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House of Assembly - Fifty-Second Parliament, First Session (52-1)
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

In committee (resumed on motion).

The CHAIR: We now proceed to examination of the Auditor-General's Report in relation to the Minister for Employment, Training and Further Education, Minister for Science and Information Economy, Minister for Road Safety and Minister for Veterans' Affairs, 30 minutes. I remind members that the committee is in its normal session, so any questions have to be asked by members on their feet, and all questions must be directly referenced to the Auditor-General's Report.

Ms CHAPMAN: Substantially, the Department of Further Education, Employment, Science and Technology is in Volume 2, and I will start at page 548. The section, if you have noticed there, starts at page 547. My first question relates to point 5 on that page under 'Hourly paid instructors'. This is a payroll issue that was under the scrutiny of the Auditor. There is a recommendation there by the Auditor-General that there be independent checks. The response, apparently, is that they will be implemented by two months ago, so my question really is have those checks been implemented, who is undertaking them and how often is that operating?

The Hon. J.J. SNELLING: There is an interim measure that has been introduced which requires TAFE SA work group office managers to check and countersign the spreadsheets, and this has already been implemented. There is a longer-term solution, which is the implementation of the time and attendance module for hourly-paid instructors on the HR management system, which I believe is called Empower. Shared Services have taken Empower over and they are developing their own payroll system across government, and that will solve these problems.

Ms CHAPMAN: I refer to 'Human resource delegations' on the same page. The Auditor found that forms used to process changes to employee master files were not always being properly authorised. How has this process changed to ensure rigour and accuracy or, in fact, has this matter been referred to Shared Services as well?

The Hon. J.J. SNELLING: The processes are in place. It is a matter of training the employees in the proper implementation of the processes. Appropriate training and reinforcement of the processes will continue to optimise compliance. Delegations are being reviewed to ensure absolute clarity in regard to the different types of employee master file changes that can be made, and by whom. Other changes in place minimise the risk of unauthorised changes, for example, the TAFE institute staffing committee and the HR unit review staffing information.

Ms CHAPMAN: On the same page under a number of control deficiencies that the Auditor has highlighted, one of them is the Masterpiece users' access. I suppose the logical question is: why do DFEEST employees have access to Masterpiece for payment processing when this is a Shared Services responsibility?

The Hon. J.J. SNELLING: That access was cancelled for all DFEEST staff on 12 July 2010. Only Shared Services SA has this level of access as the system administrator. Prior to that date there were a couple of DFEEST staff who had access. That was for reasons of backup. In the case of problems with Shared Services, there were some other officers in the department who were able to access it. But, as I said, they have been removed as of 12 July. It has been checked and there were no inappropriate payments processed prior to the access being cancelled.

Ms CHAPMAN: I appreciate that post-12 July there is a new regime and, obviously, there is no necessity for DFEEST personnel of any kind to be involved at that level, but I do not quite understand the backup. Was there a period pre-12 July for which Shared Services had responsibility, which is what the Auditor-General seems to be suggesting here: that they clearly had it in the financial period we are talking about? Perhaps there was some historical carryover for these people continuing to have access? I do not know.

It just seems rather peculiar that, in the period in which the Auditor has identified, that responsibility had already transferred. Some personnel had access but, whether there were a couple or how senior they were, I do not know. I do not need names, but perhaps you can identify the level of responsibility in the department of these people who did have access to it; and why did they during this audit year? We do not have people in other departments providing backup as a matter of course. I think it needs some further explanation.

The Hon. J.J. SNELLING: The two officers who had access were a systems administrator and an ICT administrator. But the important thing to remember is that a check has been done and no inappropriate payments were processed by either of these officers. I think there was just a carryover or leftover as control of the system was changed from the department to Shared Services.

Ms CHAPMAN: On page 549 but under the same expenditure of control deficiencies identified by the Auditor under 'Expenditure', there is reference to the 'Scanning Workforce Accounts Payable delegations' and then 'Segregation of duties'.

What the Auditor-General here is telling us is that you can end up with a situation where one officer can purchase, receipt and approve payments for goods. I am sure that the minister would appreciate the very significance of having people in different roles, and to have crosschecking and then an audit process is to ensure that there is a segregation of those duties and responsibilities, and this therefore sets up a crosschecking situation.

I ask the minister to explain what is actually happening. The report simply tells us that 'control deficiencies have been addressed'. It talks about using the eProcurement system. Perhaps you could explain how that will fix the problem.

The Hon. J.J. SNELLING: As the member for Bragg acknowledged, the report does say that there has been implementation of the eProcurement system. DFEEST acknowledged the limitation of the Scanning Workflow Accounts Payable system in the area, and it considered the risk was minimal, given the areas involved and the involvement of internal audit. So, there is an internal audit process which provides checks and balances to make sure that nothing untoward is happening.

As the member for Bragg noted, SWAP has been decommissioned with the implementation of the eProcurement system. The way the eProcurement system works, I am told, is that, at different stages of the procurement chain, the system ensures that there are different people along the chain authorising whatever needs to be authorised. This enforces appropriate segregation duties.

Ms CHAPMAN: In 2008-09, the Auditor questioned DFEEST's grant expenditure control processes. The target date for completion of a framework was December 2009. In March 2010, it was not complete, and a review was not completed until April. When will a formal policy and minimal control framework for grant expenditure be complete?

The Hon. J.J. SNELLING: The new policy is in place now, I am advised.

Ms CHAPMAN: Again, page 549, 'Student revenue—Fees by instalment'. The Auditor found controls issues based on a review of the Mount Gambier campus and unauthorised staff approving fees by instalment and processes that are outdated and inconsistent with revenue delegations. Minister, could you explain when the TAFE policy will be tightened up to satisfy the Auditor's requirements in this area and how is it intended to do so?

The Hon. J.J. SNELLING: The department does not believe that it is a widespread or high risk issue. The TAFE SA policy committee, which is the body responsible for developing and implementing policy on such matters, is reviewing all arrangements in conjunction with the department's legislation and delegation area and we hope to have new arrangements in place early in the new year.

Ms CHAPMAN: On the enrolment forms, how is it that client services staff have been able to charge fees varying from the stipulated amount, and how will the department be addressing the auditor's concerns?

The Hon. J.J. SNELLING: The revised TAFE SA regional enrolment administrative procedure includes a directive that all enrolments must be performed on the student management system (SMS) first, followed by the raising of fees in the ARPOS system. That program area is to include the accurate fee calculations on or with the enrolment form. This revision occurred in March of this year and all staff have been advised of the changes. This change would have overlapped with the time of the audit's visit to the Mount Gambier campus.

This new directive provides a checking mechanism for the fee shown on the enrolment form against the fee loaded in SMS, prior to the fee being receipted in the ARPOS system. Where the fee calculation on the enrolment form differs from the fee recorded in SMS, the client services officer will charge the fee as recorded in the SMS system, as this is where official TAFE fees are loaded. Ad hoc audits of the enrolment process in TAFE SA regional is being undertaken to ensure that all enrolment forms are appropriately authorised. The identified issues will be fully addressed through the implementation of the new student information system, which will be in place next year and will replace ARPOS and SMS.

Ms CHAPMAN: I do not profess to understand all of that, minister, so just clarify this for me: are you saying that this was able to occur, that is, a different fee charged, because they did not have a system in place which would automatically reject the identification of an amount that was different to the stipulated fee and that, therefore, electronically, it could not be processed until it had the right money in it? Is that as I understand the gist of your answer?

The Hon. J.J. SNELLING: In essence, what you are saying is correct. However, there was a normal conciliation process and audit process which would have picked up if this was a widespread problem: it was not picked up as being a widespread problem. What it demonstrates is the importance of the new student information system. These old systems are antiquated and not easily modified, and the student information system will go a long way to making sure that these issues can be addressed straight away.

Ms CHAPMAN: The other issue is, I think, a little more serious, which is DFEEST being found to have approached the market with an expression of interest re the acquiring of the student information system (SIS) before gaining approval from the State Procurement Board. I am sure that you would be aware of the importance of ensuring that that process is adhered to. What happened? Why did this happen? Why would DFEEST even try to do this?

The Hon. J.J. SNELLING: The simple answer to your question is that Procurement Board policy, such as the market approaches guidelines, were only issued in August of 2009 and this procurement was in 2006, so three years before detailed procurement policies were put in place. DFEEST short-listed and sought tenders from two vendors after an expression of interest to the broader market place. The Auditor-General indicates this did not fully comply with the State Procurement Board policies. At the time, four years ago, discussions with the State Procurement Board were extensive. The fact that audits commented that SPB policies and frameworks have been enhanced since indicates there were grey areas previously.

In November 2006, when the procurement happened, there were minimal State Procurement Board policies in this area, and guidance on the use of expressions of interest was minimal prior to the promulgation of November 2008. Procurement board policies such as the market approaches guidelines, as I said before, were only issued in August 2009. So, the detailed procurement guidelines were issued after this process was entered into to comply with SPB requirements.

Ms CHAPMAN: Excellent. DFEEST also deviated significantly from documentation for DTF with regard to the discount rate in a number of years used to evaluate the student information system and also in relation to identification and definition of service needs for SIS. Why did this occur?

The Hon. J.J. SNELLING: I am advised that there were discussions with the Department of Treasury and Finance, but these discussions were not documented. DFEEST's processes have been updated to ensure full compliance of all future relevant projects. The DTF provided a costing comment when the proposal went before cabinet, so when it went before cabinet the normal costings were done and costing comment was provided by the Treasury, and implementations under one system will progressively go live during 2011.

Ms CHAPMAN: I have one other question, and I think my colleagues would like to ask some questions on your other portfolios. The University of Adelaide, Flinders University and the University of South Australia all, of course, have separate portfolio audits, for which you are responsible. In relation to the vice-chancellors of each of these institutions, at page 1726 the University of Adelaide discloses income of between $820,000 and $834,000; at page 1771 the University of South Australia, $580,000 plus; and Flinders University at page 533, $470,000 plus.

That is obviously quite a disparity. In the same financial accounts of each of those universities there is quite a significant variance in the annual income budgets. It is about $700 million for that academic year for the University of Adelaide, compared to UniSA, which is $473 million, and Flinders University, $331 million. All these figures are in the accounts. The guidelines are referred to in the footnotes. Is the guideline applicable to the provision of the chief executive officer's salary package based on the turnover of the university, or the number of students, or the asset base of the university; and, if you do not have it, is it publicly available on the website or otherwise?

The Hon. J.J. SNELLING: Is the member for Bragg quoting from the Auditor-General's Report or something else?

Ms CHAPMAN: The Auditor-General's Report, yes. The Auditor-General's Report provides an audit of each of the universities. I have referred to their page numbers. Perhaps I will tell you where they are because I have referred to each of the page numbers which relate to the salaries of all the people earning over $100,000. In the Auditor-General's Report, the University of Adelaide starts on page 1694, the University of South Australia starts on page 1742, and Flinders University starts on page 499. The page numbers I have given you are within those divisions, and I have simply quoted the turnover for each of those universities.

There is also a disparity in the assets and liabilities net of those entities. I am assuming there is still some assessment of the salaries that the heads of these universities receive commensurate upon the asset and turnover; but it may be other factors these days, I do not know—maybe student numbers or the number of schools within the university, etc. Could we have that? It does refer in the report to this being commensurate with guidelines. I am not sure where they are or if they are publicly available. That is my question.

The Hon. J.J. SNELLING: The remuneration would be a decision of the councils, or it would go before the councils of each individual university. If there is any other information I can provide, I will take it on notice and come back.

Ms CHAPMAN: What about the guidelines? Are they available?

The Hon. J.J. SNELLING: I will find out for you.

The ACTING CHAIR (Ms Thompson): Member for Bragg, the table officers and I are a bit confused. Can you give us those page references again? This is referring to the pages of the Auditor-General's Report?

Ms CHAPMAN: Yes. The page number of the commencement of the section on the University of Adelaide is 1694, and the page I have referred to, which relates to all of the executive salaries, is page 1726. The University of South Australia commences on page 1742, and I have referred to page 1771. Then, for Flinders University, that whole division starts at page 499, and I have referred to page 533.

Mr HAMILTON-SMITH: Minister, the government has employed a special envoy for Europe—Nicola Sasanelli. Parliament has been told that $130,000 comes from DTED, with a matching payment (I am not sure exactly what) from DPC. Has DFEEST, or any of the portfolios for which the minister is responsible, had any engagement with Mr Sasanelli? Has any funding been expended from your portfolio on visits to Puglia, or any other matter to do with the Fiera del Levante, or any of the issues that have been recently raised regarding Sasanelli? This refers to Auditor-General's Report, page 570, remuneration of employees and other matters.

The Hon. J.J. SNELLING: I do not think these issues are specifically addressed in the Auditor-General's Report with regard to my portfolio areas, so I do not have the information to hand, but I am happy to come back to the house and report accordingly.

Mr HAMILTON-SMITH: I thank the minister for that commitment to come back with an answer on any expenses from his portfolio in that regard. One final question, very quickly—and I am referring to page 569 of the Auditor-General's Report: Activity Technology Investment—options put forward by Leanna Read for Playford Capital. Was one of the options to outsource Playford Capital as a going concern? Do you think you could have obtained some revenue for Playford Capital as a going concern? Could you explain to the committee why you did not choose to offload Playford Capital from government as a going concern, because all that goodwill and that history was going to be lost with the decision to fold it up and wrap it up?

The Hon. J.J. SNELLING: Once again, I do not think Playford Capital is mentioned anywhere in the Auditor-General's Report. I made myself available for two hours of questioning by the member for Waite during the estimates process on this very issue. All I can say to him is what I said to him then and that is, of the options, I chose the option which I believed would be least disruptive to the investee companies. The issues being dealt with, being of a commercial-in-confidence nature, I am not able to make any more information available to the house than that.

Mr GOLDSWORTHY: I have a road safety question. Minister, at page 1608 in Volume 5, under the heading Consultancies, can you tell us which department is paying Professor Wegman, Thinker in Residence, for his consultancy; what is the total expected amount to be paid to the professor; and is he returning to South Australia this month, as the government previously announced?

The Hon. J.J. SNELLING: I do not have the exact amount of DTEI's contribution to Professor Wegman's residency. I can let the member for Kavel know that Professor Wegman is in Australia and he is here in Adelaide at the moment. He is here for the next three weeks. There are a number of partners engaged in Professor Wegman's residency: the RAA; DTEI (as I have indicated); the Motor Accident Commission, I think; the South Australia Police. They are some of the partners involved in Professor Wegman's residency. I am sure Professor Wegman will be very happy to make himself available to the member for Kavel to discuss the sorts of issues he is looking at.

Progress reported; committee to sit again.

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