NSW Audit Office - Awareness - Issue 2005 06 - July 2005
Description
AWARENESSAccounting and Auditing Developments ISSUE 6 - JULY 2005AUDIT OFFICE 1 AUDIT OFFICE UPDATEUPDATEFollow-up Performance Audit Report AUSTRALIAN 7 ACCOUNTING State Transit Authority: Bus Maintenance, STANDARDS BOARD UPDATEMinistry of Transport: Bus ContractsURGENT ISSUES 11GROUP UPDATE BackgroundPeriodically, we review the extent to which agencies have implemented AUDITING 13the recommendations they accepted from our earlier audits. This gives UPDATEParliament and the public an update on the extent of progress made.INTERNATIONAL 14In this follow-up audit, we examine changes following our May 2002 UPDATEreport on how well the:MISCELLANEOUS 16 State Transit Authority maintained its buses PUBLICATIONS Ministry of Transport administered contracts for the provision of LEGISLATIVE 18regular passenger bus services.CHANGES UPDATEState Transit Authority: Bus maintenanceTREASURY UPDATE 18The State Transit Authority (State Transit) is the largest bus operator PREMIER’S 19in NSW and one of the few remaining government bus operators in DEPARTMENTAustralia. In 2003-04, it had a fleet of 1,926 buses that travelled more UPDATEthan 90 million kilometres. Garages that are staffed by State Transit employees, and that operate as part of depots, maintain this fleet. AUDIT OFFICE 20Most routine maintenance and repairs are completed on-site in the BETTER PRACTICEgarages. State Transit had 419 maintenance staff and spent more than GUIDES$30 million on ...
Informations
| Publié par | Ipsa |
| Nombre de lectures | 13 |
| Langue | English |
Extrait
AUDIT OFFICE 1 UPDATE AUSTRALIAN 7 ACCOUNTING STANDARDS BOARD UPDATE URGENT ISSUES 11 GROUP UPDATE AUDITING 13 UPDATE INTERNATIONAL 14 UPDATE MISCELLANEOUS 16 PUBLICATIONS LEGISLATIVE 18 CHANGES UPDATE TREASURY UPDATE 18 PREMIER’S 19 DEPARTMENT UPDATE AUDIT OFFICE 20 BETTER PRACTICE GUIDES
Background Periodically, we review the extent to which agencies have implemented the recommendations they accepted from our earlier audits. This gives Parliament and the public an update on the extent of progress made. In this follow-up audit, we examine changes following our May 2002 report on how well the: State Transit Authority maintained its buses Ministry of Transport administered contracts for the provision of regular passenger bus services.
State Transit Authority: Bus maintenance The State Transit Authority (State Transit) is the largest bus operator in NSW and one of the few remaining government bus operators in Australia. In 2003-04, it had a fleet of 1,926 buses that travelled more than 90 million kilometres. Garages that are staffed by State Transit employees, and that operate as part of depots, maintain this fleet. Most routine maintenance and repairs are completed on-site in the garages. State Transit had 419 maintenance staff and spent more than $30 million on maintenance in 2003-04. Our 2002 performance audit examined the efficiency and effectiveness of State Transit’s approach to maintaining its bus fleet, finding that State Transit was not meeting its own maintenance standards. State Transit accepted only five of the nineteen recommendations in our 2002 performance audit report.
AUDIT OFFICE UPDATE
Follow-up Performance Audit Report State Transit Authority: Bus Maintenance, Ministry of Transport: Bus Contracts
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Audit Opinion This follow-up audit found that State Transit satisfactorily implemented those recommendations it accepted by: Revising and improving its performance indicators, to better monitor garage performance Implementing various initiatives to improve the quality of fleet records Reporting quarterly to the Board on the results of fleet maintenance audits, and monthly to its executive committee on the number of outstanding work orders. State Transit has also implemented other changes to address issues we raised in the 2002 report, including obtaining certification of its bus maintenance systems to the ISO 9001:2000 quality standard. Following these changes, there was some improvement in reliability and reduction in outstanding work orders. In October 2004, State Transit commenced an organisation-wide reform program. A review conducted as part of this reform program concluded that further improvement to garage operations and maintenance practices was needed. State Transit is now consulting with trade unions to develop a Maintenance Improvement Program. It expects this to result in market testing of fleet maintenance audits, improved maintenance supervision, and a greater proportion of safety inspections being undertaken by a single person. These are consistent with the recommendations in our 2002 report.
Ministry of Transport: Bus contracts Bus operators in New South Wales can only provide regular passenger services under contract with the Ministry of Transport in accordance with the Passenger Transport Act 1990. Contracts entered into prior to 2004 gave operators the exclusive right to provide services in a designated area or on certain routes. The Act also requires all bus operators to be accredited to ensure they meet the NSW Government’s standards of financial viability, safety and vehicle maintenance.
Audit opinion 2002, we concluded there was no guarantee that: Value for money was being achieved, because contracts were not contestable and did not provide incentives for operators to optimise service levels Operators were complying with contract conditions, because of the lack of reliable data on operator performance Operators were complying with accreditation standards, because of limited auditing of operator compliance.
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The Ministry of Transport accepted all the recommendations of our 2002 audit and has made progress in addressing the issues raised. The Ministry has overseen changes to the Passenger Transport Act, which enable the phased introduction of contestability, provision of incentives for good performance, and enhanced performance reporting. It is currently in the process of negotiating new, performance-based contracts with bus operators and finalising a framework to strengthen auditing of operator compliance with accreditation requirements.
Further Information Jane Tebbatt, Director, Performance Audit on 9275 7274 o j r a n o e r . tebbatt@ audit.nsw.gov.a . u The full report is available from our Internet sit h e tt : p:// www.audit.nsw.gov.au/perfaud-rep/Year-2004-2005/Followup-Bus-June2005/followup-bus-contents.htm . l
Background Routine disruptions to train services occur even on the most sophisticated rail networks. What influences a passenger’s opinion of the service is: How quickly the operator resolves the problem and minimises the impact of the delay The provision of clear, accurate and timely information. Because of the complexities of Sydney’s rail network, a single event can disrupt many services. In this audit, we looked at how well RailCorp responds when there are unplanned routine disruptions to its CityRail passenger services. We focused on how CityRail manages passenger journeys and informs passengers. This report informs Parliament and the community about the limitations of the current system, and what more needs to be done in order to minimise the impact of disruptions on passengers. It should also help passengers judge the extent to which they can rely on the information they receive, and to better understand some of the obstacles faced by staff.
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Audit Opinion RailCorp is making a serious effort to improve its performance in managing disruptions. Much is being spent on improvements. It has a large number of projects underway that are developing and implementing long-term engineering solutions, new technology, timetable and staffing changes to help it reduce disruptions and recover faster. But for the best part of the next decade, any major improvement in service quality will rely more on good day-to-day management and the performance of rail staff than these innovations. RailCorp has initiated many programs to improve practices. But, we believe that RailCorp needs to make a quantum leap to focus the business more on responding to passenger needs and achieving service excellence while we await the engineering solutions to reduce disruptions and enhance reliability. We believe that RailCorp’s efforts and resources need to focus intensively in the short term on better communication between staff and with passengers. Some of this is about systems and processes. Some of it is about staff being well informed and having a total passenger focus.
Key Findings The Rail Management Centre (RMC) manages the day-to-day operation of CityRail train services. Train controllers in the RMC decide what, if any, changes to make to train movements when there is a disruption to scheduled services. Creation of the RMC in 2002 has improved RailCorp’s capability to manage passenger journeys, but there is scope to further improve its effectiveness. RailCorp is implementing a project to improve RMC communication, supervision, guidance and quality systems. RailCorp is also addressing current ‘dark areas’ where controllers cannot ‘see’ the location of trains on the network. Network complexity, structural elements of the current timetable, driver shortages and train crewing arrangements limit a controller’s response options. To address this, RailCorp is introducing a new timetable, has started the Rail Clearways program, has recruited more drivers and reduced training time, and will implement ‘sectorised’ weekday train crewing with the new timetable. Disruptions to the afternoon peak are generally greater than the morning peak, because RailCorp is not always able to recover fully from morning delays before the afternoon peak starts. Understanding of the extent to which off-peak services should be sacrificed in order to recover before the start of the peak varies among controllers. Present performance indicators do not show how well controllers are making trade-offs which are likely to advantage some passengers at the expense of others. RailCorp is now developing a measure of passenger delay.
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We found communication between controllers, signallers, train crews, stations and others breaks down during service disruptions. RailCorp’s communication technology supporting this function is cumbersome (and obsolete). As a result, changes to train movements do not always occur as controllers intend. And because RailCorp’s passenger information systems depend on staff updating them during service disruptions, advice about disruptions is often delayed, inaccurate, inconsistent or incomprehensible. RailCorp is gradually computerising signal control and is proposing to accelerate this program so that the heavy-traffic parts of the network are computerised by 2012. This should reduce the risk of communication breakdowns and improve the information that passengers receive. Despite current limitations, some staff at various locations interpret and pass on messages far more effectively than others. These variations demonstrate an opportunity to improve and RailCorp has started several projects to enhance the quality and consistency of communication between staff and with passengers.
Summary of Recommendations We made a series of recommendations designed to improve: Communication between staff Staff preparedness to deal with disruptions Consistency of response across the network Train visibility and decision support tools for controllers Performance measurement and management, and staff accountability Use of technology to inform passengers Passenger focus.
Further Information Jane Tebbatt, Director, Performance Audit on 9275 72 j 7 a 4 n e o . r t ebbatt@audit.nsw.go v.au . The full report is available from our Internet si h t t e t : p ://www.audit.nsw.gov.au/ perfaud-rep/Year-2004-2005/CityRail-June2005/cityrail-contents . .html
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Program of Performance Audit Topics for 2005-06 NSW Auditor-General, Bob Sendt has released his provisional list of performance audit topics for 2005-06. The 2005-06 program again tackles important topics in a wide variety of government agencies and endeavours. The audits look at government performance in public infrastructure, transport, law and order, health and welfare, education, the environment and public sector governance. Audits already in progress, to be released in 2005-06: Coordination of Rescue Services In-Year Monitoring of the State’s Budget Position Effectiveness of the Juvenile Justice System Implementing Asset Management Reforms Bus Transitways Agency Relocations to Regional Areas Agency Collaboration in Service Delivery Fare Evasion on Public Transport (Follow-up) Oversight of State Owned Corporations Agency Use of Performance Information to Manage Service Delivery New audits to commence in 2005-06: Electronic Procurement of Hospital Supplies (Follow-up) Managing Sick Leave Police and Corrective Services (Follow-up) The Condition of our Roads Special Education Prisoner Rehabilitation Ferry Maintenance Private Sector Building and Maintaining Government Schools Workforce Management: Nursing Resources Aged Care Cross-agency Management of Young Offenders Cross-city Tunnel a ‘PPP project’ Services for the Homeless A detailed release on the program is available h tt a p t ://www.audit.nsw.gov.au/ AuditsinProgress/PerformanceAuditsprogramJune20 05.pdf
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AUSTRALIAN ACCOUNTING STANDARDS BOARD (AASB) UPDATE
MEETING 8-9 JUNE 2005 The AASB discussed the following matters:
Strategy and Work Program The Board discussed its approach to a review of the activities and role of the UIG. The Board agreed that it should clarify its process for dealing with issues that IFRIC decides not to address.
Australian Guidance In respect of the inclusion of Australian Guidance into Australian equivalents of IFRSs, the Board agreed that such guidance would only be provided where there is a particular Australian issue. The Board indicated it would welcome comments on whether existing ‘Aus’ paragraphs are appropriate and useful.
Income Tax The Board decided to discontinue the development of Australian Guidance to accompany AASB 112 ‘Income Taxes’. Instead, where specific issues addressed by the draft guidance are not already the subjects of a request for an IFRIC interpretation, the Board will request the IFRIC to consider them.
Fair Value option Amendment to AASB 139 The Board made AASB 2005-4 ‘Amendments to Australian Accounting Standards‘ [AASB 1, 132, 139, 1023 and 1038] to incorporate the IASB’s revisions to IAS 39 ‘Financial Instruments: Recognition and Measurement’ that amend the fair value option. The amended AASB 1023 and AASB 1038 continue to require financial assets that back insurance liabilities to be measured at fair value with movements reflected in the profit and loss. It was agreed that the amended fair value option should also be applied by not-for-profit entities.
UIG Report The Board approved the following pronouncements: UIG Interpretation 4 ‘Determining whether an Arrangement contains a Lease’ UIG Interpretation 5 ‘Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds’ UIG Interpretation 1052 ‘Tax Consolidation Accounting’
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Interpretations 4 and 5 apply to reporting periods beginning on or after 1 January 2006 and Interpretation 1052 applies to reporting periods ending on or after 31 December 2005. Early adoption is permitted in all instances.
Provisions and Contingencies The Board intends to issue an Australian ED ‘Request for Comment on proposed Amendments to IAS 37 Provision, Contingent Liabilities and Contingent Assets and IAS 19 Employee Benefits’ in late June, to coincide with the issue of the equivalent International ED. Comments will be due by 23 September 2005.
Business Combinations Phase 2 The AASB decided to issue an Australian version of the International ED proposing changes to IFRS3/AASB 3 ‘Business Combinations’ in late June, to coincide with the issue of the international ED. The ED will reflect the Business Combinations Phase 2 project conducted by the IASB and FASB to bring about convergence between IFRS and US GAAP.
Employee Benefits The Board made Accounting Standard 2005-3 ‘Amendments to Australian Accounting Standards [AASB 119]’. AASB 2005-3 deletes paragraphs Aus 55.1 and 55.2 within AASB 119, which deal with how an entity that is the sponsor of a defined benefit plan allows for taxes. An additional paragraph has been added within the Australian Guidance at the end of AASB 119, which does not form part of the standard, which addresses the issue.
Interim Reporting The AASB has decided to delete paragraph Aus 21.1 of AASB 134 ‘Interim Financial Reporting’ as it may appear to give a narrow interpretation of the “comparable interim period in paragraph 20 when the preceding annual reporting periods differ from 12 months.
Intangible Assets The Board noted a status report on the IASB Intangible Assets and Goodwill research project being led by the AASB. Consistent with the project’s scope and approach document, staff will develop issues papers for consideration by the AASB and IASB; initially focussing on the accounting for internally generated intangible assets and the remeasurement of recognised intangible assets.
Joint Ventures The Board received an update from staff on the progress of the IASB’s Joint Ventures Research Project being led by the AASB. The Board noted the establishment of an
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Advisory Panel for the project and agreed to include panel members from New Zealand.
GAAP/GFS Convergence The Board reviewed an amended draft ED ‘Financial reporting of General Government Sectors by Governments’ including illustrative financial statements and selected notes. The draft will be finalised with the expectation that it will be formally approved for issue at the next meeting.
Financial Reporting by Government Departments The Board continued its consideration of an extract of a draft ED on administered items, discussed the distinction between controlled and administered items and confirmed that the ED should propose that administered items be reported with appropriate prominence in the general-purpose financial reports of government departments. It was also agreed that where a government department administers its government’s controlling interest in a government subsidiary, the government should, in accounting for the administered item, adopt the principles that would be adopted by its government if the department were to prepare separate financial statements in accordance with AASB 127 ‘Consolidated and Separate Financial Statements’.
Parent Entity Relief and Financial Instruments Disclosures An option for relief from parent entity disclosures exists within AASB 130 ‘Disclosures in the Financial Statements of Banks and Similar Financial Institutions’ and AASB 132 ‘Financial Instruments: Disclosure and Presentation’ in the forthcoming AASB 7 ‘Financial Instruments: Disclosures’. The Board decided not to include such an option in the forthcoming AASB 7 ‘Financial Instruments; Disclosures’.
Contributions by Owners The Board considered a proposed ED 139 ‘Proposed Amendments Relating to the Definition of “Contributions by Owners‘that proposed amendments to: AASB 1004 ‘Contributions’ Interpretation 1038 ‘Contributions Made by Owners to Wholly-Owned Public Sector Entities’ AAS 27 Financial reporting by Local Governments’ AAS 31 ‘Financial Reporting by Governments’ The ‘Framework’. The Board agreed not to proceed at the present time with an ED proposing amendments to the above standards, but will vote out of session to make an Accounting Standard to amend AASB 3 ‘Business Combinations’ to align it with IFRS
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3 thereby deleting the definition of contributions by owners, and scoping common control transactions out of AASB 3.
Director and Executive Disclosures by Disclosing Entities The Board decided not to extend the disclosure requirements of AASB 1046 ‘Director and Executive Disclosures by Disclosing Entities’ to cover the additional executives required by s 300A(1) of t C h o e r porations Act 20 0 t 1 o be included in the Remuneration Report. The Board also agreed to prepare an exposure draft to canvass whether director and executive disclosures should be included in AASB 124: ‘Related Party Disclosures rather than in AASB 1046. Sources: AASB Action Alert No 85 (June 20I0C5A),A Accounting and Auditing News Today (ANT) Edition 23, 16 June 2005.
SUMMARY OF RELEASED STANDARDS AND PRONOUNCEMENTS Released in June 2005: AASB 2005-2 ‘Amendments to Australian Accounting Standards’ AASB 2005-3 ‘Amendments to Australian Accounting Standards’ [AASB 119] AASB 2005-4 ‘Amendments to Australian Accounting Standards’ [AASB 139, AASB 132, AASB 1, AASB 1023 & AASB 1038] AASB 2005-5 ‘Amendments to Australian Accounting Standards’ [AASB 1 & AASB 139] AASB 2005-6 ‘Amendments to Australian Accounting Standards’ [AASB 3] AASB 2005-7 ‘Amendments to Australian Accounting Standards’ [AASB 134] AASB 2005-8 ‘Amendments to Australian Accounting Standards’ [AASB 3] UIG Interpretation 4 ‘Determining whether an Arrangement contains a Lease’ UIG Interpretation 5 ‘Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds’ UIG Interpretation 1052 ‘Tax Consolidation Accounting’
AASB STAFF ARTICLE ON FINANCIAL REPORTING BY GOVERNMENT DEPARTMENTS From 1 January 2005, government departments are required to adopt Australian equivalents to International Financial Reporting Standards, unless AAS 29 ‘Financial Reporting by Government Departments’ specifies otherwise. The AASB has issued a staff article in response to questions raised: Which statements are required to be included in a government department’s financial report?
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How superseded cross-references to AAS 1 ‘Profit and Loss or other Operating Statements’ should be considered. The staff consider that to ensure compliance with both AAS 29 and AASB 101 ‘Presentation of Financial Statements’, government departments would need to comply with the more extensive requirements of AASB 101 and prepare: A balance sheet An income statement A statement of changes in equity A cashflow statement Notes. The staff are of the view that until the revision of AAS 29 by the AASB is completed, any paragraphs in AAS 29 that contain superseded references should be read and interpreted in accordance with the requirements of the most up-to-date applicable Australian Accounting Standards. A copy of the staff article can be obtained fro w m w : w .aasb.com.au/whatsnew/staff_ /Govt_Dept_ eports_and_AAS29_Override . .pdf articles r
URGENT ISSUES GROUP (UIG) U PDATE MEETING 16 JUNE 2005 The UIG discussed the following matters:
Dual Listed Companies The UIG reached a consensus on draft Interpretation 1001 ‘Consolidated Financial reports in relation to Pre-Date-of-Transition Dual Listed Company Arrangements’ and the AASB is expected to consider the draft interpretation at its next meeting. The Interpretation specifies that where the dual entities operate in substance as a single parent entity, it would be appropriate for each of those entities to present the same combined financial statements as their consolidated financial statements. Subject to the AASB’s approval, the Interpretation will apply for annual reporting periods ending on or after 31 December 2005, with early adoption permitted.
Inventory Rebates and Settlement Discounts The UIG reached a consensus on draft Interpretation 1002 ‘Inventory Rebates and Settlement Discounts’ and the AASB is expected to consider the draft interpretation at its next meeting. The Interpretation specifies: That settlement discounts and rebates related to the price of inventories should be accounted for as a reduction in the cost of inventories
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