The Department is an administrative unit established pursuant to the Public Sector Management Act 1995.
The Department has responsibility for the care and custody of adult offenders. These responsibilities are discharged by:
the provision of custodial accommodation, including the opportunity for training and education, for both sentenced and remand inmates;
non-custodial supervision of sentenced offenders through the probation and parole function, the Community Service Order Scheme and the Home Detention Scheme.
The Department is also responsible for the Justice Information System (JIS Services), a collaborative criminal justice and welfare administration system which provides computing facilities to a number of government agencies including the Department for Correctional Services.
The strategic management of JIS Services is the responsibility of a Board of Directors made up of the major agencies that participate in the System. JIS Services has, effective from 1 July 2000, been renamed ‘Justice Technology Division’ and is now a division of the Attorney-General’s Department.
The structure of the Department is shown in the following diagram:
Subsection 31(I)(b) of the Public Finance and Audit Act 1987 provides for the Auditor-General to audit the accounts of the Department in respect of each financial year.
The audit program 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 statements and internal control.
An outline of the major areas of audit coverage under the relevant departmental responsibility area is provided hereunder:
Head Office
accounts payable
asset register
budgetary control and management reporting
contract administration
general ledger
revenue, receipting and banking
salaries and wages
sundry debtors
working accounts
capital works.
Institutions
stores
prison industries
receipting and banking
budgetary control
prisoner finances
fixed assets
debtors
In addition, the audit included a review of the operation of JIS Services.
A management letter communicating issues arising from the audit was forwarded to the Chief Executive and a satisfactory response was received. Comments on material issues referred to management are contained in ‘Audit Findings and Comments’ hereunder.
The reviews of the specific auditable areas of coverage involved an assessment of the adequacy of accounting, record keeping and control, and the test verification of financial transactions processed and recorded during the year. Audit reviews identified a number of instances where internal control procedures either required improvement or were not applied consistently over the year. The areas of particular concern included the need to:
minimise the number of workers compensation duplicate and inaccurate payments;
improve controls so as to ensure that key reconciliations of various subsidiary systems are reconciled on a timely basis to the general ledger;
improve the control structure at the Institutions particularly with respect to their Advance Account. The Audit review revealed that a number of Advance Accounts were being overdrawn on a consistent basis and not being reconciled in a timely manner.
The Department has advised that corrective action will be taken on the issues identified by Audit.
While there were a number of control issues raised by Audit, substantive testing of transactions processed by the Department did not reveal material errors in the sample of transactions tested.
Comments in relation to the implementation progress of the Financial Management Framework can be found under the Attorney-General’s Department, ‘Audit Findings and Comments’.
The management and operation of the Mount Gambier prison was outsourced to the private sector in 1995.
The then Minister for Correctional Services entered into a contract with Group 4 Correction Services Pty Ltd (Group 4) on 13 May 1995 for the management and operation of the Mount Gambier Prison. This contract which expired on 27 June 2000 provided that the Minister, not later than six months prior to the end of the contract, advise the contractor in writing whether the Government wished to renew, extend or replace the contract.
During the latter half of 1999, the Department considered the various options available to it and at the same time analysed the performance and value-for-money of the existing contract. Options considered included:
reverting the management of the prison to the public sector;
replacing the existing contract through a process of competitive tender;
extending the existing contract with Group 4;
renewing the contract with Group 4.
Throughout the process the Department consulted with the Government’s Prudential Management Group.
Upon finalisation of their review, the Department initiated an independent evaluation to:
verify the information on which the Department based its conclusions;
confirm the operational effectiveness and benefits of the existing contract;
identify and evaluate key issues that have the potential to impact on the operation of the prison contract over the forthcoming five years.
The Evaluating Committee confirmed the Department’s findings that the existing contract had been operationally effective and had resulted in a value-for-money outcome. The Committee also supported the Department’s preferred option to renew the contract.
On 20 December 1999 Cabinet gave approval for the Minister to renew the contract with Group 4 for a period of up to five years.
The contract was renewed for a further five year period. The new contract was signed on 19 May 2000 and the terms of the contract became effective from 27 June 2000.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Department for Correctional Services 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 Department for Correctional Services 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 the law.
The Department reported a higher ‘net cost of services’ in 1999-2000 ($95.1 million) as compared to 1998-99 ($92.8 million). Revenues from government increased by $5.1 million (5.6 percent) to $96.1 million.
The written down value of property, plant and equipment increased by $13.1 million to $161.4 million. The main factor contributing to this increase is the revaluation increment of land and buildings of $9.6 million. Refer Note 24.
The outputs of the Department are identified and described in Note 3.
Total operating expenses for the year were $103.4 million, of which $74.1 million was spent on Custodial Services.
The following chart shows expenditure by output for the last two years.
The areas in which expenditure incurred in 1999-2000 was spent is depicted in the following chart.
The organisation objectives of JIS Services are set out in Note 1 of the Financial Statements.
Qualification
As explained by the JIS Services in Note 2(b) to the Financial Statements, JIS Services has not been able to provide appropriate documentation to support with a considerable degree of certainty values attributed to the account items, Plant and Equipment.
The absence of an appropriate standard of supporting documentation relates to the absence of accrual based accounting systems in existence at the time of the purchase or development of the assets.
As a result Audit has not been able to determine with certainty the values of those account balances in the accounts and the associated quantifiable effect these values have on the Statement of Financial Position and Operating Statement for the year ended 30 June 2000.
Qualified Audit Opinion
In my opinion, except for the effects on the financial report of the matters referred to in the qualification paragraphs, the financial report presents fairly in accordance with Treasurer’s Instructions promulgated under the provisions of the Public Finance and Audit Act 1987, applicable Australian Accounting Standards and other mandatory professional reporting requirements, the financial position of the JIS Services as at 30 June 2000, the results of its operations and its cash flows for the year then ended.