Prime Minister and Cabinet 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 Prime Minister and Cabinet portfolio considerations predominantly relate to its responsibilities to deliver timely and targeted services to Aboriginal and Torres Strait Islander peoples and ensure it can articulate the performance and impact against policy objectives for the programs and activities it funds The portfolio also carries governance risk through the delivery of activities by its many corporate entities and ensuring transparency and effectiveness of these entities PM&C is the primary coordination point for policy development and as such influences the risks and expectations for evidence based policy development across the public sector Service delivery Recent audit work has identified areas for improvement in the department ability to demonstrate value for money and impact of programs for the benefit of Aboriginal and Torres Strait Islander people This risk is evidenced through issues in program implementation oversight in establishing clear performance targets and in the management and measurement of outcomes for Aboriginal and Torres Strait Islander grants and programs There are risks with grants management with regard to the justification for the selection of grant recipients and the extent to which existing experience and knowledge is leveraged from the regional network of PM&C staff Governance The portfolio includes entities that have been established as either corporate Commonwealth entities or Commonwealth companies limited by guarantee to serve the interests of Aboriginal and Torres Strait Islander people This creates heightened governance risks given the remoteness and size of some of these entities and transparency risks for the performance of their activities and expenditures Policy development To support the implementation of the Australian Government reform agenda the department needs to ensure the provision of effective advice when coordinating the development of policy in areas of significance This requires clear articulation to government of the evidence base and likely impacts of proposals including through use of relevant data Portfolio overview The Prime Minister and Cabinet portfolio is responsible for providing support and policy advice to the Prime Minister the Cabinet and ministers on public and government administration matters including policy development and whole of government coordination The Department of the Prime Minister and Cabinet PM&C is the lead entity in the portfolio The department three key purposes are to support the Prime Minister as the head of the Australian Government and the Cabinet provide advice on major domestic policy and international national security matters and improve the lives of Aboriginal and Torres Strait Islander peoples ? Further information is available from the department website at www pmc gov au In addition to PM&C there are entities within the portfolio excluding subsidiaries which cover a broad range of functions and policy areas In the Portfolio Budget Statements PBS for the Prime Minister and Cabinet 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 PM&C 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 Prime Minister and Cabinet 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 The Prime Minister and Cabinet portfolio coordinates policy development across government in economic domestic and international affairs public service stewardship and Aboriginal and Torres Strait Islander policies and programs The strategic purposes of the department are supporting the Prime Minister in his role as head of the Australian Government and the Cabinet providing advice on how to make Australia more prosperous and to improve its security on a global scale enhancing the ability of Aboriginal and Torres Strait Islander people to improve their lives and working with government entities to build a more diverse public service Financial statements and other audit engagements Overview Entities within the Prime Minister and Cabinet portfolio and the risk profile of each entity are shown in Table Table Prime Minister and Cabinet portfolio entities and risk profile Type of entity? Risk of material misstatement? Number of higher risks? Number of moderate risks? Material entities Department of the Prime Minister and Cabinet Non corporate Moderate Indigenous Business Australia Corporate Moderate Indigenous Land and Sea Corporation? Corporate Low North Queensland Livestock Industry Recovery Agency Non corporate ? Non material entities Australian Institute of Aboriginal and Torres Strait Islander Studies Corporate Low Aboriginal Hostels Limited Company Moderate Anindilyakwa Land Council Corporate Low Australian Public Service Commission Non corporate Low Central Land Council Corporate Low National Australia Day Council Limited Company Low Northern Land Council Corporate Moderate Office of National Intelligence Non corporate Low Office of the Official Secretary to the Governor General Non corporate Low Outback Stores Pty Ltd Company Moderate Tiwi Land Council Corporate Low Torres Strait Regional Authority Corporate Low Workplace Gender Equality Agency Non corporate Low Wreck Bay Aboriginal Community Council Corporate Low Other audit engagements including Auditor General Act section engagements Aboriginals Benefit Account Central Land Council Native Title Representative Body Northern Land Council Native Title Representative Body Material entities Department of the Prime Minister and Cabinet The Department of the Prime Minister and Cabinet PM&C is responsible for coordinating policy development across government in economic domestic and international affairs and Aboriginal and Torres Strait Islander advancement PM&C total budgeted expenses for are just over billion with per cent of these expenses attributable to grants as shown in Figure Figure Department of the Prime Minister and Cabinet 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 PM&C 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 effectiveness of internal control activities and financial reporting arrangements for Aboriginal and Torres Strait Islander affairs functions and administered grant programs KAM Occurrence of grant expenses valuation and reporting of PM&C employee provisions and expenses due to the significance of the balance in the statement of financial position and the complexity of the calculations valuation of land and building and infrastructure plant and equipment assets due to the location of assets in remote and regional Australia where market data on comparable assets is limited and valuation of PM&C administered investments which are significant in size unique in nature and require the exercise of management judgement by the portfolio entities Indigenous Business Australia Under its enabling legislation the Aboriginal and Torres Strait Islander Act Indigenous Business Australia IBA purposes are to assist and enhance Aboriginal and Torres Strait Islander self management and economic self sufficiency and to advance the commercial and economic interests of Aboriginal and Torres Strait Islander peoples by accumulating and using a substantial capital base for their benefit IBA has actively trading subsidiaries which are audited by the ANAO IBA total budgeted expenses for are just under million with per cent of these expenses attributable to supplier expenses as shown in Figure Figure Indigenous Business Australia total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May IBA three key risks for its financial statements are the valuation of loan receivables due to changes in the classification and accounting treatment of loans as a consequence of the introduction of AASB Financial Instruments impairment of loan receivables associated with significant judgements involving the calculation of expected credit losses and valuation of loan receivables following the reassessment of inputs to the valuation methodology which requires significant judgements Indigenous Land and Sea Corporation The purpose of the Indigenous Land and Sea Corporation ILSC is to assist Aboriginal and Torres Strait Islander people to acquire manage and invest in land and water so as to provide economic environmental social and cultural benefits and to provide land and water management assistance to support the delivery of sustainable benefits from land and water rights acquisition ILSC total budgeted expenses for are just over million with per cent of these expenses attributable to supplier expenses as shown in Figure Figure Indigenous Land and Sea Corporation total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The ILSC five key risks for its financial statements are the valuation and management of property plant and equipment and intangibles held by the ILSC subsidiary Voyages Indigenous Tourism Australia Pty Ltd in relation to the Ayres Rock Resort This is due to the judgements and assumptions involved in the valuation of these assets valuation of property plant and equipment and livestock of the ILSC and its subsidiary Australian Indigenous Agribusiness Company Pty Ltd Valuation of biological assets involves complex judgements and assumptions transfer of commercial property back to the ILSC from Australian Indigenous Agribusiness Company Pty Ltd in view of the tax implications which include the complex calculation of tax balances and asset valuations on transfer valuation of the concessional loan liability and associated asset between the ILSC and the Department of the Prime Minister and Cabinet and recognition and reporting of revenue and expenses by the ILSC subsidiary Voyages Indigenous Tourism Australia Pty Ltd due to the varying revenue and purchasing streams and the decentralised nature of the entity operations North Queensland Livestock Industry Recovery Agency The North Queensland Livestock Industry Recovery Agency NQLIRA was announced on March in response to a monsoons trough event in January and February which caused widespread flooding across northern and western Queensland These floodwaters had a catastrophic impact on the pastoral zone of North West Queensland impacting severely on grazing properties and causing extensive damage to related infrastructure such as fences dams and other watering infrastructure The NQLIRA purpose is to coordinate the immediate response recovery and reconstruction efforts and produce a strategy for long term recovery in support of North Far North and Western Queensland communities affected by the heavy rainfall and widespread flooding in early The NQLIRA total budgeted expenses for are just over million with per cent of these expenses attributable to other expenses as shown in Figure Figure North Queensland Livestock Industry Recovery Agency total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May At the time of publication the key risks for the North Queensland Livestock Industry Recovery Agency had not been identified