In accordance with section 16A and 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 with a request for submissions or comments.
The submissions 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.
The financial sustainability of public hospitals has been assessed using the risk assessment criteria outlined in Figure C1.
Figure C1
Financial sustainability indicators—risk assessment criteria
Risk |
Underlying result |
Liquidity |
Average number of days cash available |
|---|
Audit type |
Financial report | |||
|---|---|---|---|---|
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.
A resource controlled by an entity as a result of past events, and from which future economic benefits are expected to flow to the entity.
This Part presents the results of our assessment of general internal controls and controls over procurement and information technology security in public hospitals.
Internal controls at public hospitals and controlled entities were adequate for producing reliable, accurate and timely financial reports. Nevertheless, a number of areas for improvement were identified.
To be financially sustainable, public hospitals need the capacity to meet current and future expenditure as it falls due, and to be able to absorb foreseeable changes and financial risks as they materialise. This Part provides our insight into the financial sustainability of public hospitals obtained from analysing the trends in five indicators over a five‑year period.
The financial objective for public hospitals should be to generate a sufficient surplus from operations to meet their financial obligations, and to fund asset replacement and new asset acquisitions. The ability of public hospitals to achieve this depends largely on how well they manage their expenditure and whether they maximise revenue. The performance is measured by the operating result—the difference between revenue inflows and expenditure outflows.
This Part covers the results of the audits of the 2010–11 financial reports of 87 public hospitals and 25 associated entities.
Independent audit opinions add credibility to financial reports by providing reasonable assurance that the information reported is reliable.
Public hospitals provide complex acute care, prevention, early intervention and primary care, aged care and mental health services.
While metropolitan and regional public hospitals largely provide acute health services, they also provide a mix of mental health, sub-acute, community health services and aged care programs. Rural public hospitals generally offer a higher proportion of aged care and community health services.