Output Group 1: Performance Audit Services

This sub-section describes our audit themes and performance audit products and how they contribute to the work of the Parliament and public sector entities.

Output Group 1 comprises performance audit reports and other audit and related products. The following summarises our performance in producing these outputs in 2007–08. Details of financial resources for performance audit services are set out in Tables 1 and 2 of this report.

Performance audits

The Auditor-General Act 1997 (the Act) provides the Auditor-General with the authority to conduct, at any time, a performance audit of an agency, a Commonwealth authority or company, other than a Government Business Enterprise (GBE) or any of its subsidiaries. The Auditor-General may conduct a performance audit of a fully owned GBE or its subsidiaries if the responsible Minister, the Finance Minister or the Joint Committee of Public Accounts and Audit (JCPAA) request the audit.

The Act defines a performance audit as a ‘review or examination of any aspect of the operations of a body or person’. In accordance with accepted auditing practice, performance audits are an independent, objective and systematic examination of the operations of a body for the purposes of forming an opinion on whether:

  • management of the operations is economical, efficient and effective;
  • internal procedures for promoting and monitoring economy, efficiency and effectiveness are adequate; and
  • improvements might be made to management practices (including procedures for promoting and monitoring performance).

Typically, performance audits examine governance arrangements, information systems, performance measures, monitoring systems and legal compliance. Audits are conducted in accordance with ANAO Auditing Standards. All performance audit reports are tabled in the Parliament.

In seeking to improve public administration, performance audits also identify better practices, which may then be incorporated into Better Practice Guides (BPGs) produced by the ANAO for dissemination throughout the Australian Government public sector. These guides are discussed under Output Group 2.

Because of the size, complexity and diversity of many Australian Government entities, a performance audit usually examines selected program activity. Cross-portfolio or cross- agency performance audits, which include business support process audits and protective security audits, examine the same issue or activity in a number of entities, and the findings and recommendations of these audits are likely to have application across other public sector entities.

PAS staff members, from left, Rosanne Lawrence, Charles Higgins and Anne Svarcas.

Audit topics are selected with two major considerations in mind:

  • where an audit can be expected to add the greatest value in improved accountability, economy, efficiency or administrative effectiveness; and
  • to ensure appropriate coverage of entity operations within available audit resources.

PAS staff members from left, Rosanne Lawrence, Charles Higgins, Anne Svarcas.

The Auditor-General may also undertake audits on request, for example, from the Parliament, ministers or parliamentarians. In the case of requests for reviews which are relatively straightforward, we are often able to respond to the relevant issues through normal correspondence rather than a formal report.

Performance Audit Work Program

Our Performance Audit Work Program is developed annually in consultation with the JCPAA and audited entities. The JCPAA also seeks and coordinates comments from other Parliamentary committees on the draft Audit Work Program. This process is to ensure that our audit products and outputs meet the needs of the Parliament and public sector bodies, and are in tune with the key risks and challenges facing the Australian Government in a rapidly changing environment.

Audit activity is planned having regard to risks; financial materiality; program significance; audit impact; visibility of the program; the extent of recent audit and evaluation coverage; and broad themes derived from the audit planning process. The performance audit themes identified in the 2007–08 Planned Audit Work Program5 are set out below:

  • governance (including whole of government initiatives, financial management, information system integrity, and compliance with policy and legislative requirements);
  • administration of border security;
  • program implementation;
  • service delivery;
  • grants administration; and
  • the environment.
  • 5 Available from the ANAO’s website.