The Department of Industry and Trade is an administrative unit established under the Public Sector Management Act 1995. The Department is responsible to the Minister for Industry and Trade.
The specific responsibility of the Department is to implement the South Australian Government's economic development strategy by undertaking the following:
Create a competitive business operating environment;
Promote investment in appropriate physical capital;
Promote development of human and intellectual capital;
Integration of South Australia into the global economy;
Create a culture of collaboration and cooperation;
Encourage the development of productive, creative and competitive enterprises.
On 30 June 1999, by proclamation in the Government Gazette, employees in the Office of State Development of the Department of Premier and Cabinet and employees in the Information Economy Policy Office engaged in Information Technology industry investment and attraction activities of the Department for Administrative and Information Services were transferred to the Department of Industry and Trade.
On 14 February 2000, by proclamation in the Government Gazette, employees in the Office for Recreation and Sport were transferred to the Department for Environment and Heritage and employees in the Office of Local Government (including the staff involved in the activities of the Outback Areas Community Development Trust and the Local Government Grants Commission) were transferred to the Department for Transport, Urban Planning and the Arts.
In addition, three employees engaged in investment attraction activities in the Department of Primary Industries and Resources and the Government Services Export Unit of SAGRIC International Pty Ltd were transferred to the Department of Industry and Trade during the year.
The structure of the Department and its relationship with the Minister are shown in the following chart.
In the latter part of 1999-2000 a new Commercial and Prudential Services division was established in the Department. Refer ‘Audit Findings and Comments’ hereunder in this section of the Report for further commentary.
The Operating Statement includes the financial transactions and activities of the Office for Recreation and Sport and the Office of Local Government for the period 1 July 1999 to 14 February 2000. As a consequence, the figures shown for the previous reporting period are not directly comparable.
During the reporting period, the Department provided $54.9 million in assistance to industry and other external parties in the form of grants, contributions, sponsorships and non-interest bearing loans. Note 7 to the financial statements refers.
Pursuant to an agreement between the State and Commonwealth, the Government has received $18.2 million for the Program. The Department is responsible for the administration of the Program and during the reporting period made payments totalling $4.4 million.
The Department's contribution to the Hindmarsh Soccer Stadium - Stage Two Development during the reporting period was $7.1 million and is recorded as an expense as the stadium is owned by the City of Charles Sturt and leased to the South Australian Soccer Federation. Note 8 to the financial statements refers.
Subsection 31((1)(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 scope included a review of the following major areas of activity:
policies and processes including application of the Financial Management Framework
the revenue collection, accounts payable and personnel/payroll functions
the maintenance of the general ledger, reconciliations and funds management
asset and liability identification, valuation and management
general ledger maintenance
financial reporting, including accounting and reporting for the organisational structure changes to the Department.
At the time of finalising this section of the Report, Audit was in the process of preparing an Audit Management letter to the Department. The letter is to outline the scope of the audit and related findings, including matters commented on below under ‘Audit Findings and Comments’.
The Financial Management Framework (FMF) provides agencies of government with guidance on critical processes and controls to be put in place to enable the exercise of good financial management. The FMF is premised on the fact that financial management and its relationship with an overall requirement for accountability of resources and funds use, has an effect on the whole entity.
The Department of Industry and Trade has as its predominate role the enhanced development of the South Australian economy through the provision of financial assistance for the creation, investment and development of industry and business enterprises in this state.
Previous Reports have included comment on the accountability arrangements covering the material financial aspect of the Department’s operations, that of provision of financial assistance under various industry support programs.
In essence, Audit has considered that the Department needed to improve in areas of policy and procedural requirements covering the initiation and approval processes associated with the provision of financial assistance; related filing and record keeping processes important for financial reporting purposes; and standards of evaluation, monitoring and reporting in respect of industry assistance.
Last year’s Report indicated the status of action progressed by the Department to address these issues. The actions have included confirmation of financial assistance receivables as disclosed in the Department’s Statement of Financial Position and progressive revision and application of revised policies and procedures covering financial assistance project initiation, assessment and approval processes.
The Committee in July 2000 presented to Parliament its Report on South Australian Government Assistance to Industry. The Report recommended among other things that;
The State Government clarify its strategic framework for economic development and that it be incorporated into an overarching strategy for economic development that clearly identifies South Australia’s potential competitive advantages and helps to promote them.
The Department of Industry and Trade improve its application and approval procedures for Industry assistance; expedite the development of program evaluation guidelines in respect of industry assistance; and introduce procedures to ensure regular post assistance monitoring.
The Department has taken steps in the latter part of 1999-2000 to enhance its accountability arrangements in respect of this significant aspect of its operations, notably;
A new Commercial and Prudential Services division has been established with higher level resources charged with overseeing the upgrading of the commercial, financial, legal, prudential, public benefit analysis, and contractual management aspects of financial assistance projects.
The division will be responsible for the modelling of the economic impact (public benefit) of major assistance packages based on recommendations contained in a report dated May 2000, prepared by ACCESS ECONOMICS for the Department.
The Executive of the Department in August 2000 endorsed amendments to assessment and approval policies and procedures to apply to Industry financial assistance funds.
The effective implementation of these organisational, policy and procedural changes are directed to the improvement in the financial management, control and accountability of this significant aspect of the Department’s financial operations.
In addition to these developments the Department is working towards the formulation of a Risk Management Plan. Such a plan is described in the FMF as the central plank to risk management practice.
Audit intends in 2000-01 to undertake a review of the implementation of the Department’s revised arrangements with respect to industry assistance and actions in progress to finalise the Risk Management Plan.
The examination of the financial accounting and reporting auditable areas identified some matters requiring attention. These in the main related to improvement required in accounting record keeping and reconciliation processes. In the area of financial reporting Audit officers worked in conjunction with the Department to address certain financial statement reporting issues associated with the organisational changes that affected the Department in 1999-2000.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Department of Industry and Trade 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 of Industry and Trade 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 outlined under ‘Audit Findings and Comments’, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
Financial activities relating to the Office for Recreation and Sport and the Office of Local Government have been included in the Operating Statement for the period 1 July 1999 to 14 February 2000.
The Statement of Financial Position reflects the financial position of the reporting entity at 30 June 2000 and consequently the figures presented for 30 June 1999 are not directly comparable.
During the reporting period the Department paid $54.9 million in assistance (grants and loans) to Industry and other external parties. At 30 June 2000 the Department has reported Financial Assistance Debtors of $60.9 million and Financial Assistance Commitments of $64.2 million.