The Department of Industry and Trade is an administrative unit established under the Public Sector Management Act 1995.The Department is responsible to the Minister for Industry and Trade.
The specific responsibility of the Department is to implement the South Australian Government’s economic development strategy by undertaking the following:
Create a competitive business operating environment;
Promote investment in appropriate physical capital;
Promote development of human and intellectual capital;
Integration of South Australia into the global economy;
Create a culture of collaboration and cooperation;
Encourage the development of productive, creative and competitive enterprises.
The structure of the Department and its relationship with the Minister are shown in the following chart.
During the reporting period, the Department provided $138.3 million in assistance to industry and other external parties in the form of grants, contributions, and loans.Of that amount, $75 million related to the Adelaide to Darwin railway construction project.
Subsection 31(1)(b) of the Public Finance and Audit Act 1987 provides for the Auditor-General to audit the accounts of the Department in respect of each financial year.
In respect of 2000-01, specific areas of audit attention included:
business and financial accounting cycles and controls covering:
revenue collection
accounts payable
personnel/payroll function
financial assistance
fixed assets
general ledger
development and operation of the Bizgate e-commerce activity of government;
financial statement preparation and verification.
The commentary that follows in ‘Audit Findings and Comments’ hereunder, principally provides a summary of issues arising from the 2000-01 audit review activity and that have been communicated to the Department.The Department is actioning the matters raised by Audit.
As was the position last year, certain weaknesses were noted in relation to key financial accounting record and reconciliation processes.These weaknesses impacted on the Department’s financial reporting processes both internally and in respect of the production of the Department’s statutory year end accounts.
The nature of the weaknesses related to the important requirement to perform regular and effective reconciliation processes between the Department’s general ledger system and critical sub-systems associated with industry financial assistance and fixed assets.
Last year’s Report indicated that Audit officers worked in conjunction with the Department to address certain financial reporting issues associated with the organisational changes that affected the Department in 1999-2000.
In 2000-01, Audit resources were again applied to assist the Department to finalise the statutory financial statements above that which is reasonably expected.
The 1999-2000 Report (Part A:Audit Overview) indicated the future audit review direction of this Department in matters concerning electronic commerce (e-commerce).In 2000-01 Audit sought to gain a more fuller understanding of some key electronic commerce initiatives of government, including the operations of Bizgate which is managed through the Department of Industry and Trade.
Bizgate is a significant e-commerce initiative of the South Australian government and provides a diverse range of e-commerce services to over 30 government and local government organisations including the provision of online forms and payment services.The Department attributes the success of the project largely to a policy of cautious implementation of new technologies and concepts and an informal project management style.The Department has emphasised that Internet delivery of Government services is an emerging field and that through Bizgate, South Australia has become notable in this area of business service provision.
The audit approach and coverage of this matter consists of two phases.
Phase 1 of the review addressed an overall management understanding of Bizgate and certain matters of a policy, management reporting, contract and control nature.It was in the nature of a focussed compliance review and is subject to specific comment in my 2000-01 Annual Report (Part A: Audit Overview) in the section titled Electronic Government — Legal, Policy, Privacy And Control:Issues Of Importance.
Given the extent to which Bizgate has evolved and developed, Audit’s review highlighted a number of important matters that need to be addressed by the Department.These broadly related to the areas of policy, management reporting and control arrangements, contract and service level agreements, and intellectual property rights.The Department has advised of action proposed or taken to address the matters.
Broadly, Audit notes the achievements over time which have made Bizgate a notable e-commerce development within government.Those achievements have been made with a level of modest resources.
Phase 2 of the review involves Audit’s ongoing review of e-commerce initiatives in 2001-02.It will give consideration to general project management and achievements and a review of Bizgate security arrangements as well as selected client agencies’ Bizgate operations.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987,the audit of the Department of Industry and Trade included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.The assessment also considered whether those controls were consistent with the prescribed elements of the Financial Management Framework as required by Treasurer’s Instruction 2 ‘Financial Management Policies’.
Audit formed the opinion that the controls exercised by the Department of Industry and Trade in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, except for the matters outlined under ‘Audit Findings and Comments’, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
In 2000-01 the Department paid $138.3 million in assistance to Industry and other external parties.Included in this amount is $75 million provided in respect of the Adelaide to Darwin railway construction project.Note 8 to the financial statements refers.
At 30 June 2001 the Department has reported Financial Assistance Debtors of $84.7million and Financial Assistance Commitments of $178.4million.The value of Financial Assistance Debtors of $84.7 million takes into account the write down of certain debtors amounting to $19.4 million.The write down is consistent with the accounting policy recognition of the Department.Notes 2.4 and 10 to the financial statements refer.
Cash at 30 June 2001 was $16.9 million ($52.9 million).The reduction reflects the application of the cash balances to increased outlays during the year, principally in respect of industry and other financial assistance.
The value of fixed assets increased by $14.5 million to $19.2 million due mainly to land acquisition and construction work-in-progress.Notes 2.10 and 14 to the financial statements refer.