AUDITOR-GENERAL’S REPORT FINANCIAL AUDITS Volume Nine 2009_part4 ppt

PERFORMANCE INFORMATION Size and Scope of the Commission in New South Wales The Commission is the largest vocational education and training VET provider in Australia.. Source: New Sout

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28 _ Auditor-General’s Report to Parliament 2009 Volume Nine

New South Wales Technical and Further

Education Commission AUDIT OPINION

The audits of the Commission and its controlled entities’ financial reports for the year ended

30 June 2009 resulted in unqualified Independent Auditor’s Reports

Unless otherwise stated, the following commentary relates to the consolidated entity

PERFORMANCE INFORMATION

Size and Scope of the Commission in New South Wales

The Commission is the largest vocational education and training (VET) provider in Australia

Year ended 30 June 2006-2008

Change % Increase/

(Decrease) 2008 2007 2006

Annual student hours (ASH) (’000) 3.6 112,660 108,509 108,785 Net cost of services * ($’000) (1.9) 1,188,845 1,204,231 1,212,107

Net cost of services/enrolment ($) (2.6) 2,359 2,419 2,422 Net cost of services per ASH ($) (5.5) 10.53 11.10 11.14

* Net cost of services is for the financial year ended 30 June, whereas enrolments and student hours are for the

calendar year

Source: New South Wales Technical and Further Education Commission (unaudited).

Enrolments have remained steady and there has been a 3.6 per cent increase in hours of training

delivered since 2006 The Commission has advised that this trend reflects a 0.7 per cent increase in

enrolment numbers and also a change in the student profile, with an increasing number of students

undertaking studies in longer higher level qualifications In 2008, 42.7 per cent of all enrolments

were in these higher level qualifications (Certificate III and above) compared to 40 per cent in

2006

Higher level qualifications provide better employment outcomes Increasing the number of people

with higher level qualifications has been an agreed goal of State and Commonwealth governments

for several years

Enrolments by Aboriginal and Torres Strait Islanders have increased by 25.3 per cent since 2006,

while enrolments by students from language backgrounds other than English increased by

11.6 per cent in the same period

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Auditor-General’s Report to Parliament 2009 Volume Nine 29

New South Wales VET Cost per Student Hour

The table below provides details of the volume of vocational education and training hours delivered

in New South Wales from training providers in receipt of Government funding Government expenditure per student hour has decreased by 18.1 per cent since 2004 The Commission has advised that over this period Government funded student enrolments in New South Wales increased

by 10.2 per cent and totalled 429,181 in 2008

Year ended 30 June

2004-2008 Change Increase/

(Decrease) 2008 2007 2006 2005 2004

Government recurrent

expenditure* ($m) (90.0) 1,363 1,397 1,429 1,434 1,453 Student hours (million) 14.2 112.1 108.8 105.8 106.7 97.9 Expenditure per student

hour ($/hour) (2.7) 12.2 12.8 13.5 13.4 14.9 Change in expenditure

per student hour

since 2004 (%) (18.1) (18.1) (13.5) (9.1) (9.5)

Source: National Centre for Vocational Education Research, 2004-08 Australian vocational education and training statistics – financial information Unpublished data from NCVER The costs noted in the table above have been adjusted to 2008 dollars to exclude the effect of inflation (unaudited)

* Government Recurrent Expenditure is made up of:

TAFE NSW (approx 82 per cent of total), VET programs within NSW DET, agricultural colleges and

NSW Adult Migrant English Service

OTHER INFORMATION

We identified some minor opportunities for the Commission to improve internal controls and we have reported these to management We have reported the following matters to the Commission for the last two years:

 the need to better manage the review and transfer of completed projects in capital works in progress to completed assets The balance of these projects totalled $91.1 million at

30 June 2009

 the need to correctly identify land and buildings included in both the Department of Education and TAFE NSW’s financial reports The maximum value of properties potentially duplicated is approximately $12.8 million As the land and buildings date back in time, the Commission has deferred confirming the accuracy of their records until the 2010 financial year

Maintenance Backlog

TAFE NSW Institutes are given an overall budget by the Commission The Institutes determine a maintenance budget based on service priorities In accordance with the Government’s policy of total asset management, the Commission is developing a new methodology for future condition assessments This uses new software to identify and prioritise maintenance works by matching data collected with maintenance work programs It was anticipated that the new condition assessments would be completed by the end of 2008, but to date they have not been undertaken At

30 June 2009, maintenance backlog was estimated by management to be $37.6 million ($27.7 million in 2007-08) The backlog is not considered significant in the context of the estimated replacement value of TAFE NSW buildings of $3.0 billion

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New South Wales Technical and Further Education Commission _

Workers’ Compensation Claims

Estimated cost for all workers compensation claims ($m) 6.8 9.1 8.5

* Figures for prior years include data accumulated to date Therefore the total days lost and costs are higher for the

earlier years due to the passage of more time

Source: New South Wales Technical and Further Education Commission (unaudited).

In 2008-09, the Commission had 15,962 (16,231) full time equivalent employees and there were

66 stress claims made, 34.7 per cent less than in 2007-08 The average cost per stress claim in

2008-09 was $28,971 ($35,947) compared to $10,766 ($13,015) for all types of injuries

The number of workers’ compensation claims has decreased by 10.3 per cent since 2007-08 and

there has been a 25.3 per cent reduction in the estimated cost of the claims The Commission has

advised the improvement was due in part to a reduction in the number of claims incurred along

with a reduction in the average duration of time lost The Commission attributes these reductions

to the successful implementation of programs and initiatives under its safe working and learning

strategy, which targets improvements in injury prevention, return to work and claims management

outcomes

Workers’ Compensation Premiums Benchmark

Year ended 30 June 2010+ 2009 2008 2007

Equivalent full time employees

* Benchmark paid by The Treasury

** Excess paid by TAFE NSW

*** EFT numbers as specified in the Commission’s Workers’ Compensation Declarations

+ Estimates for 2010

The Treasury sets a benchmark for agencies that determines the level of funding provided for

workers’ compensation premiums If an agency’s premiums exceed the benchmark, the agency

needs to fund the excess This offers a financial incentive for agencies to actively manage their

workers’ compensation costs and minimise workplace injuries

The Commission has advised that there has been a $2.6 million reduction (76 per cent) in the short

fall payable by the Commission over the last four premium renewal periods as a result of improved

claims management This has also led to a $1.0 million reduction (6.2 per cent) in the deposit

premium for the 2009-10 period

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Overtime

Overtime costs decreased two per cent in 2008-09

Year ended 30 June 2009 2008 2007 2006

As shown in the table below, 157 (156) non-teaching TAFE NSW employees earn 20 per cent or more

of their gross salary in overtime

Overtime to Base Salary % Number of Non-Teaching Employees

2009 2008

For four employees overtime was more than 50 per cent of their base salary compared to six in the

prior year Overtime worked by non-teaching staff is paid at penalty rates, which is a relatively

expensive way of obtaining more resources

Overtime

$

Base Salary

$

Annual Gross

$

Overtime to Base Salary

%

The Commission has previously advised that high levels of overtime may be paid because:

 overtime paid was for services that needed to be performed and that overtime was the

cheapest alternative for providing the required services

 the cost of some overtime has been built into the budget for commercial activities

 of industrial action and other circumstances beyond the control of the Commission

 TAFE NSW operating hours are from 6.00am to 10.00pm, Monday to Saturday, therefore some

overtime is unavoidable

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New South Wales Technical and Further Education Commission _

FINANCIAL INFORMATION

Abridged Consolidated Operating Statement

Year ended 30 June Consolidated Parent

2009 2008 2009 2008

Personnel services 343,344 330,845 1,232,114 1,188,636

Other operating expenses 307,779 303,384 307,779 303,384

Depreciation and amortisation 78,072 75,675 78,072 75,675

TOTAL EXPENSES 1,673,450 1,611,045 1,617,965 1,567,695

TOTAL REVENUE 396,026 380,560 396,313 380,556

NET COST OF SERVICES 1,277,408 1,232,191 1,221,636 1,188,845

Government contributions 1,272,110 1,244,084 1,216,626 1,200,734

(DEFICIT)/SURPLUS (5,298) 11,893 (5,010) 11,889

The increase in revenue is attributable to the increase in student enrolment numbers, referred to previously

Abridged Consolidated Balance Sheet

2009 2008 2009 2008

Current assets 181,321 166,353 181,321 166,111

Non-current assets 2,991,280 2,978,932 2,991,280 2,978,932

TOTAL ASSETS 3,172,601 3,145,285 3,172,601 3,145,043

Current liabilities 212,669 180,210 213,511 180,943

TOTAL LIABILITIES 213,511 180,897 213,511 180,943

NET ASSETS 2,959,090 2,964,388 2,959,090 2,964,100

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The increase in current liabilities of $32.5 million was predominately due to:

 a rise in personnel services payable the to the Department of Education and Training of

$5.5 million

 an increase in unearned revenue of $12.1 million due to new programs and increased commercial activity domestically and overseas

 a $9.9 million increase in accrued salaries and wages

COMMISSION ACTIVITIES

The Commission, more commonly known as TAFE NSW, was constituted by the Technical and

Further Education Commission Act 1990 as a statutory body corporate

Its principal objective is to provide relevant technical and further education services to industry, students and other client groups

The Commission provides vocational and pre-vocational education and training services through its ten Institutes and the Open Training and Education Network (OTEN) While the Institutes and OTEN observe Commission policies and priorities, they develop their own education and training profiles and manage their own operations

Since December 1997, the Commission has been a controlled entity of the Department of Education and Training

The Commission is subject to the control and direction of the Minister for Education and Training For further information on the Commission, refer to www.tafensw.edu.au

The four Metropolitan Institutes are Northern Sydney, South Western, Sydney and Western Sydney The six Country Institutes are Hunter, Illawarra, New England, North Coast, Riverina and Western

CONTROLLED ENTITIES

The following controlled entities have not been reported separately on as they are not considered material by their size or the nature of their operations to the consolidated entity

A.C.N 093 230 374 Pty Limited

The company ceased trading and was wound up on 15 November 2008

New South Wales Technical and Further Education Commission Division

The Division provides personnel services to the Commission

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Office of the Board of Studies AUDIT OPINION

The audit of the Office’s financial report for the year ended 30 June 2009 resulted in an unqualified

Independent Auditor’s Report

FINANCIAL INFORMATION

Abridged Operating Statement

$’000 $’000 2008

The fall in other revenue is due primarily to a decrease in interest earned on cash balances

Depreciation and amortisation rose due to increased asset purchases during the year

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Abridged Balance Sheet

$’000 $’000 2008

The increase in non-current assets was due predominantly to the acquisition of leasehold improvements of approximately $959,000, plant and equipment of $1.6 million and intangible assets of $421,000

The decrease in non-current liabilities was due to a reduction in the provision for restoration costs

Abridged Service Group Information

Office of the Board of Studies net cost of services on a service group basis is detailed below:

Year ended 30 June Net Cost of Services Net Assets

$’000 $’000 $’000 $’000 $’000

Curriculum Development and Support 9,071 8,322 8,462 1,251 660 Examinations Assessments and

Credentialing 86,569 86,755 85,385 4,376 4,089 Registration and Accreditation 3,420 3,513 3,349 (127) (126) Not Attributable ** (256) (301) 3,557 4,417

Total all service groups 99,060 98,334 96,895 9,057 9,040

* Per the New South Wales 2008-09 Budget Papers

** Represents items that could not be reliably allocated to a ‘service group’

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Office of the Board of Studies _

OFFICE ACTIVITIES

The Office is responsible for developing and delivering professional and administrative services to the Minister for Education and Training, the Board of Studies and its committees This includes developing and supporting New South Wales curriculum, registering and accrediting non-government schools, registering home schooling, and assessing and examining students for the New South Wales School Certificate and Higher School Certificate (HSC) The Office carries out functions delegated to it by the Board of Studies, including employing staff to run the HSC The Office bears the cost of carrying out those functions and does not charge the Board for those services

The Office also includes the Australian Music Examinations Board (NSW) and the Aboriginal

Education Consultative Group The Office is a department under the Public Sector Employment and

Management Act 2002

For further information on the Office of the Board of Studies, refer to

www.boardofstudies.nsw.edu.au

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*Greyhound and Harness Racing Regulatory Authority

Refer to Appendix 1 for:

Casino, Liquor and Gaming Control Authority

*Responsible Gambling Fund

* The audit was incomplete at the time of compiling this Volume

The comment will be included in a later 2009 Volume

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