This Appendix sets out the financial indicators used in this report. The indicators should be considered collectively, and are more useful when assessed over time as part of a trend analysis. The indicators have been applied to the published financial information of the 19 water entities for the five-year period 2007–08 to 2011–12.
This Appendix presents the composition of revenue, expenses, assets and liabilities at an industry, metropolitan, regional urban and rural level.
Figure E1
Revenue composition
Source: Victorian Auditor-General’s Office.
Figure E2 Expense composition
Note: Non-FMA audit types: C – Corporations Act 2001.
The performance report for Melbourne Water was completed on the same date as the financial report. A clear opinion was issued.
Source: Victorian Auditor-General’s Office.
This report is the third of six reports to be presented to Parliament covering the results of our audits of public sector financial reports. The reports in this series are outlined in Figure C1.
Figure C1
VAGO reports on the results of the 2011–12 financial audits
Report |
Description |
|---|---|
Auditor-General’s Report on the Annual Financial Report of the State of Victoria, 2011–12 |
The responsible minister for the water industry is the Minister for Water. The relationship between the Minister for Water and the water entities is established by the Water Act 1989.
The Water Group, a business unit within the Department of Sustainability and Environment, supports and advises the Minister for Water.
The 19 water entities also report to the Treasurer of Victoria.
AAS Australian Accounting Standard
AASB Australian Accounting Standards Board
DSE Department of Sustainability and Environment
ESC Essential Services Commission
FMA Financial Management Act 1994
FRD Financial Reporting Direction
VAGO Victorian Auditor-General's Office
This Part presents the results of our assessment of general internal controls and controls over risk management and water tariff revenue.
Internal controls were adequate for producing reliable, materially accurate and timely financial reports. Nevertheless, a number of areas for improvement were identified.
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.