Audit focus

In determining the 2019–20 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement, as well as emerging risks from new investments, reforms or operating environment changes. In the Employment, Skills, Small and Family Business portfolio, considerations predominantly relate to service delivery, to ensure jobseekers and employers are supported in a timely manner, with relevant financial support arrangements. Governance is a further risk area, including the need to ensure effective compliance controls, capture relevant industry information, and measure benefits against program objectives.

Service delivery

Emerging risks include ensuring the department’s regulatory and service delivery approaches adapt to industry and policy changes. This includes the management of reform programs, including the new national employment model, to be implemented initially as a pilot from July 2019. This new model shifts service arrangements to online self-service as well as a new payment structure. The new model creates risks in quality assurance and performance management, as well as a need to capture lessons learned to inform program adaptations after the pilot period.

Governance

Recent audit work has highlighted the importance of the department’s development of a performance framework, including targets, to underpin accountability for, and transparency of, delivering on objectives.

Outsourcing components of service deliveryto another agency, such as Services Australia, does not reduce accountability, and the Department of Employment, Skills, Small and Family Business needs to ensure that service and quality control expectations are agreed and maintained. This assurance also applies to the priority given to the department’s services in the outsourcing entity to ensure that policy objectives are being met, as it would do with internal delivery.

Portfolio overview

The Employment, Skills, Small and Family Business portfolio is responsible for national policies and programs to support economic growth by delivering policies and programs that assist job seekers to find work; encourage small and family businesses to grow; and maximise opportunity through access to quality skills and training. The portfolio is also responsible for reducing regulation and small business policy and programs.

The Department of Employment, Skills, Small and Family Business is the lead entity in the portfolio. Further information is available from the department’s website at www.employment.gov.au.

In addition to the Department of Employment, Skills, Small and Family Business, there is one other entity within the portfolio which regulates courses and providers in the vocational education and training sector to ensure nationally approved quality standards are met.

In May 2019, a Machinery of Government change transferred the Industrial Relations functions to the Attorney-General’s Department and transferred in the Skills and Training functions from the Department of Education.

In the 2018–19 Portfolio Budget Statements (PBS) for the Employment, Skills, Small and Family Business portfolio, the aggregated budgeted expenses for 2019–20 total $2.45 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through the 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 Employment, Skills, Small and Family Business (the department) represents the largest proportion of the portfolio’s expenses, and administered expenses are the most material component, representing 80 per cent of the entire portfolio’s expenses.

Figure 1: Employment, Skills, Small and Family Business portfolio — total expenses and average staffing level by entity

Source: ANAO analysis of PBS 2019–20 Budget related papers pre–machinery-of-government changes announced on 29 May 2019.

Financial statements and other audit engagements

Overview

Entities within the Employment, Skills, Small and Family Business portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Employment, Skills, Small and Family Business portfolio entities and risk profile

 

Type of entity

Risk of material misstatement

Number of higher risks

Number of moderate risks

Material entities  

Department of Employment, Skills, Small and Family Business

Non-corporate

Moderate

1

0

Non-material entities 

Australian Skills Quality Authority

Non-corporate

Low

 

 

Other audit engagements (including Auditor-General Act 1997 section 20 engagements) 

Nil

         

Material entities

Department of Employment, Skills, Small and Family Business

The Department of Employment, Skills, Small and Family Business supports economic growth, by delivering policies and programs that assist job seekers to find work; encourage small and family businesses to grow; and maximise opportunity through access to quality skills and training. The department’s total budgeted expenses for 2019–20 are just over $2.41 billion, 62 per cent of which relates to supplier expenses, as shown in Figure 2.

Figure 2: Department of Employment, Skills, Small and Family Business’s total budgeted expenses by category ($’000)

Source: ANAO analysis of PBS 2019–20 Budget related papers pre–machinery-of-government changes announced on 29 May 2019.

The key risk for the department’s 2018–19 financial statements that the ANAO has highlighted for specific audit coverage in 2019–20, and that the ANAO considers a potential key audit matter (KAM), is effectiveness of the design and implementation of the significant ‘jobactive’ compliance program to reduce invalid claims, and the outsourced arrangements for data collection over many locations (KAM – Accuracy and completeness of administered expenses).

Potential performance audits

Potential Performance audit: 2019-20
Potential Performance audit: 2019-20
Activity
Potential Performance audit: 2019-20
Potential Performance audit: 2019-20

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