The Public Trustee is a body corporate established pursuant to the provisions of the Public Trustee Act1995. The duties and responsibilities of the Public Trustee which include administering the estates of deceased and protected persons are detailed in the Act. Those obligations include to:
provide comprehensive, value added trustee, estate management, will-making and related services to clients;
ensure that clients have prudent investment strategies based on an effective funds management structure which optimises returns on those investments;
ensure that clients receive quality legal representation, advice and legal services in compliance with relevant legislation.
The Public Trustee has, in accordance with the Trustee (Investment Powers) Amendment Act 1995, a diversified funds management operation.
The Public Trustee has in place the following sector common funds investment structure:
Cash Common Fund
Short Term Fixed Interest Common Fund
Long Term Fixed Interest Common Fund
Australian Shares Common Fund
Listed Property Securities Common Fund
Overseas Shares Common Fund
Overseas Fixed Interest Common Fund.
The structure of the Public Trustee Office is shown in the following diagram:
The profit from ordinary activities before notional tax was $2.8 million ($2.9 million).
Total distributions available to the State Government were $2.2 million ($2.5 million).
Total trust funds under administration decreased by $16.1 million (2.4 percent) to $644.3 million.
Subsections 26(2), 30(2) and 50(2) of the Public Trustee Act 1995, provide for the Auditor‑General to audit the accounts of the Public Trustee in respect of each financial year.
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal controls.
During 2001-02 the following areas were the subject of audit attention:
Corporate Operations:
|
· budgetary control |
· salaries |
|
· accounts payable |
· investments |
|
· revenue, receipting and banking |
· general ledger |
|
· accounts receivable |
· fixed assets. |
Estate Operations:
|
· revenue |
· assets |
|
· expenditure |
· liabilities. |
Common Funds:
|
· investment policy and strategy |
· management reporting and monitoring |
|
·
investments
(purchases and sales, valuation |
·
expenditure |
|
· custodial and fund management |
· contributor funds. |
Investment Advisory Board Minutes.
In addition, Audit reviewed:
the work undertaken by the Internal Audit division;
procurement practices.
A management letter communicating issues arising from the audit was forwarded to the Public Trustee in September 2002. The main issue raised by Audit related to procurement practices and relationships with key agencies. Further comments are included in ‘Audit Findings and Comments’ hereunder.
An assessment of the extent and nature of the Public Trustee’s internal control structure, conducted as part of the audit planning process, found the level of controls to be satisfactory. This assessment was made prior to the performance of audit testing and, was confirmed by the results of the audit for the 2001-02 year. The assessment took into account the extent of coverage given by Internal Audit to Public Trustee operations.
As part of the audit of the Public Trustee a review was conducted into Public Trustee procurement practices and relationships with key agencies.
It was disclosed that the Public Trustee did not form part of the Department of Justice Accredited Purchasing Unit and did not have direct accreditation from the State Supply Board. Reliance for exemption from the State Supply Act 1995 (the Act) had been placed on provisions of the Public Trustee Act 1995.
Shortly after Audit’s preliminary review, Crown Law advice was received indicating that the provisions of the Act applied to many of the activities of the Public Trustee. As a result, the Public Trustee has sought further legal opinion on specific applications of the Act in light of the requirements of the Public Trustee Act 1995.
Audit understands that the Public Trustee intends to work with, and be included in the Department of Justice Accredited Purchasing Unit for future procurement activities that fall within the requirements of the Act.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Public Trustee 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 Public Trustee 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.
The Financial Statements are divided into three separate reporting entities, being the:
Corporate Statements
Statement of Trusts being Administered
Common Funds Statements.
The profit from ordinary activities before notional tax remained stable at $2.8 million ($2.9 million). This result reflects corresponding increases in revenue and expenditure from ordinary activities.
The after tax profit was $2 million ($1.8 million).
Of the $12.5 million incurred on expenses from ordinary activities, 64 percent represents salaries and related payments.
Trust funds administered by the Public Trustee decreased to $644.3 million ($660.4 million), of which 41 percent (43 percent) relates to the administration of protected estates and aged and infirmed persons. Further, of the total funds being administered, 77 percent (76 percent) were invested in the various common funds, the remaining 23 percent (24 percent) represents estate assets.
All common funds, with the exception of the Australian Shares and Overseas Shares common funds, made an operating surplus for the year. The operating deficits for the Australian Shares and Overseas Shares common funds were $7 million (operating surplus $13.4 million) and $19.8 million (operating deficit $4.4 million), respectively. The operating deficits reflects the decrease in the market value of equities during the year.
Under section 20 of the Public Trustee Act 1995, the Public Trustee has the ability to accept investments from persons other than estates. Investments from persons other than estates represents 15.6 percent (14.3 percent) of the total trust funds being administered.
Financial assets comprising the common funds are valued at market value as disclosed in Note 1.3 to the financial statements.
The common funds are invested in various securities. The level of holdings for each of these investments for the last five years is illustrated in the following chart.
