Report lifts lid on gifts to public sector agencies

Tickets to premier sporting events, art exhibitions and a Michael Buble concert were among the unregistered gifts bestowed on staff at NSW public sector agencies last year, an audit shows.

Providers, customers, consultants and suppliers hosted agency staff at the Australian Open tennis tournament,  a Newcastle Jets soccer game, the Archibald art exhibition, awards ceremonies, theatre and restaurants, the NSW Auditor General’s Internal controls and governance 2019 report reveals.

Many of the gifts were not recorded on benefits registers or declared to a governance committee.

“In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions … were inappropriate, compliant with policy and were not direct or indirect inducements to the recipients to favour suppliers or service providers.”

The report looked at internal controls and governance at 40 of the state’s largest public sector agencies, including several affected by Machinery of Government changes that came into effect in July.

It found while all agencies had a gifts and benefits policy and 90 per cent had a register, more than half of the registers failed to meet the Public Service Commissioner’s minimum standards, including documentation of why a gift was given.

“In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions in those instances were appropriate and compliant with policy,” auditor general Margaret Crawford said.

Smaller agencies more likely to accept gifts

NSW Auditor General Margaret Crawford.

The report found smaller agencies were more likely to accept a gift or benefit from a supplier or potential supplier. It also found staff were accepting “higher risk” gifts and benefits “that could be perceived as an inducement for a staff member to act in a certain way”, such as hospitality.

Only three per cent of agencies published their registers on their websites, and just over one in three reported trends in the number and nature of gifts on their register or to an agency executive or governance committee.

“In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions in those instances were appropriate, compliant with policy and were not direct or indirect inducements to the recipients to favour suppliers or service providers,” the report said.

It recommended agencies should publish their gifts and benefits registers on their websites “to demonstrate a commitment to a transparently ethical environment”.

A need to improve governance and internal controls

The auditor-general found a 12 per cent increase in internal control deficiencies compared to the previous year, including out of date or non-existent policies to guide decision making, poor record keeping and incomplete or inaccurate registers.

Without strong governance systems and internal controls, agencies increase the risks associated with effectively managing their finances and delivering services to citizens.

The report found 58 per cent of agencies had deficiencies in the administration of user access, and password controls at 20 per cent of agencies didn’t align with password policies.

It also found inventories of sensitive datas “were not always complete”.

The auditor general also said 17 per cent of agencies had failed to show safeguards to protect the independence of their Chief Audit Executive, and 35 per cent didn’t have a documented quality assurance program for internal audits.

The audit cited data from NSW Procurement showing a 75 per cent increase in spending on consultants, contractors and freelancers over the last five years, with $1.5 billion splashed out on contingent labour in 2018-19.

This raised question about whether agencies were getting the best value for money, the report said.

It recommended improving management of contingent labour with regular reporting, better workforce plans and the involvement of human resources units.

The report focused on public sector agencies from the customer service, community, planning, education, health, transport, treasury and Premier and Cabinet clusters.

They included Destination NSW, Transport for NSW, Infrastructure NSW, Sydney Water Corporation, Sydney Opera House Trust, Office of Local Government, Essential Energy, TAFE, Service NSW and the DPP.

“Without strong governance systems and internal controls, agencies increase the risks associated with effectively managing their finances and delivering services to citizens,” the report said.

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