Financial position

Our financial position is sound

Our financial position is sound

While we have a net liability position, we are a going concern as we have a sustainable level of cash with positive cashflows. Our net liability position is a result of the actuarial losses on the defined benefit superannuation schemes. This liability is a long-term liability whereby the Audit Office has not been required to make employer contributions for several years to these schemes, nor do we foresee any contributions in the near future.

Most of our assets and liabilities are of a financial rather than physical nature. Cash remains our largest asset with $11.0 million at 30 June 2018. Our assets include $7.5 million for the Crown agreeing to fund our staff’s long service leave entitlements. This offsets the liability in our financial statements. We also have $6.0 million in receivables from government entities and councils for our auditing services.

Our liabilities at 30 June 2018 were $55.5 million, a small decrease of $0.8 million from 30 June 2017.

Solvency remains stable and debtor management is getting better

Our current ratio at 30 June 2018 shows we had $2.02 in current assets to meet every $1.00 of our current liabilities. This is consistent with last year’s ratio and at the upper level of our target range of between $1.00 and $2.00.

The average time to collect unpaid invoices was 33 days, some four days better than last year. While the timeliness of collecting unpaid invoices did improve, the average time is outside our target of 28 days. We continue to look at ways to reduce the length of time it takes to collect money owing to us to ensure we have sufficient cash on hand to meet our liabilities.

We continue to generate net cash inflows from our core business

We generated $0.9 million from our operating activities, some $0.3 million more than the previous year. As a self-funded organisation, it is important that we generate enough cash to fund today’s expenditure, our capital works program and future investment in the organisation. We expect to generate $1.0 million from our operating activities in 2018–19.

Timely creditor payments

During the year we paid 99 per cent of our creditors on time. We are expected to pay all creditors within 30 days, unless contracts state otherwise.

For more detail on our performance with creditor payments, see Appendix Seven.

Cashflows from operating activities 2017–18/$m

Solvency – current ratio

Debtor management – average days to collect

Work in progress – at 30 June 2018

The year ahead

In 2018–19, we will:

  • continue to improve our internal reporting capability, bringing together the financial and non-financial metrics which measure our inputs, outputs and success
  • invest in upgrading our practice management system, making it more accessible and providing greater integrity checks and balances
  • further develop our current audit benchmarking tool to measure the efficiency of our financial audits.