The Auditor-General is an independent officer of the Australian Parliament whose responsibilities include financial statements audits, performance audits and other assurance activities. In delivering against this mandate, the Auditor-General is assisted by the Australian National Audit Office (ANAO). The Annual Audit Work Program 2017–18, which reflects the ANAO’s strategy and deliverables for the coming year, is a key part of the ANAO’s strategic planning framework and complements the organisation’s corporate plan.


Auditor-General’s mandate

The Auditor-General is an independent officer of the Australian Parliament whose responsibilities, as set out in the Auditor-General Act 1997 (the Act), include:

  • auditing the financial statements of Commonwealth entities, Commonwealth companies and their subsidiaries;
  • auditing annual performance statements of Commonwealth entities on request in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act);
  • conducting performance audits, assurance reviews, or audits of the performance measures, of Commonwealth entities and Commonwealth companies and their subsidiaries;
  • conducting performance audits of Commonwealth partners as described in section 18B of the Act;
  • providing other audit services as required by other legislation or allowed under section 20 of the Act; and
  • reporting directly to the Parliament on any matter or to a minister on any important matter.

As an independent officer of the Parliament, the Auditor-General has discretion in the performance or exercise of his functions or powers. In particular, the Auditor-General is not subject to direction in relation to whether or not a particular audit is to be conducted, the way in which a particular audit is to be conducted, or the priority to be given to any particular matter. In the exercise of his functions or powers, the Auditor-General must, however, have regard to the audit priorities of the Parliament, as determined by the Joint Committee of Public Accounts and Audit (JCPAA).

The Act constrains the Auditor-General’s independence in conducting:

  • a performance audit or an audit of performance measures of a government business enterprise unless it is requested by the JCPAA;
  • a performance audit of a Commonwealth partner that is part of, or controlled by, a state or territory government unless it is requested by the responsible minister or the JCPAA; or
  • an audit of the annual performance statements of Commonwealth entities unless requested by either the Minister for Finance or the responsible minister (this means that the Parliament does not receive assurance, as a matter of course, on performance statements included in annual reports as it does over financial statements, where an independent audit report is mandatory).

In delivering against this mandate, the Auditor-General is assisted by the Australian National Audit Office (ANAO). The purpose of the ANAO is to improve public sector performance and support accountability and transparency in the Australian Government sector through independent reporting to the Parliament, the executive and the public.

The ANAO’s work is governed by the auditing standards established by the Auditor-General. These incorporate the standards made by the Auditing and Assurance Standards Board as applied by the auditing profession in Australia.

ANAO strategic planning framework

The annual audit work program is a key part of the ANAO’s strategic planning framework (see Figure 1). The composition of the program is guided by the ANAO’s commitments to the Parliament, as outlined in its Portfolio Budget Statements 2017–18 (PBS) and through the ANAO 2017–18 Corporate Plan, which provides an overview of the ANAO’s operating environment and sets out how the ANAO will deliver on its purpose.

Figure 1: ANAO strategic planning framework

Annual audit work program

The annual audit work program sets out the ANAO’s strategy and deliverables for the coming year. It informs the Parliament, the public and government sector entities of the planned coverage for the Australian Government sector by way of financial statements audits, performance audits and other assurance activities.

The annual audit work program presents information on the financial statements audits and other assurance activities that will be finalised in the coming year. In 2017–18, the ANAO expects to complete:

  • the audit of the Australian Government’s consolidated financial statements;
  • a minimum of 250 mandated financial statements audits of entities;
  • a minimum of 45 other assurance activities, which include audits by request under section 20 of the Act (largely related to financial statements and compliance audits); and
  • two reports on the results of financial statements audits.

The program also presents information on performance audits in progress and a rolling program of potential performance audits and assurance engagements for each portfolio. In 2017–18, the ANAO expects to complete:

  • a minimum of 48 performance audits;
  • the Defence major projects priority assurance review; and
  • a minimum of three assurance review activities.

Financial statements audits

The primary purpose of financial statements is to provide relevant, reliable information to users about a reporting entity’s financial position. In the public sector, the users of financial statements include Parliament, Ministers and the community. The preparation of timely and accurate audited financial statements is also an important indicator of the effectiveness of an entity’s financial management, which fosters confidence in an entity on the part of users.

The ANAO’s financial statements audits provide an independent examination of the financial accounting and reporting of public sector entities. The ANAO’s approach is to focus on the identification of key areas of financial statements risk that have the potential to impact an entity’s financial statements.

The ANAO’s risk assessment process considers the nature of the entity’s financial statements and an understanding of the entity’s environment and governance arrangements, including its financial reporting regime and system of internal control. The ANAO also considers the results of recent performance audits relevant to the financial management or administration of the entity as part of the financial statements audit risk identification process. The areas of financial statements risk identified from planning the 2016–17 financial statements audits of public sector entities have been summarised within the respective portfolio sections of this work program.

On completion of a financial statements audit, the Auditor-General will provide an independent auditor’s report to the responsible minister. The independent auditor’s reports relating to 2016–17 will be issued from July 2017. Planning for 2017–18 audits will commence from October 2017.

From 2016–17, the independent auditor’s reports for major public sector entities will include key audit matters in accordance with the relevant auditing standard—ASA 701 Communicating Key Audit Matters in the Independent Auditor’s Report. The purpose of communicating key audit matters is to provide greater transparency about the audit that was performed. Communicating key audit matters helps users of financial statements to better understand those matters that, in the auditor’s professional judgement, were of the most significance in the audit of the financial statements. In addition, communicating key audit matters may also assist users to understand the entity and the areas of significant management judgement in the financial statements.

In accordance with the requirements of the PGPA Act, a copy of the annual financial statements and the independent auditor’s report must be included in the entity’s annual report. The annual report is to be tabled in the Parliament.

In 2017–18, the ANAO will publish two reports addressing the outcomes of the financial statements audits of Australian Government entities and the consolidated financial statements of the Australian Government. The following reports provide Parliament an independent examination of the financial accounting and reporting of public sector entities:

  • Interim Report on Key Financial Controls of Major Entities—this report focuses on the results of the interim audit phases, including an assessment of entities’ key internal controls, for 25 entities, including all departments of state, and a number of major Australian government entities. The entities included are selected on the basis of their contribution to the revenues, expenses, assets and liabilities of the consolidated financial statements; and
  • Audits of the Financial Statements of Australian Government Entities—this report will present the final results of the 2016–17 audits of all Australian Government controlled entities and the consolidated financial statements.

Performance audits

A performance audit is a review or examination of the operations of an Australian Government sector entity. A performance audit aims to provide the Parliament with assurance relating to the administration of entities and programs, including where these activities involve a Commonwealth partner. Performance audits also encourage better administrative and management practices by identifying and alerting public sector leaders to areas of weakness and highlighting areas of innovation and good practice for adoption more broadly across the sector.

In developing the annual work program, emphasis is given to both an entity’s core business functions that underpin its program and service delivery activities, and areas of risk to the achievement of entity purposes. A performance audit can be entity-specific or involve examination of a common issue as part of a broader cross-entity audit involving a number of entities. Performance audits include an examination of one or more of:

  • economy (minimising cost);
  • efficiency (maximising the ratio of outputs to inputs);
  • effectiveness (the extent to which intended outcomes are achieved);
  • ethical use and management of public resources; and
  • legislative and policy compliance.

This focus reflects the relevant auditing standards and the requirements of the PGPA Act relating to the proper use and management of public resources. Proper use means economical, efficient, effective and ethical use.

Once completed, performance audit reports are tabled in the Parliament and publicly released on the ANAO’s website.

Other assurance activities

Other assurance activities conducted by the ANAO consist of audits by arrangement with an audited entity, assurance reviews and priority assurance reviews.

Audits by arrangement

In addition to mandated financial statements audits, entities can request the ANAO to conduct additional audit services in accordance with section 20 of the Act. These additional audit services generally support the reporting requirements of existing mandated audits and commonly relate to the audit of financial statements outside of the existing mandate or compliance-related requirements of the requesting entity.

In considering requests, legislative and public interest considerations and the capacity to deliver these services in conjunction with the ANAO’s existing legislative responsibilities are taken into account. The acceptance of requests will also take account of the ability of the Auditor-General to report results to the Parliament and the responsible ministers when in the Commonwealth’s interest. Audit services conducted in accordance with section 20 of the Act and that are expected to be finalised during 2017–18 have been detailed within the relevant portfolio sections of this work program.

Assurance reviews

The conduct of assurance reviews by the ANAO under section 19A of the Act is generally less extensive than performance audits or financial statements audits, primarily in terms of the nature and scope of issues covered and the extent of evidence collected and analysed. Performance and financial statements audits are designed and conducted to provide ‘reasonable assurance’. An assurance review may also provide a ‘limited assurance’ opinion if it is determined that, as a result of the less extensive nature of the audit, the acceptable risk associated with the findings is higher than for a reasonable assurance engagement.

The ANAO can initiate an assurance review on the basis of information obtained in the course of performing an Auditor-General function or in response to requests from stakeholders, including parliamentarians, parliamentary committees, entities and members of the public. Once relevant inquiries have been concluded by the ANAO, the findings from these individual assurance activities may be handled through the tabling of a report in the Parliament or by issuing correspondence, with the relevant correspondence published on the ANAO’s website. The Auditor-General can also present a report for tabling in the Parliament on any matter.

Priority assurance reviews

The Auditor-General’s mandate also provides for the conduct of priority assurance reviews, with the Joint Committee of Public Accounts and Audit (JCPAA) determining whether an assurance review is a priority assurance review. A significant assurance activity that is undertaken each year by the ANAO is the priority assurance review of major Department of Defence (Defence) equipment acquisition projects. The outcomes of this review are published annually in the Major Projects Report.

Increased transparency and accountability in relation to the progress of Defence major projects has been an ongoing focus of the Parliament due to their high cost and contribution to national security, and the challenges involved in completing these projects within the specified budget and schedule, and to the required capability. In response to this focus, an annual program was established by the ANAO in 2007–08 to review and report to the Parliament on the status of Defence major projects.

The Major Projects Report includes information relating to the cost, schedule and capability delivery performance of individual projects as at 30 June each year. The 2015–16 Major Projects Report, which was released in February 2017, provided coverage of 26 projects, with total approved budget of approximately $62.7 billion.

Developing the annual audit work program

The ANAO’s annual audit work program provides the basis on which the ANAO delivers against the Auditor-General’s key functions established under the Act, including the mandated audits of the:

  • annual financial statements of Commonwealth entities;
  • annual financial statements of Commonwealth companies;
  • annual financial statements of subsidiaries of corporate Commonwealth entities and Commonwealth companies; and
  • annual consolidated financial statements.

As outlined earlier, in addition to these mandated audits, entities can request the ANAO to conduct additional audit services in accordance with section 20 of the Act. The work program outlines the key risks and considerations that inform the delivery of the ANAO’s financial statements audit program.

The development of the performance audit components of the program is guided by the following high level planning objectives:

  • the application of the full breadth of the Auditor-General’s mandate;
  • responsiveness to the needs of the Parliament;
  • coverage of the lifecycle of program and service delivery, procurement and regulatory activities; and
  • the provision of a balanced perspective on public sector performance.

In the context of these objectives, the ANAO’s approach to the development of the performance audit program is informed by the following planning criteria:

  • Impact: the outcomes or potential benefits that might flow from performance audit coverage, including improved administrative effectiveness, greater efficiency, or improved program/service delivery performance.
  • Importance: the importance of the area proposed for audit coverage to key stakeholders.
  • Materiality: the significance of the program, including the financial and non-financial materiality.
  • Risk: risk coverage at the whole-of-system level that has the potential to impact on public sector administration more broadly and also at the individual program level.
  • Auditability: the extent to which the area of proposed audit coverage is able to be audited.
  • Previous coverage: the extent to which the area of proposed audit coverage has been subject to previous audit coverage.

This planning approach, combined with the focus areas for performance audit coverage—that is the economy, efficiency, effectiveness, ethical use and management of public resources and legislative and policy compliance—is the basis on which the potential topics for inclusion in the program, and the activities to be examined as part of each audit, are determined. In addition, the ANAO seeks to achieve balanced coverage across public sector entities, informed by an assessment of risk, and across key areas of public sector activity, including procurement, contract management, grants administration, governance, ICT implementation (including cyber security) and risk management.

Importantly, the ANAO’s development of the annual audit work program takes into account the views of the Parliament, as presented by the JCPAA, and relevant stakeholders. The ANAO also consults directly with entities subject to financial statements audit coverage and potential performance audit coverage to obtain their views on the program. The release of draft potential performance audit topics on the ANAO’s website provides an opportunity for members of the public to provide their views.

The whole-of-organisation planning process brings together the knowledge and insights gained from the ANAO’s financial statements audit work and the program of performance audits to inform the identification of topics for inclusion in each year’s program. The process also takes account of those areas of strategic focus that the ANAO has identified to enable it to effectively respond to changes in its operating environment to maximise opportunities and mitigate threats.

Recurring themes from recent audit coverage

The audits conducted by the ANAO over recent years have identified examples of sound public administration across a range of activities. These audits have also highlighted common recurring issues and shortcomings. In particular, the ANAO’s audit coverage of the Australian Government sector has highlighted the importance of:

Getting the basics right …

Key to the effective management of public sector entities are systems and frameworks that underpin the integrity of financial and business activity by: providing visibility and oversight of key responsibilities; appropriately engaging with risk; ensuring accountable decision-making; managing staff performance; safeguarding data holdings; and maintaining a focus on quality. Getting these ‘basics’ right requires more than a ‘checklist’ approach—it requires the thoughtful consideration of outcomes that are being sought and the individual circumstances of each entity. In essence, the establishment of fit-for-purpose systems and frameworks is fundamental to good governance and the delivery of effective and efficient programs and services to the Australian community.

The effectiveness of entity systems and frameworks is evidenced through the strength of the IT controls environment, the level of focus attributed to record keeping practices and supporting systems, the embedding of a risk management culture, an appreciation of the importance of robust cybersecurity arrangements and an organisation-wide commitment to quality assurance.

The ANAO’s recent financial statements and performance audit coverage has identified scope for entities to increase their focus on getting these basics right.

Examples of audits completed in 2016–17 where entities had addressed key basic requirements:

  • ANAO Report No. 14 Abatement Crediting and Purchasing under the Emissions Reduction Fund 
  • ANAO Report No.26 Prudential Regulation of Superannuation Entities 
  • ANAO Report No.34 Implementation of the Biosecurity Legislative Framework 

Examples of areas for improvement identified in 2016–17 include:

  • ANAO Report No.1 Procurement of the International Centre for Complex Project Management to Assist on the OneSKY Australia Program
  • ANAO Report No.23 National Rental Affordability SchemeAdministration of Allocations and Incentives 
  • ANAO Report No.24 National Disability Insurance Scheme–Management of Transition of the Disability Services Market 
  • ANAO Report No.31 Administration of the VET FEE-HELP Scheme
  • ANAO Report No.33 Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2016 
  • ANAO Report No.52 Managing Underperformance in the Australian Public Service

Implementing mandatory requirements …

The delivery of public sector programs and services are governed by regulatory frameworks set by the Parliament, the Government, public sector regulators and those set out by accountable authorities of public sector entities for their staff. These frameworks include legislative obligations, policy requirements, regulations and standards for the preparation of financial statements (including the controls that are required to be in place), procurement, record keeping, grants administration, program implementation, performance management, planning and risk management, and cyber security.

The current approach to regulation is to impose the minimum regulatory intervention to achieve policy outcomes. This approach has been reinforced through the implementation of the PGPA Act and associated rules and the Review of Whole-of-Government Internal Regulation (the Belcher Red Tape Review). In this context, the mandatory regulatory frameworks against which the ANAO now audits are progressively presented to the sector in a minimum requirements and principles-based way to deal with the areas of risk that they seek to address. A decision by a regulator to impose mandatory requirements signals the importance of the risks that are to be managed.

Performance audits and financial statements audit coverage in 2016–17 continue to find that entities’ performance in meeting mandatory requirements within established frameworks is mixed.

Examples of audits completed in 2016–17 that identified entity compliance with the minimum mandatory requirements for grants administration and procurement:

  • ANAO Report No.49 Apprenticeship Training–alternative delivery pilots 
  • ANAO Report No.61 Procurement of the National Cancer Screening Register 

Examples of areas for improvement from 2016–17 include:

  • ANAO Report No.33 Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2016  
  • ANAO Report No.35 Indigenous Advancement Strategy 
  • ANAO Report No.39 The Australian Border Force’s Use of Statutory Powers 
  • ANAO Report No.42 Cybersecurity Follow-up Audit 

Achieving value for money from public sector procurement…

The Australian Government has established a strong framework of rules and supporting guidance for entities undertaking procurement activity. A key focus of the framework is on those factors that must be considered by entities to meet the core requirement of achieving value for money. This is not always a simple matter of lowest cost, but requires the thoughtful consideration of the financial and non-financial costs and benefits associated with a specific procurement.

The rules and guidance also provide significant flexibility for entities to adapt procurement processes to best meet the needs of specific circumstances, for example there is provision for entity-specific operational rules. The rules and guidance also make provision for a limited tender in defined circumstances such as extreme urgency, to benefit from exceptionally advantageous conditions, and where there is no reasonable alternative or substitute. In utilising this flexibility, a key factor for entities is to ensure that procurement approaches continue to deliver best value for taxpayers’ money and that corners are not cut simply for the convenience of the purchaser.

Recent audit findings demonstrate that entities could apply more rigour in complying with rules and guidance and could more actively manage procurement through good governance with an eye to outcomes. The ANAO’s audits have highlighted:

  • shortcomings in the planning and conduct of procurements, including in relation to keeping records of reasons for decisions and the assessment of value for money;
  • insufficient attention to the identification and ongoing management of risks, including probity risks;
  • significant skill and capability gaps amongst personnel (at all levels) undertaking procurement activities; and
  • shortcomings in record keeping systems, which complicate external scrutiny and review processes and can affect entities’ ability to protect the Commonwealth’s interests.

Example of an audit completed in 2016–17 where the entity had established effective practices:

  • ANAO Report No.48 Future Submarine—Competitive Evaluation Process 

Examples of areas for improvement from 2016–17 include:

  • ANAO Report No.16 Offshore Processing Centres in Nauru and Papua New Guinea: Procurement of Garrison Support and Welfare Services 
  • ANAO Report No.33 Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2016 
  • ANAO Report No.29 Design and Implementation of Defence’s Base Services Contracts
  • ANAO Report No.45 Replacement Antarctic Vessel 
  • ANAO Report No.46 Conduct of the OneSKY Tender 

Applying resources and delivering against agreed commitments …

As part of the annual Budget process, public sector entities are funded for specific activities according to government priorities, with departmental and administered funding often tied to entities’ achievement of specific outcomes. The effective monitoring of new policy proposal implementation and robust reporting of performance to government underpins transparent and accountable administration. Given accountable authorities within entities have statutory responsibilities to apply resources efficiently, effectively, economically and ethically, tracking implementation of new measures, particularly where the measures have Budget savings outcomes, is an essential element of sound public sector administration.

Performance audits in 2016–17 have identified weaknesses in entities’ monitoring arrangements for new policy proposals, particularly in the context of monitoring savings generated from new compliance measures and managing significant contractual arrangements.

  • ANAO Report No.15 Meeting Revenue Commitments from Compliance Measures
  • ANAO Report No.41 Management of Selected Fraud Prevention and Compliance Budget Measures

Knowing what you are trying to achieve and whether you are…

A key element of recent public sector reforms has been the establishment of a new performance framework under the PGPA Act and related PGPA Rule 2014. This framework strengthens the accountabilities of the public sector for measuring and reporting on their performance and introduced system-wide planning and performance reporting requirements for the first time.

Clear expectations have been placed on entities to measure and report on the delivery of public services and programs by preparing corporate plans and annual performance statements that demonstrate the effectiveness of government policies and programs and the efficiency of their delivery—in essence, to tell a rich performance story. Enhancing the quality of performance information—at both the entity and the activity level—allows informed decisions to be made about the efficient allocation of resources and, where necessary, to change policy settings.

The ANAO’s performance audit coverage over many years has indicated that entities continue to experience challenges in developing performance measures that clearly communicate achievements against stated objectives, including savings targets. The ANAO has also identified issues associated with the accuracy and consistency of performance data. As a result, in relation to key policy initiatives, many entities did not provide clear and accurate advice on the achievement of desired outcomes.

Examples of audits completed in 2016–17 where entities had established approaches in place to measure and evaluate performance:

  • ANAO Report No.2 Conduct of the External Compliance Assurance Process pilot
  • ANAO Report No.27 Reef Trust–Design and Implementation
  • ANAO Report No.47 Strengthening Australia’s Tourism Industry

Examples of areas for improvement from 2016–17 include:

  • ANAO Report No.5 Passenger Security Screening at Domestic Airports
  • ANAO Report No.17 Design and Monitoring of the Rural Research and Development for Profit Programme 
  • ANAO Report No.56 Pesticide and Veterinary Medicine Regulatory Reform
  • ANAO Report No.58 Implementation of the Annual Performance Statements Requirements 2015–16 
  • ANAO Report No.61 myGov Digital Services

Areas of strategic focus

Critical to the ANAO’s success in delivering on its purpose is the ability to anticipate changes occurring in its operating environment and to effectively respond to these changes through its audit program. In 2017–18, the ANAO will continue to position its financial and performance audit program to give focus to recurring issues identified through its prior work. As with last year’s program, the 2017–18 program will exercise the full range of powers under the Auditor-General’s mandate to deliver audits that are impactful through both their examination of contemporary public administration issues and through the clarity with which they deliver their findings.

Financial statements audit program

The ANAO’s 2017–18 financial statements audit program will focus on the themes of timeliness and accessibility.

Timely financial statements are indicative of effective financial management. Under the PGPA Act, Commonwealth entities must prepare annual financial statements as soon as practicable after the end of the reporting period and the Auditor-General must examine the financial statements and give the audit report to the responsible minister as soon as practicable. There have been recent steps to have annual reports, including audited financial statements, delivered in a more timely manner.

Initiatives such as the simplification and streamlining of financial statements assist in the readability and transparency of financial information. These have also contributed to more timely reporting. The ANAO is committed to assisting entities to meet their reporting timeframes set by government and will work in consultation to adjust the timing of activities, when appropriate to do so, to achieve earlier audit completion.

The ANAO will continue to assist individual entities streamline their financial statements and transition to tiered reporting, where this is appropriate, having regard to auditing standards and the government reporting requirements.

Key audit matters will be included in audit reports of major public sector entities to be published in 2017–18. This aligns with recent changes to the auditing standards that require auditors of listed entities to report on key audit matters and will assist users to understand significant audit matters and areas of significant management judgement within those financial statements. This will also enable Parliament to have insight into the views of the Auditor-General.

Performance audit program

A continuing focus of the performance audit program will be the design, planning and implementation phases of programs—both for services to be delivered by the public sector and those intended to be delivered by the private and not-for-profit sectors. The resulting emphasis on the robustness of entities’ design and planning activities and advice to government, including the extent to which appropriate cost–benefit analyses and modelling is used to inform decision-making, will bring greater attention to these important activities within the public sector. The ANAO will also continue to direct audit effort earlier in the implementation phase of programs to provide entities with an early ‘health check’ of their planning implementation activities and to strengthen program arrangements with the aim of improving the likelihood of successful outcomes.

The ANAO will also continue to broaden its coverage beyond the current focus on non-corporate entities, to include a greater focus on corporate entities, government business enterprises and Commonwealth partners—noting that the Auditor-General is constrained in self-initiating audits of government business enterprises and of Commonwealth partners that involve a state or territory. This broadening will also move the performance audit program beyond the historically strong focus on the examination of the effectiveness of public sector program delivery to include greater consideration of how well resources have been deployed to achieve results. This is in line with the expectations of both the community and of successive governments that the public sector will strive for greater efficiency in its operations—ultimately delivering greater value for taxpayers’ money.

The ANAO plays an important role in advising the Parliament, through the JCPAA, on the implementation of the reforms to the resource management framework following the introduction of the PGPA Act. One aspect of this role includes undertaking audits to provide feedback on, and influence the development, implementation and operation of, an effective corporate planning, performance and risk management framework.

Along with the examination of new areas of public administration, a continuing role for the ANAO is the maintenance of a watchful eye on entities’ implementation of recommendations arising from earlier audits and parliamentary inquiries. To this end, the ANAO will continue to monitor the implementation of recommendations to entities through attendance at entity audit committees, the review of implementation in relevant audits and through the conduct of targeted follow-up audits.

Other assurance activities

To complement the role that financial statements and performance audits play in improving public administration, the ANAO will look to further expand the use of assurance reviews over the coming years to respond in a more timely manner to matters of concern brought to the attention of the Auditor-General. These include matters identified by the ANAO through the performance of an Auditor-General function or from requests received from parliamentarians and members of the public to examine a specific aspect of public administration.

Sharing insights

To complement its financial statements and performance audit work, and its assurance activities, the ANAO will explore options to provide its stakeholders, including the Parliament, with additional insights into public sector administration. A specific focus will be the development and publication of materials that draw together key learnings from across the ANAO’s suite of activities, with the aim of assisting entities to improve their delivery of programs and services.

ANAO-wide performance

Delivering high-quality audit services

The ANAO operates in a contestable environment, and is committed to maintaining a business model that has quality at its foundation and reflects contemporary better practices and delivers strong performance. The ANAO’s Quality Statement links the Quality Assurance Framework to the strategic objectives and priorities of the ANAO:

Audit quality is the provision of timely, accurate and relevant audits, performed independently in accordance with the Act, ANAO auditing standards and methodologies, which are valued by the Parliament. Delivering quality audits results in improved public sector performance through accountability and transparency.

The ANAO Quality Assurance Framework is based on the auditing standard ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements. Incorporated into the framework is a system of quality control and monitoring programs that provides assurance that the ANAO complies with applicable professional standards and relevant regulatory and legal requirements, and that all reports issued are appropriate in the circumstances.

The ANAO governance structure, policies and procedures promote an internal culture based on the recognition that quality is essential in performing audit engagements. The ANAO Quality Committee, a standing committee of the Executive Board of Management, monitors the implementation of the ANAO Quality Assurance Framework. The ANAO has clearly defined roles and responsibilities for the management of quality.

Quality policies and monitoring programs are reviewed on an ongoing basis and benchmarked against audit offices in other jurisdictions to ensure the ANAO continues to implement best practice. Recent reviews have resulted in the revision of classification and reporting of findings and incorporating real-time ‘in-flight’ reviews of audit engagements into the monitoring program. Ongoing focus areas include the strengthening of quality reporting to the ANAO’s Executive, including reporting on audit quality indicators and external reviews of the framework and audit files.

Contributing to national and international auditing capability

The ANAO engages with national and international auditing organisations and associations to maintain its capability in contemporary audit practices and collaborate through the two-way exchange and sharing of information and practices with the auditing community.

As a member of the Australasian Council of Auditors-General, the ANAO continues to contribute to the council’s objectives of advancing public sector auditing in all states and territories of Australia, New Zealand, Fiji and Papua New Guinea. The ANAO participates in executive and subgroup forums, takes part in annual benchmarking surveys, conducts peer reviews and training, and is involved in other shared initiatives with council members.

The ANAO also contributes to the Auditing and Assurance Standards Board and the Australian Accounting Standards Board in their roles of setting and maintaining professional and ethical standards for the auditing and accounting professions, as members of project advisory groups, contributing to roundtable discussions and commenting on standards exposure drafts.

The ANAO is a member of the International Organization of Supreme Audit Institutions (INTOSAI), and is a member or observer on the Asian and Pacific regional organisations, and participates in congress meetings and subgroups that advance the strategic priorities of these organisations. In 2018, the ANAO will host the INTOSAI Working Group of IT Audit, expecting delegates from 46 member countries to attend and discuss project status and topics that are current and relevant to members. The ANAO also participates in peer-to-peer forums that facilitate international public auditing dialogue, such as the triannual Commonwealth Auditors General Conference and annual Global Audit Leadership Forum. The ANAO also responds to requests from INTOSAI directly, including providing information and participating in surveys and by hosting visiting delegations.

The ANAO continues to participate in the Australian Government’s international aid program in the Indo-Pacific region through peer-to-peer institutional capacity development. Supported by senior ANAO staff who are deployed in the Indonesia and Papua New Guinea audit offices, the programs target strategic priority areas and deliver assistance through reciprocal twinning arrangements. The ANAO will be working with the Department of Foreign Affairs and Trade through its aid program to redesign initiatives that will establish the revised principles that will be adopted when formulating and managing projects with Australian counterpart agencies.

In the coming year, the ANAO will continue to support these national and international engagements and obligations, with a focus on articulating and promulgating a strategic engagement strategy.

Communicating with stakeholders

Effective and engaging communication remains an ongoing focus for the ANAO, given the important role that it plays in providing assurance to the Parliament and improving public sector administration. In this context, the ANAO continues to develop and enhance a contemporary communications capability, which underpins the production and communication of accessible and engaging audit products that are valued by stakeholders.

A key focus of the strategy is to fully exploit the benefits of digital engagement, both internally and externally. The expanded adoption of digital work practices and communication approaches not only delivers more efficient operations, but also allows the ANAO to better target the communication of key audit messages.

The ANAO continues to explore and adopt options for enhancing audit and administrative practices through the implementation of new digital technologies and workflows. The redesigned ANAO website, launched in April 2016, has been well received by stakeholders, and this platform has given the ANAO a solid foundation for continuous improvement based on user feedback, analytics and our own observations. Subscriptions to receive updates to work in progress, including performance and financial statements audit work, continue to grow steadily.

In addition to the expanded adoption of digital work practices and communication approaches, the ANAO has redesigned the style and format of its financial statements and performance audit reports to enhance accessibility and more clearly communicate the key audit messages.

Measuring the ANAO’s performance

The Auditor-General and the ANAO are committed to the accountable and transparent delivery of the Auditor-General’s functions under the Act. In this context, the ANAO has sought to improve over time the quality of its performance information that underpins the accountability of the Auditor-General to the Parliament and to the community.

A key focus of the ANAO over recent years has been responding to the reforms established as part of the new performance framework outlined under the PGPA Act and related PGPA Rule. This framework strengthens the accountabilities of Australian Government entities and companies for measuring and reporting on their performance and introduced system-wide planning and performance reporting requirements for the first time. Under this framework, the ANAO has produced two corporate plans and included, for the first time, an Annual Performance Statement in the Auditor-General’s 2015–16 Annual Report.

In responding to the enhanced planning and reporting requirements established under the PGPA Act, the ANAO has taken the opportunity to review and improve its performance measurement framework with a suite of new performance measures to be implemented from 2017–18. These measures place greater focus on the ANAO’s support to the Parliament and provide a more meaningful description of the ANAO’s performance by outlining the ANAO’s achievements against its purpose with regard to:

  • delivery—what were the ANAO’s achievements over the year?
  • quality and efficiency—how were they delivered?
  • impact—what were the benefits derived from their delivery?


1 A significant legislative finding is reported where a significant potential or actual breach of the Constitution occurs; or where non-compliance with an entity’s enabling legislation, legislation the entity is responsible for administering, or the PGPA Act is identified. A non-significant legislative finding is reported where instances of non-compliance with other legislation, or subordinate legislation, are identified.