Education | Australian National Audit Office (ANAO)

Portfolio overview

The Education Portfolio is responsible for creating a better future for all Australians through education. The portfolio is comprised of six entities , including the Australian National University, Australian Research Council and the Department of Education. The entities within the portfolio are responsible for policy, program and regulation responsibilities and delivering better outcomes for students, educators and teachers in early learning and care centres, schools and higher education providers. Further information is available from the department’s website.

In the 2026–27 Portfolio Budget Statements (PBS) for the Education portfolio, the aggregated budgeted expenses for 2026–27 total $70.7 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through annual appropriation Acts.

The level of budgeted departmental and administered expenses, and the average staffing level for entities in the GGS within this portfolio are shown in Figure 1. The Department of Education represents the largest proportion of the portfolio’s expenses, and administered expenses of the portfolio are the most material component, representing 99 per cent of the entire portfolio’s expense.

Figure 1: Education portfolio – total expenses and average staffing level by entity

Source: ANAO analysis of 2026–27 Portfolio Budget Statements.

Audit focus

In determining the 2026–27 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments or changes in the operating environment.

The ANAO had regard to the final report of the capability review of the Department of Education that was endorsed by the Australian Public Service Commissioner on 27 June 2025.

The primary risks identified by the ANAO for the portfolio relate to effective governance, policy development, and regulation in areas of joint responsibility with portfolio and state and territory entities.

Governance

Achieving educational outcomes relies on multiple sectors, delivery partners and portfolio and state and territory entities, which raises the risk of poor oversight and accountability.

Past audits of the department have made recommendations to improve oversight and performance measurement and monitoring, including effective use of data. The department needs to effectively oversee its contributions to areas of joint responsibility, and use performance measurement and monitoring to better understand the contribution of program activity to the achievement of outcomes.

Service delivery

With the legislation to establish the Australian Tertiary Education Commission (ATEC) passing the Parliament in March 2026, and work with states and territories on early childhood education safety underway, the department is taking greater responsibility for service delivery across education sectors, alongside its traditional policy functions. This exposes it to a range of risks, including capability and governance gaps.

Policy development

As highlighted in the 2025 capability review, the department has a lead policy role to steward the whole education system. This requires a high degree of collaboration to co-design evidence-based policy and performance outcomes for the system, which incorporate appropriate oversight and assurance. This raises the risk that ineffective consultation with states and territories, which the Australian Government relies on for implementation of national policy, leads to poor quality policy development and program delivery.

Regulation

The portfolio has multiple regulators, including regulatory functions in the department (associated with the Child Care Subsidy, school funding, and the National Higher Education Code to Prevent and Respond to Gender-based Violence), and the stand-alone higher education regulator, the Tertiary Education Quality and Standards Agency (TEQSA). Regulation in education also relies on joint responsibilities with state and territory regulators. This exposes the department and portfolio entities to risks associated with poor coordination and regulatory gaps between jurisdictions.

Financial management

The Australian National University (ANU) needs to ensure its financial management provides a sustainable basis to provide quality higher education.

The department has specific risks in financial management relating to the valuation of assets and liabilities of the Higher Education Loan Program receivable and the Higher Education Superannuation Program liability. These valuations require judgement to be applied in selecting appropriate underlying assumptions. This raises risks related to transparency, consistency and appropriateness of the valuations.

Previous performance audit coverage

The ANAO’s performance audit activities involve the independent and objective assessment of all or part of an entity’s operations and administrative support systems. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service.

During the performance audit process, the ANAO gathers and analyses the evidence necessary to draw a conclusion on the audit objective. Audit conclusions can be grouped into four categories:

unqualified;
qualified (largely positive);
qualified (partly positive); and
adverse.

In the period between 2021–22 to 2025–26 entities within the Education portfolio were included in tabled ANAO performance audits eight times. The conclusions directed toward entities within this portfolio were as follows:

none were unqualified;
six were qualified (largely positive);
two were qualified (partly positive); and
none were adverse.

Figure 2 shows the number of audit conclusions for entities within the Education portfolio that were included in ANAO performance audits between 2021–22 and 2025–26 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2021–22 to 2025–26: entities within the Education portfolio compared with all audits tabled

Source: ANAO data.

The ANAO’s annual audit work program is intended to deliver a mix of performance audits across seven audit activities: governance; service delivery; grants administration; procurement; policy development; regulation and asset management and sustainment. These activities are intended to cover the scope of activities undertaken by the public sector. Each performance audit considers a primary audit activity. Figure 3 shows audit conclusions by primary audit activity for audits involving entities in the Education portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Education portfolio, 2021–22 to 2025–26

Source: ANAO data.

Performance statements audit

The audit of the 2025–26 Department of Education annual performance statements is being conducted following a request from the Minister for Finance on 29 September 2025, under section 40 of the Public Governance, Performance and Accountability Act 2013. The audit is conducted under section 15 of the Auditor-General Act 1997.

Education is in its fifth year of inclusion in the annual performance statements audit program. The ANAO considers the risk associated with the Education performance statements audit as low. This is due to Education having been audited for a number of years, with the measures and processes being well understood.

Key risks for Education’s performance statements that the ANAO has highlighted include:

performance measures and analysis which may not provide meaningful information to assist the user measure and assess the department’s performance in achieving its purposes; and
the completeness of performance reporting information, where incomplete information may increase the risk that readers of performance statements will be unable to determine if the work undertaken by Education and the funding provided is appropriately supporting achievement of the desired outcomes.

Financial statements audits

Overview

Entities within the Education portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Education portfolio entities and risk profile

	Type of entity	Engagement risk	Number of higher risks	Number of moderate risks
Material entities
Department of Education	Non-corporate	Moderate	2	3
Australian Research Council	Non-corporate	Low	0	3
Non-material entities
Australian Curriculum, Assessment and Reporting Authority	Corporate	Low
Australian Institute for Teaching and School Leadership Limited	Company	Low
Australian National University	Corporate	Moderate
Tertiary Education Quality and Standards Agency	Non-corporate	Low
Other audit engagements (including Auditor-General Act 1997 section 20 engagements)
Australian Children’s Education and Care Quality Authority – financial statements audit

Material entities

Department of Education

The Department of Education is responsible for leading implementation of national policy and programs that help to build a strong future by supporting the early childhood education and care and schooling systems, developing strong educational frameworks for Australia’s young people, and enabling access to higher education, so that Australia can maximise personal, social and economic outcomes.

The Department of Education’s total budgeted expenses for 2026–27 are $69.5 billion, with grants and personal benefits representing 69 per cent and 24 per cent, respectively, as shown in Figure 4. Trade and other receivables represent 91 per cent of total budgeted assets, while grants provisions (encompassing the Higher Education Superannuation Provision) represent 78 per cent of total budgeted liabilities.

Figure 4: Department of Education’s total budgeted financial statements by category ($’000)

Source: ANAO analysis of 2026–27 Portfolio Budget Statements.

There are five key risks for the Department of Education’s 2025–26 financial statements that the ANAO has highlighted for specific audit coverage, including three risks that the ANAO considers potential key audit matters (KAMs).

The estimation and valuation of the Higher Education Loan Program (HELP) receivable and related line items, as the valuation involves adjustment for legislation changes, significant and complex judgements about the timing and recoverability of HELP debts, discount factors, and future employment and salary rates, which contain a significant degree of uncertainty and are influenced by the economic environment. (KAM – Valuation of the Higher Education Loan Program (HELP) receivable)
The accuracy of the Child Care Subsidy (CCS) payments, due to reliance on information provided by payment recipients and childcare service providers. (KAM – Accuracy of ‘Assistance to families with children’ personal benefit expenses)
The accuracy of Early Childhood Education and Care (ECEC) Worker Retention Payments, due to increased funding available for eligible ECEC staff till November 2026 and reliance on self-reported data from childcare service providers used to determine the payments.
The estimation and valuation of the Higher Education Superannuation Program (HESP) due to the complexity of the actuarial estimation process. (KAM – Valuation of Higher Education Superannuation Program (HESP) provision)
The completeness and accuracy of financial statement balances, as a result of the complexity and range of IT systems, including the implementation of new systems to replace existing legacy systems that are used to maintain information and process payments.

Australian Research Council

The Australian Research Council (ARC) is responsible for administering the National Competitive Grants Program (NCGP), assessing the quality, engagement and impact of research, and providing advice and support on research matters. The Australian Research Council Act 2001 was amended effective from 1 July 2024 to change the accountable authority for the entity to be an independent board to strengthen governance, strategy, research funding accountability and transparency.

ARC’s total budgeted expenses for 2026–27 are $1.1 billion, with 97 per cent of these expenses attributable to grants as shown in Figure 5.

Figure 5: Australian Research Council’s budgeted financial statements by category ($’000)

Source: ANAO analysis of 2025–26 Portfolio Budget Statements.

There are three key risks for the ARC’s 2025–26 financial statements that the ANAO has highlighted for specific audit coverage.

Administered Grants Expenditure (Administered Grant Liabilities) due to the significance of the payments made and the self-assessment nature of the grants.
Right-of-use assets and lease liabilities due to the pending expiration of current lease arrangements and the complexity to calculate and recognise the right-of-use assets and lease liabilities in accordance with relevant accounting standards.
Valuation of assets due to new leasehold improvements.