Provides an overview of the annual audit work program including the purpose and key features, and how the program is developed and delivered. Information about the development of the annual audit work program includes details of environmental scanning, topic development, coverage review, consultation, final review and audit selection.

Auditor-General and ANAO

The Auditor-General is an independent officer of the Parliament whose role is to support accountability and transparency in the Australian Government sector by providing independent reporting to the Parliament. The Auditor-General’s reports assist the Parliament to hold government entities accountable and to drive improvements in public administration.

The Auditor-General is assisted by the Australian National Audit Office (ANAO) to conduct a range of audits in Australian Government entities, such as:

The ANAO also supports the Parliament through briefings, appearances at parliamentary committees and other activities.

More information regarding the Auditor-General’s mandate and functions under the Auditor-General Act 1997 can be accessed at the ANAO website.

Annual audit work program

The Auditor-General chooses to publish an annual audit work program in July each year, which outlines the proposed audit activities to be undertaken in the financial year. As an independent officer, the Auditor-General has the discretion in the performance or exercise of functions or powers and may at any time explore additional areas of audit interest beyond that published in the annual audit work program.

The purpose of the annual audit work program is to inform the Parliament, government sector entities and the public of the audits the ANAO proposes to deliver throughout the financial year, covering financial statements, performance audits, and other assurance activities. The annual audit work program complements the ANAO’s primary strategic planning document, the corporate plan, and outlines the rationale for audit work priorities, including potential performance audit topics for 2018–19. The annual audit work program is designed to anticipate and respond to current and emerging risks and challenges impacting on public administration.

Key features of the Annual Audit Work Program 2018–19

In addition to the annual program of mandated financial statements audits, the Annual Audit Work Program 2018–19 includes 87 potential performance audit and assurance review topics, and provides details about in-progress performance audit and assurance work.

Key features of the Annual Audit Work Program 2018–19 include:

  • an ongoing focus on the key accountabilities as outlined in the Public Governance, Performance and Accountability Act 2013 (the PGPA Act), including efficiency, effectiveness, economy and ethics;
  • compliance with legislation and government policy frameworks;
  • promoting transparency on the effective use of taxpayers’ money through audits of procurement processes, contract management and grants management;
  • program implementation and risk management in major areas of public investment, such as in Defence capability; large-scale infrastructure such as the national broadband network; the National Disability Insurance Scheme; and programs targeting Indigenous Australians;
  • value for money and transparency of the operations of government business enterprises;
  • transparency in the measurement of performance and impact against agreed program objectives;
  • effective delivery of services to citizens; and
  • cyber resilience, including IT security and systems controls.

The implementation of prior-year ANAO audit findings and recommendations will be examined in follow-up audits, including potential audits of:

  • Defence facilities in Benalla and Mulwala;
  • Implementation of ANAO and parliamentary committee recommendations; and
  • Mobile Black Spot Program.

Development of the annual audit work program

The annual audit work program is developed through the process outlined in Figure 1 and is guided by the following objectives:

  • respond to the interests and priorities of the Parliament of Australia;
  • provide a balanced program of activity informed by risk, and which promotes accountability, transparency and improvements to public administration;
  • follow up on past recommendations and identify trends for improvement, or declines in performance across government; and
  • apply all of the Auditor-General’s mandate.

Figure 1: Annual audit work program development process

1. Environmental scan

An environmental scan is conducted at the initial planning stage to form a comprehensive understanding of areas of parliamentary interest, changes and trends in the Australian Government sector and risks to the achievement of government and legislative objectives, including through analysis of prior year budget decisions. The ANAO maintains an awareness of Parliament’s interests throughout the year, including through daily monitoring of chamber debates and motions, parliamentary committee inquiries and recommendations, and interactions with Members of Parliament through briefings on request. The review of sector trends and risks involves examination of public and entity held information gathered through constant interaction with entities and stakeholders during performance and financial statement audit work and through the attendance of ANAO staff at entity audit committee meetings. Risk review work is also informed by key learnings and findings from previous ANAO performance and financial statements audits. Key issues emerging from ANAO performance audits tabled in 2017–18 included getting the basics right, maximising value for money and using evidence in the design, implementation and review of programs.

Getting the basics right

Audit coverage in 2017–18 has continued to identify the need for fit-for-purpose systems and frameworks to support the effective and efficient delivery of government programs and services to the Australian community. The theme of getting the basics right is further explored in ANAO’s Audit Insights quarter one and quarter two 2017–18.

Getting the basics right can also be reflected through evidence of entity commitment to good governance and a mature compliance culture through efforts to embed characteristics such as:

  • ensuring compliance with relevant legislation and policies;
  • measuring and assessing performance against agreed outcomes;
  • maintaining accurate and complete records;
  • managing risk and value for money throughout a project or program life cycle; and
  • building capability in data analytics such that decisions can be informed by a broad base of evidence.

These are all fundamental characteristics of an organisation’s culture, and are indicative of the level of maturity in the delivery of the governance and performance requirements under the PGPA Act.

Maximising value for money

ANAO audits have found that entities can generate significant value from having an understanding of the market and maintaining competition through the procurement process. The ANAO observed that entities that understood their market were better able to scope their service or product needs, were more aware of the options available and could better provide assurance of best value for money being delivered. Where timeframes are tight for delivery of a product or service, spending time up front understanding the market can save time later as the product or service is better understood, can be more clearly scoped and therefore assessed, and a successful value for money outcome can be more clearly measured and reported on. Furthermore, competition throughout the process of selecting a tender plays an important role in obtaining, and being seen to obtain, value for money. Entering into direct negotiations with one proponent, from the outset or early in the procurement process, can significantly impact the level and balance of competitive tension between the parties to the transaction and compromise value for money. The theme of maximising value for money is outlined further in ANAO’s Audit Insights quarter three 2017–18.

Using evidence in the design, implementation and review of programs

The ANAO has observed variable quality in the evidence base of policy advice to government, in the design of programs and in the evaluation of program performance. Quality advice to government contextualises the nature and extent of the problem; sets out the best available evidence for and against the proposal; and provides a clear rationale where intervention is recommended, including identifying the likely net benefits. A rigorous evidence base is also crucial to informing management of the status of implementation, the extent to which objectives are being met and identifying when adaptions are required. Review and evaluation arrangements should be planned up-front, in the design phase, including establishing baseline data and access to reliable sources of evidence to help measure or evaluate the intended impact of activities. The theme of using evidence in program administration is covered in ANAO’s Audit Insights quarter two 2017–18.

2. Topic development

General areas of coverage priority identified during the environmental scan are then developed into potential topics guided by six key considerations:

  • Risk: both financial and non-financial risk at the whole-of-system, portfolio and individual program levels.
  • Impact: possible benefits that will flow from audit coverage, including improved transparency, administrative effectiveness, greater efficiency, improved performance, and key learnings and insights for whole-of-government.
  • Importance: the criticality of the effective and efficient delivery of the proposed topic to key stakeholders, including the Parliament and the public.
  • Materiality: the significance of the program in terms of the value, dependence and citizen reach, and the extent to which the program contributes to the broader objectives of government, or to changing or influencing decisions.
  • Auditability: the extent to which the area of proposed audit coverage is able to be audited, with consideration for factors such as: the Auditor-General’s mandate; the availability of an appropriate audit methodology and product; quality and accessibility of material for analysis; and the clarity of existing frameworks and requirements to audit against.
  • Previous coverage: the extent to which the area has been subject to previous audit coverage or other recent reviews and inquiries, including by the Parliament.

3. Coverage review

The potential audit topics identified are considered as a portfolio to assess the extent to which the annual audit work program would appropriately cover Australian Government portfolios and entities, the range of activities undertaken within portfolio entities, the maturity of program/activity delivery, and how the potential audits align with the objectives of ‘proper use and management of public resources’ under the PGPA Act. Some lower priority potential topics are removed from the annual audit work program to ensure coverage across the program is proportionate to risk level and also considers entity audit load.

Portfolio coverage

Audit coverage across portfolios is tailored to the level of Australian Government Budget commitments, the breadth of responsibilities within entities and risks to the achievement of government and parliamentary objectives. The ANAO also undertakes 4–5 Indigenous program audits annually following the transfer of the Office of Evaluation and Audit (Indigenous Programs) to the ANAO in December 2009, from the then Department of Finance and Deregulation. Potential audits of Indigenous programs follow the same planning and development processes as audit topics in other portfolios. Indigenous program audits may be undertaken in the Prime Minister and Cabinet Portfolio, which has responsibility for coordinating and leading policy development in Indigenous affairs, and other portfolios, such as Health and Social Services which are responsible for delivering certain Indigenous programs.

Activity coverage

To ensure that the annual audit work program has a sound spread of coverage across portfolios, the topic list is reviewed against a range of key public administration activities. These activities include service delivery, regulatory actions, governance arrangements, procurement, use of information technology, grants administration, and asset management and sustainment.

Stage-of-delivery coverage

Australian Government programs and activities present a variety of risk profiles related to their stage of maturity. The annual audit work program is reviewed to provide assurance that potential topics cover an appropriate range of programs and activities across different stages of implementation maturity. Audits of programs in the design, standing up and early delivery phases enable insights to be made that assist the implementation, mature delivery and completion stages. Audits of programs at the mature delivery stage aim to provide findings directed towards assurance, evidence collection and improvement.

Audit objective coverage

Section 15(1) of the PGPA Act provides that the accountable authority of a Commonwealth entity must govern the entity in a way that promotes the proper use and management of public resources. The PGPA Act defines ‘proper’ as efficient, effective, economical and ethical. Entities are also obliged to comply with relevant legislative requirements, and for non-corporate Commonwealth entities, operate in a way that is not inconsistent with the policies of the Australian Government.

In consideration of the obligations set out under the PGPA Act, each audit will include an assessment of the extent to which entities comply with relevant legislative requirements, established administrative frameworks and government policies. Further, each audit will ultimately make a conclusion on whether the entity was efficient, effective, economical and/or ethical in its implementation of the program or activity under examination.

4. Consultation

A draft of the annual audit work program is provided to the Parliament for consultation through the Joint Committee of Public Accounts and Audit, consistent with the Auditor-General’s requirement to have regard to the audit priorities of the Parliament. Feedback is also invited from accountable authorities of Australian Government entities, members of the public, the Australian Council of Auditors-General, the Commonwealth Ombudsman, the Inspector-General of Taxation and the Inspector-General of Intelligence and Security. In the development of the Annual Audit Work Program 2018–19:

  • 28 audit priorities were identified by the JCPAA, plus 9 priorities from other parliamentary committees, and four new potential audit topics were suggested;
  • 61 entities were consulted, three entities suggested new topics; and
  • 7 submissions from the public were received.

5. Final review

A final review of the potential performance audit topics is conducted prior to the finalisation of the annual audit work program and publication on the ANAO’s website. This involves considering feedback received during consultation, reviewing recent developments in the sector including Budget decisions, and reviewing the overall coverage (stage 3). The following figures set out the coverage of audit topics included in the Annual Audit Work Program 2018–19.

All Australian Government portfolios (except Veterans’ Affairs, for which the most recent audit was tabled on 27 June 2018) have been identified for at least one single- or multiple-entity performance audit in the Annual Audit Work Program 2018–19. In addition, any Australian Government entity may be included in one of the 12 cross-entity audits included in the Annual Audit Work Program 2018–19. Figure 2 provides an overview of the Annual Audit Work Program 2018–19 by portfolio.

Figure 2: Portfolio coverage 2018–191

Note 1: each multi-entity topic is represented in its relevant portfolio on a half basis. For example, the six topics planned within the Finance portfolio are represented as three as they are all multi-entity topics involving other entities.

The planned activity coverage of the Annual Audit Work Program 2018–19 prioritises governance, performance and accountability, service delivery and procurement. Figure 3 outlines the spread of the audit coverage across activities.

Figure 3: Activity coverage 2018–19

The annual audit work program has been designed to capture the varying public administration challenges related to programs and activities during the stages of design, standing up, early delivery, mature delivery and after completion. Figure 4 illustrates the spread of audit coverage in 2018–19 across programs and activities at different stages of delivery.

Figure 4: Stage-of-delivery coverage 2018–19

Figure 5 provides an overview of the proposed audit objectives covered by the Annual Audit Work Program 2018–19.

Figure 5: Audit objective coverage 2018–19


6. Audit selection

Throughout the year, the Auditor-General determines which audits will commence, based on a risk assessment, identified Parliamentary priorities, and achieving sufficient breadth and depth across the government sector. The Auditor-General also considers any recent developments in the public sector and areas of public concern, opportunities to demonstrate good practice in public administration and accountability, requests for audit, and resourcing. Approaches by parliamentarians, parliamentary committees and others with suggestions for audits are also considered by the Auditor-General for potential audit activity.

Prior to commencing the audit, the allocated audit team will develop an audit work plan including the proposed audit scope, timeframe and budget, and review strategic and operational risks specific to the audit.

Delivering against the annual audit work program

Once a performance audit or assurance review is completed and approved by the Auditor-General, the relevant report is tabled in the Parliament of Australia. The tabled report is then published on the ANAO website. Additionally, the ANAO shares key learnings from performance audit reports in quarterly Audit Insights publications.