Appendix 26: Response to significant matters in Statutory Audit Report and Management letter
The Audit office of New South Wales raised the following significant matters in the Statutory Audit Report and Management letter:
the accounting treatment adopted under Build-Own-Operate contractual arrangements for some water filtration services provided by the private sector
the sharing of passwords by some senior level managers.
The accounting treatment of the existing contractual arrangements with the owners of the Prospect, Illawarra and Woronora Water Filtration Plants has been the subject of a difference in professional opinion between Sydney Water and the Auditor-General since 1993–94. The difference stems from the fact that there is no explicit Accounting Standard covering the issue, and therefore the contractual arrangements are a matter of interpretation.
Until a definitive Australian Accounting Standard is issued on these types of arrangements, or the arrangements are renegotiated with new terms and conditions, we will maintain our current accounting policy when preparing our financial statements.
In the meantime, we have included a number of disclosures in the Notes to the Financial Statements. Our detailed accounting policy is disclosed in Note 1(g), providing further details in relation to our position on the accounting treatment adopted, and the tariff expense for the financial year is disclosed in Note 2(c).
On the matter relating to sharing passwords, the Audit Office did additional tests to gain assurance on the expenditure approved by some senior managers and the results were satisfactory.
Sydney Water found that five senior level managers shared their passwords with their personal assistants. The personal assistants used the managers’ passwords to data enter purchase orders on transactions that had already been approved by the senior manager. We ended the practice of sharing passwords as soon as it was raised and transparently dealt with the matter by reporting it to the Audit Office.
Appendix 27: External production costs
The external production costs for the Annual Report are about $53,000. Costs during 2011–12 included photography, proofreading and design and production of the Annual Report Summary 2012, full Annual Report 2012 and website.