SA St John Ambulance Service Inc (the Ambulance Service), is an incorporated association established pursuant to section 11 of the Ambulance Services Act 1992 (the Act) as a result of a joint venture agreement between the Priory in Australia of the Order of St John and the Minister for Health for the Government of South Australia. In January 1999 the Priory’s authority to nominate and appoint directors to the Ambulance Board was delegated to the then Minister for Police, Correctional Services and Emergency Services.
The Ambulance Service provides pre-hospital patient care and ambulance transport as part of the State’s health and emergency services and is controlled by the Ambulance Board established pursuant to section 12 of the Act.
The structure of the Ambulance Service is:
The Ambulance Service recorded a surplus from ordinary activities for the year of $14.8 million ($5.1 million). Included in that surplus was $5.9 million in assets transferred to the Ambulance Service from St John Ambulance Australia South Australia Inc. and $4.2 million provided by the Department for Administrative and Information Services for the Government Radio Network.
The Ambulance Cover Scheme incurred an operating deficit of $5.7 million ($6.4 million).
Ambulance transport fees increased by $2.3 million ($4.8 million) which was offset by an increase in pensioner and Ambulance Cover concessions of $0.2 million ($3.6 million).
Revenues from the Government increased by $7.8 million to $40.2 million.
Subsection 14(2) of the Ambulance Services Act 1992 specifically provides for the Auditor-General to audit the accounts of the Ambulance Service in respect of each financial year. Furthermore, subsection 14(3) of the Act provides for the application of Part III of the Public Finance and Audit Act 1987 (ie Audit Provisions) to the Ambulance Service, as if it were a public authority within the meaning of the Act. Subsection 14(4) of the Act provides that Division II (Accounts and Audit of Certain Incorporated Associations) of Part IV of the Associations Incorporation Act 1985 does not apply to the Ambulance Service.
The scope of the external audit took into account the internal audits of the Ambulance Service’s internal controls performed by an external accounting firm. The external audit 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 report and the adequacy of internal controls.
The specific areas of audit attention included:
budgetary control and management reporting
ambulance transport revenue
Ambulance Cover Scheme
accounts payable
payroll
inventories
property, plant and equipment.
During the year a management letter communicating issues arising from the audit was forwarded to the Chief Executive Officer. The main issues related to opportunities to improve the control environment through better documentation of key financial policies and procedures. A satisfactory response was received. Further details relating to these issues are contained in ‘Audit Findings and Comments’ hereunder.
The overall assessment of the Ambulance Service’s control structure was that it was satisfactory.
This assessment had regard to the responses and action taken by the Ambulance Service to issues raised by both external and internal audit. The Board of the Ambulance Service has established a Finance and Audit Committee that regularly reviews all aspects of financial management and ensures that appropriate responses and follow-up action occurs in respect of issues raised by both external and internal audit.
In past reports, Audit has commented on the lack of documentation with respect to the Ambulance Service’s financial policies and procedures.
The audit this year revealed that a project was commenced to document the policies and procedures, however, the project was delayed due to the departure of key staff. The Ambulance Service indicated that replacement staff are expected to progress the project in 2002-03.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the SA St John Ambulance Service Inc. 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 SA St John Ambulance Service Inc 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.
As commented in previous reports it is difficult to apply conventional financial ratio analysis to the Ambulance Service. As with most government agencies, it is reliant on revenues from government to sustain its level of operations and service, notwithstanding that it charges for certain services and products. Comparison of the charges for these services and products to previous years is affected by the ambulance transport fees not charged in 2001-02 during the period of temporary bans imposed by the Ambulance Employees Association.
Total revenues for the year ended 30 June 2002 were $86.7 million ($70 million) and total expenses were $71.9 million ($64.9 million), resulting in a surplus from ordinary activities of $14.8 million ($5.1 million).
Revenues from the Government totalled $40.2 million ($32.4 million) and included $4.2 million provided by the Department for Administrative and Information Services towards the South Australian Government Radio Network.
Non-operating revenues of $6.1 million included the transfer of $5.9 million in assets from St John Ambulance Australia South Australia Inc to the Ambulance Service for no consideration. Refer Note 6 to the Financial Statements.
The accumulated surplus increased by $13.9 million to $26.3 million ($12.4 million), while reserves increased to $7.6 million (from $6.8 million).
The following chart depicts the major sources of internally generated and externally provided revenues for 2001-02:
The following diagram depicts the movement in these revenues over the last seven years:
The acceleration of government funding over that time is clearly discernible, with revenues from government increasing from $9.4 million in 1994-95 to $40.2 million in 2001-02, an increase of 328 percent. This compares with an increase of only 44 percent in internally generated revenues over the same period, from $32.4 million to $46.5 million which includes $5.9 million in assets transferred from St John Ambulance Australia South Australia Inc. to the Ambulance Service in 2001-02. The increasing reliance on government revenues is clearly evident from these figures.
The increasing cost of employee benefits (11.1 percent in 2001-02) essentially reflects the standards embodied in terms of service provision and response times. However, limitations on flexibility in work practices and increases in rates of pay following enterprise bargaining agreements have also been identified as factors causing these costs to increase.
The Ambulance Cover Scheme has significantly impacted on the operating result since its inception as a result of the premiums charged to subscribers being substantially less than the cost of the scheme (ie benefits provided to subscribers). The cumulative deficit from operating the Scheme is $29.1 million. There has been a decrease in the operating deficit for 2001-02 to $5.7 million ($6.4 million), with an average annual operating deficit of $4.7 million, over the last five years. As detailed in Note 3 to the Financial Statements, it is also important to note the deficit on the Ambulance Cover Scheme for 2001-02 was decreased by the amount of those transport fees unable to be charged against the Scheme during the period of the temporary case information bans imposed by the Ambulance Employees Association. The Ambulance Service estimates the amount of the understatement to be $360 000.
The following chart reflects the movement in revenues, expenses and deficit of the Ambulance Cover Scheme over the past five years and underlines the increasing trend in Transport Fee Concessions.
In previous reports comments were made in respect of a consultant’s review of the Ambulance Service undertaken in 1999-2000 at the request of the Department of Justice so that it may better assess the financial position of the Ambulance Service.
The consultant identified that the Ambulance Service had an ongoing funding shortfall which needed to be addressed as a matter of priority.
The consultant provided a number of suggestions for both the Government and the Ambulance Service to consider.
One of the suggestions was for the Government to provide additional funding to the Ambulance Service on an annual basis.
Additional funding of $6.2 million was provided in 1999-2000 and the increased annual funding started in 2000-01.
The diagram below reflects the increase in net assets, particularly the accumulated surplus, in recent years due to the additional funding from the State Government together with additional revenue from ambulance transport fees. The significant increase in 2001-02 also relates to one-off transfers of assets of $5.9 million and a one-off increase of $4.2 million in funding for the South Australian Government Radio Network.
Property, plant and equipment increased by $7.2 million to $30.9 million ($23.7 million) due principally to the assets transferred by St John Ambulance Australia South Australia Inc. to the Ambulance Service as detailed in Note 6 to the Financial Statements.