The Department of Water, Land and Biodiversity Conservation (DWLBC) is an administrative unit that was established pursuant to the Public Sector Management Act 1995. That establishment occurred on 8 April 2002 as a part of a restructure of certain government functions.
DWLBC comprises all the functions of the former Department for Water Resources, which was abolished on the creation of DWLBC, and certain sections of the Sustainable Resources Group of the Department of Primary Industries and Resources.
The role of DWLBC is to deliver a range of policies, programs and advice on practices relating to the integrated management of natural resources. These are directed toward the management of the State’s land and water resources, including the River Murray, in a manner that facilitates economic activity and development while ensuring the natural resources are managed in a sustainable manner.
At the time of preparing this Report, the structure and scope of the Department’s operations were in the process of being determined.
Subsection 31(1)(b) of the Public Finance and Audit Act 1987 provides for the Auditor-General to audit the accounts of DWLBC in respect of each year.
The audit program covered all major financial areas of activity and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal control. During 2001-02 specific areas of audit attention included:
water licensing system
accounts payable
salaries and wages
receipting and banking
property, plant and equipment
grants.
During the year a letter communicating the issues arising from the audit was forwarded to the Chief Executive. A satisfactory response was received.
In previous years, Audit reported that certain assets have been identified by the former Department for Water Resources (DWR) since its establishment in February 2000, but not recognised in the accounts, as uncertainty exists over where control and ownership rests and the appropriate entity that should recognise them. Examples of these assets include infrastructure assets associated with the River Murray (evaporation basins, locks, weirs, etc), metropolitan drainage assets and Linear Park. Due to the potential significance of these assets the Independent Audit Reports on the financial statements for DWR were qualified for the past two years.
Last year, DWR advised that it has been working towards identifying those assets it should be responsible for and that while progress has been made, the matter remained unresolved. As a part of this process, issues were raised as to whether, in principle, the scope of DWR was to include being a major Government asset owner with a large asset base and significant asset management responsibilities. DWR indicated that “until the matter of principle is settled, we will not be able to resolve the asset identification issue for the Department”.
As noted, all the functions and assets of the former DWR were transferred to DWLBC. Audit review revealed that uncertainty over the control and ownership of these assets remain unresolved.
Due to the potential significance of these assets on the financial statements the Independent Audit Report has again been qualified with respect to assets. An extract from the Independent Audit Report is provided hereafter.
Other matters arising from the audit related to checks and reconciliations over the Water Licensing System revenue and the degree of management review and checking of key accounts payable and payroll reports.
A satisfactory response was received from DWLBC on all matters raised.
Note 2(d) to the financial statements describes that certain assets have not been brought to account as at 30 June 2002. Due to the potential significance of these assets, I am unable to form an opinion on the completeness of values ascribed to assets included in the Statement of Financial Position and any resultant depreciation that may impact on the operating result.
In my opinion, except for the effects on the financial report of the matters referred to in the qualification paragraph, the financial report presents fairly in accordance with the Treasurer’s Instructions promulgated under the provisions of the Public Finance and Audit Act 1987, applicable Australian Accounting Standards and other mandatory professional reporting requirements in Australia, the financial position of the Department of Water, Land and Biodiversity Conservation as at 30 June 2002, its financial performance and its cash flows for the year then ended.
Without further qualification to the opinion expressed above, attention is drawn to the following matter. As indicated in Note (1)(a) to the financial statements, the Department of Water, Land and Biodiversity Conservation was established on 8 April 2002 from the functions of the former Department for Water Resources and the Sustainable Resources Group from the Department of Primary Industries and Resources. Note 12 explains that the asset and liability balances transferred from the Department of Primary Industries and Resources were as agreed between the parties at the time of preparing this report and that there remain a number of matters that require further negotiation and agreement between the two agencies. The nature and amount of future transfers of assets and liabilities could not be reliably determined and measured as at the date of issuing this report and accordingly are not disclosed in this report.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Department of Water, Land and Biodiversity Conservation 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 Water, Land and Biodiversity Conservation 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 law.