Our financial position is sound
While we have a net liability position, we are a going concern as we have a sustainable level of cash with positive cashflows. Our net liability position is a result of the actuarial losses on the defined benefit superannuation schemes. This liability is a long-term liability whereby the Audit Office has not been required to make employer contributions for several years to these schemes, and nor do we foresee any contributions in the near future.
Most of our assets and liabilities are of a financial rather than physical nature. Cash remains our largest asset with $10.5 million at 30 June 2017. Our assets include $6.7 million for the Crown’s assumption of the liability for our staff’s long service leave entitlements. This offsets the liability in our financial statements. We also have $5.3 million in receivables from government entities and councils for our auditing services.
Our liabilities at 30 June 2017 were $56.3 million, a decrease of $16.5 million from 30 June 2016. This large drop is due to a decrease in superannuation liabilities from $61 million to $44 million.
Solvency remains stable but debtor management needs improving
Our current ratio at 30 June 2017 shows we had $2.04 in current assets to meet every $1.00 of our current liabilities. This is consistent with last year’s ratio and at the upper level of our target range of between $1.00 and $2.00.
Some of our debtors continue to take longer to pay than our agreed invoice terms of 14 days. In 2016–17, it took us an average of 37 days from invoice to collection. While this is an improvement from 40 days in 2015–16, we need to do more to improve the collection timeframe.
Solvency – current ratio
Debtor management – average days to collect
Work in progress – at 30 June 2017
Timely creditor payments
During the year we paid 99 per cent of our creditors on time. We are expected to pay all creditors within 30 days, unless contracts state otherwise. For more detail on our performance with creditor payments, see appendix seven.
The year ahead
In 2017–18, we will:
- improve our efficiency and productivity by making financial management information available to all levels in the business via a self-service reporting tool and better corporate performance reporting
- improve our procurement and contract management practices
- improve our revenue and expense modelling to ensure we continue to operate at a sustainable level.