The purpose of the Department is to support the Premier, Cabinet and Executive Council in the development of a competitive, creative and well managed State. This is achieved through providing the Premier, Cabinet and Executive Council with 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.
Changes to the structure of the Department during the year have added to the diversity of a multifaceted organisation with a broad focus. In particular, the Department assumed responsibility for the management of Olympic Football Tournament events that were transferred to the Department on 28 January 2000. Whilst costs and revenues associated with the project remain administered by the South Australian Tourism Commission, and are reflected within the Department’s financial statements.
In addition, on 1 July 1999 the Office of State Development SA was transferred to the Department of Industry and Trade as part of a Cabinet decision to coordinate economic development activities within the one departmental agency.
Further, following the finalisation of the Year 2000 issue across government agencies, both the Office for the Minister for Year 2000 Compliance and the Office for Year 2000 were closed.
Note 4 to the financial statements further refers to all these changes.
The following depicts the organisation structure of the Department as at 30 June 2000.
Total operating expenses were $51.8 million ($51.1 million).
Revenues from Government were $44.9 million ($45.9 million).
Increase in net assets resulting from operations before abnormal items was $0.5 million ($1.9 million).
Cash as at 30 June 2000 was $18.7 million ($16.6 million).
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 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.
Audit coverage included the following areas:
compliance with legislative and other requirements;
executive management activities, including a review and assessment of whole-of-government initiatives, policies and procedures and the Department’s involvement;
contract administration with respect to external consultants/contractors;
use of corporate credit cards;
revenue raising and receipting, including interpreting and translating services;
accounting for fixed assets;
external financial reporting;
administered items, including the Targeted/Voluntary Separation Packages Scheme and the Government Workers Rehabilitation and Compensation Fund and, Minister’s other payments;
budgetary control and management reporting.
The audit was coordinated with the audit of the activities of the Corporate Services Branch of the Department of Treasury and Finance. The branch provides: accounting, financial management, human resources services, administration and IT services to the Department under a service level agreement.
Various letters, communicating issues arising from the audit process, were forwarded to the Department. The main issues raised were of a compliance nature and reflected lapses in control rather then a situation where no internal controls were present. Satisfactory responses have been received from the Department in all respects.
A matter of particular importance raised with the Department was to seek clarification regarding its role with respect to the Government Management Framework and Budget Reform agendas. This recognised the collaborative approach needed by the Department and the Department of Treasury and Finance in this area of cultural and managerial reform in the public sector. Further discussion in relation to this issue can be found within Part A of this Report.
The overall internal control structure of the Department was assessed as satisfactory. Some instances of lapses in control were noted and audit suggestions were made to address those matters, as the underlying principles were considered important.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Department of the Premier and Cabinet 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 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, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
The following represents a brief comparative analysis between years of the most significant aspects of the Department’s financial operations:
The net result from operations, prior to abnormal items, was $0.5 million ($1.9 million);
Cash, again, increased by $2.1 million ($1.4 million) to $18.7 million mainly reflecting an increase in the accrual appropriation to the Department;
Employee costs decreased by $1.1 million reflected by the reduction in full time employees from the closure of both the Office for Year 2000 Compliance and the Office for the Minister for Year 2000 Compliance and the transfer of the Office of State Development to the Department of Industry and Trade;
Payments to consultants were $1.9 million compared to $1.4 million last year;
Other expenses increased by $2.5 million. This increase predominantly reflects additional grants to various organisations of $1.3 million and costs associated with the newly transferred Olympic Football Tournament of $0.9 million.
The Department assumed responsibility for costs associated with the Olympic Football Tournament. The full year effect of those costs amounted to $2.3 million. Note 4 to the financial statements refers.
The Department has the responsibility for administering the Government Workers Rehabilitation and Compensation Fund and the Targeted/Voluntary Separation Package Schemes Fund. Details of the audit coverage and the financial statements relating to the operations of both funds are included after the Department’s Financial Statements. Other administered items are shown within the Notes to the Financial Statements.
The Targeted Voluntary Separation Package (TVSP) Scheme is a method of achieving workforce and budgetary reductions across the public sector.
The TVSP Scheme is administered by the Department’s Office for the Commissioner for Public Employment.
The administration of the costs associated with the Scheme is through a Treasurer’s Special Deposit Account. Payments through the account include separation costs, terminal leave payments, workers compensation and costs associated with the processing of packages. Funding is by way of Parliamentary appropriations.
To facilitate Public Sector agencies covered by the Wages Parity Agreement continuing to implement organisational restructuring objectives to improve efficiency and productivity, access to the Government’s TVSP Scheme was again approved with effect from 1 July 1999.
The Scheme is the same as that specified under the Public Sector Management Act 1995, Direction 1 (Reissue No 3) and which was in force immediately prior to 31 December 1999. It should be noted, however, that at the time of this Report, Direction 1 was in the process of being updated to be more reflective of the new Public Sector Management Act 1995 format.
For 1999-2000 the TVSP Scheme continued to adopt two levels of separation payment relative to the employee’s resignation date. The staged levels were as follows:
Stage 1 A separation package of 8 weeks pay plus 3 weeks pay for every completed year of service up to a maximum of 104 weeks pay, if employees, who are offered a TVSP resign within 4 weeks after the offer being made.
Stage 2 A separation package of 4 weeks pay plus 2 weeks pay for every completed year of service up to a maximum of 52 weeks pay, if employees who are offered a TVSP resign more than 4 weeks after the offer is made.
In addition, to the TVSP, an employee who is under age 55 is entitled to an additional superannuation resignation benefit. The benefit varies depending on the nature of Scheme membership (ie Sate Pension, State Lump Sum or Triple S).
Payments for Targeted Voluntary Separation Packages increased by $18.6 million (41 percent) to $63.9 million.
Appropriations increased by $3.9 million (7.8 percent) to $53.9 million. The additional appropriation was insufficient to meet the additional payments from the TVSP Scheme, resulting in a decrease in net assets from operations of $11.3 million.
The audit of the Department of the Premier and Cabinet included matters relating to the audit of the TVSP Scheme which it administers.
The audit program and review covered all major financial systems and processes 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.
Matters arising from the audit were detailed in a management letter. That letter, whilst indicating that existing systems of internal control were, in general, operating satisfactorily, also noted that specific consideration was warranted towards the need to:
fully review the effectiveness of the TVSP Scheme to assess whether it had achieved Government objectives;
improve documentation maintenance; in particular when monitoring TVSP reimbursement against Commissioner for Public Employment approvals.
The response from the Department was positive in most respects. It was noted, however, that the Commissioner for Public Employment did not consider a full review of the Scheme would be useful at this stage.
The total number of separations and the cost of those separation packages (ie excluding other payments) for the past seven years is illustrated in the following diagram.
The major reason for the increase in the number of separations during 1999-2000 from that of the previous year relate to contracting out arrangements of TransAdelaide. Of the 1603 total separations, this accounted for 940.
The Government Workers Rehabilitation and Compensation Fund (the Fund) is administered by, but not controlled by, the Department of the Premier and Cabinet.
The Fund was established to provide for the funding of rehabilitation programs and payments of workers compensation benefits for government workers in accordance with current workers compensation legislation and in respect of claims for damages at common law for injury and disease suffered as a result of work.
The audit of the Department of the Premier and Cabinet included matters relating to the audit of the Fund.
The audit encompassed a review, evaluation and testing of internal controls surrounding the Fund’s operations. The major focus of the audit was with respect to financial reporting, including valuations undertaken of the Fund’s liabilities and assets, where applicable. The audit also considered actions taken by management during the year to address findings of an external review undertaken during the previous year.
There were no material issues that were formally communicated to management during the year. Matters noted during the course of the audit were satisfactorily addressed by the Department.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Government Workers Rehabilitation and Compensation Fund 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 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, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
There was a decrease in Net Assets resulting from Operations of $2.6 million (an increase of $1.9 million). This represents a negative turnaround in operations of $4.5 million. The main reasons for this were:
an increase in Claims expense of $1.6 million.
a decrease in Operating Revenues of $2.7 million.
The value of the outstanding claims liability was $18.1 million ($16.0 million). The increase predominantly reflects a more detailed provision of source data for actuarial estimation, based on individual claim files, compared with previous years. This has enhanced interpretation of the financial position of the Fund.
In addition, the data revealed that income benefits to income maintenance claimants were expected to continue considerably longer than other payment types, thereby contributing to the increased liability.
Claim expenses totalled $7.4 million ($5.8 million) an increase of 27.5 percent which is mainly attributed to the increased expenses as a result of the increase in the outstanding claims liability.
The Fund continues to carry an accumulated deficit, which has reached $10.5 million. This deficit essentially represents unfunded non-current liabilities. The Fund has, however, sufficient cash assets ($6.2 million) to meet current claim liabilities ($6.1 million).