Annual Report 2005 NSW Department of Education and Training

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Appendices Appendices Appendix 22: Organisational improvement and risk management Introduction During 2005 the Audit Directorate developed the Enterprise Risk Management policy. This policy will be implemented in 2006, replacing the existing Risk Management Policy 91/090 (S.063, 24/4/91). The Department uses a risk management approach for both the development of its internal audit plan and for conducting audits and reviews. Staff are trained in the principles and methodology of risk management. The methodology is used to help auditors and management focus on risks relevant to the business directions of the Department. Risk assessment workshops were conducted with departmental staff for a number of audits.These workshops resulted in a shared understanding of risks by staff and greater acceptance and ownership of recommendations made at the workshop to minimise risks and improve processes. All TAFE NSW Institutes submitted a signed statement of responsibility for internal control for 2005. These documents stated that the objective of reducing risks to an acceptable level had been achieved and that a system of internal controls had operated satisfactorily. NSW government schools During 2005, the Department undertook 1,305 school audits that focused on the key financial and related operations in accordance with assessed risk. These audits found that 92% of the schools managed their finances satisfactorily, while 8% had adverse reports. Common findings and summary reports were provided to regional offices. Audits were also undertaken in school enrolments, occupational health and safety, teacher professional learning and leave systems. Recommendations to improve asset management policy and procedures were implemented from 1 December 2005. Organisational improvement To help identify and manage risk as well as to improve processes and systems so that services to students and industry are improved, TAFE NSW Institutes, OTEN and the Centre for Learning and Innovation implemented business systems that meet ISO 9001:2000 Quality Standards. Many Institutes also embraced other improvement standards including ISO 14001:1996 Environmental Standards and Hazard Analyses and Critical Control Point (HACCP) Standards. To ensure that business processes are robust, risk is identified and addressed, and internal and external audits are carried out. Findings are used to improve planning, resource use and services. TAFE NSW Audits of major high-risk Institute functions such as purchasing and accounts payable, receipting and banking, payroll, and occupational health and safety were conducted at all TAFE NSW Institutes. Audits were also conducted covering the International Students Centre, information and system sharing, TAFE NSW marketing, and management of staff travel. Auditors from the National Centre for Vocational Education Research (NCVER) were assisted in their audit of TAFE NSW student data on behalf of the Australian National Training Authority (ANTA). This audit is considered as being of high priority as the results have a direct bearing on the Australian Government’s funding received by TAFE NSW. Statewide audit Departmental staff undertook 24 audits in State Office directorates. Significant system improvements resulted from these audits and some examples are listed below. • Governance review of major DET strategic initiatives • Technology for Learning Program • Budgetary process • Joint funded projects in schools • Payroll • Accounts payable • Employment screening • Financial viability checks on higher education institutions seeking registration under the Higher Education Act • Probity audits of large tenders • Quality control review over year end accounts. Information systems Sixteen audits were completed during the year. Recommendations made in these reports, when implemented, will improve operational controls, security and efficiency in the systems reviewed. Examples of some of these audits include: • Systems - applications including corporate-wide systems (personnel, payroll, finance and student systems) and systems for specific directorates including Adult and Community Education (ACE) and Selective Schools • Infrastructure - regional networks, wide area networks, database and server management and internet services • Projects - technology projects including new systems such as electronic establishment control (e-EC) upgrades, system migrations and acquisition of equipment and/or services • IT Governance - significant resources were applied to probity audits of request for tenders/quotations. DET policy documents Current DET policy documents are now accessible to staff and members of the public on the corporate 111 NSW Department of Education and Training - Annual Report 2005
website at www.det.nsw.edu.au/policies/ . The majority of these documents have been rewritten in a concise and standardised format over the last twelve months. The remaining policies will be reviewed and reformatted into this standardised format over the next year. The policy website provides online access and a telephone contact for requests for further information or to provide feedback. Benchmarking audit services The Department participated in an international benchmarking program in which internal audit departments in the public and private sectors were compared with each other, with groups of similar size, purpose or location, and against world-class internal auditing groups. This benchmarking process is conducted annually. Areas of comparison included level of resourcing, skill and experience of audit staff, timeliness of audit work, quality of audit planning, risk awareness and quality improvement activities. In 2005, the Department continued to meet or exceed worldclass standards in several areas of auditing including audit planning and risk awareness. Insurance activities The Department manages its insurable risks such as workers’ compensation, property, public liability and motor vehicles through a risk management program and the NSW Treasury Managed Fund Scheme. The Department manages non-insurable risks through sound administrative and management practices and by implementing preventative controls. During the reporting period, the Department continued to follow its code of conduct and to provide training in ethics, accountability and internal control. Corruption prevention The Audit Directorate appointed a Manager, Corruption Prevention in late November 2005. The position will focus on conducting corruption prevention projects to minimise the risk of corruption and fraud in DET. Projects will be initiated from risk assessments, the results of investigations and audits and from management requests. The position will liaise with key areas of the Department to promote corruption prevention. Projects to be undertaken include the follow-up of the Independent Commission Against Corruption (ICAC) Report on investigation into schemes to fraudulently obtain building licences; the DET Statement of Business Ethics; the DET Fraud Control Plan and a project on academic fraud. Table 22.1 Complaints registered for investigation by Audit Directorate by sector per calendar year Sector 2005 % 2004 % 2003 % 2002 % 2001 % Schools and Regional Offices 41 48 73 64 56 53 71 71 70 69 TAFE Institutes 33 38 25 22 35 33 16 16 23 23 State Offices 10 12 15 13 8 8 10 10 8 8 External/Other 2 2 1 1 6 6 3 3 0 0 Total 86 114 105 100 101 % Protected disclosures 24% 39% 21% 26% 29% Source: DET, Director, Audit Table 22.2 Outcomes of complaints investigated per calendar year Outcome 2005 % 2004 % 2003 % 2002 % 2001 % Unsubstantiated 37 46 57 47 48 49 38 40 38 41 Substantiated 44 54 64 53 50 51 58 60 54 59 Total 81 121 98 96 92 Source: DET, TAFE NSW Appendix 23: Matters affecting the operations of the Department Financial operations The introduction of International Accounting and Reporting Standards came into effect for all reporting periods commencing on or after 1 January 2005 and will apply to all government and non-government entities. The financial statements for the year ended 30 June 2005 covering the Department and its controlled entities were prepared under both existing standards and new standards in order to provide comparative figures for the 2005-2006 annual financial statements. The financial impact of the first time application of the new standards will be fully addressed in the 2005- 2006 financial statements. Issues that could impact on TAFE NSW in 2006 • Addressing skills shortages in NSW • Implementing the recommendations of the Aboriginal Education Review and achieving all targets for improvement • Meeting targets for ASH, skill shortages, equity and age groups under the State VET Plan and the Results and Services Plan Appendices NSW Department of Education and Training - Annual Report 2005 112
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Annual Report 2005 NSW Department of Education and Training

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