Audits examining governance

Audit Report No.4 2006–07 Tax Agent and Business Portals . The audit examined the operation of the Australian Taxation Office’s (ATO’s) Tax Agent and Business Portals. The report commented that introduction of the Tax Agent and Business Portals has been a significant achievement for the ATO. The Tax Agent and Business Portals have facilitated easier access to information for both tax agents and businesses. In relation to information technology (IT) security and user access controls, a key component of the audit, the report identified several areas where the ATO needed to strengthen controls around the Portals. The report made a number of recommendations focused on improving aspects of the ATO’s IT security around its Portals.

Audit Report No.5 2006–07 The Senate Order for Departmental and Agency Contracts (Calendar Year 2005 Compliance). This report was the eighth audit under the Senate Order, which requires all Financial Management and Accountability Act 1997 agencies to place on the Internet, lists of contracts valued at $100 000 or more, that summarises the use of confidential provisions in each contract. The purpose of the audit was to examine in seven agencies, compliance with the Senate Order and to report on the appropriateness of the use of confidentiality provisions in contracts. The results of this audit, and other similar audits over the last four years, have indicated a progressive reduction in the number of contracts reported as including confidential provisions. This situation is consistent with the Government’s policy position that contracting information should not be treated as confidential, unless there is a sound reason for doing so. However, it was found that agencies could improve processes and controls that enhance the completeness and accuracy of the contract listings, and improve guidance to staff, including those with contract negotiation responsibilities.

Audit Report No.6 2006–07 Recordkeeping Including the Management of Electronic Records. Each of the entities subject to audit were at different stages in addressing their recordkeeping responsibilities. Over recent years, each entity had made improvements, to varying degrees, to their recordkeeping regimes. In one entity this involved a focus on managing their records electronically. The audit concluded that each of the three audited entities had aspects that required improvement.

The main areas where entities could improve related to:

  • the development and implementation of a recordkeeping strategy;
  • the improvement of recordkeeping policies and guidance;
  • the identification of vital records and the establishment of contingency arrangements for those records;
  • the consideration of recordkeeping needs when developing or upgrading electronic systems; and
  • the development of a formal preservation strategy for electronic records.

To assist entities in meeting their recordkeeping responsibilities, the audit also recommended that the National Archives of Australia should set minimum recordkeeping standards and requirements, and develop further practical guidance.

Audit Report No.13 2006–07 Management of an IT Outsourcing Contract Follow up. The main issues raised related to the Department of Veterans’ Affairs (DVA’s) planning to: meet its strategic IT needs through its IT outsourcing contract; the provisions of the contract; contract administration; management of the impacts of the outsourced services on DVA’s business; and the outcomes of DVA’s approach to the contract. The follow-up audit found that DVA had addressed the strategic and operational issues raised in the previous audit and this had resulted in improvements in the department’s management of its current IT outsourcing contract and in preparing for the IT outsourcing contract which is scheduled to come into effect in April 2007.

Audit Report No.14 2006–07 Regulation of Pesticides and Veterinary Medicines. Pesticides and veterinary medicines are used widely in Australia to protect crops, livestock, and plants from pests and diseases, and to treat animals, including household pets, for illnesses. The Australian Pesticides and Veterinary Medicines Authority (APVMA) registers such products for use in Australia and monitors their quality up to the point of retail sale. The audit assessed whether the APVMA has performed these key regulatory functions effectively. It concluded that greater emphasis needs to be given to compliance and review programs, to provide stronger assurance on the safety and efficacy of pesticides and veterinary medicines; and that the timeliness of the registration process could be improved, to reduce regulatory costs, as well as to provide users with better access to products.

Audit Report No.16 2006–07 Administration of Capital Gains Tax Compliance in the Individuals Market Segment. The audit assessed the ATO’s administration of Capital Gains Tax (CGT) compliance in the individuals market segment. The audit reviewed governance arrangements, the mechanisms and strategies used to identify and assess compliance risks, and the products and processes used to manage compliance. The focus of the audit was the two most common CGT events: share and real property disposals. The audit found that since
receiving additional funding in 2004–05, the ATO has significantly increased its focus on CGT in the individuals market segment, through active compliance, and marketing and education activities. However, there are opportunities to improve planning and reporting arrangements, and data matching activities.

Audit Report No.17 2006–07 Treasury’s Management of International Financial Commitments – Follow-up. This follow-up audit found that Treasury’s response to the findings and recommendations of the previous audit had been effective. The main issue arising from it is compliance with agencies’ reporting obligations under the Government’s Foreign Exchange Risk Management policy. This policy, the Guidelines for which were issued in 2002 and revised in 2006, is designed to better assist the Government in the management of its foreign exchange risks. The audit found that, although the Treasury had drawn Finance’s attention to potential payments or receipts arising from exchange rate movements, it had not reported its foreign exchange gains or losses as required by the Guidelines.

Audit Report No.18 2006–07 ASIC’s processes for receiving and referring for investigation Statutory Reports. The audit was undertaken at the request of the Parliamentary Joint Committee on Corporations and Financial Services (JCCFS), flowing from its 2004 inquiry into corporate insolvency laws. In its report, the Committee expressed a number of concerns about the Australian Securities and Investment Commission’s (ASIC’s) investigation of suspected breaches of the Corporations Act 2001 (as reported to it by external administrators), including that ASIC may not be according the reports sufficient priority. The audit concluded that over a period of some years, there had been a marked decrease in the number of reports that ASIC investigated, even though the number of reports lodged with the regulator had significantly increased. The main issue was therefore, whether ASIC devoted sufficient resources to what the JCCFS referred to as ‘among the most important mechanisms in the law for bringing to light possible breaches of the Corporations Act.’ Given the large number of reports received each year that allege offences, and the JCCFS’ concerns that sufficient regulatory effort is not being given to such recommendations, the key recommendation was that ASIC identify opportunities for increasing the number of statutory reports that it currently investigates.

Audit Report No.21 2006–07 Implementation of the revised Commonwealth Procurement Guidelines. The audit assessed how well the seven audited entities implemented the revised Commonwealth Procurement Guidelines (CPGs), which took effect in January 2005. The audi found that the entities generally took reasonable steps to update their policies, procedures and systems. A review of sample procurements found that most steps in procurement were compliant with the revised CPGs. However, the audit found that improvements were required in: the consideration and approval of the use of direct sourcing; the consideration and approval of contract variations; and in the reporting of completed procurements. The audit also reported on better practices in procurement that were identified during the audit.

Audit Report No.22 2006–07 Management of Intellectual Property in the Australian Government Sector. The audit examined the progress of four agencies (the Attorney-General’s Department, the Department of Communications, Information Technology and the Arts, the Department of Finance and Administration and IP Australia) in developing a whole-of-government approach and guidance for the management of intellectual property (IP) in the Australian Government. The audit found that although there had been some progress in developing the whole-of-government approach, this had been slow. Several factors had contributed to the delays, notably:

  • the failure of the agencies involved to resolve key questions that would lead to a shared understanding of the approach;
  • a lack of clarity of purpose and inconsistencies within the documents comprising the
    approach;
  • insufficient attention having been paid to questions of implementation of the approach; and
  • inadequate structures for dealing with disputes and for recording decisions of the agencies involved in developing the approach.

The audit noted that the often complex nature of whole-of-government challenges means that early attention to establishing structures and processes to identify, discuss and resolve different views in reaching a shared understanding and formal agreement amongst the various agencies is necessary. In addition, earlier attention to questions of implementation may have enabled more timely identification (and resolution) of some of the issues that eventually arose and that have delayed development of the overarching approach.

Audit Report No.23 2006–07 Application of the Outcomes and Outputs Framework. The Outcomes and Outputs framework provides the basis of the Government’s approach to budgeting and reporting for public sector agencies and the means by which the Parliament appropriates funds in the annual budget context. The objective of the audit was to assess the application of the outcomes and outputs framework in Australian Government agencies. The audit involved detailed fieldwork in three agencies and a survey of 44 agencies. The audit concluded that although the application of the outcomes and outputs framework in each of the audited agencies’ incorporated some better practice characteristics, each of the three audited agencies had aspects that required improvement.

The main areas where agencies could improve related to:

• the specification of outcomes and outputs;

• the integration of the framework into agency operations;

• performance indicators;

• business processes for capturing and monitoring performance information and management reporting arrangements; and

• performance reporting arrangements.

The ANAO also identified a number of enhancements to the framework which, if adopted, have the potential to improve consistency in agency reporting and to further assist in meeting the needs of stakeholders.