The financial sustainability of public hospitals has been assessed using the risk assessment criteria outlined in Figure C1.
Figure C1
Financial sustainability indicators—risk assessment criteria
Risk |
Underlying result |
Liquidity |
Average number of days cash available |
|---|
Audit type |
Financial report | |||
|---|---|---|---|---|
Responsibility of public sector entities to achieve their objectives, with regard to reliability of financial reporting effectiveness and efficiency of operations, compliance with applicable laws, and reporting to interested parties.
A resource controlled by an entity as a result of past events, and from which future economic benefits are expected to flow to the entity.
This Part presents the results of our assessment of general internal controls and controls over procurement and information technology security in public hospitals.
Internal controls at public hospitals and controlled entities were adequate for producing reliable, accurate and timely financial reports. Nevertheless, a number of areas for improvement were identified.
To be financially sustainable, public hospitals need the capacity to meet current and future expenditure as it falls due, and to be able to absorb foreseeable changes and financial risks as they materialise. This Part provides our insight into the financial sustainability of public hospitals obtained from analysing the trends in five indicators over a five‑year period.
The financial objective for public hospitals should be to generate a sufficient surplus from operations to meet their financial obligations, and to fund asset replacement and new asset acquisitions. The ability of public hospitals to achieve this depends largely on how well they manage their expenditure and whether they maximise revenue. The performance is measured by the operating result—the difference between revenue inflows and expenditure outflows.
This Part covers the results of the audits of the 2010–11 financial reports of 87 public hospitals and 25 associated entities.
Independent audit opinions add credibility to financial reports by providing reasonable assurance that the information reported is reliable.
Public hospitals provide complex acute care, prevention, early intervention and primary care, aged care and mental health services.
While metropolitan and regional public hospitals largely provide acute health services, they also provide a mix of mental health, sub-acute, community health services and aged care programs. Rural public hospitals generally offer a higher proportion of aged care and community health services.
This report covers the results of our financial audits of 112 entities within the public hospital sector, comprising 87 public hospitals and the 25 entities they control. It informs Parliament about significant issues arising from the audits and augments the assurance provided through audit opinions included in the entities’ annual reports.
This report comments on the quality and timeliness of financial reporting, the financial sustainability of public hospitals and the effectiveness of procurement practices and information technology security.
Ordered to be printed
VICTORIAN GOVERNMENT PRINTER November 2011
PP No 84, Session 2011–12