3 December 2003

AG's REPORT PUTS SPOTLIGHT ON PUBLIC SECTOR FINANCIAL MANAGEMENT AND ACCOUNTABILITY ISSUES

WA Auditor General Des Pearson has again reproached State Public Sector agencies over the quality and timeliness of their financial and performance reporting.

In his Report on Ministerial Portfolios, tabled in Parliament today, Mr Pearson reiterates criticisms made in his Annual Report earlier this year, expressing his dissatisfaction that a significant proportion of agencies continued to submit poor quality financial statements and performance indicators with numerous technical and typographical errors; irrelevant, inconsistent or missing note disclosure; and poor quality supporting working papers.

In addition, the unavailability of key agency staff due to leave and other commitments at critical stages of the audit process complicated the audit tasks, says Mr Pearson, and consequently additional audit resources and time were required to enable him to issue an audit opinion.

Timeliness was still an issue in 2003, with 10% of both departments and statutory authorities not meeting their August deadlines and 73% of departments and 64% of statutory authorities submitting on the very last day - however, there was some progress on last year, the Auditor General commending 22 agencies for submitting finalised financial statements well ahead of deadline thus enabling an early start to the audit process.

Primarily this report details the results of 178 financial statement and controls audits and 133 performance indicator audits completed to November 25 at agencies across the public sector.

The opinions of four agencies were qualified in relation to financial statements, controls or compliance with relevant laws; in brief:

• The Department of Industry and Technology (abolished last February) did not have authority to collect and keep $1.5 million in fees collected from suppliers under government common use contracts.
  
• The Government Employees Superannuation Board could not reconcile its bank account to the general ledger during the year, as there was a significant number of unexplained reconciling items.
  
• The Minister for Health in his capacity as the Deemed Board of Metropolitan Public Hospitals was again qualified due to inadequate controls over postal remittances relating to Special Purpose Accounts and for inadequacies in incurring and certifying expenditure.
  
• The Rottnest Island Authority was qualified for the third year running over control inadequacies in the case of landing fees - the Authority relying on information provided by third parties to determine the landing fee revenue due, but not having the controls in place to verify the accuracy or completeness of that information.

Six agencies were qualified in regard their performance indicators:

• The Department of Health did not include $185 million of its $563 million expenditure in its reported key efficiency indicators, and the reported key effectiveness indicators did not adequately measure the extent to which they achieved the sought outcome of
• Improvement in the quality of life for people with chronic illness or disability" (Outcome 3).
  
• Similarly, the key effectiveness indicators of the Minister for Health in his capacity as the Deemed Board of Metropolitan Public Hospitals, Peel Health Services, and the South West Health Board did not adequately measure the extent to which they achieved Outcome 3.
  
• The Eastern Goldfields Transport Board did not have data to prepare its key effectiveness indicator, being unable to accurately measure the number and distribution of people needing public transport in its operating area.
  
• The Department of Land Administration's new effectiveness indicator was not implemented in time to collect data for the 2002-03 year.

A separate section of the report details the results of an audit of 559 Act of Grace or Ex Gratia payments totalling $3.4 million made over two years by 28 government agencies.

Justification and proper approvals were found for 93% of the payments, with the exceptions being:

• The Police Service made $117,000 in ex-gratia payments for legal costs and damages to two police officers found by the District Court and the Full Court Appeal to have maliciously charged and falsely imprisoned a colleague (the payments arose from an undertaking given by the Police Service to fully support the defendants against the action, and with the knowledge of Government).
  
• Ministerial approval for Act of Grace payments was not obtained by the Department of Justice for 20 payments totalling $3,617, the Department of Agriculture for 12 payments totalling $4,800 and the Department of Land Administration for one payment totalling $1,400.
  
• Curtin University made five payments totalling $44,906 without Ministerial approval.

The report also draws to the attention of Parliament the Auditor General's concerns over a number of specific control issues relating to corporate credit cards, computer access and security controls, disaster recovery plans for critical information systems, and asset management of public property.

Ends/.

Media Contact: Peter Villiers, Manager Reporting and Communications
Tel: (08) 9222 7558. Mobile: 0417 936 171 Fax: (08) 9322 5664
4th Floor Dumas House 2 Havelock Street West Perth

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