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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-07-22 Daily Xml
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AUDITOR-GENERAL'S REPORT

In reply to the Hon. D.W. RIDGWAY (Leader of the Opposition) (20 November 2007).

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning):

1. An independent audit review conducted in October 2007 with respect to progress on the implementation of the initial recommendations identified that only two issues remained outstanding and these were implemented by the end of December 2007.

The initial delay in full implementation was due to the complex nature of calculating royalties in a processing plant environment where there was a large volume of raw product of various composition, and the need to apportion specific plant operating costs to the products that flow from the plant and are subject to royalty calculations.

The complexities involved require both engineering and accounting expertise, from both Santos as the operator of the South Australian Cooper Basin Joint Venture, and PIRSA, to determine the best way to identify and account for the variable costs and the apportionment of fixed costs across various petroleum products that are subject to royalties.

2. Significant procedures have been implemented that gives assurance that correct royalty has been paid to the State.

Such procedures include:

Implementing a Revenue Review and Audit Committee in PIRSA to continuously monitor effectiveness of royalty accounting and audit practices and to oversee progress to address any Auditor-General Audit findings.

Implementation of a Joint PIRSA/Santos Project Team to address the accuracies within reporting methodology and royalty payments made to the State by Santos.

Dedicated resource overseeing all Royalty Returns and Payments to the State. Dedicated resource to perform site audits to confirm Royalty Returns are being

Accurately processed in accordance with the Petroleum Act 2000.

Provision of independent audit verification of royalty paid.

I have been advised by PIRSA that with procedures currently in place to monitor and verify royalty paid, that there is minimal risk that any petroleum royalties paid by producers is not correctly calculated.

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