Health Audit focus In determining the audit work program the ANAO considers prior year audit and other review findings and what these indicate about portfolio risks and areas for improvement as well as emerging risks from new investments reforms or operating environment changes In the Health portfolio considerations predominantly relate to service delivery through other entities and governance issues Service delivery The department is heavily reliant on other entities for the delivery of programs including through the administration of Medicare and aged care payments by Services Australia administration of grants through the Department of Social Services and the National Health and Medical Research Council and provision of digital health services through the Australian Digital Health Agency The risks associated with these arrangements need to be actively managed by the department to ensure that service and quality control expectations are agreed and maintained and that its business is appropriately prioritised to provide assurance that policy objectives are being met Governance The Department of Health implements a large number of national strategies and will need to further embed strong project management mechanisms that work across the organisation to achieve success Audit work over the three years to has identified challenges in recording and assessing implementation progress developing performance frameworks for grants programs monitoring the ongoing impacts of aged care policies and delivering value for money on large scale investments The distribution of roles and responsibilities in the delivery of Australia health services requires ongoing collaboration between Australian Government entities state and territory entities and a range of stakeholders in the private sector Portfolio overview The Health portfolio works towards achieving better health and wellbeing for all Australians now and for future generations The Department of Health is the lead entity in the portfolio It is responsible for achieving the Australian Government health outcomes in the areas of health system policy design and innovation health access and support services sport and recreation individual health benefits regulation safety and protection and ageing and aged care This includes administering programs and services such as Medicare and the Pharmaceutical Benefits Scheme and forming partnerships with the states and territories as well as other stakeholders Further information is available from the department website at www health gov au In addition to the Department of Health there are entities within the portfolio that are responsible for the delivery of programs including aged care accreditation services digital health reforms the development and reporting of health and welfare data nuclear safety supporting the integrity of sport funding medical research managing blood supplies cancer research pricing and funding public hospitals and food safety In the Portfolio Budget Statements PBS for the Health 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 Health 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 Health 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 Health portfolio and the risk profile of each entity are shown in Table Table Health portfolio entities and risk profile Type of entity? Risk of material misstatement? Number of higher risks? Number of moderate risks? Material entities Department of Health Non corporate Moderate National Blood Authority Non corporate Low National Health and Medical Research Council Non corporate Low Non material entities Aged Care Quality and Safety Commission Non corporate Low Australian Commission on Safety and Quality in Health Care Corporate Low Australian Digital Health Agency Corporate Low Australian Institute of Health and Welfare Corporate Low Australian National Preventive Health Agency Non corporate Low Australian Radiation Protection and Nuclear Safety Agency Non corporate Low Australian Sports Commission Corporate Low Australian Sports Anti Doping Authority Non corporate Low Australian Sports Foundation Limited Company Low Cancer Australia Non corporate Low Food Standards Australia New Zealand Corporate Low Independent Hospital Pricing Authority Corporate Low National Health Funding Body Non corporate Low National Mental Health Commission Non corporate Low Organ and Tissue Authority Non corporate Low Professional Services Review Scheme Non corporate Low Other audit engagements including Auditor General Act section engagements Nil Material entities Department of Health The Department of Health is responsible for achieving the Australian Government health and ageing priorities through evidence based policy program administration research regulatory activities and partnerships with other government entities consumers and stakeholders The department total budgeted expenses for are just over billion with per cent of these expenses attributable to personal benefit payments as shown in Figure Figure Department of Health total budgeted expenses by category Note Segment A refers to employee benefits supplier expenses payments to Corporate Commonwealth entities depreciation and amortisation and other expenses Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The six key risks for the department 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 payment of aged care subsidies to nursing home providers based on Aged Care Funding Instrument assessments prepared by the same providers These payments involve judgements regarding the level of care KAM Accuracy of payments of personal benefits and subsidies complexity and high volume of transactions processed by Services Australia on behalf of the Department of Health using ageing IT systems for personal benefit payments including the Medicare Benefits Scheme the Pharmaceutical Benefits Scheme and the Private Health Insurance Rebate KAM Accuracy of payments of personal benefits and subsidies estimation of revenue under the Therapeutic Goods Act which involves judgements and assumptions related to the assessment of application assessment and inspection fees and associated exemptions complexity and judgements involved in calculating Pharmaceutical Benefits Scheme drug recovery revenue using data sourced from Services Australia estimation of outstanding claims under medical indemnity schemes and midwife professional indemnity schemes which involves complex assumptions and judgements and management of and accounting for a range of grant payments maintained through multiple systems and arrangements National Blood Authority The National Blood Authority NBA is responsible for securing the supply of safe and affordable blood products including through national supply arrangements and coordination of best practice standards within agreed funding policies under the national blood arrangements The NBA total budgeted expenses for are just over billion with per cent of these expenses attributable to supplier expenses and grants as shown in Figure Figure National Blood Authority total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The NBA key risk for its financial statements relates to significant judgements and assumptions involved in the valuation of blood and blood products which are reported as assets National Health and Medical Research Council The National Health and Medical Research Council NHMRC is the Australian Government key entity for managing investment in and integrity of health and medical research NHMRC is also responsible for developing health advice for the Australian community health professionals and governments and for providing advice on ethical practice in health care and in the conduct of health and medical research NHMRC total budgeted expenses for are just under million with per cent of these expenses attributable to grants as shown in Figure Figure National Health and Medical Research Council total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May NHMRC two key risks for its financial statements are the management of and accounting for a range of grants payments which constitute a significant expense reported in NHMRC financial statements and are susceptible to fraud and judgements and assumptions involved in the management of non financial and intangible assets