Darlington Upgrade Project

We examined whether the arrangements established to deliver the project on time, within budget and with intended benefits were effective.

The Darlington Upgrade Project will upgrade about 3.3 kilometres of the existing Main South Road. The project features a non-stop motorway between the Southern Expressway and north of Tonsley Boulevard and includes the construction of eight bridges and a lowered motorway. Once completed it will form part of the North-South Corridor and will be an important piece of State transport infrastructure.

The project is complex and requires effective management of significant project risks.  It will also require significant expenditure of public monies, with a current budget of $667 million.  On 18 November 2019 the Commonwealth and SA Governments announced additional funding for the Darlington Upgrade Project of $87.5 million. The Commonwealth Government is contributing $70 million and the SA Government $17.5 million. This increases total funding for the project from $667 million to $754.5 million. At the time of this announcement we were finalising this Report and therefore we have not amended the Report to reflect the impact of this additional funding. Accordingly, we have not reviewed any revision to the total expected cost and budget for the project.

We concluded that key elements of the Darlington Upgrade Project were not effectively managed as we identified deficiencies in important processes and functions. These included:

• numerous utility service relocation processes were deficient including; lack of documented analysis of DPTI’s capacity to deliver works on time; the adequacy of contract provisions; lack of timely reporting; and gaps in monitoring works by service authorities and contractors
• key governance arrangements were not established or implemented timely, clearly defined and documented and there was limited oversight by governance committees
• fundamental contract management processes and documents were not established or established timely
• a significant contract variation was issued without documented analysis supporting this decision
• a risk management plan was not prepared timely and was still in draft
• deficiencies in the planning, monitoring and reporting on quality of works
• contingency management practices needed to provide better control and visibility over the use of contingency funds
• DPTI had yet to establish robust benefits realisation processes for the Darlington Upgrade Project.

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Country health property maintenance

We have completed a review of regional local health networks (regional LHNs) property assets. We examined whether the arrangements to manage the maintenance of those assets were effective.

Together with their staff, the assets used by regional LHNs are critical to delivering safe and reliable services to the public at the required level.

Regional LHNs manage over $821 million in property assets at 168 different sites across regional South Australia.

Poor maintenance practices result in assets providing deteriorating levels of service, and increase the financial burden and risk of asset failures. It is therefore important that systems and processes are in place, and information available, to effectively manage and maintain these assets.  This will ensure asset management and maintenance risks, and their impact on service delivery, are appropriately managed and there is proper use of public money..

We found that processes, practices, systems and arrangements established by the State to manage the maintenance of regional health property assets were not effective. We identified numerous gaps in fundamental areas including:

• clearly defined roles and responsibilities were not established and agreed with DPTI
• foundational strategies, policies and plans for asset management were not established
• fit-for-purpose information systems with complete and reliable asset data were not established
• maintenance budgets were based on the previous year’s budget rather than maintenance needs and priorities
• no effective certification that works by external contractors were completed to an appropriate standard, and that payment was only made for actual work performed and for a reasonable price.

In line with the new governance arrangements, regional LHNs need to take responsibility for their assets and work with the mandated facilities management service provider and DHW to implement remedial strategies and actions. Further, regional LHNs need to:

• consider how the new governance arrangements impact the relationships and responsibilities of all parties involved
• establish effective processes for the six separate regional LHNs to work together to collectively address remedial strategies and actions.

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Information and communications technology reviews

Each year we review agency security controls over IT systems and the status of selected IT projects.

This report communicates the results of the following key IT reviews we conducted in 2018-19:

• Information technology general controls
• State taxation systems
• Active Directory within the SA Government
• End User Computing (ICT desktop outsourcing) program
• Education Management System project
• Electronic Medical Record project

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State finances and related matters

The 2019-20 State Budget was tabled in Parliament in June 2019. This Report provides our observations on the State’s public finances based on our review of the Budget, in particular:

• an overview of key matters, trends and risks currently relevant to the State’s public finances
• an analysis of the State’s financial performance
• a review of the State’s financial position, including analysis of major assets and liabilities.

Key overall observations are:

• Significant increases in the State’s net debt to fund the general government sector’s investing program increase the risk the SA Government will have less capacity and flexibility for expenditure on services.
• The Budget expands the State’s capital program to $9.7 billion and effective planning and management of major capital projects will be needed to mitigate risks to the Budget from increased capital outlays.
• The SA Government has implemented savings initiatives and targeted revenue increases to meet the challenge of significant write-downs in GST revenue and conveyance duties.
• The SA Government has taken steps to address budget overruns in Health but faces ongoing challenges in meeting its cumulative Health savings task of $1.173 billion over the four years of the Budget.
• Robust budget management is required to achieve the fiscal target of consistent operating surpluses.

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Report on the Operations of the Auditor-General's Department for the year ended 30 June 2019

This Annual Report provides information on the Auditor-General’s Department’s activities and performance in 2018-19.

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Annual Report of the Auditor-General for the year ended 30 June 2019

This Report has three parts:

Part A – Executive summary contains the opinions the Auditor-General is required to give under section 36 of the Public FInance and Audit Act 1987.  It summarises the main matters from our annual audits of public sector agencies.  This includes significant financial outcomes, events and control matters communicated to agencies and small-scale specific reviews.  Part A also identifies any examinations we have conducted under section 32 of the Act.

Part B – Controls opinion explains the Auditor-General's controls opinion responsibilities and our approach to issuing this year's opinion.  It also comments on any significant control matters we identified in conducting our controls opinion audit program. 

Part C – Agency audit reports summarises the outcomes of the audits of the agencies included in the Annual Report.  This includes a snapshot of each agency's key financial information and whether the financial statement opinion is modified or unmodified.  There is also commentary on any significant issues of administration, financial management and controls.  The financial statements of the agencies included in this report are published on this website (see link below). 

Financial statements for the agencies we audit that are not included in this report will be published on this website progessively, as soon as reasonably practicable after we complete each audit.

Adelaide Oval redevelopment for the designated period 1 January 2019 to 30 June 2019

This Report provides an executive summary of the matters arising from the audit for the three reporting terms of reference provided for in the Adelaide Oval Redevelopment and Management Act 2011.

No findings were raised with the Department of Planning, Transport and Infrastructure (DPTI) from our review of the current designated reporting period. However we note that there are ongoing delays in resolving some of the outstanding defects. It is important that DPTI works closely with relevant parties to finalise the outstanding defects and ensure that the project and financial close out position for the project is achieved as soon as practical.

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Update to the Annual Report for the year ended 30 June 2018

In September 2018 I issued my Annual Report for the year ended 30 June 2018.  In it I reported on the audit outcomes for 46 agencies. This included any significant financial outcomes, events and control matters communicated to those agencies.

Not every agency I am required to audit was included in my Annual Report. Some audits were unfinished at the time, and some I used my discretion under the Public Finance and Audit Act 1987 to exclude.

This report provides a summary of the audit outcomes for the remaining 103 agencies I have audited for 2017-18. The financial reports and independent audit reports for all these agencies are now available for viewing on the Auditor-General’s Department website.

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Consolidated Financial Report review

This Report provides our observations on the 2017-18 Consolidated Financial Report (CFR), including:

• highlights of the CFR
• the findings of our review of controls over the preparation of the CFR
• an analysis of the State’s actual financial performance
• an analysis of the State’s actual financial position.

We found that the whole of government reported a $675 million net operating balance deficit for 2017-18 and a net lending deficit of $825 million. The State’s net worth increased by $561 million, and the State is increasingly reliant on Commonwealth grant revenue, particularly GST revenue. We identified opportunities to improve the way financial information is collected, validated and consolidated in preparing the CFR, but did not identify any material misstatements or control deficiencies.

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Adelaide Oval redevelopment for the designated period 1 July 2018 to 31 December 2018

This Report provides an executive summary of the matters arising from the audit for the three reporting terms of reference provided for in the Adelaide Oval Redevelopment and Management Act 2011.

No findings were raised with the Department of Planning, Transport and Infrastructure (DPTI) from our review of the current designated reporting period. However we note that while the redeveloped oval has been in use and meeting its intended purpose for some time, some outstanding defects are not yet resolved. There are continued delays in resolving some of the outstanding defects. It is important that DPTI works closely with relevant parties to finalise the outstanding defects and manage the completion of any remaining works promptly to limit further delays and ensure that a financial close out position for the project is achieved as soon as practical.

As highlighted in previous Reports, given that expenditure is approaching the statutory cap of $535 million and the uncommitted project contingency has reduced to a relatively small amount, the timely and effective management of remaining project works is required to ensure the statutory cap is not exceeded.

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State finances and related matters

The 2018-19 State Budget (2018-19 Budget) was tabled in Parliament in September 2018. It is the first Budget for the new SA Government following its election in March 2018. The 2017-18 estimated result in the 2018-19 Budget reflects the activities of the previous SA Government from July 2017 to March 2018, and the new SA Government from March 2018 onwards.

This report provides our observations on the State’s public finances based on our review of the 2018-19 Budget and the December 2018 mid-year budget review, in particular:

• an overview of key matters currently relevant to the State’s public finances
• an analysis of the State’s financial performance. This primarily involves examining the results for the past year and the Budget and forward projections included in the Budget Papers
• a review of the State’s financial position, including analysis of major assets and liabilities.

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