Industry Innovation and Science 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 Industry Innovation and Science portfolio considerations predominantly relate to the provision of evidence based advice to government effective governance of and service delivery by portfolio entities and the management of scientific assets The department responsibilities for the Business Grants Hub also bring delivery and accountability risks Policy development Audit work has highlighted that effective policy development particularly where there are short timeframes requires articulation of the evidence based and frank advice on likely impacts and implementation risks of proposals An area of policy risk is in developing performance frameworks to ensure that the success of policy implementation can be measured and the benefits articulated Governance The audit of the Northern Australia Infrastructure Fund highlighted that while the use of expert judgement in decision making may be appropriate this does not reduce the expectation that the use of this judgement is transparent and clearly documented Recent audits including of the Australian Institute of Marine Science emphasise the importance of boards focusing on soft elements of governance such as culture and behaviour alongside the harder elements of overseeing conformance and performance Service delivery One key area of service delivery risk is the achievement of efficient business operations In regulatory service delivery particularly where other agencies play a key role in detection such as in the regulation of illegal dumping measuring efficiency can assist in ensuring ongoing affordability and risk based management Asset management and sustainment The portfolio carries a large number of physical assets predominantly for scientific purposes These assets often require specific maintenance and sustainability planning unique to the nature and use of the asset but the asset portfolio also needs to be managed to adapt to changing needs and scientific advancements over time Grants management The delivery of end to end grants management services through the department Business Grants Hub means the department needs to ensure that service and quality control expectations are agreed and maintained and that priorities accord with entity expectations to provide assurance that policy objectives are being met This will also apply to any department grant programs delivered through this mechanism Portfolio overview The Industry Innovation and Science portfolio is responsible for boosting Australia competitiveness and facilitating economic and technological transformation to deliver a modern digital and globally integrated economy that supports economic growth and job creation The Department of Industry Innovation and Science is responsible for supporting science and commercialisation growing business investment and improving business capability developing northern Australia and streamlining regulation The department has established a grants hub to streamline the administration of government grants to business Further information is available from the department website at www industry gov au In addition to the Department of Industry Innovation and Science there are seven entities within the portfolio excluding subsidiaries with responsibilities in relation to marine nuclear and geological science Australia intellectual property rights system and offshore petroleum safety and environmental management In the Portfolio Budget Statements PBS for the Industry Innovation and Science 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 Industry Innovation and Science represents the largest proportion of the portfolio expenses Departmental expenses are the most material component representing per cent of the entire portfolio expenses Figure Industry Innovation and Science 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 Industry Innovation and Science portfolio and the risk profile of each entity are shown in Table Table Industry Innovation and Science portfolio entities and risk profile Type of entity? Risk of material misstatement? Number of higher risks? Number of moderate risks? Material entities Department of Industry Innovation and Science Non corporate Moderate Australian Nuclear Science and Technology Organisation? Corporate Moderate Commonwealth Scientific and Industrial Research Organisation? Corporate Moderate Non material entities Australian Institute of Marine Science Corporate Low Geoscience Australia Non corporate Low IP Australia Non corporate Low National Offshore Petroleum Safety and Environmental Management Authority Corporate Low Northern Australia Infrastructure Facility Corporate Low Other audit engagements including Auditor General Act section engagements Nil Material entities Department of Industry Innovation and Science The Department of Industry Innovation and Science is responsible for supporting science and commercialisation growing business investment and improving business capability developing northern Australia and streamlining regulation The department total budgeted expenses for are just over billion with per cent of these expenses attributable to payments to corporate Commonwealth entities as shown in Figure Figure Department of Industry Innovation and Science total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The four 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 completeness and accuracy of the department offshore petroleum and uranium royalties revenue due to the reliance on the data included in self assessments provided by uranium and petroleum producers KAM Completeness and accuracy of royalty revenue completeness and accuracy of the department other revenue streams ? which are diverse in nature often rely on manual calculations to quantify the amount of revenue recognised and/or are cash based transactions valuation of concessional loans made under the Northern Australia Infrastructure Facility due to the complexity of the accounting treatment for these loans and the level of estimation required in the calculations supporting their valuation and management of and accounting for the department grants programs due to the size and diversity of these programs ? Australian Nuclear Science and Technology Organisation The Australian Nuclear Science and Technology Organisation ANSTO is Australia national nuclear research and development organisation ANSTO operates Australia only nuclear research reactor and the Australian Synchrotron contributes to radiopharmaceutical production and supply and conducts research into areas of national priority including human health the environment and the nuclear fuel cycle ANSTO also provides advice to government and other stakeholders on matters relating to nuclear science technology and engineering ANSTO total budgeted expenses for are just under million with per cent of these expenses attributable to employee benefits as shown in Figure Figure Australian Nuclear Science and Technology Organisation total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May ANSTO four key risks for its financial statements are the valuation of the decommissioning provision ? due to the complexity of the calculation and reliance on the exercise of significant judgement complexities arising from the sale of the PETTECH operations and impairment testing carried out over each of ANSTO investments being subject to judgement and estimation valuation and subsequent depreciation of assets due to their unique nature and materiality and completeness and accuracy of material streams of commercial revenue due to the number of revenue streams from both commercial and government sources and complex funding arrangements Commonwealth Scientific and Industrial Research Organisation The primary functions of the Commonwealth Scientific and Industrial Research Organisation CSIRO as set out in the Science and Industry Research Act are to carry out scientific research and facilitate the application or utilisation of the results of such research CSIRO is responsible for delivering science and innovative solutions for industry society and the environment CSIRO total budgeted expenses for are just under billion with per cent of these expenses attributable to employee benefits as shown in Figure Figure CSIRO total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May CSIRO key five risks for its financial statements are the capturing of actual costs of various projects and their complex accounting treatments in accordance with the relevant accounting standards completeness and accuracy of project revenue due to the number of revenue streams from a variety of sources and funding models ongoing management of CSIRO innovation funds due to the diverse nature and funding arrangements for investments in the early stages of technological opportunities calculation of waste remediation liabilities due to the significant judgements required in the selection of the model assumptions and valuation of CSIRO land and buildings plant and equipment and properties held for investment or sale These are material balances sensitive to movements in assumptions adopted in the underlying valuation models