More New South Wales tax dollars are going to consultants than government agencies are reporting, according to a scathing review by the state’s auditor-general.

The review of 12 government departments – covering from July 2016 to March 31 this year – found none materially complied with procurement guidelines.

Auditor-General Margaret Crawford found eight of the agencies did not comply with annual requirements in the 2016-17 financial year.

Another three agencies failed to report expenditure on consultants that had been capitalised as part of asset costs, while another didn’t disclose agency fees incurred by its subsidiaries.

The report found it was difficult to quantify government spending on consultants because each agency defined ‘consultants’ differently.

Ms Crawford also found there had been an 83 per cent increase in consultancy expenses between 2012-13 and 2016-17 financial years, to more than $327 million.

That figure does not include consultants used with the sale or lease of assets, which was $298 million over the past five years.

The report said the use of consultants increased in four of the past five years.

NSW government agency expenses on consultants year by year. Photo: NSW Auditor-General

Ms Crawford also described the agency charged with overseeing the process, the NSW Procurement Board, as being “not fully effective”.

It relies on self-reporting, with insufficient information provided for them to be properly monitored.

The procurement principles are intended to help agencies obtain value for money and be fair, ethical and transparent.

In a statement, the Department of Finance, Services and Innovation (DFSI) said it agreed with the findings and supported the recommendations.

“The NSW government is spending a record amount on infrastructure and services and pursuing an unprecedented level of reform that benefits families and businesses,” the department said.

“Given the complex nature of these reforms, external advice and expertise from outside the public sector is often required to ensure we secure the best outcomes for NSW citizens.”

The department said outsourcing advice and expertise was more efficient, because it allows agencies to “access resources where the work to be undertaken is for a defined timeframe or project, or requires a specific skill-set that may not be available from the permanent workforce”.

The department said NSW Procurement was introducing a Vendor Management System (VMS) to centralise its monitoring without manual processing.

It will also allow NSW Procurement to apply sanctions when suppliers do not produce information or breach the commercial framework.

The system will also assist agencies in complying with the standard framework, and improve templates and published information to help agencies understand their obligations.

NSW Procurement introduced a standard commercial framework for procurement best practice in January this year.

The audit found agencies found the framework challenging to use in practice.

“To better achieve the direction’s intent, the board needs to simplify procurement and compliance processes,” the report said.

Shadow Treasurer Ryan Park said the consultancy spend highlighted “corporate waste” and mismanagement under the Berejiklian government.

He said a Labor government would reduce the number of consultants by 20 per cent, saving $800 million in the first four-year term.

-with AAP