POLICE DEPARTMENT

 

 

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

 

Establishment

 

The Police Department is an Administrative Unit established under the Public Sector Management Act 1995.

 

Functions

 

The functions of the Police Department are as follows:

 

·                     Uphold the law.

·                     Preserve the peace.

·                     Prevent crime.

·                     Assist the public in emergency situations.

·                     Coordinate and manage responses to emergencies.

·                     Regulate road use and prevent vehicle crime.

 

Structure

 

The structure of the Police Department is illustrated in the following organisation chart.

 

 

Changes to Functions and Structure

 

Protective Security Service was established in October 2005 as the SAPOL organisational response to the current level of new responsibilities from national counter terrorism measures and changes to emergency management and police security services.  Its role in preventing, protecting, preparing and planning for terrorist threats or major emergency situations at the local and national level also includes response and recovery.

 

Protective Security Service consists of the Police Security Services Branch, which monitors and disseminates information and intelligence and provides investigation and analytical capability to investigate State based terrorist acts or other suspected criminal activity; and the State Protective Security Branch, which provides alarm monitoring and security officers for government agencies and when designated, critical infrastructure sites.

 

AUDIT MANDATE AND COVERAGE

 

Audit Authority

 

Audit of the Financial Report

 

Subsection 31(1)(b) of the Public Finance and Audit Act 1987 provides for the Auditor-General to audit the accounts of the Police Department for each financial year.

 

Assessment of Controls

 

Subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987 provides for the Auditor-General to assess the controls exercised by the Police Department in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.

 

This assessment also considers whether those controls are consistent with the prescribed elements of the Financial Management Framework as required by Treasurer’s Instruction 2 Financial Management Policies.

 

Scope of Audit

 

The audit program covered major financial systems and was directed primarily to obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal controls.

 

During 2005-06, specific areas of audit attention included:

 

·                     the Department’s corporate governance framework

·                     expenditure, including procurement and contract management

·                     payroll, including workers compensation and sick leave

·                     property, plant and equipment

·                     firearms registration and licence fees

·                     expiation notices

·                     police security services fees

·                     cash and general ledger processing

·                     public, private partnerships.

 

 

AUDIT FINDINGS AND COMMENTS

 

Audit Opinions

 

Audit of the Financial Report

 

In my opinion, 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 Police Department as at 30 June 2006, the results of its operations and its cash flows for the year then ended.

 

Assessment of Controls

 

In my opinion, the controls exercised by the Department in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities are sufficient to provide reasonable assurance that the financial transactions of the Department have been conducted properly and in accordance with law.

 

Audit Communications with Management

 

Matters arising during the course of the audit were detailed in management letters to the Commissioner.  Responses to the management letters were generally considered to be satisfactory.  Major matters raised with the Department and the related responses are considered herein.

 

Risk Management

 

The Financial Management Framework (FMF) requires each Chief Executive to ensure that risk management practices continue to be effective and relevant to the issues facing an organisation.

 

Specifically, the FMF requires that Chief Executives must also identify, assess and manage risk by carrying out an assessment of any material new risk, or changes to existing risks in a timely manner as circumstances change.

 

Review of the Police Department’s risk management practices revealed that that the Risk Register has not been formally updated since 2002 and that the Department’s Risk Management Policy does not refer to the current Risk Management Standard issued by Standards Australia.

 

It is acknowledged that management are aware of these issues and have considered the revision of these documents.

 

Procurement and Contract Management

 

The prescribed elements of the FMF require Chief Executives to ensure expenditure is effectively and efficiently managed including the letting of contracts and monitoring the performance of contracts.  A contract register is fundamental in achieving this.

 

Review of the Police Department contract register revealed a number of contracts that:

 

·                     were not recorded in the contract register;

·                     did not record the latest terms and conditions of existing contracts;

·                     a copy was not held by the Procurement and Contract Management Branch.

 

The Department have advised that the contract register will be reviewed to ensure that all material contracts and conditions are included in the register.

 

SACREDD DNA Database System

 

The South Australian Criminal Reference and Evidence DNA Database (SACREDD) system is a Laboratory Information Management System which tracks and manages samples through the entire analytical process and allows for the searching and matching of nominated DNA profiles.

 

The SACREDD system is operated by Forensic Science SA of the Department for Administrative and Information Services (DAIS), under delegations and a Memorandum of Understanding with the Commissioner of Police.

 

Audit commentary in my Supplementary Report of November 2005 to Parliament titled ‘Government Management and the Security Associated with Personal and Sensitive Information’, identified a number of important matters of principle and practice that were required to be addressed to meet the expected high standards of management and operational control for such a critical system as the SACREDD DNA database system.  These matters related to compliance with governing legislation, effectiveness of the administrative arrangements between the agencies involved in the management of the DNA database system, and security and control issues associated with maintaining the integrity of the system and information, including proper custody and use of system information.

 

In June 2006, Audit sought an update status position regarding the corrective actions being implemented by the DAIS/Forensic Science SA and the Police Department. 

 

In the section of Part B of this Report, titled ‘Department for Administrative and Information Services’, audit commentary provides an update position on corrective actions being taken in relation to the operations of the SACREDD DNA database system.  One such action concerned the preparation of a legislative submission by the Police Department.  In relation to that submission, the Police Department advised in July 2006 of a number of specific recommendations which would be included in the legislative submission.

 

The status of these matters will be further examined by Audit in 2006-07.

 

Capture Adjudication and Reporting System (CARS)

 

The 2004-05 Report included commentary in regard to a review that was undertaken in 2005 of the Department’s Capture Adjudication and Reporting System (CARS).  CARS is an integrated software and hardware system which has been developed to provide computerised film scanning, adjudication, archiving, document management and reporting services and to incorporate technologies such as digital film processing and optical character recognition. An external service provider is responsible for development and support of aspects of the system.

 

The salient observations arising from the 2005 review principally related to the alignment of Department security policies and procedures to the Government’s Information Security Management Framework requirements, finalisation of service level agreements between the Department and the external service provider, operating system and database security strengthening, information access security and integrity issues, business continuity and disaster recovery planning, and deficiencies with operational documentation.  In addition, Audit recommended revisiting the monitoring of usage of intellectual property by the external service provider regarding the CARS architecture to ensure the Department’s rights were protected.

 

Last year’s report also advised that the Department had identified a range of measures to be taken in relation to the matters raised by Audit and that the proposed action to be taken would be subject to follow up review.

 

During the year, a follow up review was undertaken to obtain an update status of resolution of action items from the 2005 review.  The update status revealed that the main areas have been satisfactorily addressed, as follows:

·                     Department security policies and procedures have been approved and user awareness undertaken.

·                     Opinion regarding specific audit access clauses within the service level agreements between the Department and the external service provider was sought from the Crown Solicitor’s Office and the agreements finalised.

·                     Operating system and database security strengthening matters had been addressed with the external service provider with review of the Local Area Network conducted by the Department and EDS Australia.

·                     A password synchronisation system to enforce password standards across all systems was undergoing implementation.

·                     User access management issues have been addressed.

·                     Business continuity and disaster recovery plans were implemented and ‘walk through’ tested in late 2005.  Further testing is planned for November 2006.

·                     Change management forms and guidelines had been adopted.

 

In relation to the matter of intellectual property rights, the Department had sought a status update from the external service provider.

 

 

INTERPRETATION AND ANALYSIS OF FINANCIAL REPORT

 

Highlights of Financial Report

 

	2006	2005	Percentage
	$’million	$’million	Change
EXPENSES
Employment benefits costs	410	381	7
Other expenses	105	100	5
Total Expenses	515	481	7
INCOME
Revenue from fees and charges	15	14	7
Other revenue	14	13	8
Total Income	29	27	7
Net Cost of Providing Services	486	454	7
REVENUES FROM/PAYMENTS TO
SA GOVERNMENT
Revenues from SA Government	480	444	8
Payments to SA Government	17	-	-
Net Result	(23)	(10)	130
Cash generated from Operations	36	28	29

 

	2006	2005	Percentage
	$’million	$’million	Change
ASSETS
Current assets	46	58	(21)
Non-current assets	170	169	1
Total Assets	216	227	(5)
LIABILITIES
Current liabilities	59	52	13
Non-current liabilities	149	138	8
Total Liabilities	208	192	8
EQUITY	8	35	(77)

 

Income Statement

 

Income

 

Revenues from the State Government increased by $36 million or 8 percent to $480 million principally as a result of additional funding for the implementation of the Enterprise Bargaining Agreement for police officers and for increases in the workforce.

 

A structural analysis of income for the Department in the four years to 2006 is presented in the following chart.

 

 

Expenses

 

Employee benefit costs increased by $29 million or 7 percent to $410 million due largely to an increase in the number of full time equivalents and the impact of increases associated with the Enterprise Bargaining Agreement for police officers.

 

Other expenses increased by $5 million to $105 million.  Increases in the cost of rent, computing expenses, operating leases, communication expenses and building repairs and maintenance account for the majority of this increase.

 

For the four years to 2006, a structural analysis of the main operating expense items for the Department is shown in the following chart.

 

Net Result

 

The Department receives government funding based on annual budgeted expenditure, less estimated revenues from fees and charges and other sources.

 

The net result deficit of $22.9 million reflects a $17 million payment to government, taken through the Income Statement pursuant to the Cash Alignment Policy.

 

The Department recorded operating deficits in 2005 and 2004 and the deficit reported in 2003 reflected a significant increase in the provision for workers compensation.

 

The following chart shows the income, expenses and net result for the four years to 2006.

 

 

Balance Sheet

 

Current assets decreased by $12 million to $45.9 million during 2006 due to a reduction in cash and cash equivalents.  Pursuant to the Cash Realignment Policy, the Department made payments to Government of $23.3 million, reducing contributed capital by $6.3 million to $nil and reflecting the balance of $17 million as an expense.  This was partially offset by the accumulation of cash from operations during year.

 

The Department’s non-current assets have remained relatively constant over the four year period to 2006.  The minor decrease in 2005 was primarily the result of land transfers at nil consideration to the Department under Public, Private Partnership arrangements.

 

Non-current liabilities have increased each year since 2003 due mainly to increases in employee benefit entitlements and the provision for workers compensation.  The increase in employee benefit entitlements, consistent with the reasons for the increase in employee expenses, is mainly as a result of the increase in the number of full time equivalents and the impact of the implementation of the Enterprise Bargaining Agreement for police officers.  The significance of employee benefits costs and related expenses is discussed later.

 

For the four years to 2006, a structural analysis of assets and liabilities is shown in the following chart.

 

Employee Benefits and Workers Compensation

 

Employee benefits, related on-costs and workers compensation liabilities totals $204 million and represents 98 percent (97 percent) of total liabilities.  At June 2006, the workers compensation liability of $58.7 million ($53 million) represented 28 percent (28 percent) of total liabilities of $208 million ($192 million).

 

The significance of employee related liabilities compared to total liabilities is shown in the following chart.

 

Cash Flow Statement

 

The following table summarises the net cash flows for the four years to 2006.

 

	2006	2005	2004	2003
	$’million	$’million	$’million	$’million
Net Cash Flows
Operating Activities	4	29	15	10
Investing Activities	(9)	(10)	(10)	(5)
Financing Activities	(6)	(19)	0	0
Change in Cash	(11)	0	5	5