Close to our break-even target
The work of the Audit Office is largely self funded, generated from audit fees paid by our clients. These fees are set to cover our expenses while maximising value for the NSW public sector. Unlike private sector auditors, we aim to break even overall rather than make a profit.
In monitoring our financial performance, we exclude the impact of the annual superannuation adjustments that affect our operating results. Like all government agencies with staff in the State’s defined benefit superannuation schemes, the schemes’ assessment of our liability to them varies substantially from year to year. These annual variations are outside our control and reflect the investment performance of the schemes and changes in actuarial assumptions and disclosure requirements of the Australian Accounting Standards.
These superannuation adjustments are fully reflected in our audited financial statements, but are excluded from the information presented here so we can focus on our own performance.
Our 2015–16 result was a profit of $1.0 million, excluding defined benefit superannuation adjustments. Over the five years to 2015–16, the cumulative result was a profit of $0.9 million representing 20 per cent of average turnover and above our medium-term break-even target.
Our 2015–16 revenue of $45 million was $2 million more than the previous year’s $43 million. Government agencies and universities paid $37 million for the audit of their financial statements. Parliament contributed $7.5 million towards our performance audits and reports to parliament. Our 2015–16 total expenditure of $44 million, excluding the defined benefit schemes superannuation adjustments, was $0.5 million less the previous year’s $43.5 million.
Audit fees increased by $2 million compared to the previous year. Total expenditure, excluding superannuation adjustments, is similar to last year. Employee related expenses increased $2 million on last year. This is consistent with the increase in revenue. Other expenditure also remained consistent with the prior year. Contract audit agent costs decreased by $0.4 million, consistent with our ongoing strategy around the rotation of contracted out work which, among other things, allows us to measure our performance against the private sector. Travel also increased by $0.4 million due to the change in accounting treatment of recoverable costs during the financial year.
We are budgeting for a $1.4 million surplus in 2016–17. Revenue is expected to be $46.5 million, about three per cent more than the 2015–16 actual of $45 million. Expenditure is budgeted at $45 million, an increase of three per cent on the 2015–16 actual of $44 million.
Our 2015–16 operating profit was $0.3 million over budget. This was due to an increase in income from seconded staff, and reduced depreciation than budget due to reduced spending on capital.
Total expenses were $0.2 million over budget. This was due to higher staff costs including agency resources, higher recruitment and consultancy costs, and lower than expected capitalised expenses.