The Public Trustee is a body corporate established pursuant to the provisions of the Public Trustee Act 1995. The duties and responsibilities of the Public Trustee which include administering the estates of deceased and protected persons are detailed in the Act. Those obligations include:
To provide comprehensive, value added trustee, estate management, will-making and related services to clients;
To ensure that clients have prudent investment strategies based on an effective funds management structure which optimises returns on those investments;
To ensure that clients receive quality legal representation, advice and legal services in compliance with relevant legislation.
The Public Trustee has, in accordance with the Trustee (Investment Powers) Amendment Act 1995, a diversified funds management operation.
The Public Trustee has in place the following sector common funds investment structure:
Cash Common Fund
Short Term Fixed Interest Common Fund
Long Term Fixed Interest Common Fund
Australian Shares Common Fund
Listed Property Securities Common Fund
Overseas Shares Common Fund
Overseas Fixed Interest Common Fund.
The structure of the Public Trustee Office is shown in the following diagram:
The operating profit before notional tax was $3.5 million ($3 million).
Total distributions available to the State Government were $2.1 million ($2.7 million).
Total trust funds under administration increased by $47.6 million (8.4 percent) to $614 million.
Net investment in common funds increased by $52 million (12.3 percent) to $474 million.
Subsections 26(2), 30(2) and 50(2) of the Public Trustee Act 1995, provide for the Auditor-General to audit the accounts of the Public Trustee 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 controls.
During 1999-2000 the following areas were the subject of audit attention:
Corporate Operations:
budgetary control
accounts payable
revenue, receipting and banking
salaries
investments
general ledger
fixed assets.
Estate Operations:
revenue
expenditure
assets
liabilities.
Common Funds:
investments
income
expenditure
distributions
contributor funds.
In addition, Audit reviewed the:
work undertaken by the Internal Audit division;
implementation progress with respect to the Financial Management Framework.
A management letter communicating issues arising from the audit was forwarded to the Public Trustee and a satisfactory response was received. The main issues raised by Audit related to the need to make procedural changes to enhance general controls over a number of activities particularly within the Common Funds operations.
An assessment of the extent and nature of the Public Trustee’s internal control structure, conducted as part of the audit planning process, found the level of controls to be satisfactory. This assessment was made prior to the performance of audit testing and, was confirmed by the results of the audit for the 1999-2000 year. The assessment took into account the extent of coverage given by Internal Audit to Public Trustee operations.
For comments on the implementation progress of the Financial Management Framework, refer to the Attorney-General’s Department, ‘Audit Findings and Comments’.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Public Trustee 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 Public Trustee 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 financial statements are divided into three separate reporting entities, being the:
Corporate Statements
Statement of Trusts being Administered
Common Funds Statements.
The operating profit before tax increased by $500 000 to $3.5 million. This result reflects an increase in operating revenues of $1.1 million and an increase in operating expenses of $600 000.
Included in this year’s operating result are the following:
an increase in revenue from core operating activities of $1 million (8.4 percent). This increase is attributable to the increase in funds being administered by the Public Trustee. Refer Note 2.1;
an unrealised gain on investments of $761 000. Refer Note 2.2;
a payment of $499 000 to SAICORP to meet the cost of an insurance payment relating to the incorrect transfer of funds as outlined in the ‘Report of the Auditor-General for the year ended 30 June 1999’, Part A.4, page 65. Also refer Note 11.
The after tax profit was $2.5 million ($1.8 million).
Of the $11 million incurred on operating expenses, 64 percent of this represents salaries and related payments.
The following major adjustments were made against reserves:
A transfer from reserves of $580 000, $499 000 of which was used to meet the insurance payment to SAICORP as outlined above under ‘Operating Result’.
A transfer to reserves of $483 000. This reflects the revaluation increment as a result of land and buildings being revalued to recoverable amount at 30 June 2000.
Trust funds administered by the Public Trustee increased to $614 million ($566 million), of which 43.3 percent (42.3 percent) relates to the administration of protected estates and aged and infirmed persons. Further, of the total trusts funds being administered, 77.3 percent (74.6 percent) were invested in the various common funds, the remaining 22.7 percent (25.4 percent) represent estate assets.
Under section 20 of the Public Trustee Act 1995, the Public Trustee now has the ability to accept investments from persons other than estates. Of the $52 million increase in common funds investments from the previous year, $11 million was from investors other than estates.
Financial assets comprising the common funds are valued at market value as disclosed in Note 1.3 to the financial statements.
The common funds are invested in various securities. The level of holdings for each of these investments for the last five years is illustrated in the following chart.
