SA AMBULANCE SERVICE INC

 

 

FUNCTIONAL RESPONSIBILITY AND STRUCTURE

 

Establishment

 

SA Ambulance Service Inc (the Ambulance Service) is an incorporated association formed by the Minister for Health and subject to the provisions of the Ambulance Services Act 1992 (the Act).

 

Functions

 

The functions of the Ambulance Service are to provide pre-hospital patient care and ambulance transport as part of the State’s health and emergency services.

 

Structure

 

The structure of the Ambulance Service is illustrated in the following organisation chart.

 

 

 

AUDIT MANDATE AND COVERAGE

 

Audit Authority

 

Audit of the Financial Report

 

Subsection 14(2) of the Ambulance Services Act 1992 and subsection 31(1)(b) of the Public Finance and Audit Act 1987 provide for the Auditor-General to audit the accounts of the Ambulance Service in respect of 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 Ambulance Service in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.

 

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:

 

·                     cash

·                     accounts payable

·                     payroll

·                     ambulance transport revenue

·                     Ambulance Cover revenue

·                     general ledger processing.

 

 

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 SA Ambulance Service Inc 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 SA Ambulance Service Inc 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 in relation to leave processing as outlined under ‘Audit Communications to Management’, are sufficient to provide reasonable assurance that the financial transactions of the SA Ambulance Service Inc have been conducted properly and in accordance with law.

 

Audit Communications to Management

 

Matters arising during the course of the audit were detailed in a management letter to the Chief Executive Officer.  Major matters raised and the related responses are considered herein.

 

Leave Processing

 

Audit noted that the Ambulance Service has not established controls which effectively monitor attendance for non-operational staff and ensure that all leave taken by non-operational staff is reflected in the CHRIS payroll system. 

 

In response the Ambulance Service has indicated that it is developing a time recording policy for non-operational staff designed to ensure a consistent approach to monitoring attendance for all non-operational staff.

 

Strategic Asset Management Plan

 

Audit noted that the Ambulance Service had not developed a strategic asset management plan which links its physical resources to service delivery programs and corporate objectives. 

 

The need for a formal strategic asset management plan was acknowledged by the Ambulance Service who indicated that work was progressing on its development.

 

General Ledger Chart of Accounts

 

Audit noted that the Ambulance Services’ general ledger structure does not support the financial reporting disclosure requirements of the Department of Treasury and Finance with respect to the separate disclosure of transactions within government.

 

The Ambulance Service responded that whilst it has been able to use alternate sources to complete the preparation of its financial report with respect to the separate disclosure of transactions within government, the Ambulance Service acknowledged the benefits of capturing the required data in the general ledger and indicated that opportunities to develop alternate data capture techniques and processes would be explored.

 

SA Ambulance Service Computer Processing Environment

 

Last year Audit identified opportunities to improve controls within the Ambulance Services’ Ambulance Revenue and Subscription, HP Inventory/Comcen, CAD Ambulance Dispatch application systems and the related computer processing environment.  In particular Audit noted:

 

·                     the absence of procedures for recording and monitoring user access and reviewing access privileges;

·                     potential segregation of duty conflicts for developers in the Ambulance Service database development and operational areas;

·                     the need for confirmation of procedures with EDS for the disposal of obsolete equipment and the extent of monitoring of operating system and network logs;

·                     opportunities to improve the level of documentation of policies and procedures.

 

During 2005-06 the Ambulance Service advised that action to resolve these matters had been initiated and that resolution of all matters was scheduled for completion by June 2008.  The Ambulance Service also advised that new systems, including the South Australian Computer Aided Despatch (SACAD) system, are being considered for possible replacement of current systems in September 2007.

 

Action being taken by the Ambulance Service in relation to all Audit recommendations will be reviewed in 2006-07.

 

INTERPRETATION AND ANALYSIS OF FINANCIAL REPORT

 

Highlights of Financial Report

 

	2006	2005	Percentage
	$’million	$’million	Change
EXPENSES
Employee benefits costs	65	68	(4)
Supplies and services	28	27	4
Other Expenses	10	11	(9)
Total Expenses	103	106	(3)
INCOME
Ambulance transport fees	39	36	8
Ambulance cover	16	16	n/a
Other	5	4	25
Total Income	60	56	7
Net Cost of Providing Services	(43)	(50)	14
REVENUES FROM/PAYMENTS TO SA GOVERNMENT
Revenues from SA Government	51	49	4
Net Result	8	(1)	n/a
Cash Generated from Operations	10	8	25
ASSETS
Current assets	32	32	n/a
Non-current assets	47	39	21
Total Assets	79	71	11
LIABILITIES
Current liabilities	22	20	10
Non-current liabilities	8	12	(33)
Total Liabilities	30	32	(6)
EQUITY	49	39	26

 

Income Statement

 

Income

 

Revenues from the SA Government are approximately 46 percent of total income consistent with the previous four years which demonstrates the dependency of the Ambulance Service on government funding.

 

Ambulance transport revenue for 2006 increased by 9 percent to $39.2 million as a result of a 5 percent increase in the volume of chargeable ambulance usage and a 3 percent increase in rates for ambulance services.

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

 

 

Expenses

 

During 2006 employee benefits costs decreased from $68 million to $65.4 million.  The decrease in employee benefits costs is impacted by movements in the Ambulance Services superannuation defined benefit liability.  In 2006 the defined benefit liability decreased by $4.2 million.  This gain was offset against other employee benefits costs recognised in the Income Statement.  In 2005 a $3.6 million increase in the defined benefit liability was recognised as an employee benefits cost.

 

Salaries and wages increased by 7.8 percent to $62.3 million due mainly a 3.5 percent pay rise and a $1.1 million increase in employee annual leave provisions.

 

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

 

 

Net Result

 

The $9 million fluctuation in the net result between 2005 and 2006 is due mainly to the movement in the Ambulance Services superannuation defined benefit liability.  The defined benefit liability is measured  by an actuarial valuation at 30 June each year. 

The superannuation defined benefit scheme expense recognised in the Income Statement represents the movement in the estimated defined benefit liability offset by employer contributions for the year.  In 2005 the $3.6 million increase in the defined benefit liability was recognised as an expense.  During 2006 the defined benefit liability decreased by $4.2 million and a resultant gain was recognised in the Income Statement.

 

The following chart shows the operating revenues, operating expenses and surpluses/deficits for the four years to 2006.

 

 

Balance Sheet

 

Receivables of $8.1 million represent 25 percent of the Ambulance Services’ current assets.  The balance of receivables includes a provision for the value of debts considered doubtful as at 30 June.  Consistent with the previous four years, the Ambulance Service estimated that 26 percent of outstanding debtors as at 30 June 2006 were unlikely to be collected.

 

Non-current assets increased by $7.9 million to $46.8 million due mainly to the acquisition of $15.8 million of property, plant and equipment offset by depreciation charges of $7.6 million. 

 

Current liabilities increased by $2.8 million due mainly to $1.9 million of outstanding creditors for the acquisition and fit out of ambulances at 30 June 2006.  Non-current liabilities decreased by $4.2 million due mainly to the reduction in the superannuation defined benefit liability.

 

For the four years to 2006, a structural analysis of assets and 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
Operations	9.9	7.8	12.5	6.4
Investing	(12.3)	(8.6)	(6.0)	(8.3)
Change in Cash	(2.4)	(0.8)	6.5	(1.9)
Cash at 30 June	20.6	23.0	23.8	17.3

 

The analysis of cash flows indicates that cash decreased by $2.4 million to $20.6 million during 2005-06.  This decrease was due mainly to additional capital spending.  The Ambulance Service has developed an interim budget for 2006-07 which includes planned capital investment of $13.3 million.

 

 

FURTHER COMMENTARY ON OPERATIONS

 

Ambulance Cover Scheme

 

The Ambulance Cover Scheme has a significant impact on the Ambulance Service’s operating result as premiums charged do not cover the cost of transport concessions provided to subscribers.

 

Premiums received for 2005-06 of $16.1 million increased by $620 000 while concessions provided to subscribers increased by $1.9 million to $26.6 million.

 

The following chart reflects the movement in revenues, expenses and deficit of the Ambulance Cover Scheme over the past four years and underlines the increasing deficit in Transport Fee Concessions.

 

 

Withdrawal of the Priory in Australia of the Order of St John (the Priory)

 

Previous reports have noted the intention of the Priory to withdraw from the provision of ambulance services in South Australia.  The Ambulance Services (SA Ambulance Service Inc) Amendment Act 2005 (the Act) was proclaimed on 16 February 2006 and came into operation on 17 February 2006.  The amendments to the Ambulance Services Act 1992 ended the Priory’s role in the provision of ambulance services in South Australia.

 

The amended provisions of the Ambulance Services Act 1992 provided for the continued existence of the SA St John Ambulance Service Inc under the name ‘SA Ambulance Service Inc’.  Management of the affairs of the SA Ambulance Service Inc is vested in a committee known as the Ambulance Board.  The Ambulance Board consists of 10 members appointed by the Minister.