The Department is an administrative unit established pursuant to the Public Sector Management Act 1995. It has a broad ranging role which seeks to integrate urban and regional development, local government initiatives, transport infrastructure and services and cultural and artistic development for South Australia. It also provides services to Aboriginal people to advance economic and community development. The Department has identified the following outcomes which provide direction for departmental activities:
Urban and regional development that achieves economic development with a specific focus on urban regeneration and rural prosperity.
Transport accessibility for the community that is efficient, safe and environmentally sound, and supports economic and social development.
A strong creative arts industry that enhances the State’s profile as a world centre for cultural richness and diversity.
Enhancing the status of women and achieving full and equal participation of women in all sectors of society.
Availability of information to South Australians at community access sites.
A revitalised City of Adelaide.
A stable, democratic and accountable system of local government participating fully in improving the economic and social environment of the State.
Equality for Aboriginal people.
On 14 February 2000, as part of a number of administrative changes to portfolios, the Department assumed responsibility for the Office of Local Government from the Department of Industry and Trade and the Division of State Aboriginal Affairs from the Department for Environment, Heritage and Aboriginal Affairs.
The following is a diagrammatic representation of the organisational structure of the Department for financial reporting purposes.
The Department recorded a Net Cost of Services for the year of $125 million.
Grants from the Commonwealth Government decreased by $32.1 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.
During 1999-2000 specific areas of audit coverage included:
asset registers
contract administration
motor vehicles registration and drivers’ licensing
revenue, including cash receipting and banking and debtors
expenditure, including accounts payable, salaries and wages and grants
costing and budgetary control.
During the year several letters communicating issues arising from the audit were forwarded to the Department with satisfactory responses being received. Details relating to the main issues contained in those letters are outlined in ‘Audit Findings and Comments’ hereunder.
Where the response from the Department indicates that action has been, or will be, taken to address the particular issue, Audit intends to conduct a follow up assessment during the 2000-01 audit.
ARTS SA
An assessment of Arts SA’s internal control structure identified that the internal controls were adequate and operating satisfactorily. There were, however, areas where Audit considered there was room for improvement. Commentary with respect to these areas follows.
The audit revealed that there was no assurance that there was a complete and up-to-date asset register for attractive items. Audit also noted that regular confirmation of existence of these items had not been undertaken.
In response Arts SA indicated that the integrity of the attractive assets register will be validated and regular confirmation of the existence of assets will be undertaken.
The audit of the procedures for the management of grants identified the need for documentation of policies and procedures together with the need to ensure that all funding agreements were signed in a timely manner. Both of these issues were also raised as a result of the 1998-99 audit.
Arts SA indicated that policies and procedures will be developed by December 2000. With regard to the signing of funding agreements Arts SA indicated that ‘as a matter of policy it does not have funding and performance agreements with organisations budgeting for deficits’ and this was the reason a signed agreement did not exist for a number of organisations in receipt of grants.
The audit at Artlab Australia identified the need to review the procedures for providing price quotations to private clients for work undertaken on artefacts.
In response Artlab indicated that it has procedures in place to regularly monitor costs against price quotations and that because of the complexity of some work cost overruns are inevitable.
TRANSPORT SA
An assessment of the internal control structure at Transport SA identified that the internal controls were adequate and operating satisfactorily. There were, however, areas where Audit considered there was room for improvement. These areas are outlined below. It should be noted that a number of these issues have been raised as a result of audits in previous years.
The audit of the payroll function revealed that improvements in internal controls could be achieved in relation to the follow-up of outstanding bona-fide certificates, control over manual cheque stationery, modifications to employee masterfile details, reconciliation of payroll holding accounts, and evidencing of the independent checks undertaken.
In response Transport SA indicated that revised procedures will be implemented to address the issues raised by Audit.
The results of the audit revealed that there was a need to ensure that purchase orders raised were authorised by an officer with the appropriate level of authority.
Transport SA advised that comprehensive procedures exist with respect to the authorisation of purchase orders and that a review is currently being undertaken on the operation and use of authorisation procedures in the Masterpiece Purchasing System.
The audit of asset registers revealed a need to improve controls over reconciliations between subsidiary systems and the General Ledger and monitoring of user access to the Masterpiece Fixed Asset System.
Transport SA advised that revised procedures have been implemented to address the issues raised.
The audit of the Registration and Licensing function revealed there was room for improvement in:
compliance with established internal control procedures relating to Customer Services Centre operations;
the documentation of policies and procedures for the Finance section;
the timeliness and adequacy of some reconciliation procedures;
the application development procedures with respect to the DRIVERS system;
management of contract arrangements for outsourcing of licence renewal services.
In response Transport SA advised that action would be taken to address all the issues raised by Audit by documenting policies and procedures for the Finance section and ensuring the reconciliation procedures are adequately undertaken in a timely manner; reminding Customer Services Centre staff of the need to comply with established procedures; implementing revised application development procedures with respect to the DRIVERS system; and reviewing the procedures for the management of contract arrangements where services are outsourced.
PLANNING SA
Although Planning SA utilises the systems of Transport SA to record its financial transactions, a number of related record keeping functions are undertaken within Planning SA. The audit of these functions identified that there were opportunities for improvement in relation to the verification of the existence of assets and the reconciliation of the job costing system to the General Ledger.
In response Planning SA advised that action has been implemented to address the Audit observations by undertaking regular verification of the existence of assets and ensuring the job costing system is reconciled to the General Ledger on a regular basis.
The audit identified that there was room for improvement in the evidencing of independent checking processes undertaken in various accounting functions, the checking of leave recorded in the payroll system and the timely checking of amounts banked.
In response DOSAA indicated that staff have been reminded of the need to provide evidence of checks undertaken and that revised procedures for the checking of leave records will be implemented.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Department for Transport, Urban Planning and the Arts 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 Transport, Urban Planning and the Arts 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.
Operating expenses for the year totalled $485.7 million ($440.7 million). The following chart shows the major categories of operating expenses as a percentage of Total Operating Expenses.
The chart reveals that depreciation expense represents 22 percent (23 percent) of Total Operating Expenses. Grants and subsidies to other organisations represents 17 percent (18 percent) of Total Operating Expenses.
Operating revenues for the year totalled $360.6 million ($398.3 million). The following chart shows the major components of Total Operating Revenues.
The chart indicates that motor registration and drivers’ licence fees comprised 55 percent of Total Operating Revenues. Grants from the Commonwealth Government, primarily through the Australian Land Transport Development Act 1988 for road construction and maintenance, accounted for a further 21 percent of the Total Operating Revenues.
In addition to the Total Operating Revenues, the Department received a further $162.3 million ($160.6 million) in appropriations from the State Government. These appropriations were predominantly associated with the operations of Arts SA and Transport SA.
Cash on hand and deposits decreased by $11.8 million to $93.4 million. Note 13 to the financial statements details the Deposit and Special Deposit Accounts which make up this total. The Highways Fund balance decreased by $21.9 million mainly as a result of increased payments for supplies and services. The Arts SA Deposit Account balance increased by $8.5 million mainly as a result of an increase in appropriation for capital works at the State Library which has not yet been passed on to the Libraries Board of South Australia by way of a capital grant.
The written down value of non-current assets totalled $3.9 billion ($3.7 billion). The amount, however, does not include a value for land under roads which has not been recognised in accordance with the transitional provisions of Australian Accounting Standard AAS 29 ‘Financial Reporting by Government Departments’.
The following chart displays the value of each asset class as a percentage of the total value of non-current assets.
The chart indicates that Network Assets comprising roads, earthworks, bridges and culverts, traffic signals, road lighting, drainage, busway, busway interchanges, weigh stations, navigational aids and work in progress have a written down value of $3.5 billion which represents 90 percent of Total Non-current Assets. The major subclass of Network Assets is roads and signs with a written down value of $1.6 billion or 47 percent of the total value of Network Assets.
In relation to the dominance of Network Assets it can be observed that the major sources of funding to maintain and develop the network come from the annual collection of registration and licence fees ($198.1 million) and grants from the Commonwealth Government ($75.6 million). This regular source of funding explains the low level of outstanding borrowings ($65.7 million) recorded in the Statement of Financial Position.
The Asset Revaluation Reserve increased by $169.9 million primarily as a result of a revaluation increment of $169.1 million for Network Assets.
The Department collects money through its Registration and Licensing function on behalf of third parties. Such collections include Compulsory Third Party Insurance on motor vehicles on behalf of the Motor Accident Commission and stamp duty on behalf of the Department of Treasury and Finance. In 1999-2000 amounts collected on behalf of third parties totalled $454.1 million and included $259.6 million for Compulsory Third Party Insurance, $101.4 million for stamp duty and $32.8 million for the Emergency Services Levy.