| AAS | Australian Accounting Standard |
| AASB | Australian Accounting Standards Board |
| CRC | Current Replacement Cost |
| DRC | Depreciated Replacement Cost |
| DSE | Department of Sustainability and Environment |
| DTF | Department of Treasury and Finance |
| ESC | Essential Services Commission |
| FMA | Financial Management Act 1994 |
| FRD | Financial Re |
This Part presents the results of our assessment of general internal controls over declarations of interests, valuation of assets and outsourcing in water entities.
Internal controls at water entities were adequate for producing reliable, accurate and timely financial reports. Nevertheless, a number of areas requiring improvement were identified.
Sixteen of the 19 water entities are required to include an audited statement of performance in their annual report. The three water entities that report under the Corporations Act 2001 are encouraged to include these reports.
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 sector entities based on our analysis of the trends in six indicators over a five‑year period.
The financial performance of entities is measured by their net operating result—the difference between revenue and expenses. Their financial position is measured by reference to its net assets—the difference between its total assets and total liabilities. This Part covers the financial results of the 19 water entities for the year ended 30 June 2011.
Independent audit opinions add credibility to financial and performance 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 2010–11 audits of the 19 water entities and one controlled entity. It also compares financial reporting practices in 2010–11 against better practice, legislated time lines and 2009–10 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 government. 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 at Appendix B.
This report covers the results of our financial audits of 20 entities in the water industry, comprising 19 water entities and one controlled entity. It informs Parliament about significant issues arising from the audits of financial and performance reports and augments the assurance provided through audit opinions included in the entities' annual reports.
Ordered to be printed
VICTORIAN GOVERNMENT PRINTER November 2011
PP No 83, Session 2010–11