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Annual performance statements audits
The intent of performance statements audits is to drive improvements in the transparency and quality of entities’ performance reporting and, in turn, increase entities’ accountability to the Parliament and public.
In August 2019, following the review of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), the Minister for Finance requested that the Auditor-General conduct a pilot of audits of annual performance statements in consultation with the Joint Committee of Public Accounts and Audit (JCPAA). The intent of performance statements audits is to drive improvements in the transparency and quality of entities’ performance reporting and, in turn, increase entities’ accountability to the Parliament and public.
Following the Auditor-General’s agreement, the pilot commenced under section 15 of the Auditor-General Act 1997.
The pilot examined the performance statements of the Department of Veterans’ Affairs (DVA), the Attorney-General’s Department (AGD), and the Department of Social Services (DSS). Updates on the progress of the pilot were provided to the JCPAA progressively throughout the audit process and to the Audit Committee Chairs Forum in July 2020 and December 2020, sharing emerging findings and messages for the sector.
On 2 December 2020, the Auditor-General provided the Minister for Finance with two audit opinions. The ANAO withdrew from the 2019–20 DSS audit. This was due partly to delays in the provision of information as DSS prioritised resources to the government’s COVID-19 response. The ANAO examined DSS’ revised performance measures in 2020–21.
The Minister for Finance tabled the two 2019–20 audit opinions in Parliament on 3 February 2021. These are available on the Department of Finance’s website.
Both DVA and AGD made improvements in response to the ANAO’s interim findings, and as a result presented more transparent and meaningful performance reporting to the Parliament in their annual reports. Both departments’ 2019–20 performance statements provide an example for the sector of the alignment of purposes with activities and results, and the reporting of these results based on targets and different types of performance measures. DVA’s performance statements will be a particularly relevant example for agencies focused on service delivery; AGD’s performance statements will be a relevant example for agencies focused on policy development and implementation.
Continuation of the Pilot in 2020–21
As part of the 2021–22 Budget, the ANAO received additional funding to deliver a staged program of performance statement audits — from six audits in 2021–22 increasing to 19 audits by 2024–25. Full implementation of mandatory auditing of entity performance statements would give the Parliament the same level of assurance over non-financial performance information that it currently receives for financial performance information. This should result in improvements in the quality of performance information provided to the Parliament.
Options to formalise arrangements for performance statements audits across all material entities are being developed following the 2021 Budget. To maintain the momentum and capability building from the 2019–20 pilot, the ANAO conducted audits of the 2020–21 performance statements of DVA, AGD and DSS. These audits were conducted as a continuation of the Finance Minister’s request to conduct the pilot under section 40 of the PGPA Act, pursuant to section 15 of the Auditor-General Act 1997. The Minister for Finance tabled the three 2020–21 audit opinions on 8 April 2022. These are available on the Department of Finance’s website.
Audits of the Annual Performance Statements of Australian Government Entities — Report on Pilot
In April 2022, the Auditor-General tabled a report in the Parliament on the outcome of the ANAO’s annual performance statements audit pilot and the ANAO’s preparation for the staged implementation of an annual performance statements assurance audit program. The report noted improvement during the pilot program in the standard of performance statements preparation and reporting for each of the audited entities, demonstrating that mandated audits of performance statements can drive more transparent and meaningful performance reporting to Parliament. The report also highlighted that entities’ performance reporting functions and supporting systems will need to mature if they are to play a more proactive role in strategic planning and quality assurance, and the ANAO will need to increase awareness within the sector of its methodology for conducting performance statements audits.
2021–22 Performance Statements Audit Program
Following a request from the Minister for Finance in October 2021, the ANAO conducted six audits in 2021–22 as part of the first year of implementation of the performance statements audit program. The ANAO continued the program of work with DVA, AGD and DSS and audited three new entities, being the then Department of Agriculture, Water and the Environment (DAWE), the then Department of Education, Skills and Employment (DESE), and the Treasury.
All six entities signed their performance statements by 18 October 2022, and the Auditor-General’s independent audit reports were provided to the Minister for Finance on 24 October 2022. The Minister tabled all six audit reports in the Senate on 16 December 2022. These are available on the Department of Finance’s website.
On 9 February 2023, the Auditor-General tabled a report to Parliament on the outcome of the first year of implementation of the program of auditing entities’ performance statements. Across the six 2021–22 audits, entities’ annual performance statements were largely effective in meeting the requirements of the performance framework and accurately reporting the performance of the entity in achieving its purposes. In particular, the results reported against the performance measures in the annual performance statements and accompanying supporting analysis were generally accurate and supported by appropriate records. There were, however, some exceptions where entities did not have appropriate measures or adequate processes to support performance reporting.
The Auditor-General issued modified audit conclusions for three out of six entities (50 per cent), which compares favourably to 2020–21 where all entities were issued a modified audit conclusion. AGD, DESE and the Treasury each received an unmodified audit opinion. DAWE, DSS and DVA received a modified audit conclusion. Qualifications related to 13 out of 199 performance measures, which represents a reduction from 2020–21 in the proportion of qualified performance measures from 15 per cent to 7 per cent.
2022–23 Performance Statements Audit Program
Following a request from the Minister for Finance in January 2023, the ANAO will undertake ten audits in 2022–23. The ANAO will continue the program of work with DVA, AGD, DSS and the Treasury. Taking into account the 1 July 2022 Machinery of Government changes, the ANAO will also continue the program of work with the Department of Agriculture, Fisheries and Forestry and the Department of Education. Four new entities will be added to the program, being the Department of Industry, Science and Resources, the Department of Health and Aged Care, Services Australia and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts.
The ANAO will continue to liaise with the JCPAA on this program of work, including to review audit methods and outcomes each year.
More information about the Auditor-General's mandate and functions under the Auditor-General Act 1997 is available on the ANAO website.