In determining the 2020–21 audit work program, 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 changes in the operating environment. A key area of risk for the public sector, including the Attorney-General’s portfolio, is the impact of the COVID-19 pandemic, both on entity operations but also through the rapid development of new legislation required to effect a number of the government response policy changes. In the Attorney-General’s portfolio, risk considerations are predominantly related to the efficient and effective delivery of legislative, judicial and investigatory services, with the additional risk of a call for more investigations and inquiries when significant funds are being put into the economy and the demand for citizen services are at a peak. The portfolio also faces effectiveness and compliance risks for its whole-of-government regulatory frameworks and its administration of grants.

Service delivery

The department’s implementation and administration of business-as-usual processes is being impacted by the need to manage a number of royal commissions, the development of a proposal for a new Commonwealth integrity commission, and the development of new or amended COVID-19-related legislation. Clarity and coherence in AGD’s governance arrangements and resource allocations are critical in managing related risks.

Audit work in portfolio entities has highlighted issues in measuring the efficiency of service and function delivery, and risks in relation to case management and the exercise of investigatory functions. 

Grants administration

The department also uses grant hubs for administering a number of grant programs. Outsourcing the management of grant programs to service providers does not reduce accountability. The department needs to ensure that it is able to obtain assurance from these service providers that the grants have been processed accurately, completely and in line with the department’s requirements.

Regulation

The portfolio has carriage of a number of whole-of-government integrity and security frameworks, including the Protective Security Policy Framework, cyber resilience,  the lobbyist register,  fraud (including the 2019 Commonwealth Fraud Prevention Centre pilot), and freedom of information . Audit work in these areas has highlighted that, while policy frameworks have been established for these areas, compliance across entities has not been strong, which raises questions about the effectiveness of policy implementation.

Financial management

Comcare and the Coal Mining Industry (Long Service Leave Funding) Corporation, respectively, estimate the liabilities for workers compensation reported by participating portfolio entities, and the reimbursements to participating and/or eligible employers. The estimation of these liabilities are complex due to the significant level of judgement that needs to be applied in the selection of appropriate underlying assumptions. This raises risks regarding transparency, consistency and appropriateness of the valuations.

Attorney-General’s Department

The role of the Attorney-General’s Department is to contribute towards a just and secure society through the maintenance and improvement of Australia’s law, justice, security and integrity frameworks. This work helps people to thrive and succeed in a prosperous, fair and cohesive nation. The department supports the Attorney-General as First Law Officer to protect and promote the rule of law, to provide strong oversight and accountability, and to act as principal legal adviser to government. AGD also has responsibility for a number of industrial relations and work health and safety functions.

AGD’s total budgeted expenses for 2019–20 are $1.27 billion, with 29 per cent of these expenses attributable to payments to corporate Commonwealth entities, subsidies and personal benefits, as shown in Figure 2.

Figure 2: Attorney-General’s Department’s total budgeted expenses by category ($’000)

Source: ANAO analysis of 2019–20 PAES.

The three key risks for AGD’s 2019–20 financial statements that the ANAO has highlighted for specific audit coverage in 2019–20 are the:

• restructuring due to machinery-of-government changes, resulting in gaining responsibilities for a number of industrial relations and work health and safety functions. This represents a significant change to the activities, assets and liabilities of AGD;
• management of the Fair Entitlements Guarantee scheme was part of the newly gained functions under the May 2019 machinery-of-government changes. The scheme protects certain unpaid employment entitlements for employees who have lost their jobs due to the liquidation or bankruptcy of their employer. The scheme is a material activity for AGD, with complexity in the eligibility and payment amounts; and
• the completeness and accuracy of revenue and related balances from rendering of legal services by the Australian Government Solicitor is material to AGD’s financial statements and subject to judgements on revenue recognition.

High Court of Australia

The High Court of Australia is responsible for interpreting and applying the law of Australia; deciding on cases of special federal significance, including challenges to the constitutional validity of laws; and hearing appeals, by special leave, from federal, state and territory courts.

The High Court’s total budgeted expenses for 2019–20 are just under $26.5 million, with 73 per cent of these expenses attributable to employee benefits and supplier expenses, as shown in Figure 3.

Figure 3: High Court of Australia’s total budgeted expenses by category ($’000)

Source: ANAO analysis of 2019–20 PAES.

The key risk for the High Court’s 2019–20 financial statements is the accuracy of the fair value attributed to land and buildings, as these are special purpose assets with a number of unique features.

The High Court is in the process of implementing a digital lodgement system that integrates key business processes. The integration of business processes increases the potential risk that information contained in the financial management information system is not complete and accurate.

National Archives of Australia

The National Archives of Australia has four main roles under the Archives Act 1983: to promote sound records management by Australian Government entities by providing and setting standards for the management of information and records; to authorise the retention and disposal of records; to preserve records of national archival value; and to make material publicly available.

The National Archives’ total budgeted expenses for 2019–20 are just over $88 million, with supplier expenses representing 49 per cent of the total budgeted expenses, as shown in Figure 4.

Figure 4: National Archives of Australia’s total budgeted expenses by category ($’000)

Source: ANAO analysis of 2019–20 PBS.

The key risk for the National Archives’ 2019–20 financial statements is the valuation of the national archival collection, due to its complex and unique nature.

Coal Mining Industry (Long Service Leave Funding) Corporation

The Coal Mining Industry (Long Service Leave Funding) Corporation (Coal LSL) collects levies from employers to fund long service leave payments made to employees in the Australian black coal mining industry. The levies collected are invested until the employee takes long service leave, at which point the employer makes a payment to the employee and seeks reimbursement from Coal LSL in accordance with legislative arrangements.

Coal LSL’s total actual expenses for 2018–19 are $364.24 million, with 96 per cent of these expenses attributable to increases in provision for reimbursements, as shown in Figure 5.

Figure 5: Coal LSL’s total actual expenses by category ($’000)

Source: ANAO analysis of Coal LSL’s 2018–19 Annual Report.

The two key risks for Coal LSL’s 2019–20 financial statements are the:

• complex valuation processes used to determine the fair values attributed to unlisted trust investments; and
• significant judgement required by management to estimate the value of the liability for reimbursement of employers’ long service leave obligations, due to a range of assumptions relied on to underpin the valuation methodology and estimation process.

Comcare

Comcare is responsible for the administration of an integrated safety, rehabilitation and compensation scheme for federal employers, employees and their representatives. Comcare aims to support participation and productivity nationally, through healthy and safe workplaces that minimise the risk of harm. This also includes the management of a comprehensive workers compensation liability scheme and the Commonwealth common law liabilities for asbestos compensation.

Comcare’s total budgeted expenses for 2019–20 are $267.58 million, 59 per cent of which relates to claims payments, as shown in Figure 6.

Figure 6: Comcare's total budgeted expenses by category ($'000)

Source: ANAO analysis of 2019–20 PBS Budget related.

The two key risks for Comcare's 2019–20 financial statements are the:

• judgements required in selecting assumptions when calculating workers compensation and asbestos-related disease claim provisions and related expense accounts; and
• timing of revenue recognition relating to the collection of workers compensation and common law asbestos premiums, which involves complex calculations prescribed in legislation.