The South Australian Metropolitan Fire Service (SAMFS), a Corporation constituted of the Minister, was established under the South Australian Metropolitan Fire Service Act 1936. It is primarily responsible for the provision of: efficient fire fighting services; services to prevent the outbreak of fires in fire districts; and services to deal with other emergencies.
The Emergency Services Administrative Unit (ESAU) provides various services to the SAMFS in support of its primary functions, including strategic risk management, financial management and accounting services. These were subject to corporate service level agreements.
The SAMFS’ financial management is heavily reliant on information and reporting provided by ESAU. An Emergency Services Leadership Group (ESLG) which comprises the chief executive officers of the SAMFS, ESAU, the Country Fire Service and the Director, State Emergency Services (a division of ESAU) has been established to ensure that emergency services operate in an integrated manner and that appropriate strategic and business plans consistent with the Government’s priorities are established, maintained and implemented.
The ESLG, through the Chief Executive Officer of ESAU, reports to a (Department of) Justice Leadership Team. There is in turn a lineage of reporting responsibilities from the Justice Leadership Team to the Minister for Emergency Services.
The operating result was a Deficit from Ordinary Activities of $1.2 million compared with a Surplus of $2.2 million the previous year.
Contributions from the Community Emergency Services Fund decreased by $6.3 million to $57.8 million.
Cash assets decreased by $4.5 million to $30.6 million.
Subsection 11(2) of the South Australian Metropolitan Fire Service Act 1936 provides for the Auditor-General to audit the accounts of the Corporation (SAMFS) 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 control.
The audit of the SAMFS during 2001-02 required Audit to direct much of its focus to the audit of the ‘centralised accounting’ structure maintained by ESAU and to test transactions at this level.
During 2001-02 specific areas of Audit attention included:
expenditure systems, including accounts payable and payroll
general ledger
management reporting and budgetary control
plant and equipment, including the adequacy of asset registers
revenue, including debtors and cash receipting
investments.
A letter communicating issues arising from the audit was forwarded to the Chief Officer of SAMFS. A satisfactory response to those issues has been received.
The overall internal control environment was assessed as satisfactory with considerable improvement being achieved in a range of areas identified by Audit as requiring attention in previous years. Notwithstanding this improvement, there remained a number of areas where Audit considered that there was room for improvement. These areas are outlined below.
The audit revealed the need to ensure that budgetary processes were clearly documented and understood by staff. Audit also observed that strategic and business plans were not up to date and that there was no mechanism for monitoring the plans on a regular basis.
Regarding the management of the Service Level Agreements established with ESAU, Audit noted that there was a need for regular monitoring of the achievement of the performance standards embodied in the Agreements.
In response SAMFS indicated that comprehensive documentation on the budget processes would be produced and that strategic and business plans were currently being updated. Regular monitoring and review of such plans along with the achievement of performance standards under Service Level Agreements would be undertaken.
The audit of the accounts payable function revealed that there was room for improvement in the documentation of, and compliance with, purchasing procedures and the timely payment of invoices.
In response SAMFS indicated that procedures would be updated and action taken to ensure the timely payment of invoices.
The audit of the revenue function revealed that improvement could be achieved in relation to the application of approved pricing structures in relation to the raising of invoices. Audit also noted that there was no delegation of authority for the authorisation of credit notes.
In response SAMFS advised that a delegation of authority would be established for the authorisation of credit notes and that approved pricing structures would be applied in future.
With respect to my 2001-02 Independent Audit Report I have issued a qualified audit opinion. An extract from the Independent Audit Report is provided hereunder:
Qualification
With respect to 2000-2001 I issued a qualified Independent Audit Report for the South Australian Metropolitan Fire Service. The qualification related to a loan transaction for an amount of $2 million from the South Australian Metropolitan Fire Service to the Emergency Services Administrative Unit. I was of the opinion that the loan was unlawful as it was not in accordance with the relevant statutory requirements as set out in the South Australian Metropolitan Fire Service Act 1936.
Qualified Audit Opinion
In my opinion, except for the effects on the financial report of the matter 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 Accounting Standards and other mandatory professional reporting requirements in Australia, the financial position of the South Australian Metropolitan Fire Service at 30 June 2002, its financial performance and its cash flows for the year then ended.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the South Australian Metropolitan Fire Service 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 South Australian Metropolitan Fire Service in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with law.
The net cost of services for the year was $63.9 million, an increase of $1.2 million over the previous year. Contributions from the Community Emergency Services Fund fell by $6.3 million to $57.8 million. This decrease in funding from the State Government was largely offset by the transfer of former ETSA assets with a written down value of $5 million from the Distribution Lessor Corporation to arrive at the deficit from ordinary operations of $1.2 million.
Cash Assets
Cash assets decreased by $4.5 million to $30.6 million. The decrease is due primarily to payments of $5.1 million for the purchase of non-current assets.
Non-Current Assets
The written down value of property, plant and equipment increased by $7.2 million due mainly to the transfer of assets from the Distribution Lessor Corporation ($5 million) and additional capital expenditure of $5.1 million, offset by depreciation expense of $4.5 million.