Financial Report

Statement of comprehensive income for the year ended 30 June 2018

 

Notes 2017–18
Actual $’000
2017–18
Budget $’000
2016–17
Actual $’000
Revenue
Sales of services  C1 48,000 50,801 37,827
Government contributions  C1 10,337 9,750 8,592
Other revenue  C1 997 364 832
TOTAL REVENUE 59,334 60,915 47,251
Expenses
Employee related expenses  C2 37,266 38,685 35,586
Operating expenses  C3 22,378 19,309 12,585
Depreciation and amortisation  C4 1,247 1,039 1,150
Finance costs  E2.1 14 19 13
TOTAL EXPENSES 60,905 59,052 49,334
NET RESULT (1,571) 1,863 (2,083)
Other comprehensive income
Items that will not be reclassified to net result:
Superannuation actuarial gain/(loss) on liabilities  E2.2 (81) 14,299
Superannuation actual return on Fund assets less interest income E2.2 3,928 4,703
Total remeasurement in other comprehensive income 3,847 19,002
TOTAL COMPREHENSIVE INCOME 2,276 1,863 16,919

The accompanying notes form part of these financial statements.

 

Statement of financial position as at 30 June 2018

 

Notes 2017–18
Actual $’000
2017–18
Budget $’000
2016–17
Actual $’000
Assets
Current assets
Cash and cash equivalents D1 11,014 10,962 10,554
Receivables D2 5,957 4,522 5,323
Other financial assets D3 1,572 575 1,138
Other current assets D4 6,917 6,570 6,174
TOTAL CURRENT ASSETS 25,460 22,629 23,169
Non-current assets  
Leasehold improvements D5
Property, plant and equipment D5 582 1,253 894
Intangible assets D5 2,078 3,842 2,628
Other non-current assets D4 601 571 537
Total non-current assets 3,261 5,666 4,059
TOTAL ASSETS 28,721 28,295 27,228
Liabilities
Current liabilities
Payables E1 2,413 1,293 2,114
Provisions E2 10,212 9,646 9,196
Other current liabilities 64
TOTAL CURRENT LIABILITIES 12,625 10,939 11,374
Non-current liabilities
Provisions  E2 42,872 61,844 44,905
TOTAL NON-CURRENT LIABILITIES 42,872 61,844 44,905
TOTAL LIABILITIES 55,497 72,783 56,279
NET LIABILITIES (26,776) (44,488) (29,051)
Equity
Accumulated funds (26,776) (44,488) (29,051)
TOTAL EQUITY (26,776) (44,488) (29,051)

The accompanying notes form part of these financial statements.

 

Statement of changes in equity for the year ended 30 June 2018

 

Notes Actual
$’000
Balance at 1 July 2016  (45,970)
Net result for the year  (2,083)
Other comprehensive income:
– Superannuation actuarial loss and return on Fund assets E2.2  19,002
Total comprehensive income for the year  16,919
BALANCE AT 30 JUNE 2017  (29,051)
Balance at 1 July 2017 (29,051)
Net result for the year  (1,571)
Other comprehensive income:
– Superannuation actuarial gain and return on Fund assets E2.2  (3,847)
Total comprehensive income for the year  2,276
BALANCE AT 30 JUNE 2018  (26,776)

The accompanying notes form part of these financial statements.

Statement of cash flows for the year ended 30 June 2018

Notes 2017–18
Actual $’000
2017–18
Budget $’000
2016–17
Actual $’000
Cash flows from operating activities
Receipts
Rendering of services and Government contributions 65,172 60,551 51,234
Interest received 172 151 183
Other 709 213 665
TOTAL RECEIPTS  66,053 60,915 52,082
Payments
Employee related (35,441) (38,717) (33,328)
Other (29,746) (19,336) (18,164)
TOTAL PAYMENTS (65,187) (58,053) (51,492)
NET CASH FLOWS FROM OPERATING ACTIVITIES  D1.1 866 2,862 590
Cash flows from investing activities
Purchases of property, plant and equipment (103) (720) (852)
Purchases of intangible assets (283) (1,000) (204)
NET CASH FLOWS FROM INVESTING ACTIVITIES (386) (1,720) (1,056)
Net increase/(decrease) in cash (-480) 1,142 (466)
Opening cash and cash equivalents 10,534 9,820 11,000
Closing cash and cash equivalents  D1 11,014 10,962 10,534

The accompanying notes form part of these financial statements.


Section 1: Basis of preparation and significant changes

Notes to and forming part of the financial statements for the year ended 30 June 2017

A1. Entity information

The Audit Office of NSW (the Audit Office) is a statutory authority, established under the Public Finance and Audit Act 1983 that conducts audits for the Auditor-General of NSW (the Auditor-General). The Auditor-General helps parliament hold government accountable for its use of public resources. The Audit Office is a not-for-profit entity as profit is not its principal objective. Its financial statements are consolidated as part of the NSW Total State Sector Accounts.

These financial statements for the year ended 30 June 2018 have been authorised for issue by the Auditor-General on 13 September 2018.

A2. Basis of preparation

The Audit Office’s financial statements are general purpose financial statements that have been prepared on an accrual basis and in accordance with:

  • Australian Accounting Standards (which include Australian Accounting Interpretations)
  • the Public Finance and Audit Act 1983 and Public Finance and Audit Regulation 2015, and
  • Financial Reporting Directions mandated by the Treasurer.

Property, plant and equipment are measured at fair value. Other financial statement items are prepared in accordance with the historical cost convention except where specified otherwise.

All amounts are rounded to the nearest one thousand dollars (unless otherwise stated) and expressed in Australian currency.

A3. Going concern

As at 30 June 2018, the Audit Office has a net liability position of $26.8 million (2017: $29.1 million). Despite the net liability position, we believe the assumption that the Audit Office is a going concern is justified. The solvency ratio (short-term) of the Audit Office remains high at 2.02 (2017: 2.04) and the cash balance is at a sustainable level with positive cash flows from operating activities.

The net liability position is due to the Audit Office having a net defined benefit superannuation scheme liabilities of $41.5 million (2017: $43.6 million). Note E2.2 contains more detail. This liability is a long-term non-current liability and the Audit Office has not been required to make employer contributions for a number of years to the schemes, and nor do we foresee making any contributions in the near future. The trustee has advised that we do not need to make any contributions in 2018-19. This is because the trustee’s use the measurement basis under AASB 1056 ‘Superannuation Entities’ to determine an employer’s obligation to make contributions. Based on the recent actuarial assessment, the combined schemes have a net surplus of $8.3 million at 30 June 2018 (2017: $7.5 million). Factors that could trigger a contribution by the Audit Office include: multiple large lump sum payments to members that exceed the available surplus under AASB 1056; and/or poor investment returns; and/or reduction in the value of fund assets.

A triennial review of the liability was done at 30 June 2018, where economic assumptions and significant risks were reviewed.

A4. Significant accounting judgments, estimates and assumptions

The significant judgements, key assumptions and estimates we have made in preparing these financial statements are listed below. Refer to the relevant note for more details.

A5. Statement of compliance

The financial statements and notes comply with Australian Accounting Standards.

 

Note Item Key Judgement/Estimate
C1 Revenue We have exercised judgement in determining the stage of completion for recognising revenue
D2 Receivables We have exercised judgement in assessing the recoverability of amounts invoiced to clients for audit engagements.
D3 Other financial assets-work in progress We have exercised judgement in assessing the recoverability of time worked and other charges which remain unbillled at reporting date.
D5 Property, plant and equipment and intangible assets We have exercised judgement in determining the useful lives of the Audit Office’s physical and intangible assets. We have also determined that the written down value of physical assets approximates to their fair value.
E2 Employee provisions We have made assumptions about the expected tenure of existing staff, patterns of leave claims and payouts, future salary movements and future discounts in measuring employee liabilities.
E2.2 Superannuation Defined Benefit Plans The calculation of the defined benefit liability involves actuarial assumptions that may differ from actual developments in the future.
F1 Financial instruments We believe recognising the Audit Office’s financial instruments at amortised cost approximates their fair value because of their short-term nature.

A6. Comparative information

Where necessary, the comparatives are reclassified and repositioned to be consistent with current year disclosures except when an Australian Accounting Standard permits or requires otherwise.

A7. Accounting for the Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of GST except for:

  • the amount of GST incurred as a purchaser that is not recoverable from the Australian Taxation Office (ATO), which is recognised as part of the cost of acquisition of an asset or as part of an item of expense
  • receivables and payables are stated with the amount of GST included.

Cash flows are included in the statement of cash flows on a gross basis. However, the GST components of cash flows arising from investing activities that are recoverable from, or payable to, the ATO are classified as operating cash flows.

A8. New Australian accounting standards

New Australian Accounting Standards issued but not yet effective

At the reporting date, the Audit Office has not early adopted accounting standards and interpretations issued by the AASB but not yet operative. The key accounting standards that will have an impact on the Audit Office of New South Wales are:

  • AASB 15 Revenue from Contracts with Customers (replaces AASB 118 Revenue) and AASB 1058 Income for Not-for-profit Entities – these standards apply to reporting periods beginning on or after 1 July 2019. The new standards will result in revenue recognition policies aligning with the satisfaction of performance obligations in contracts with customers. AASB 1058 includes specific requirements with respect to grants received under enforceable agreements for construction or acquisition of recognisable non-financial assets.

In terms of audit fee revenue, we believe the Audit Office would account for it under AASB 15 as revenue from contracts with customers. AASB 15 states that a contract ‘is an agreement between two or more parties that creates enforceable rights and obligations’ and ‘if the counterparty to the contract is a customer’. In terms of when to recognise audit fee revenue (timing), AASB 15 states an entity shall recognise revenue when it has satisfied a performance obligation. We believe the conduct of an audit represents transferring control of a service over time and therefore the Audit Office has an enforceable right to payment based on the stage of completion (i.e. work performed). Based on the above we do not foresee any major changes to the way we currently recognise audit fee revenue.

The Audit Office receives government funding for its performance audits and preparing the Auditor’s General Reports to Parliament. Our assessment is that these grants do not have elements of ‘enforceable’ rights and obligations and therefore the Audit Office will continue to recognise this contribution as revenue by reference to the stage of completion (work performed).

  • AASB 16 Leases – this standard applies to reporting periods beginning on or after 1 July 2019. This standard introduces new criteria for assessing contracts to identify leases. Certain leases previously reported as expenses (such as the Audit Office’s office accommodation lease) will be recorded on the Statement of Financial Position. Under this new accounting standard, the Audit Office will present these leases as right-of-use assets separately from other assets on the balance sheet or in the notes. Likewise, the Audit Office will present lease liabilities separately from other liabilities on the Statement of Financial Position or in the notes. In the Statement of Comprehensive Income, the Audit Office will present interest expense on the lease liability separately from the depreciation charge for the right-of-use asset. In the Statement of Cash Flows, cash payments for the principal portion of the lease liability will be presented within financing activities, while cash payments for the interest portions will be presented within operating activities (in accordance with AASB 107 Statement of Cash Flows and Treasury Mandates). Based on the Audit Office’s current leasing arrangements, the impact of this new standard will be minimal because the current office accommodation lease expires 31 July 2019. However the Audit Office is likely to execute a new lease before the new standard is applied from 2019-20 and this will result in the Audit Office recording a significant right of use asset and a corresponding lease liability.
  • AASB 9 Financial Instruments – this standard applies to reporting periods beginning on or after 1 January 2018. This standard replaces the classification, measurement, recognition and de-recognition requirements in AASB 139 ‘Financial Instruments’. Because the Audit Office’s only financial instruments are cash, debtors and payables, and because the Audit Office’s credit risk is low, we do not expect this standard to have a material impact on our financial statements.

A9. Events after the reporting period

There were no events subsequent to reporting date that require disclosure in the financial statements.


Section 2: Budget review

The budgeted amounts are drawn from the original budgeted financial statements presented to Parliament. Other amendments made to the budget are not reflected in the budgeted amounts. Major variances between the original budgeted amounts and the actual amounts disclosed in the primary financial statements are explained below.

B1. Budget review

Net result

The actual net result was unfavourable to the budgeted net result by $3.4 million. The main reasons for this variance were:

  • we do not budget for the current service cost and interest associated with the Audit Office’s defined superannuation liability. These expenses totalled $1.8 million for the year. The expenses are actuarially assessed at the end of the financial year and our outside our control. More information on our defined superannuation liability can be found in Note E2.2.
  • the original budget was based on a preliminary impact assessment of the Auditor-General becoming the auditor of local councils. This assessment was done before we determined the resourcing and pricing approach for the new mandate. The NSW Government subsequently approved a $2.0 million reduction to the Audit Office’s net result.

Taking into account the budget adjustments subsequently approved by the NSW Government (but not reflected in the financial statements), the Audit Office operated the year within the approved expenditure limits.

Assets and liabilities

Total current assets of $25.5 million is some $2.9 million higher than the budgeted position of $22.6 million. This higher than expected position is due to the increase in the Audit Office’s operations, following the appointment of the Auditor-General as the auditor of local councils. This change in operations is also the reason why total current liabilities exceed budget by $1.7 million.

Total non-current assets of $3.3 million is lower than budget because our actual spend on property, plant and equipment was significantly less than budget. Some of the planned expenditure will now take place in 2018-19 and it relates to projects such as our Future Workplace project and corporate system enhancements.

Total non-current liabilities are lower than budget because of the drop in the Audit Office’s defined superannuation liability.

Cash flows

The net cash from operating activities of $866,000 was significantly lower than budget because the original budget was based on a preliminary impact assessment of the Auditor-General becoming the auditor of local councils. This assessment was done before we determined the resourcing and pricing approach for the new mandate. The NSW Government subsequently approved a $1.8 million reduction to our net cash from operating activities, reducing it to $1.0 million. Our actual net cash from operating activities was largely consistent with the revised budget.


Section 3: Our financial performance

This section outlines the major areas of revenue and expenditure incurred by the Audit Office in the course of its ordinary activities.

C1. Revenue 2018
$’000
2017
$’000
(a) Rendering of services
Audit fee revenue from NSW Government agency audits 30,059 30,135
Audit fee revenue from university audits 5,061 4,500
Fee revenue from local council audits 12,880 3,192
48,000 37,827
(b) NSW Government contributions
Funding for performance audits and compliance review 7,108 6,260
Funding for the Auditor-General’s Report to Parliament 3,229 2,332
10,337 8,592
(c) Other revenue
Interest income 172 167
Recoupment of salaries and oncosts from staff secondments 431 601
Grant funding – twinning support to the Office of the Auditor General Solomon Islands 116
Impact conference – ticket sales and contribution by the Australian Council of Auditors General 104
Other  174  64
 997  832

Recognition and measurement

Income is measured at the fair value of the consideration or contribution received or receivable.

(i) Rendering of services – audit fees

Audit fee revenue from rendering of services is recognised by reference to the stage of completion (work performed) on audit engagements. The Audit Office invoices its auditees in arrears for work completed on each audit engagement.

Revenue is recognised when:

a) the amount of revenue, stage of completion and transaction costs incurred can be reliably measured, and

b) the probable economic benefits associated with the transaction will flow to the Audit Office.

The stage of completion for audit engagements is determined by reference to the actual costs incurred.

(ii) NSW Government contributions

Revenue from the NSW Government is based on an agreed amount set through the annual State Budget process. The Audit Office recognises this revenue source by reference to work performed.

(iii) Recoupment of salaries and oncosts

From time to time, the Audit Office enters into secondment arrangements with other NSW public sector agencies and professional services firms. In return for seconding staff, the Audit Office generally seeks to recover the salary and related oncosts on a cost recovery basis. Revenue from seconding staff is recognised by reference to days worked and the agreed daily/hourly rate.

Audit fee revenue – analysis by auditee

 

2017
2018

Key judgements and estimates

At reporting date, we have reviewed amounts owed to the Audit Office (Receivables – see Note D2) and unbilled time and charges on all fee earning audit engagements (Work in progress – see Note D3) to assess their recoverability. Where there was objective evidence that the debtor balance and/or the unbilled time and charges may not be recovered, we have raised an allowance for impairment or written off the amount. Factors considered when making this assessment include: the agreed audit fee; the engagement budget; known or possible variations to the audit engagement; and the likelihood of additional recoveries from the auditee.

 

C2. Employee related expenses

The Audit Office’s employee related expenses for the year totalled $37,266,000 (2017: $35,586,000).

The chart below shows the split between the major components

($’000)

 

C3. Other operating expenses

The Audit Office’s employee related expenses for the year totalled $22,378,000 (2017: $12,585,000).

The chart below shows the split between the major components. *The increase in Audit Service Providers is due to the Auditor-General being appointed as the auditor of local councils from 2016-17. Most of these audits were resourced with an audit service provider.

($’000)

 

Operating lease commitments
Future non-cancellable operating lease rentals not provided for and payable: 2018 
$’000
2017
$’000
Within one year 2,150  2,069
Later than one year and not later than five years  187 2,333
Total (including GST)  2,337 4,402

The above commitments relate to office accommodation, office equipment and motor vehicle leases that will expire within 1 to 3 years. The Audit Office’s office accommodation lease contains a fixed annual increase and the lease expires in July 2019.

Recognition and measurement

Leases

The Audit Office does not have any finance leases. It has operating leases for office accommodation, office equipment and motor vehicles whereby the lessors (being the landlord/supplier) retain substantially all of the risks and benefits incidental to owning the leased assets.The Audit Office recognises the operating lease payments as expenses on a straight-line basis over the period of the lease term.

C4. Depreciation and amortisation

The Audit Office’s depreciation and amortisation expenses for the period totalled $1,247,000 (2017: $1,153,000). The chart below shows the split between the major components.

($’000)


Section 4: Our assets

An Audit Office asset is a resource it controls as a result of past events and from which it expects to obtain future economic benefits. The Audit Office’s assets comprise cash at bank, receivables, other assets (work in progress and Crown reimbursement), property, plant and equipment and intangibles.

 

D1. Current assets – cash and cash equivalents 2018

$’000

2017

$’000

Cash at bank and on hand 11,014  10,534

 

Cash comprises cash on hand and bank balances within the NSW Treasury Banking System. NSW Treasury determines the interest rate and interest is earned on daily bank balances and paid monthly.

For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and cash on hand.

Credit facility

The Audit Office has a credit card facility of $350,000 and we have used $187,000 of the facility (2017: $122,000). The Audit Office has no other standing credit facility. The Audit Office’s cash position has consistently been adequate to meet its liquidity requirements.

Risk

Interest rate risk

The Audit Office’s exposure to interest rate risk arises primarily through its cash at bank. It does not hold any other interest bearing financial assets or liabilities.

The Audit Office does not hold collateral and has not granted any financial guarantees.

D1.1 Reconciliation of cash flows from operating activities to net result 2018

$’000

2017

$’000

Reconciliation of cash flows from operating activities to the net results as reported in the statement of comprehensive income
Net cash from operating activities 866 590
Depreciation and amortisation (1,247) (1,150)
Finance costs (14) (13)
Decrease/(Increase) in provisions (2,752) (1,561)
Increase/(Decrease) in receivables and other assets 1,875 933
Decrease/(Increase) in creditors (299) (882)
NET RESULT (1,571) (2,083)

 

D2. Current assets – receivables 2018

$’000

2017

$’000

Rendering of services – audits 5,436 4,807
Less: allowance for impairment (16) (16)
TOTAL RECEIVABLES 5,420 4,791
Prepayments 534 402
Accrued income and other debtors 3 60
Interest receivable 70
5,957 5,323

 

Recognition and measurement

Receivables are recognised at fair value based on the original invoice amount. Receivables are due for settlement within 14 days from the date of issuing the invoice. They are not amortised or discounted as the effect of discounting is immaterial.

Impairment of financial assets

When there is objective evidence that we will not collect the amounts due, the Audit Office recognises an allowance for impairment. The amount of the allowance is the difference between the receivable’s carrying amount and the amount we expect to receive.

When an impairment is recognised, the loss is recorded in the net result for the year. Where there is objective evidence of recovering a previously impaired receivable, the reversal of impairment losses is also recognised through the net result for the year.

Risk

Receivables – trade debtors

Credit risk is the risk of financial loss arising from another party to a contract or financial obligation. This amount is equal to the total amount of receivables for services of $5,420,000 (2017: $4,791,000) and amounts recorded in WIP $1,572,000 (2017: $1,138,000).

The Audit Office is not materially exposed to concentrations of credit risk to a single debtor or group of debtors. It has policies and procedures in place to guide debt recovery. Most of the debtors are government agencies or local councils whose credit risk is considered low.

 

Key judgement/estimates Audit Office receivables

The carrying value of the Audit Office’s receivables approximates its fair value because of the short-term nature of this financial asset.

We review the Audit Office’s receivables for impairment on an ongoing basis. Apart from a single debt of $16,000 (2017: $16,000) that is considered impaired at reporting date, we believe all outstanding receivables are recoverable. This is because all amounts owing are bound by agreed terms with our auditees. The ageing profile of our debtors is shown in the chart below.

 


 

Trade Receivables – past due but not impaired*

 

2017

 

2018

 

* The ageing analysis excludes statutory receivables, as these are not within the scope of AASB 7 and excludes receivables that are not past due and not impaired. Therefore, the ‘total’ will not reconcile to the receivables total recognised in the statement of financial position.

 


 

D3. Other financial assets (work in progress) 2018

$’000

2017

$’000

Work in progress – unbilled charges on audit engagements 1,572 1,138

Recognition and measurement

Work in progress (WIP) represents work performed on audit engagements which the Audit Office has not invoiced to the auditee. This is largely made up of staff time and charges by the Audit Office’s contract audit agents. Staff time is based on approved hourly charge out rates.

We assess WIP for impairment annually to ensure it is not carried at an amount in excess of its recoverable amount. A provision for unrecoverable amounts is raised when there is objective evidence that the WIP may not be recoverable.

Risk

Credit Risk – We believe the Audit Office is exposed to minimal credit risk. The maximum exposure arises from a debtor potentially defaulting on their debt / WIP. We believe the likelihood of this occurring is low.

The audit directors responsible for the audit engagements review and monitor WIP on a monthly basis. WIP is also monitored by the Office Executive on a monthly basis. Refer to Note D2 on Receivables for commentary on auditee creditworthiness.

 

Key judgement/estimates Audit Office WIP

The audit directors have reviewed the WIP (unbilled staff time and charges) on their engagements to assess their recoverability at reporting date. The figure recognised in the financial statements is net of any time or charges the audit directors have assessed as potentially not being recoverable.

In assessing the recoverability of WIP, the audit directors make reference to factors such as: the remaining budget versus forecasted effort to complete the audit engagement; the historical cost for recurring audit engagements; any unexpected scope variations; and the potential to recover scope variations with an additional billing. audit engagements; unexpected scope variations; and the potential to recover scope variations with an additional billing.

D4. Current/non-current assets – other 2018 
$’000
2017 
$’000
Crown acceptance of long service leave liability – current  6,917 6,174
Crown acceptance of long service leave liability – non-current 601 537
7,518 6,711

The ‘Crown Acceptance of Long Service Leave Liability’ represents the Audit Office’s right to reimbursement from the Crown Finance Entity for long service leave owed to employees. See Note E2 for more details.

 

D5. Plant, equipment and intangibles
2018: Leasehold improvements
$’000
Plant and equipment
$’000
Intangible assets
$’000
TOTAL
$’000
At 1 July 2017
Cost (gross carrying amount) 3,108 2,875 6,217 12,200
Accumulated depreciation and amortisation (3,108) (1,981) (3,589) (8,678)
Net carrying amount as at 1 July 2017  894 2,628 3,522
Additions 121 283 404
Depreciation and amortisation expense 0 (414) (833) (1,247)
Disposals (19) (19)
Net carrying amount as at 30 June 2018 0 582 2,078 2,660
         
Net carrying amount as at 30 June 2018 as represented by:  
Cost (gross carrying amount) 3,108 2,977 6,499 12,584
Accumulated depreciation and amortisation (3,108) (2,395) (4,421) (9,924)
Net carrying amount as at 30 June 2018  0 582 2,078 2,660

 

Reconciliation

A reconciliation of the carrying amount of each class of intangible assets at the beginning and end of the current reporting period is set out below:

2017: Leasehold improvements
$’000
Plant and equipment
$’000
Intangible assets
$’000
TOTAL
$’000
At 1 July 2016
Cost (gross carrying amount) 3,108 2,053 6,078 11,239
Accumulated depreciation and amortisation (3,105) (1,744) (2,771) (7,620)
Net carrying amount as at 1 July 2016  3 309 3,307 3,619
Additions 852 204 1.056
Depreciation and amortisation expense (3) (267) (883) (1,153)
Disposals
Net carrying amount as at 30 June 2017 894 2,628 3,522
         
Net carrying amount as at 30 June 2017 as represented by:  
Cost (gross carrying amount) 3,108 2,875 6,217 12,200
Accumulated depreciation and amortisation (3,108) (1,981) (3,589) (8,678)
Net carrying amount as at 30 June 2017 894 2,628 3,522

 

Recognition and measurement

The Audit Office’s intangible assets comprise its audit methodology/software, computer software systems and associated enhancement costs. These assets are carried at cost less accumulated amortisation and impairment losses. The useful lives of the Audit Office’s intangible assets are finite.

Research and Development costs

All research costs are expensed. Development costs are only capitalised when certain criteria are met.

Amortisation

All intangible assets are amortised using the straight-line method over a period of three to ten years.

Impairment

Intangible assets are tested for impairment where an indicator of impairment exists. If the recoverable amount is less than its carrying amount, the carrying amount is reduced to recoverable amount and the reduction is recognised as an impairment loss.

 

Key judgement/estimates Audit Office intangibles

We have determined there is no active market for the Audit Office’s intangible assets and therefore they are recorded at cost less accumulated amortisation and impairment.

We have determined the useful lives of the Audit Office’s intangibles to be between three to ten years. The major intangible assets are:

  • audit methodology software – 10 years (2017: 10 years)
  • corporate management systems – 5 to 6.5 years (2017: 5 years)
  • other software licenses – 3 to 5 years (2017: 3 to 5 years).

Effective 1 May 2018, we extended the useful life of some of the Audit Office’s intangible assets by up to 18 months to better represent their intended life. As a result of this change, this has reduced the Audit Office’s depreciation and amortisation expense by $48,000 in 2017-18 and will reduce it by $201,000 in 2018-19 and increase it by $169,000 in 2019-20 and $80,000 in 2020-21.

Some of the factors considered in setting the useful lives include: technical obscolescence; the likely support period by vendors; the Audit Office’s ability to invest in replacement assets; the typical life cycle of similar assets; and the actual lives of similar assets currently or previously controlled by the Audit Office.

We have reviewed the intangible assets for any indication of impairment at reporting date. None was noted (nil in the prior year).

 

Recognition and measurement

Acquisition of assets

Purchases of plant and equipment (P&E) are initially recognised at cost in the Statement of Financial Position. The Audit Office capitalises individual pieces of equipment costing $1,000 or more. When the equipment forms part of a network, the threshold of $1,000 is applied to the network cost. All other equipment purchases are expensed in the year they are acquired.

Revaluation

Following initial recognition at cost, leasehold improvements and plant and equipment are recorded at fair value less accumulated depreciation and impairment. The Audit Office applies the valuation guidelines outlined in the ‘Valuation of Physical Non-Current Assets at Fair Value’ Policy and Guidelines Paper (TPP 14-01). This policy applies the requirements of AASB 13 Fair Value and AASB 116 Property, Plant and Equipment.

Property, plant and equipment is measured at the highest and best use by market participants that is physically possible, legally permissible and financial feasible. The highest and best use must be available at a period that is not remote and take into account the characteristics of the asset being measured. In all cases, after taking into account these considerations, the highest and best use of the Audit Office’s assets is their existing use.

Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

2018 2017
Computer equipment 3 years  3 years
Office equipment 5 years 5 years
Furniture and fittings 10 years 10 years
Leasehold improvements Over the term of the lease Over the term of the lease

 

Make good

The estimated cost for making good the Audit Office’s leasehold premises is included in leasehold improvements to the extent it is recognised as a liability. See Note E2.1.

 

Key judgement/estimates
Plant and equipment

In deciding whether costs should be expensed or capitalised, the Audit Office treats individual computer/telecommunication hardware (such as laptops) as part of a network. As a result, equipment of this nature is generally capitalised.

We review the useful lives of all assets annually. We also assess whether there are any indicators of impairment. The lives ascribed to the Audit Office’s assets in 2018 remain unchanged from the prior year. We have also reviewed PPE assets for any indication of impairment. None was noted in the curent year (nil in the previous year) .

Some of the factors considered in setting the useful lives include: technical obsolescence; the typical life cycle of similar assets; and the actual lives of similar assets currently or previously controlled by the Audit Office.

Because the Audit Office’s property, plant and equipment assets are non-specialised with short useful lives, we believe the depreciated historical cost is a reasonable approximation of their fair value. We believe any difference between fair vaue and depreciated historical cost is unlikely to be material. the depreciated historical cost is a reasonable approximation of their fair value. We believe any difference between fair value and depreciated historical cost is unlikely to be material.

 


Section 5: Our liabilities

An essential characteristic of the Audit Office’s liabilities is that it has a present obligation from past transactions or other past events. A large proportion of the Audit Office’s liabilities are employment benefits payable to the Audit Office’s staff for services rendered to the reporting date. The Audit Office also has obligations to its suppliers and tax authorities such as the Australian Taxation Office and Revenue NSW.

An obligation is a duty or responsibility to act or perform in a certain way. A future commitment (such as a decision by the Audit Office to acquire assets in the future) does not, of itself, give rise to a present obligation.

The Audit Office’s obligations may be legally enforceable as a consequence of a binding contract or statutory requirement. This is normally the case, for example, with amounts payable for goods and services received. Obligations also arise from normal business practice.

E1. Current liabilities – payables

The Audit Office’s payables at 30 June 2018 totalled $2,413,000 (2017: $2,114,000). The chart below shows the split between the major components.

 

($’000)

Recognition and measurement

Payables

The Audit Office initially recognises liabilities for creditors and other payables at fair value, which is usually based on the transaction cost or face value. These payables are subsequently measured at amortised cost using the effective interest rate method. Payables with no stated interest rate are measured at the original invoice amount because the effect of the discounting is immaterial.

The liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced.

Risk

Liquidity risk

Liquidity risk is the risk that the Audit Office will be unable to meet its payment obligations when they fall due. The risk is continuously managed through monitoring future cash flows to ensure adequate holding of liquid assets.

During the current and prior year, there were no defaults of payables. No assets have been pledged as collateral. The Audit Office’s exposure to liquidity risk is deemed insignificant based on prior period’s data and our current risk assessment.

For small business suppliers, where terms are not specified, the Audit Office pays no later than 30 days from date of receiving a correctly rendered invoice. For other suppliers, if trade terms are not specified, payment is made no later than the end of the month following the month in which the Audit Office receives an invoice. For small business suppliers, where payment is not made within the specified time period, simple interest must be paid unless an existing contract specifies otherwise. For payments to other suppliers, the Audit Office may pay the supplier simple interest. The Audit Office paid $40 in interest during the period for a late payment (2017: Nil).

Maturity profile

All of the Audit Office’s payables and accruals have a maturity of less than 12 months (2017: less than 12 months).

Market risk

The Audit Office has no exposure to foreign currency risk and does not enter into commodity contracts.

E2. Current/non-current liabilities – provisions

The Audit Office’s current provisions at 30 June totalled $10,212,000 (2017: $9,196,000) and its non current provisions totalled $42,872,000 (2017: $44,905,000). The charts below show the split between the major components.

 

Current liabilities – provisions

($000’s)

 

Non-current liabilities – provisions

($000’s)

 

a) Employee benefits and related on-costs

Annual leave

The annual leave liability at 30 June 2018 was $2,211,000 (2017: $2,062,000). Of this liability, the value expected to be paid within the next 12 months is $1,481,000 (2017: $1,400,000) and $730,000 (2017: $662,000) after 12 months.

Long service leave

The long service liability at 30 June 2018 was $7,518,000 (2017: $6,711,000) shown as current $6,917,000 (2017: $6,174,000) and non-current $601,000 (2017: $537,000). This liability comprises:

2018
$’000
2017
$’000
Short term – expected to be settled within 12 months 278 226
Long term – not expected to be settled within 12 months 7,240 6,485
7,518 6,711

The Audit Office is part of the Crown funded Long Service Leave Pool. As a member of this pool, the Audit Office makes an annual contribution based on its budgeted salaries and wages. In return for making a contribution, the Audit Office has a right to be reimbursed by the Crown Finance Entity for an amount equal to the liability owed to staff. This asset is disclosed in Note D4.

The Audit Office made contributions of $805,000 to the Crown Finance Entity pool during the year (2017: $684,000).

Recognition and measurement

Salaries and wages, annual leave, sick leave and on-costs

Liabilities for salaries and wages, including non-monetary benefits and annual leave are measured on an undiscounted basis. Where annual leave is not expected to be settled within 12 months, it is accounted for as a long term benefit at the present value in accordance with AASB 119 Employee Benefits.

Unused non-vested sick leave entitlement does not give rise to a liability as it is considered that sick leave taken in the future will not be greater than the benefits accrued in the future.
The amount of annual leave is increased by on-costs in determining the total provision at reporting date.

Long service leave

A long service leave liability is recognised as a long-term employee benefit and measured for all employees with five or more years of service. The present value method, based on remuneration rates approved to be payable post 30 June, is used to measure the liability. The on-cost factors specified in Treasury Circular 15/09 are applied when calculating the related oncosts.

Consequential on-costs

Consequential costs to employment are recognised as liabilities and expenses where the employment benefits to which they relate have been recognised. This includes outstanding amounts of payroll tax, workers’ compensation insurance premiums, fringe benefits tax and superannuation.

 

Key judgement/estimates employee entitlements

Annual leave

We have referred to leave taken during the year to determine the split between short term (leave expected to be taken in the next 12 months) and long term (leave expected to be taken after 12 months).

Long service leave

The present value of long service leave has been calculated by an actuary. The key assumptions they used include:

  • discount rate of 2.65 per cent (2017: 2.595 per cent)
  • short term salary increases of 2.7 per cent for FY2018/19 and 3.2 per cent per annum thereafter.

In determining the split between current and non current, we have used 92 and 8 per cent respectively. This is consistent with Treasury Circular 15/09.

The Audit Office has recognised a reimbursement from the Crown Finance Entity of equal value to the long service leave liability. This is based on Treasury Circulars TC18/13 Accounting for Long Service Leave and Annual Leave and TC14/06 Funding Arrangements for Long Service Leave and Transferred Officers Leave Entitlements.

 

E2.1 Other provisions

Restoration costs

The Audit Office has an obligation to restore its leased premises at 1 Margaret Street at the end of the lease term. In accordance with AASB 137 – Provisions, Contingent Liabilities and Contingent Assets, the Audit Office has recognised a provision to make good the premises.

 

Movements in the provision during the financial year is set out below 2018
$’000
Carrying amount at the beginning of financial year 717
Re-measurement of provision (33)
Unwinding/change in the discount rate 14
Carrying amount at end of financial year 698

 

Recognition and measurement

Other provisions

Other provisions are recognised when there are legal or constructive obligations as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

Key judgement/estimates other provisions

This provision to make good the Audit Office’s leased premises has been calculated by reference to the leased space area (square metres), an industry rate per square metre to make good the premises, the lease expiry date of July 2019 and the Commonwealth Government bond rate.

E2.2 Superannuation

Some current and former Audit Office employees are members of defined benefit schemes which means contributions are required to be made to a separately administered fund and members receive a pension entitlement based on a multiple of salary and years of membership. Members receive lump sum or pension benefits on retirement, death, disablement and withdrawal.

 

Name of Scheme Type of Scheme
The State Superannuation Scheme (SSS) Multi-employer defined benefit scheme
The State Authorities Superannuation Scheme (SASS) Multi-employer defined benefit scheme
The State Authorities Non-Contributory Superannuation Scheme (SANCS – Basic Benefits Scheme) Multi-employer defined benefit scheme

The above schemes are closed to new members and employer contributions to the above funds were suspended in 2005.

Regulatory Framework

The schemes in the Pooled Fund are established and governed by the following NSW legislation: Superannuation Act 1916, State Authorities Superannuation Act 1987, Police Regulation (Superannuation) Act 1906, State Authorities Non-Contributory Superannuation Act 1987, and their associated regulations.

The schemes in the Pooled Fund are exempt public sector superannuation schemes under the Commonwealth Superannuation Industry (Supervision) Act 1993 (SIS). The SIS Legislation treats exempt public sector superannuation funds as complying funds for concessional taxation and superannuation guarantee purposes.

Under a Heads of Government agreement, the New South Wales Government undertakes to ensure that the Pooled Fund will conform with the principles of the Commonwealth’s retirement incomes policy relating to preservation, vesting and reporting to members and that members’ benefits are adequately protected.

The New South Wales Government prudentially monitors and audits the Pooled Fund and the Trustee Board activities in a manner consistent with the prudential controls of the SIS legislation. These provisions are in addition to other legislative obligations on the Trustee Board and internal processes that monitor the Trustee Board’s adherence to the principles of the Commonwealth’s retirement incomes policy.

Valuations

An actuarial investigation of the Pooled Fund is performed every three years. The last actuarial investigation was performed as at 30 June 2018.

Governance

The Fund’s Trustee is responsible for the governance of the Fund. The Trustee has a legal obligation to act solely in the best interests of the fund beneficiaries. The Trustee has the following roles:

  • Administration of the fund and payment to the beneficiaries from fund assets when required in accordance with the fund rules;
  • Management and investment of the fund assets; and
  • Compliance with other applicable regulations

The defined benefit schemes from 30 June 2018 have remained at an unfunded liability position, a net movement of $2,090,000 (2017: $16,914,000).

Employer contributions to all funds have been suspended since 1 December 2005.

The following information has been prepared by the Scheme actuary.

Reconciliation of the net defined benefit liability

Present value of obligation
$’000
Fair value of plan assets
$’000
Net amount
$’000
At 1 July 2016 (126,018) 65,510 (60,508)
Current service cost (884) (884)
Interest (expense)/ income (2,468) 1,264 (1,204)
(Expense)/ income recognised in profit or loss (3,352) 1,264 (2,088)
Contributions by fund participants:
Employers
Plan participants (229) 229
(229) 229
Remeasurements
Actual return on Fund assets less interest income 4,703 4,703
Actuarial gains/(losses) arising from changes in demographic assumptions (11) (11)
Actuarial gains/(losses) arising from changes in financial assumptions 11,611 11,611
Actuarial gains/(losses) arising from liability experience 2,699 2,699
Amount recognised in other comprehensive income 14,299 4,703 19,002
Benefits paid 3,179 (3,179)
Taxes, premiums and expenses paid (563) 563
At 30 June 2017 (112,684) 69,090 (43,595)

 

At 1 July 2017 (112,684) 69,090 (43,595)
Current service cost (615) (615)
Interest (expense)/ income (2,895) 1,753 (1,142)
(Expense)/ income recognised in profit or loss  (3,510) 1,753 (1,757)
Contributions by fund participants:
Employers
Plan participants (220) 220
Remeasurements
Actual return on Fund assets less interest income 3,928 3,928
Actuarial gains/(losses) arising from changes in demographic assumptions (596) (596)
Actuarial gains/(losses) arising from changes in financial assumptions 443 443
Actuarial gains/(losses) arising from liability experience 71 72
Amount recognised in other comprehensive income  (82) 3,928 3,847
Benefits paid 7,025 (7,025)
Taxes, premiums and expenses paid (492) 492
At 30 June 2018  (109,964) 68,458 (41,505)

Fair value of fund assets

All Pooled Fund assets are invested by SAS Trustee Corporation (STC) at arm’s length through independent fund managers. Assets are not separately invested for each entity and it is not possible or appropriate to disaggregate and attribute fund assets to individual entities. As such, the disclosures below relate to total assets of the Pooled Fund. The percentage invested in each asset class at the reporting date is:

As at 30 June 2017

Asset Category Quoted prices in
active markets
for identical assets 
Level 1 
$’000
Significant
observable
inputs
Level 2
$’000
Unobservable inputs 
Level 3 
$’000
Total
$’000
Percentage
 invested
in each asset
class
Cash 2,185,469 2,215,695 4,401,164 11%
Australian Fixed Interest  41,854 2,193,068 2,234,921 5%
International Fixed Interest 8,116 1,387,991 1,396,107 3%
Australian Equities  8,719,442 548,908 3,3055 9,271,405 22%
International Equities 8,449,476 2,391,501 373 10,891,350 26%
Property 788,018 608,934 2,314,335 3,711,287 9%
Alternatives  420,898 5,332,818 4,141,113 9,894,828 24%
TOTAL 20,663,272 14,678,915 6,458,876 41,801,063 100.0%

Derivatives, including futures and options, can be used by investment managers. However, each manager’s investment mandate clearly states that derivatives may only be used to facilitate efficient cashflow management or to hedge the portfolio against market movements and cannot be used for speculative purposes or gearing of the investment portfolio. As such managers make limited use of derivatives.

Fair value of pooled fund assets

The disclosures below relate to total assets of the Pooled Fund.

The fair value of the Pooled Fund assets as at 30 June 2018 include $97.7 million in NSW government bonds.

Of the direct properties owned by the Pooled Fund:

  • SAS Trustee Corporation occupies part of a property 100% owned by the Pooled Fund with a fair value of $280 million (30 June 2017: $250 million).
  • Health Administration Corporation occupies part of a property 50% owned by the Pooled Fund with a fair value (100% interest) of $287 million (30 June 2017: $261 million).

 

As at 30 June 2018 30 June 2017
Discount rate 2.65% p.a. 2.62% p.a
Salary increase rate (excluding promotional increases) 2.70% p.a for 2018/2019 and 3.2% p.a. thereafter 2.50% 2017/2018 and 2018/2019; 3.50% 2019/2020 and 2020/2021; 3.00% p.a. 2021/2022 to 2025/2026; 3.50% p.a. thereafter
Rate of CPI increase 2.25% 2018/2019 and 2019/2020; 2.50% p.a. thereafter 2.00% 2017/2018; 2.25% 2018/2019; 2.50% p.a. thereafter
Pensioner mortality The pensioner mortality assumptions are those to be used for the 2018 actuarial investigation of the Pooled Fund. These assumptions will be disclosed in the actuarial investigation report which will be available on the Trustee’s website when the investigation is complete. The report will show the pension mortality rates for each age. Alternatively, the assumptions are available on request from the Trustee. The pensioner mortality assumptions are as per the 2015 Actuarial Investigation of the Pooled Fund. These assumptions are disclosed in the actuarial investigation report available from the trustee’s website. The report shows the pension mortality rates for each age.

Economic assumptions

The economic assumptions adopted for 30 June 2018 AASB 1056 Accounting Standard ‘Superannuation Entitities’ are (these assumptions are consistent with the assumptions to be used for the 2018 actuarial investigation of the Pooled Fund):

Weighted average assumptions
Expected rate of return on Fund assets backing current pension liabilities 7.40% p.a.
Expected rate of return on Fund assets backing other liabilities 6.40% p.a.
Expected salary increase rate (excluding promotional salary increases) 2.70% for 2018/2019; 3.20% p.a. thereafter
Expected rate of CPI increase 2.20% p.a.

 

Sensitivity analysis

The entity’s total defined benefit obligation as at 30 June 2018 under several scenarios is presented below. The total defined benefit obligation disclosed is inclusive of the contribution tax provision which is calculated based on the asset level at 30 June 2018.

Scenarios A to F relate to sensitivity of the total defined benefit obligation to economic assumptions, and scenarios G and H relate to sensitivity to demographic assumptions.

 

Base Case Scenario A -1.0% discount rate Scenario B +1.0% discount rate Scenario C +0.5% rate of CPI increase Scenario D -0.5% rate of CPI increase Scenario E +0.5% salary increase rate Scenario F -0.5% salary increase rate
Discount rate as above as above
-1.0% p.a.
as above
+1.0% p.a.
as above as above as above  as above
Rate of CPI increase as above  as above as above above rates plus 0.5% p.a. above rates less 0.5% p.a. as above as above
Salary inflation rate as above  as above as above as above as above above rates plus 0.5% p.a. above rates less 0.5% p.a.
Defined benefit obligation (A$’000) 109,963,529 127,910,532 95,432,539 118,102,372 102,565,698 110,370,184 109,569,820

 

Base Case Scenario G Lower
Mortality*
Scenario H Higher
Mortality**
Defined benefit obligation
(A$’000)
109,963,529 111,703,324 108,751,329

*Assumes the short term pensioner mortality improvement factors for years 2018-2023 also apply for years after 2023.
**Assumes the long term pensioner mortality improvement factors for years post 2023 also apply for the years 2018 to 2023.
The defined benefit obligation has been recalculated by changing the assumptions as outlined above, whilst retaining all other assumptions.

Surplus/deficit

The following is a summary of the financial position of the Fund calculated in accordance with AASB 1056 –Superannuation Entities:

2018
$’000
2017
$’000
Accrued benefits* 60,159 61,613
Net market value of Fund assets (68,458) (69,090)
Net surplus (8,299)  (7,477)

* There is no allowance for a contribution tax provision within the Accrued Benefits figure for AASB 1056. Allowance for contributions tax is made when setting the contribution rates.

Contribution recommendations

Recommended contribution rates for the Audit Office are:

SASS multiple of member contributions SANCS
% member salary
SSS
multiple of
member
contributions
 NIL NIL NIL

Expected contributions

SASS SANCS SSS
Financial year to 30 June 2019
Expected employer contributions NIL NIL NIL

Maturity profile of defined benefit obligation

The weighted average duration of the defined benefit obligation is 13.8 years.

 

Recognition and measurement

The cost of providing benefits under a defined benefit plan is determined using the projected unit credit method. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.

Risk

Investment risk

The risk that investment returns will be lower than assumed and the Audit Office will need to increase contributions to offset this shortfall.

Longevity risk

The risk that pensioners live longer than assumed, increasing future pensions.

Pension indexation risk

The risk that pensions will increase at a rate greater than assumed, increasing future pensions.

Salary growth risk

The risk that wages or salaries (on which future benefit amounts for active members will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions.

Legislative risk
The risk is that legislative changes could be made which increase the cost of providing the defined benefits.

The defined benefit fund assets are invested with independent fund managers and have a diversified asset mix.

The Fund has no significant concentration of investment risk or liquidity risk.

Asset-Liability matching strategies

The Trustee monitors its asset-liability risk continuously in setting its investment strategy. It also monitors cashflows to manage liquidity requirements. No explicit asset-liability matching stategy is used by the Trustee.

 

Key judgement/estimates defined superannuation liability

The cost of the defined benefit pension plan and the present value of the pension obligation are determined using actuarial obligations and an actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include:

  • the determination of the discount rate
  • future salary increases mortality rates; and
  • future pension increases (Table C4.1).

Due to the complexities involved in the calculation and its long term nature, a define benefit obligation is highly sensitive to change in these assumptions. All assumptions are reviewed at each reporting date.

 


Section 6: Risk and other notes

 

F1. Financial instruments

The Audit Office’s principal financial instruments are cash (note D1), receivables (note D2), WIP (note D3) and payables (note E1). These financial instruments arise directly from the Audit Office’s operations. The Audit Office does not enter into or trade financial instruments for speculative purposes.

Quantitative and qualitative disclosures together with the objectives, policies and processes for measuring and managing risk are included throughout the financial statements.

The Auditor-General of NSW has overall responsibilities for the establishment and oversight of risk management, as well as reviewing and agreeing policies for managing each of these risks. Risk management policies are established to identify and analyse risks, to set risk controls and to monitor the risks faced by the Audit Office. Compliance with policies is reviewed by the Audit Office on a continuous basis.

F2. Capital commitments

The Audit Office has $364,000 (2017: nil) of capital contractual commitments at reporting date. These commitments relate to the Future Workplace project.

F3. Contingent assets and contingent liabilities

The Audit Office is not aware of any contingent assets (2017: nil).

F4. Auditor’s remuneration

In April 2018, the Governor appointed Mr Andrew Archer to audit the Audit Office’s financial statements for 2017-18, 2018-19 and 2019-20. Mr Andrew Archer is a partner at Grant Thornton and he uses the firm’s resources to complete the audit. The auditor’s remuneration for auditing the 2017-18 financial statements is $43,000.

While Mr Andrew Archer did not not provide any other services during the year to the Audit Office, his firm did provide services as an audit service provider (ASP). The Auditor-General appointed Grant Thornton as an ASP on a small number of audits in 2016 and 2017. Their appointment is for a period of up to four years and they conduct these audits under the control and direction of Auditor-General. The fees paid to Grant Thornton for their services as an ASP was $339,000.

In the prior year, Mr Lester Wills, a partner of Nexia Sydney Partnership, was the appointed auditor. The auditor’s remuneration for the prior year was $38,540.

F5. Related party disclosures

We have determined that the Office Executive are key management personnel (KMP) of the Audit Office. The Office Executive is made up of the Auditor-General of NSW, the Deputy Auditor-General, the four Assistant Auditors-General and the Executive Director, Corporate Services. We believe they have the authority and responsibility for planning, directing and controlling the activities of the Audit Office.

 

2018
$’000
2017
$’000
Short-term employee benefits:
Salaries 2,214 2,139
Other long-term employee benefits 86 84
Post-employment benefits 167 151
Total remuneration 2,467 2,374

The Audit Office did not enter into any material transactions with key management personnel, their close family members or entities they controlled or jointly controlled during the year.

Transactions with NSW Government agencies

During the year, the Audit Office provided audit and audit related services to entities that are controlled by the NSW Government. These services were provided at arm’s length based on agreed terms and using our standard charge rates and pricing approach. None of these transactions were individually significant. The total revenue received from NSW Government agencies was $30.1 million (2017: $29.7 million). Of this amount, $3.7 million (2017: $3.7 million) is owed to the Audit Office at the reporting date.

The Audit Office also received funding of $10.3 million (2017: $8.6 million) from the Crown Finance Entity to fund the performance audit program, Auditor-General’s Reports to Parliament and compliance reviews. This funding is set through the annual State Budget process, together with any subsequent adjustments. There were no adjustments in 2017-18. In 2016-17, the Audit Office received additional funding for the new performance audit mandate of the local government sector.

 

End of audited financial statements