DEPARTMENT OF THE PREMIER AND CABINET

 

 

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

 

Establishment

 

The Department is an Administrative Unit established pursuant to the Public Sector Management Act 1995.

 

Functions

 

The purpose of the Department is to support the Premier, Cabinet and Executive Council by providing assistance in developing policies; identifying and providing strategic advice on emerging issues and opportunities; and providing leadership and direction to the public service to achieve management improvements.

 

To facilitate the achievement of these objectives, the Department has been organised on a broadly functional basis, comprising a number of branches and offices which perform distinct roles consistent with the charter of the Department.

 

Structure

 

An overview of the structure of the Department is illustrated in the following chart.

 

 

 

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 Department of the Premier and Cabinet 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 Department of the Premier and Cabinet 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:

 

·                     revenue, including invoicing and bank reconciliations

·                     expenditure, including accounts payable and payroll

·                     grants management

·                     property, plant and equipment

·                     general ledger

·                     risk management.

 

 

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 Department of the Premier and Cabinet as at 30 June 2006 and the results of its operations and cash flows for the year then ended.

 

Assessment of Controls

 

In my opinion, the controls exercised by the Department of the Premier and Cabinet 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 of Grants Management which are commented upon below, are sufficient to provide reasonable assurance that the financial transactions of the Department of the Premier and Cabinet have been conducted properly and in accordance with law.

 

Audit Communications with Management

 

Matters arising during the course of the audit were detailed in a management letter to the Chief Executive.  The response to the management letter was satisfactory.  One matter raised with the Department and the related response is considered herein.

 

Grants Management

 

Policies and Procedures

 

In relation to Arts SA, the audit revealed that there are no documented policies and procedures relating to the management and control of grants paid.  This issue is currently being examined by a working party which expects to finalise an outcome by the end of September 2006.

 

The Department advised that the working party is required to prepare a final report on the matter, to the Internal Audit Committee by the end of October 2006.

 

Funding Agreement

 

A Treasurer’s Instruction requires a written agreement, setting out the terms and conditions of a grant, to be established for all grants paid in excess of $5 000.  Arts SA complies with this requirement for all grants paid in excess of $20 000.  In relation to the documentation completed for a grant between $5 000 and $20 000, Audit’s view was that the documentation did not meet the requirements of the Treasurer’s Instruction.

 

In its response, the Department advised that Arts SA is reviewing the adequacy of its grant funding and performance agreements.  The Crown Solicitor’s Office has been engaged to ensure that all of Arts SA’s grant agreements comply with the Treasurer’s Instruction.

INTERPRETATION AND ANALYSIS OF FINANCIAL REPORT

 

Highlights of Financial Report

 

	2006	2005	Percentage
	$’million	$’million	Change
EXPENSES
Employee benefits	32.5	32	2
Grants and subsidies	101.5	101.7	-
Other expenses	31.2	29.4	6
Total Expenses	165.2	163.1	1
INCOME
Fees and charges	3.2	3.8	(16)
Other	15	8.9	69
Total Income	18.2	12.7	43
REVENUES FROM/PAYMENTS TO SA GOVERNMENT
Appropriations	149.5	146.2	2
Payments to SA Government	(0.8)	(31.6)	(97)
Total Revenues from/Payments to SA Government	148.7	114.6	30
Net Result before Restructuring	1.7	(35.9)	-
Net Cash Flows from Operating Activities	1.4	(31)	-
ASSETS
Current assets	17.1	15.5	10
Non-current assets	22.6	23.6	(4)
Total Assets	39.7	39.1	2
LIABILITIES
Current liabilities	6.7	8.1	(17)
Non-current liabilities	4.8	6	(20)
Total Liabilities	11.5	14.1	(18)
EQUITY	28.2	25.0	13

 

Income Statement

 

Expenses

 

Grants and subsidies of $101.5 million constituted 61 percent of total expenses of $165.2 million.  The other major expense was $32.5 million ($32 million) for employee benefits.

 

Income

 

Operating income for the year was $18.2 million ($12.7 million).  The increase in income was due principally to funding of $5 million received for the Carnegie Mellon University project.

 

Revenues from Government increased by $3.3 million to $149.5 million.

 

Balance Sheet

 

The total assets of the Department increased by $653 000 to $39.7 million.

 

The reduction in the liability for employee benefits is due mainly to the transfer of employees to the Office of Public Employment (refer Note 26).

 

The Department’s liabilities at 30 June 2006 totalled $11.5 million ($14.1 million) of which $7.3 million ($8.6 million) relates to employee benefits.

 

Administered Items

 

Income and expenses in relation to the Social Inclusion Initiatives totalled $9.8 million ($11.5 million) and $9.8 million ($11.8 million) respectively.

 

Income for APY Lands was $13.4 million ($8.6 million) and expenses were $6.8 million ($4.1 million).

 

Cash held at 30 June 2006 of $21 million, includes funds held for APY Lands of $11.1 million and $7.8 million for the Commonwealth Community Essential Services Program.  Refer to Note 2 of the Administered financial statements for comment on cash held.