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Thursday, 4 May 1989
Page: 1810

Senator MICHAEL BAUME(3.55) —The financial statements of the Office of Defence Production are yet another example of tardy, inadequate, incompetent reporting. This annual report was tabled on 2 May and, as I look through the Auditor-General's reports on the various factories under the Office of Defence Production I find that generally they were audited by 24 November or early in December. Once again I wonder whether the Government would like to provide us with evidence of the justification claimed and the excuses given by the bodies involved as to why they should be given dispensation to present their reports late.

Once again we have an example of an inability to put a date on a letter. In his audited report on the Small Arms Factory, Lithgow, the Auditor-General has inserted no date, so it is impossible to tell whose fault it is that this report was not presented in time, although the statement by the general manager and the principal accounting officer is dated 24 November 1988, so it appears that there were no financial reasons why this report should have been delayed.

I mention in passing that the Small Arms Factory at Lithgow has managed to increase the value of its plant and machinery by 50 per cent during the year without bothering to make any mention of that in the written report. Apparently that is a matter of such little consequence as not to merit comment. The Auditor's report on the Maribyrnong Ordnance Factory is dated 2 December. Once again the Auditor has qualified the accounts, saying:

. . . the `work-in-progress' component of stock was not subject to adequate stocktake or other verification procedures during 1987-88. Consequently the closing balance of this item may not accurately reflect the true balance.

I might say that, throughout this report, the Auditor-General has noted some difficulties with the standard of financial reporting by the bodies involved. The next matter with which I have some concern is the report concerning Williamstown Dockyard. We have continual problems with this. The Auditor-General, on 20 December 1988, reported:

Stores stock and work-in-progress were not subject to stocktake or other verification procedures during the period.

He concluded:

Due to the lack of adequate supporting records the following items could not be satisfactorily verified-trade and other creditors, prepayments, trade debtors, accrued expenses, provision for annual leave, provision for long service leave, contingent liabilities, receipts from debtors, payments to creditors and payment of wages and redundancies.

That is a total condemnation of accounting practices involving multimillions of dollars of taxpayers's assets. Fortunately, the Williamstown Dockyard is being sold into another operation. I turn now to the Garden Island Dockyard, which has managed to make a loss of $1.9m on sales totalling $132m. The Auditor's report on this dockyard was dated 22 February. Clearly, there were financial problems in this respect. The Auditor-General reported:

. . . I am unable to ascertain whether the financial statements are in agreement with the accounts and records of the Dockyard and in my opinion, the statements are not based on proper accounts and records.

That is absolutely damning. The number of occasions on which we see organisations run by this Government on which Auditors' reports say that accounts are simply not kept is just unbelievable. Multimillion dollars of public money are involved. The Auditor-General continued:

Further, for the reasons set out below I am unable to form an opinion as to whether the statements show fairly the financial transactions for the Dockyard for the year ended 30 June 1988 and the state of affairs of the Dockyard as at that date.

The total amount of the discrepancy-

this relates to the balance in the trust account-

was not able to be quantified, although an opening balance discrepancy of $573,961 was identified.

The statement made by the Manager, Finance, of the Garden Island Dockyard says that the accounts:

. . . in our opinion show fairly the operations and state of affairs of the dockyard except for the amounts disclosed for debtors and trade and other creditors. These items are not satisfied reconciled to the General Ledger of the dockyard at balance date and are therefore considered to be materially inaccurate.

It is incredible that this sort of thing goes on. I suppose it is comforting that the statement then goes on to say:

There are reasonable grounds to believe that the dockyard will be able to pay its debts as and when they fall due.

I notice that this establishment, along with other government establishments, is to become part of a government-owned company entitled Australian Defence Industries. This organisational change came into effect from 1 April this year. This is an April Fool's joke. If this means that these bodies will no longer have to report directly to this Parliament so that we can scrutinise their incompetence and incapable financial accounting, this is an April Fool's joke in extremely bad taste.

Question resolved in the affirmative.