential pre 30 June 1993 liability for the Consolidated Fund represented in nominal amounts as at 30 June 1995 is:
Annual Leave $165 304
Long Service Leave $487 091
During the 1994-95 financial year the Consolidated Fund assumed the following amount of the liability in respect of:
Annual Leave $19 404
Long Service Leave $60 043
Change in Accounting Policy
Long Service Leave
In previous years employee entitlements to long service leave were accrued in respect of employees with more than five years service and at current salary rates. The Office recognises the liability in accordance with AAS30, Accounting for Employee Entitlements. In order to comply with that standard, these entitlements are now accrued in respect of all employees based on estimated future salaries (i.e. using a 3.5% inflation factor), and discounting the entitlement by using the rates applicable to guaranteed government securities.
This change in accounting policy resulted in net adjustments of $26 275 being made directly to retained earnings at the beginning of the year to recognise the increases in the provisions for employee entitlements upon the adoption of the standard.
Current employee entitlements 26 027
Non-current employee entitlements 248
$26 275
The change in the staff profile, and Long Service Leave taken during the year resulted in a decrease in the provision for current employee entitlements of $79 718 and an increase in the provisions for non-current employee entitlements of $4 216 at the end of the financial year.
Sick Leave
The liability in respect of sick leave resulted in an adjustment to retained earnings of $61 503.
This amount is an estimate based on the probability that sick leave entitlements for 30 June 1995 will be used up at the same rate as previous years namely, 5.26 days per employee per annum. This amount is non-vested.
7. Superannuation
Employees of the Office contribute to the Retirement Benefits Fund (RBF) Scheme.
The new RBF Scheme is a superannuation scheme which took effect from 1 July 1994 for employees in the Tasmanian public sector. The Office funds the employer contribution of the Scheme as agreed under the terms of the commercialisation agreement from the 1 July 1993. Under the agreement the employer's liability for superannuation prior to 1 July 1993 is unfunded, with the State contributing to this component on an emerging cost basis.
8. Motor Vehicles
In addition to the motor vehicles which have been depreciated, the Office hires two vehicles from the Government Car Pool on a long term basis.
9. Audit Fees
Fees payable in respect of the audit of 1993/94 accounts were raised in the 1994/95 financial year in accordance with the provisions of Section 56 of the Financial Management and Audit Act 1990. Also this year, as in previous years, interim bills were raised and funds were received in respect of work completed in relation to the audit of 1994/95 accounts. Audit fees are paid directly to the Office's Account in the Special Deposit and Trust Fund.
1994/95 1993/94
$'000 $'000
Audit Fees raised 2 811 3 865
Miscellaneous Charges raised 5 59
$2 816 $3 924
Collection of audit fees and charges for 1993/94
1994/95 1993/94
$'000 $'000
Audit Fees and Charges 2 992 3 448
Fees paid in advance 0 3
$2 992 $3 451
Additional Information
1994/95 1993/94
Debtors $'000 $'000
Audit Fees and Charges Outstanding 330 505
Other Sundry Debtors 19 7
349 512
Work In Progress 635 597
Audit Revenue 1994/95 1993/94
$'000 $'000
Audit Fees Raised 2 816 3 924
Less Work in Progress (1 July) (596) (1 623)
2 219 2 301
Add Work in Progress (30 June) 635 597
Audit Fees Revenue $2 856 $2 898
Fees Collected 2 992 3 448
Less Debtors (30/06/94) (505) (28)
Add Debtors (30/06/95) 330 505
Less Work in Progress (30/06/94) (596) (1 623)
Add Work in Progress (30/06/95) 635 596
Audit Fees Revenue $2 856 $2 898
Amounts are based on allocated hours and the rate charged to auditees.
10. Equity
Equity represents the residual interest in the net assets of the Office.
1994/95 1993/94
$'000 $'000
Equity on Formation 1 168 1 168
Retained Earnings 482 134
$1 650 $1 302
Change in Retained Earnings
$'000
1993/94 Balance 134
Long Service Leave (26)
Adjustment
Sick Leave Adjustment (62)
Operating Surplus 436
1994/95 Balance $482
11. Appropriations
Appropriation Summary
1994/95 1993/94
Estimate Expenditure Estimate Expenditure
$'000 $'000 $'000 $'000
Recurrent
Program 1 Audit
Contributions 426 416 549 535
Salary & Allowance, 113 115 109 110
Auditor-General
Total Appropriations $539 $531 $ 658 $ 645
Under the commercialisation agreement the Office will by the financial year ending 30 June 1997 fully fund Payroll Tax and by 30 June 1998 fund 80% of the Salary and Allowance of the Auditor-General.
12. Reconciliation of Net Cash provided by Operating Activities to Operating Surplus.
For the purposes of the statement of cash flows, "cash" includes cash on hand and in deposit accounts.
1994/95 1993/94
$'000 $'000
Operating Surplus 286 134
Depreciation 149 121
(Increase) in Works in Progress (38) (597)
Increase in Accrued Salaries and related 68 5
payments
(Decrease) Increase in Creditors (41) 76
(Decrease) Increase in Provisions (281) 239
(Increase) Decrease in Prepayments 12 (22)
(Increase) Decrease in Debtors 163 (510)
Gain from Insurance Recovery (3)
Gain on the Sale of Equipment & Motor - 9
Vehicles
Change in Accounting Policy 62 1 652
(Increase) in Revenue Received in Advance - 3
Net Cash Provided by Operating Activities $ 377 $ 1 110
13. Purchases of Non-Current Assets
1994/95 1993/94
$'000 $'000
Payments for acquisition of Motor Vehicle 0 11
Payments for acquisition of Computer 126 207
Equipment
Payments for acquisition of Office
Equipment, Leasehold Improvements 99 138
$225 $356
14. Depreciation
Depreciation expense for the reporting period was charged in respect of:
1994/95 1993/94
$'000 $'000
Computer Equipment 97 114
Motor Vehicles 6 5
Office Equipment 16 2
Leasehold Improvements 30 0
$149 $121
15. Accruals
Industrial Agreement
The Auditor-General as the representative for the Minister for Public Sector Employment negotiated an industrial agreement with the staff of the Tasmanian Audit Office. The staff will receive bonuses totalling $129 663, which consists of a sign on bonus $24 163 and a bonus of $105 500 on the achievement of performance criteria.
Accrued salary, payroll tax and superannuation includes the following amounts.
Salary Payroll Tax Superannuation
Sign on bonus 24 165 1 691 2 658
1st performance criterion 19 780 1 385 2 176
43 945 3 076 4 834
Accruals 1994/95 1993/94
Accrued Salary 15 985 7 680
Industrial Agreement Accruals 51 855
In Lieu of Overtime 12 275 3 732
$ 80 115 $ 11 412
16. Abnormal Items
Under the commercialisation agreement where the Office incurs additional cost in respect of the accrual liabilities for employee entitlements as at 30 June 1993, the Consolidated Fund would meet the pre 30 June 1993 amount. This Office considers the assumption of this liability as abnormal revenue. During the 1994/95 financial year the Consolidated Fund assumed the following amounts of the liability in respect of:
1994/95 1993/94
Annual Leave $19 404 $0
Long Service Leave $60 043 $0
The reduction in the provision for superannuation resulted from the provision being determined at 13.75% as at 30 June 1994 for the previous two years, but at time of payment the Office was advised the contribution was to be determined at 11%. This resulted in the provision being overstated by $70 993.
17. Auditor's Remuneration
1994/95 1993/94
Amounts received, or due and receivable by
the
Independent Auditor $4 000 $ 3 500
Deloitte Touche Tohmatsu has been
appointed as the Independent Auditor of
the Tasmanian Audit Office for a period of
three years ending with the audit of the
1997/98 financial year.
18. Goods and Services
The composition of Goods and Services is detailed below:-
1994/95 1993/94
$'000 $'000
Travel 65 92
Workers Compensation 11 0
Fringe Benefits Tax 10 0
Information Technology 131 108
Transport 26 10
Training 66 42
Communications 23 31
Office Requisites 28 40
Accommodation 178 223
Auditor-General's Conference 26 0
Contract Payments 127 75
Miscellaneous 87 7
$778 $628
CERTIFICATION OF SUPPLEMENTARY ACCRUAL FINANCIAL STATEMENTS
The accompanying supplementary accrual financial statements of the Tasmanian Audit Office have been prepared in accordance with applicable Australian Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) so as to present fairly the financial operations of the Office during 1994/95 and the financial position of the Office as at 30 June 1995.
At the date of signing I am not aware of any circumstances which would render the particulars included in the financial statements misleading or inaccurate.
A J McHugh
AUDITOR-GENERAL
11 July 1995
INDEPENDENT AUDIT REPORT TO THE TREASURER
RE: TASMANIAN AUDIT OFFICE
SUPPLEMENTARY ACCRUAL FINANCIAL STATEMENTS
Scope
We have audited the attached Supplementary Accrual Financial Statements of the Tasmanian Audit Office for the year ended 30 June 1995 being a Statement of Operations, Statement of Financial Position, Statement of Cash Flows and Notes to the Financial Statements. The Auditor General is responsible for the preparation and presentation of the financial statements and the information they contain. We have conducted an independent audit of those financial statement in order to express an opinion on them to the Treasurer.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with applicable Australian Accounting Standards so as to present a view which is consistent with our understanding of the Office's financial position, the results of its operations and its cashflows.
The audit opinion expressed in this report has been formed on the above basis.
Audit opinion
In our opinion, the Supplementary Accrual Financial Statements of the Tasmania Audit Office are properly drawn up:
a) so as to give a true and fair view of the Office's financial position as at 30 June 1995 and the results of its operations and its cashflows for the financial year ended on that date; and
b) in accordance with applicable Australian Accounting Standards.
Hobart, 14 July 1995
This index has been prepared to facilitate identification of compliance with statutory disclosure requirements: Financial Management and Audit Act 1990 (FMAA) and Treasurer's Instructions (TI), the Tasmanian State Service Act 1984 (TSS) including Statutory Rule No. 123 of 1990 Tasmanian State Service (Agency Reporting) Regulations (TSS(AR)R) and other contemporary reporting practices.
REFERENCE DESCRIPTION PAGE
AIDS TO ACCESS
Table of Contents
Alphabetical index N/A
Glossary of abbreviations and acronyms N/A
OVERVIEW
TSS(AR)R3(a)(i) Overall mission and objectives of the 3 & 19
Office.
FMAAs.27(1)(a) A report on the performance of the
TSSs.33AB(1)(a) functions and powers of the 13
Auditor-General under any written law.
FMAAs.27(1)(b)subject A report by any statutory office holder N/A
to employed in or attached to the Office.
S.27(2)TSSs.33AB(1)(b)
TSS(AR)r3(a)(v) Major initiatives taken to develop and N/A
give effect to Government policy
TI701(1)(b) Details of major changes affecting N/A
TSS(AR)R3(a)(iv) programs, objectives or organisational
structure
STATUTORY/NON-STATUTORY BODIES AND COMPANIES
A list of statutory and non-statutory bodies N/A
A list of names of companies N/A
LEGISLATION ADMINISTERED AND MAJOR DOCUMENTS PRODUCED
TSS(AR)R3(e) A list of legislation administered by the 27
Office
TSS(AR)R3(d)(i) A list of major documents or publications 27
produced
ORGANISATIONAL STRUCTURE
TSS(AR)R3(a)(ii) Organisation Chart as at the end of the 17
reporting year
TSS(AR)R3(a)(iii) Details of relationship between corporate 17
and program structure
PERFORMANCE INFORMATION
TI701(1)(a) & (e) Performance information of the Office 19 - 25
HUMAN RESOURCE MANAGEMENT
TSS(AR)R3(c)(i) Staffing information as at 30 June. 29
TSS(AR)R3(c)(ii) Eligible training courses and staff 23 & 35 development activities
TSS(AR)R3(c)(iii) Equal Employment Opportunity 36
TSS(AR)R3(c)(iv) Industrial democracy 37
TSS(AR)R3(d)(iii)
TSS(AR)R3(c)(v) Occupational health and safety strategies 37
ASSET MANAGEMENT, RISK MANAGEMENT AND PRICING POLICIES TI 701(1)(d)(i) & Major capital projects 39 (ii) TI 701(1)(g) Asset management policies, strategies and 39 initiatives TI 701(1)(c) Pricing policies of goods and services 40 TI 701(1)(f) Risk management policies, activities or 40 initiatives
EXTERNAL/INTERNAL SCRUTINY
Consultants engaged during the period N/A
PUBLIC ACCESS AND AWARENESS OF SERVICES PROVIDED
TSS(AR)R3(d)(ii) A list of contact officers 1
Points of public access 1
TSS(AR)R3(d)(i) Activities undertaken to develop community 27
awareness of the services the Office provides
TSS(AR) Freedom of Information details 37
FINANCIAL STATEMENTS
TI701(1)(h) & (j) Financial statements of the Office. 45, 47 - 74
N/A not
applicable