To be financially sustainable, entities need to be able to meet current and future expenditure as it falls due. They also need the ability to absorb foreseeable changes and materialising risks without significantly changing their revenue and expenditure policies. This Part provides our insight into the financial sustainability of the 19 water entities based on our analysis of the trends in seven indicators over a five-year period.
Accrual-based financial statements enable an assessment of whether water entities are generating sufficient surpluses and positive cash flows from operations to maintain services, fund assets maintenance and retire debt. This Part analyses the financial results of the 19 water entities for the year-ended 30 June 2012.
Sixteen of the 19 water entities are required to include an audited statement of performance in their annual report. The three metropolitan retailers are encouraged to include an audited statement of performance.
Independent audit opinions add credibility to financial reports by providing reasonable assurance that the information reported is reliable. The quality of an entity’s reporting can be measured by the timeliness and accuracy of the preparation of the reports. This Part covers the results of the 2011–12 audits of the 19 water entities and one controlled entity. It also compares financial reporting practices in 2011–12 against better practice, legislated time lines and 2010–11 performance.
The Victorian water industry consists of 20 entities, comprising 19 water entities and one controlled entity. All entities are wholly owned by the state. The entities are stand‑alone businesses responsible for their own management and performance. Each governing board appoints a managing director responsible for the day-to-day operating activities of the entity. An overview of the accountability arrangements of the water industry is provided in Appendix B.
This report presents the results of our financial audits of 20 entities, comprising 19 water entities and one controlled entity. It provides a detailed analysis of financial and performance reporting, their internal controls, financial results and sustainability.
Clear audit opinions were issued on 19 financial reports for the financial year-ended 30 June 2012. At 2 November 2012 the financial report of Watermove was yet to be finalised.
Clear audit opinions were issued on all 16 performance reports for the year.
Ordered to be printed
VICTORIAN GOVERNMENT PRINTER November 2012
PP No 194, Session 2010–12
In accordance with section 16(3) of the Audit Act 1994 a copy of this report, or relevant extracts from the report, was provided to the Department of Health and named hospitals with a request for submissions or comments.
The submission and comments provided are not subject to audit nor the evidentiary standards required to reach an audit conclusion. Responsibility for the accuracy, fairness and balance of those comments rests solely with the agency head.
Responsibility of public sector entities to achieve their objectives, with regard to reliability of financial reporting, effectiveness and efficiency of operations, compliance with applicable laws, and reporting to interested parties.
Establishing control of an asset, undertaking the risks, and receiving the rights to future benefits, as would be conferred with ownership, in exchange for the cost of acquisition.