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Agency Audit Reports Report of the Auditor-General Report 13 of 2020 Annual report for the year ended 30 June 2020 Part C: Agency audit reports [P.P.4L Report of the Auditor-General Report 13 of 2020 Annual Report for the year ended 30 June 2020 Part C: Agency audit reports Tabled in the House of Assembly and ordered to be published, 13 October 2020 Second Session, Fifty-Fourth Parliament By authority: S. Smith, Government Printer, South Australia 2020 www.audit.sa.gov.au Enquiries about this report should be directed to: Auditor-General Auditor-General’s Department Level 9, 200 Victoria Square Adelaide SA 5000 ISSN 0815-9157 Contents Agency audit reports 1 Adelaide Festival Centre Trust 9 Adelaide Oval SMA Limited 16 Adelaide Venue Management Corporation 25 Attorney‐General’s Department 30 Public Trustee 52 Auditor‐General’s Department 67 Department for Child Protection 69 Department for Correctional Services 77 Courts Administration Authority 89 Department for Education 97 Department for Energy and Mining 110 Environment Protection Authority 120 Department for Environment and Water 127 Health sector overview 141 Department for Health and Wellbeing 157 Barossa Hills Fleurieu Local Health Network Incorporated 183 Central Adelaide Local Health Network Incorporated 193 Commission on Excellence and Innovation in Health 205 Eyre and Far North Local Health Network Incorporated 209 Flinders and Upper North Local Health Network Incorporated 217 Limestone Coast Local Health Network Incorporated 225 Northern Adelaide Local Health Network Incorporated 233 Riverland Mallee Coorong Local Health Network Incorporated 245 SA Ambulance Service Inc 253 Southern Adelaide Local Health Network Incorporated 263 Wellbeing SA 274 Women’s and Children’s Health Network Incorporated 278 Yorke and Northern Local Health Network Incorporated 286 HomeStart Finance 294 Department of Human Services 307 Independent Commissioner Against Corruption 321 Department for Innovation and Skills 325 Lifetime Support Authority of South Australia 333 Motor Accident Commission 342 Department of Planning, Transport and Infrastructure 351 Department of the Premier and Cabinet 384 Department of Primary Industries and Regions 389 Return to Work Corporation of South Australia 402 South Australia Police 414 South Australian Fire and Emergency Services Commission 426 South Australian Government Financing Authority 440 South Australian Housing Trust 454 South Australian Tourism Commission 472 South Australian Water Corporation 477 Superannuation sector overview 498 South Australian Superannuation Board 503 South Australian Superannuation Scheme 508 Southern State Superannuation Scheme 515 Super SA Retirement Investment Fund 520 Superannuation Funds Management Corporation of South Australia 525 TAFE SA 536 Department of Treasury and Finance 547 University sector overview 568 Flinders University 577 University of Adelaide 584 University of South Australia 593 Urban Renewal Authority 603 Agency audit reports Introduction Part C: Agency audit reports is a summary of the audit outcomes for each agency included in this Report. It features a snapshot of key agency information covering financial statistics, significant events and transactions, and whether the financial report opinion is unmodified or modified (qualified). If modified, the key matters causing the modification are noted. The snapshot is followed by commentary on financial administration matters for each agency that, in my opinion, are important to the Parliament and the SA Government. This commentary also contains selected financial ratios and information for assessing the agency’s financial performance and position, and significant financial transactions. The financial reports of the agencies included in this Report are available on the Auditor‐General’s Department website (www.audit.sa.gov.au). Agencies not included in this Report The Auditor‐General exercises the discretion to exclude agencies from this Report. The decision to exclude an agency is based on many factors including: the materiality of its financial operations its significance to the SA Government’s operations and services the materiality of any impact on the public finances the timeliness of information the materiality of audit issues raised the public interest the timely completion of this Report and meeting the statutory deadline to deliver the Report to the presiding members of Parliament. A list of the public sector agencies not included in this Report is provided at the end of Part A: Executive summary. I will subsequently report to Parliament on them, with particular commentary on agencies where there: is a modified financial report opinion are significant matters raised by the audit are other matters that, in my opinion, need to be brought to the attention of the Parliament and the SA Government. In addition their financial reports will be published on the Auditor‐General’s Department website as the audit of each agency is finalised. Modified Independent Auditor’s Reports Expressing an opinion on an entity’s financial report by an independent professional auditor adds credibility to it and ensures that appropriate financial disclosures were made. 1 Agency audit reports For the agencies that I am required to audit, I issue an Independent Auditor’s Report on the financial report in line with professional requirements and standards. The opinion I give is usually unmodified, but if circumstances warrant it a modified opinion is expressed. In extreme cases it may not be possible to express an opinion. When a modified opinion is given, the Independent Auditor’s Report explains the reasons for the modification. This is also explained in the commentary on those agencies in this Report. Of the agencies included in this Report, a modified opinion was expressed on the financial report of the University of South Australia. This modification is for the 2018 comparative information in the current year’s financial report. In addition, without modifying my opinion on the financial reports of the Lifetime Support Authority and the Return to Work Corporation of South Australia, I drew attention to the inherent uncertainty in certain liabilities reported for those entities at 30 June 2020. Financial reporting Increased attention to disclosures is required Developments in accounting standard requirements and the increased level of complexity and subjectivity involved means a greater focus is needed on financial statement disclosures. Disclosures require knowledge and consideration of the entity, its operations and its transactions. Thought and judgement must be applied to determine how to best meet the disclosure objectives of the accounting standards, rather than relying on only those elements specifically highlighted within a standard or included in a model set of financial statements. Accounting standard requirements are not straightforward. Judgements need to be made in each area and these will differ between entities. Some of the areas where judgements may be needed include the following: Significant accounting policies – descriptions of the accounting policies adopted by the entity relevant to understanding the line items on the face of the financial statements and the basis of the entity’s accounting policies. Judgements and reasons – judgements made in the process of applying accounting policies and management decisions and reasons for the policies selected and decisions made. Assumptions/Models/Inputs – includes disclosures of material information relevant to the calculation of items in the financial statements, such as possible ranges of values, discount rates, effective interest rates and growth rates. Sources of estimation uncertainty and sensitivity analysis disclosures – disclosures to help users understand the underlying measurement variability of an item in the financial statements. Descriptions of internal processes – disclosures such as risk management policies and practices. Historically, there has been heavy reliance by preparers in the SA public sector on the model financial statements developed by the Department of Treasury and Finance (DTF). Any model will not and cannot address all the possible scenarios or cater for all transactions and events that may occur, and 2 Agency audit reports disclosures must be tailored to suit the specific circumstances of each entity. Disclosures also tend to be prepared very late in the audit process. This leads to higher risk in that there may be limited time to assess them and address any issues or differences of opinion relating to disclosures. Increased attention is required by preparers to adequately consider disclosures, determine what is necessary and conclude on the best way to meet the requirements. Ideally this analysis would be made available for review by my staff, together with draft disclosures, early in the financial statement preparation process and if needed before draft financial statements are submitted for audit. This is particularly relevant when applying new accounting standards. Preparers need to pay closer attention to prominent disclosures of key estimates and judgements made in determining accounting policies and applied in determining the amounts reported in the financial statements. Impact of new accounting standards on 2019-20 financial reports The following new accounting standards were applicable for the first time in 30 June 2020 financial reports (31 December 2019 for calendar year reports): AASB 16 Leases AASB 15 Revenue from Contracts with Customers AASB 1058 Income of Not‐for‐profit
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