by Ganesh Sahathevan
The auditor's report to the iCare 2018 Annual Report (and all other iCare annual reports) begins with the words:
To Members of the New South Wales Parliament
Opinion
I have audited the accompanying financial statements of Insurance and Care New South Wales (icare), which comprise the Statement of Comprehensive Income for the year ended 30 June 2019, the Statement of Financial Position as at 30 June 2019, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes comprising significant accounting policies and other explanatory information.
The auditor is the NSW Auditor General and its delegate. However, the audit statement above does not appear to be accurate, and may in fact be misleading, for it was Ernst&Young (EY) and not the NSW Auditor General who seem to have conducted the audits.
The NSW Auditor General called for tenders for the iCare (and related corporations) audits in 2017, and eventually awarded the audits to Ernst&Young (EY).
In the words of the NSW Auditor General , in response to a query from this writer:
Thank you for your enquiry regarding the outcome of the tender we ran in 2017-18 to appoint an audit service provider for the icare group of audits. I can inform you that we appointed Ernst & Young.
The details of their appointment can be found in our Government Information (Public Access) contract register at https://www.tenders.nsw.gov.
The fact that it was EY that was appointed to conduct the iCare group audits should have been disclosed, but was not. That in itself is misleading.
Additionally, as readers might recall, it was EY, under instructions from NSW Treasury, that discovered cashflow problems at iCare, which were not then reflected in the iCare audits. As this writer says:
In April 2018 EY said iCare had “cashflow problems due to lower than expected premium collection” : How did Audit NSW not discover the same, and did Audit NSW ignore the EY report, and a significant audit red flag in iCare's 2018-2019 annual report?
Given the above it is inconceivable that the NSW Auditor General was not aware of iCare's cashflow problems. Margaret Crawford is the NSW Auditor and is ultimately responsible.
iCare needs to be properly audited by an external auditor untainted by NSW public and private sector establishment connections. As reported, the NSW Auditor General has tended to be a co-operator with the NSW Government's inclination to non-disclosure in its annual reports.
It is anticipated that Ms Crawford and her officers at NSW Audit will want to argue that the appointment of EY by itself is not evidence that their statement in the iCare annual reports is misleading. If so, they should be happy to present themselves to Parliament and explain why Members of Parliament should accept their auditor's declaration contained in iCare's annual reports.
TO BE READ WITH
NSW Audit Office: External Audit Services for iCare Entities - RFT-10013601
Tender Details
This RFT seeks tenders from qualified Audit Firms capable of delivering external audit services to the NSW Audit Office for the financial audits of the following Insurance and Care New South Wales (icare) agencies
- iCare
- iCare Workers Insurance
-iCare Self Insurance
-iCare HBCF
-iCare Lifetime Care
-iCare Dust Diseases Care
-iCare Sports Insurance
-BIG Corp
-iCare Support Solutions Pty Limited (created in 2017-18)
The contract will cover the audits of the 2017-18 to 2019-2020 financial years, with an option to extend for the 2020-21 and 2021-22 financial years
Agreement to provide audit services - AO2018/5
Contract Award Notice Details
Contractor Name Ernst & Young
ACN 457905811
ABN 67 457 905 811
Is an Aboriginal or Torres Strait Islander owned business No
Street Address 200 George Street
Town/City Sydney
State/Territory NSW
Postcode 2000
Country AUSTRALIA
Not Applicable
$3,292,500.00 (Goods or services supplied)
Not Applicable
Open
Not Applicable
Not Applicable
Summary of the criteria against which the various tenders were assessed
| Evaluation Criteria | Weighting |
|---|---|
Engagement team resourcing, including: | 10 |
Identification of key areas of audit risk, the relationship (if any) to business risks, and how these will be addressed and reported to the Audit Office | 20 |
Price | 20 |
The availability and use of specialists and quality review partners as part of the proposed audit team | 10 |
The proposed audit team's: | 20 |
The tenderer's proposed application of innovative audit practices, including data analytics | 10 |
Understanding of the audit client, its environment and key areas of business risk | 10 |
No
Not Applicable
Not Applicable
Not Applicable
Agency Contact Audit Office of NSW
State/Territory NSW
Country AUSTRALIA
Email Address governance@audit.nsw.gov.au
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