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SOUTH AUSTRALIAN FIRE AND EMERGENCY SERVICES COMMISSION

 

 

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

 

Establishment

 

The South Australian Fire and Emergency Services Commission (SAFECOM) was established by the Fire and Emergency Services Act 2005 (the Act) which was assented to on 14 July 2005.  SAFECOM came into operation on 1 October 2005 replacing the Emergency Services Administrative Unit (ESAU), which was dissolved from 31 December 2005.

 

The Act provides for the continuation of the South Australian Metropolitan Fire Service (SAMFS), the South Australian Country Fire Service (SACFS) and the South Australian State Emergency Service (SASES).  SAMFS and SACFS were previously in existence as separate entities whereas the SASES was a division of ESAU.  The SASES is now a separate body corporate.  The Country Fires Act 1989, the South Australian Metropolitan Fire Service Act 1936 and the State Emergency Service Act 1987 were repealed upon the proclamation of the new Act.

 

The Act also defines the Emergency Services Sector as consisting of the:

 

·                     South Australian Fire and Emergency Services Commission

·                     South Australian State Emergency Service

·                     South Australian Country Fire Service

·                     South Australian Metropolitan Fire Service.

 

The Act requires that a financial statement be prepared for the Emergency Services Sector.

 

Objectives

 

SAFECOM has the following main objectives:

·                     to develop and maintain a strategic and policy framework as well as sound corporate governance across the emergency services sector;

·                     to provide adequate support services to the emergency services organisations and to ensure the effective allocation of resources within the emergency service sector;

·                     to ensure relevant statutory compliance by the emergency services organisations;

·                     to build a safer community through integrated emergency services organisations;

·                     to liaise with the peak body responsible for managing emergencies as well as to report regularly to the Minister about relevant issues.

 

Community Emergency Services Fund

 

SAFECOM is also responsible for the administration of the Community Emergency Services Fund (the Fund) which was established by the Emergency Services Funding Act 1998.  Responsibility for the administration of the Fund was transferred from the Attorney-General’s Department on 1 April 2006.

 

The Fund is the main source of funding for all of the Emergency Services Sector agencies.

 

Structure

 

While each of the agencies which comprise the Emergency Services Sector are separate corporate bodies, SAFECOM, in performing its functions, has the power to issue directions to SAMFS, SACFS and SASES, except in relation to matters dealing with emergency situations.

 

The Chief Officers of SAMFS, SACFS and SASES are all members of the SAFECOM Board.

The structure of SAFECOM is illustrated in the following organisation chart.

 

 

AUDIT MANDATE AND COVERAGE

 

Audit Authority

 

Audit of the Financial Report

 

Subsection 31(1)(b) of the Public Finance and Audit Act 1987 and subsection 21(2) of the Fire and Emergency Services Act 2005 provide for the Auditor-General to audit the accounts of the South Australian Fire and Emergency Services Commission and also the consolidated accounts for the emergency services sector 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 South Australian Fire and Emergency Services Commission 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:

 

·                     expenditure, including accounts payable and salaries and wages;

·                     plant and equipment, including the adequacy of asset register maintenance;

·                     revenue, debtors, receipting and banking;

·                     general ledger.

 

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 South Australian Fire and Emergency Services Commission and of the consolidated Emergency Services Sector as at 30 June 2006, the results of their operations and their cash flows for the period then ended.

Assessment of Controls

 

In my opinion, the controls exercised by the South Australian Fire and Emergency Services Commission 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 raised under SAFECOM Charter, Accounts Payable and Purchasing, Assets and Payroll as outlined under ‘Audit Communications with Management’, are sufficient to provide reasonable assurance that the financial transactions of the South Australian Fire and Emergency Services Commission 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 considered to be satisfactory.  Major matters raised with SAFECOM and the related responses are considered herein.

 

Overall Comment on the Results of the Audit

 

Governance Arrangements

 

The audit identified a  number of legal compliance and governance issues which have arisen as a result of the major restructure and establishment of SAFECOM which took place following the enactment of the Fire and Emergency Services Act 2005.  Audit acknowledges that such issues are common in the early stages of a new agency and that action is underway to address these matters.

 

Accounting Systems and Processes

 

For a number of years Audit has raised issues with the former ESAU in relation to various accounting processes where improvement in controls could be achieved.  SAFECOM retains the accounting and financial record keeping systems utilised by ESAU.

 

The results of the 2005-06 audit of SAFECOM highlighted that many of the areas raised in previous years with ESAU have seen little improvement and were raised again. 

 

SAFECOM have implemented some restructuring of the management of the financial operations with new senior personnel undertaking overall responsibility for the finance functions and it has also identified the need to boost its financial capabilities through the recruitment of additional, suitably qualified personnel.  Audit considers that this is a positive move in seeking to facilitate the improvements needed.

 

Legislative Compliance and Governance Arrangements

 

SAFECOM Charter

 

Section 8(4) of the Fire and Emergency Services Act 2005 requires that SAFECOM must have a charter stating its function and operations and the charter must be provided to the Minister and be publicly available.  A charter for SAFECOM was compiled by the taskforce in charge of establishing SAFECOM and parts of this charter were available on SAFECOM’s website.  However, at the time the audit was conducted Audit could find no evidence of the SAFECOM charter being approved by the Board or presented to the Minister.

 

In response SAFECOM indicated that the Charter would be updated as part of the strategic planning process.

 

Approval of Workforce Plans

 

The Act requires that the workforce plans for SAMFS, SASES and SACFS must be approved by the SAFECOM Board (the Board).  The agencies are unable to appoint staff unless they are detailed in a workforce plan approved by the Board.  The workforce plan for SAMFS was not submitted to the Board until late May 2006 was not approved until August 2006.  Audit is of the view that submission of these plans should be aligned with the budget and planning cycle of the agency. 

 

SAFECOM responded that it will establish a planning cycle which will include the requirement for the submission of workforce plans.

 

Governance Arrangements

 

Audit noted potential improvements in relation to the following areas:

·                     regular monitoring and reporting in relation to the risk management plan;

·                     the development of a planning cycle to assist in ensuring the all aspects of SAFECOM’s planning and governance requirements are prepared and approved on a timely basis;

·                     finalisation and approval of the strategic plan and key performance indicators;

·                     provision of financial information to the Board in relation to balance sheet items.

 

In response SAFECOM indicated that action would be taken to address the issues raised.

 

Accounting Systems and Processes

 

Accounts Payable and Purchasing

 

The audit of accounts payable and purchasing revealed room for improvement in the documentation of and compliance with policies and procedures related to purchasing activities.  Audit also noted that certain types of invoices were not being approved in accordance with the delegations of authority.

 

SAFECOM indicated that procedures will be reviewed and complied with to address these issues.

 

Assets

 

Audit observed that assets are transferred from work in progress once the total project has been completed instead of when they are ready for use, resulting in assets not being accounted for in accordance with Accounting Standards. 

 

In addition, Audit noted that the process for deciding whether an expense should be capitalised was not clearly documented.

 

SAFECOM advised that they would review the accounting processes in relation to capital projects.

 

Payroll

 

The audit of payroll revealed a need for improvement in the documentation of payroll policies and procedures, the timeliness of processing of payroll adjustments for SAMFS and the active monitoring and management of excessive annual leave balances.  Audit also noted that bona fide reports were not always issued on a timely basis and that there was inadequate follow up of outstanding reports. 

 

In response, SAFECOM advised that the payroll policies and procedures would be improved and payroll adjustments would be processed in a timely manner.  SAFECOM also advised that action would be taken to ensure bona fide reports were distributed and returned in a timely manner and that active management of excessive leave balances would be undertaken.

 

 

INTERPRETATION AND ANALYSIS OF FINANCIAL REPORT

 

Highlights of Financial Report

 

 

Consolidated

SAFECOM

 

2006

2006*

 

$’million

$’million

INCOME

 

 

Contributions from Community Emergency Services Fund

150

9

Other

11

-

Total Income

161

9

EXPENSES

 

 

Employee benefit costs

79

6

Depreciation

18

-

Supplies and services

40

3

Other

15

-

Total Expenses

152

9

Net Result before Restructure

9

-

Net revenue from restructure

210

(1)

Net Result after Restructure

219

(1)

 

 

Consolidated

SAFECOM

 

2006

2006*

 

$’million

$’million

 

 

 

Net Cash Flows from Operations

24

-

 

 

 

ASSETS

 

 

Current assets

38

2

Non-current assets

242

1

Total Assets

280

3

LIABILITIES

 

 

Current liabilities

18

1

Non-current liabilities

24

3

Total Liabilities

42

4

EQUITY

238

(1)

 

* SAFECOM was established on 1 October 2005.  Transactions represent the nine month period of operation to 30 June 2006.

 

Consolidated Emergency Services Sector

 

Income Statement

 

The main source of income for the sector is the contribution from the Community Emergency Services Fund, $150 million, which accounts for 93 percent of total income.

 

Expenses are dominated by employee benefit costs, $79 million, which represent 52 percent of total expenses.

 

Balance Sheet

 

The Balance Sheet shows that non-current assets of $242 million represent 86 percent of total assets.  The main asset classes held are land and buildings (written down value of $121 million) and vehicles (written down value of $82.9 million).

 

SAFECOM

 

Income Statement

 

SAFECOM’s main source of funding is from the Community Emergency Services Fund ($9 million) and its main expenses relate to employee benefits costs ($6 million).

 

Administered Item

 

Community Emergency Services Fund

 

SAFECOM took over responsibility for the administration of the Fund from the Attorney-General’s Department on 1 April 2006.

 

Contributions, by way of levies, are made by all owners (including both State and Local Government) of both fixed and mobile property to fund the provision of emergency services.  Levies are collected in accordance with the Emergency Services Funding Act 1998.  The levy on fixed property applies to capital values adjusted for location and land use and is collected by RevenueSA.  The levy on mobile property is collected by the Department for Transport, Energy and Infrastructure using the vehicle registration system.

 

In addition, the Government makes a contribution in the form of remissions of levies charged.

 

All levy receipts are paid into the Fund from which payments are made to emergency services agencies and to meet the costs of collection and administration.

 

The transactions outlined below represent the activities of the Fund for the full financial year combining the portions of the year administered by the Attorney-General’s Department and SAFECOM.

 

Levies and other income for 2005-06 totalled $176.1 million ($172 million) comprising:

 

 

2006

2005

 

$’million

$’million

Fixed property collections

68.4

63.9

Fixed property remissions

62.3

62.5

Mobile property collections

27.7

27.5

Mobile property remissions

8.8

8.9

Pensions concessions

6.2

6.2

Other

2.7

3.0

 

176.1

172.0

Payments totalling $183.3 million ($168.0 million) were made from the Fund as follows:

 

 

Emergency Services Administration Unit

0.1

0.5

SAFECOM

8.2

-

South Australian Country Fire Service

50.9

48.6

South Australian Metropolitan Fire Service

82.3

75.8

South Australian State Emergency Service

11.9

12.2

South Australian Police

16.1

16.1

Department for Environment and Heritage

2.2

2.1

SA Ambulance Service

0.9

1.1

Surf Lifesaving

1.2

1.1

Volunteer Marine Rescue

0.8

0.9

State Helicopter Rescue

0.5

0.5

Other

1.1

1.9

Levy Collection and Administration Fees:

 

 

RevenueSA

6.1

6.1

Department of Transport, Energy and Infrastructure

0.6

0.7

Attorney-General’s Department

0.1

0.4

SAFECOM

0.3

-

 

183.3

168.0

 

The balance in