Veterans Affairs 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 and emerging risks from new investments reforms or operating environment changes In the Veterans Affairs portfolio considerations predominantly relate to service delivery both through internal and outsourced delivery to ensure veterans are supported through timely and accurate DVA payments and services This creates specific risks in IT asset management and embedded compliance controls and governance risks to ensure quality standards are met Service delivery Audit work has highlighted some instances of excessively long periods to process claims from veterans and their dependants as well as a lack of internal reporting on efficiency This may indicate inefficient work practices and inadequate management oversight and action when service standards are not being met DVA reliance on the Department of Defence to provide data to support claims requires active management to address the risk that decisions are delayed when required data is not obtained in a timely manner Outsourcing service delivery and use of IT systems in another agency such as Services Australia does not reduce accountability DVA needs 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 as it should also do with internal delivery Asset management and sustainment The department significant investment in its Veteran Centric Reform program is seeking to transform DVA to improve the way it supports veterans and Defence personnel This program of work includes significant IT system changes which expose the department to both risk and opportunity Clear planning and close monitoring of progress will be essential to success Governance DVA administers personal benefit payments to veterans in a changing legislative environment and places a high level of reliance on voluntary disclosure of information by recipients This exposes the department to the risk of making payments based on incorrect or incomplete information and requires strong compliance controls and quality assurance Portfolio overview The responsibility for veterans affairs programs and policy resides within the Defence portfolio and includes support for veterans and war widows and widowers serving and former members of the Australian Defence Force certain Australian Federal Police officers with overseas service and Australian participants in British nuclear tests and their dependants The Department of Veterans Affairs DVA is the primary service delivery entity with responsibility for implementing programs to assist the veteran and ex service communities Further information is available from the department website at www dva gov au DVA together with the Australian War Memorial AWM has responsibility for repatriation rehabilitation and compensation war graves and maintaining and developing the AWM Audit considerations for the Defence portfolio are discussed separately In the Portfolio Budget Statements PBS for the Veterans Affairs 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 is shown in Figure DVA represents the largest proportion of the portfolio expenses and of this administered expenses are the most material component representing per cent of the entire portfolio expenses Figure Veterans Affairs 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 Veterans Affairs portfolio and the risk profile of each entity are shown in Table Table Veterans Affairs portfolio entities and risk profile Type of entity? Risk of material misstatement? Number of higher risks? Number of moderate risks? Material entities Department of Veterans Affairs Non corporate Moderate Australian War Memorial Corporate Low Other audit engagements including Auditor General Act section engagements Defence Service Homes Insurance Scheme Material entities Department of Veterans Affairs The Department of Veterans Affairs DVA is responsible for developing and implementing programs to assist the veteran and ex service communities This includes granting pensions allowances and other benefits and providing treatment under the Veterans Entitlements Act the administration of benefits and arrangements under the Military Rehabilitation and Compensation legislation administering the Defence Service Homes Act and the War Graves Act and conducting commemorative programs to acknowledge the service and sacrifice of Australian servicemen and women DVA total budgeted expenses for are just under billion with personal benefits and healthcare payments representing per cent and per cent respectively as shown in Figure Figure Department of Veterans Affairs 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 DVA 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 exercising of judgements involved in the assumptions and calculations underpinning the actuarial assessment of the military compensation provision KAM Valuation of personal benefit and healthcare provisions accuracy of personal benefit and healthcare payments based on a complex legislative environment and information provided by veterans and their dependants continuing effectiveness of the IT control environment as the department financial management information system human resources management information system and personal benefits and healthcare systems transition to Services Australia during the year under new shared services arrangements valuation and reporting of non financial assets including the assessment of any indicators of impairment of legacy IT systems as a result of the arrangements to transition to Services Australia systems and impact of legislative changes involving digital readiness and the introduction of non liability healthcare provisions on claims processing assessment and payment arrangements Australian War Memorial The Australian War Memorial AWM is responsible for maintaining and developing the national memorial to Australians who have lost their lives in wars or warlike operations developing maintaining and exhibiting a national collection of historical material and conducting and fostering research into Australian military history The AWM total budgeted expenses for are just under million with employee benefits and supplier expenses representing per cent and per cent respectively as shown in Figure Figure Australian War Memorial total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The AWM key risk for its financial statements is the valuation of the national collection due to the complexity in valuing a large collection of unique heritage and cultural items of significant value