Agriculture Audit focus In determining the audit work program the ANAO considers prior year audit and other review findings and what these indicate about the portfolio risks and areas for improvement as well as emerging risks from new investments reforms or operating environment changes In the Agriculture portfolio considerations predominantly relate to the planning and delivery of robust regulatory activities and governance of its programs supporting agricultural industries Regulation Growth in passenger movement increased complexity in trade pathways and increased value of fishery and aquaculture production are creating new risks in biosecurity and fisheries management In this context regulatory activities need to be informed by ongoing risk assessments undertaken in proportion to compliance risk Risk based implementation of new biosecurity enforcement measures by the Department of Agriculture is critical to managing the risk of pests and diseases entering Australian territory while facilitating trade Previous audit work has indicated that the Australian Fisheries Management Authority AFMA had scope to strengthen its monitoring of existing and emerging compliance risks Recent reviews of the Department of Agriculture regulation of live animal exports have identified a range of areas for improvement These areas include strengthening compliance monitoring arrangements improving regulatory oversight structures investing in departmental capability and systems and enhancing engagement with stakeholders Governance The portfolio is responsible for a growing range of industry financing arrangements to increase market access for primary producers and encourage agricultural productivity Recent areas of development include the establishment of the Regional Investment Corporation in and grant funding under the Regional Land Partnerships Program jointly administered with the Department of the Environment and Energy Sound planning oversight and monitoring arrangements will be required to ensure that these measures deliver benefits to the sector with value for public funding Portfolio overview The Agriculture portfolio supports Australia agricultural fisheries food forestry and water resources industries The portfolio is also responsible for Australia animal and plant health status to maintain overseas markets and protect the economy and environment from the impact of exotic pests and diseases The Department of Agriculture is the lead entity in the portfolio and is responsible for developing and implementing policies and programs on agricultural fisheries food and forestry industries sustaining water resources and managing biosecurity and imported food risk Further information is available from the Department of Agriculture website at www agriculture gov au In addition to the Department of Agriculture there are nine entities in the portfolio including statutory regulators for fisheries agricultural and veterinary chemicals and water resource management loan administration for farm businesses and water infrastructure investment as well as research and development entities for wine cotton fisheries grains and rural industries In the Portfolio Budget Statements PBS for the Agriculture portfolio the aggregated budgeted expenses for total billion The PBS contain budgets for those entities in the general government sector GGS that receive appropriations directly or indirectly through the annual appropriation acts The level of budgeted departmental? and administered? expenses and the average staffing level for entities in the GGS within this portfolio are shown in Figure The Department of Agriculture represents the largest proportion of the portfolio expenses and administered expenses are the most material component representing per cent of the entire portfolio expenses Figure Agriculture portfolio — total expenses and average staffing level by entity Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May Financial statements and other audit engagements Overview Entities within the Agriculture portfolio and the risk profile of each entity are shown in Table Table Agriculture portfolio entities and risk profile Type of entity Risk of material misstatement Number of higher risks Number of moderate risks Material entities Department of Agriculture Non corporate Moderate Non material entities Australian Fisheries Management Authority Non corporate Low Australian Pesticides and Veterinary Medicines Authority Corporate Low Cotton Research and Development Corporation Corporate Low Fisheries Research and Development Corporation Corporate Low Grains Research and Development Corporation Corporate Low Murray Darling Basin Authority Corporate Low Regional Investment Corporation Corporate Low Rural Industries Research and Development Corporation Corporate Low Wine Australia Corporate Low Other audit engagements including Auditor General Act section engagements Commission for the Conservation of Southern Bluefin Tuna Material entities Department of Agriculture The Department of Agriculture supports the sustainability profitability and competitiveness of Australia agricultural fisheries food and forestry industries and the sustainable and productive management and use of rivers and water resources The department total budgeted expenses for are just over billion with per cent of these expenses attributable to payments made for grants as shown in Figure Figure Department of Agriculture total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The five key risks for the Department of Agriculture financial statements that the ANAO has highlighted for specific audit coverage in including those that the ANAO considers potential Key Audit Matters KAMs are the accuracy and completeness of revenue relating to import and export functions due to the material dollar value of the revenue collections the risk that the self assessment process results in the under collection of import and export revenue and the complex administrative and IT system arrangements that support the collection of import and export fees and charges Fees and charges are collected on the basis of self assessment via declaration by importers and exporters A portion of the revenue is collected by Services Australia on behalf of the Department of Agriculture KAM Accuracy and completeness of own source revenue accuracy and completeness of primary industry levies and charges due to the risk of under collection arising from the submission of inaccurate levy returns and declarations and the complex calculations used to derive the estimated collections based on agricultural production KAM Accuracy and completeness of the collection and distribution of primary industry levies and charges valuation of drought and farm finance assistance loans provided to state and territory governments due to the significance of the balance to the Department of Agriculture administered receivables balance the significant judgement applied in assessing eligibility criteria limits and lending terms and the complexity of calculations in determining the valuation and impairment of the loans balance at year end KAM Valuation of loans to state and territory governments for drought and farm finance assistance valuation of the jointly controlled arrangements for the River Murray Operations RMO and Living Murray Initiative LMI This is due to the significance of the asset balances to the department financial statements and the third party arrangements for managing joint venture arrangements on behalf of the joint owner KAM Valuation of the jointly controlled arrangements River Murray Operations RMO and Living Murray Initiative LMI and management of farm household allowances where scheme applicants are required to meet a number of complex legislative eligibility conditions The payments are administered by Services Australia on behalf of the Department of Agriculture