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 Home Affairs portfolio, considerations predominantly relate to ensuring compliance with governance frameworks. In addition, risks that may impact the effectiveness of service delivery in the portfolio include workforce management and the bringing together of information and analysis from entities across the portfolio.

Governance

The portfolio is responsible for the management and administration of strategically important projects in the areas of maritime surveillance, immigration processing and biometric identification. In 2019, the Department of Home Affairs is undertaking a procurement process to deliver a new global visa processing system. Audit work has identified areas for improvement in the portfolio’s effective administration of contractual arrangements associated with major projects, which impacts on performance against program or portfolio objectives and value for money over the life cycle of the project.

Successive internal and external reviews since 2005 have shown critical deficiencies in the department’s records management processes. When combined with a high level of staff turnover experienced during the period of the integration of the Department of Immigration and Border Protection and the Australian Customs and Border Protection Service, this has negatively impacted the department’s ability to retain and manage key corporate knowledge and decisions.

The Australian Federal Police and Australian Border Force have extensive statutory powers in relation to sensitive areas such as surveillance, detention and the use of force. Previous audit work and investigations by the Commonwealth Ombudsman relating to the use of coercive powers highlighted risks relating to the need for effective assurance controls to ensure the use of powers is lawful and appropriate.

Financial statements audit work in 2016–17 highlighted areas for improvement in the department’s fraud control, integrity and anti-corruption framework. While the department has addressed these issues, in light of the complexity of the business and its decentralised operations within Australia and around the world, risks remain in relation to ongoing review and reporting of fraud and underlying fraud risk factors.

Service delivery

Audit work within the department has identified issues in workforce planning to support administrative and operational capabilities, specifically in relation to the use of resources to efficiently conduct citizenship application processing; and the need for improved workforce planning for patrol boats and for detention centre operations.

Following the completion in 2018 of a review into ASIO’s use of technology, ASIO has commenced a major transformation program impacting its workforce, culture and infrastructure in order to ensure it remains fit for purpose in a digital operating environment. This program will require strong project and performance management processes to ensure results against objectives.

The Department of Home Affairs is responsible for facilitating the movement of goods and people across the Australian border. The delivery of associated services requires the department to bring together the intelligence collection and analysis capabilities of security agencies across the Australian Government, which in turn necessitates effective planning and performance management processes to ensure services are delivered in line with government priorities and community expectations.

Financial management

The department is the largest collector of revenue for the Australian Government after the Australian Taxation Office, and administers a large and widely distributed information and communications technology environment to support revenue collection activities, creating risks to the completeness and accuracy of these activities in areas such as customs duty and visa fees.

Portfolio overview

The creation of the Home Affairs portfolio in December 2017 brought together Australia’s federal law enforcement, national and transport security, criminal justice, emergency management, multicultural affairs and immigration, and border-related functions and agencies.

The Department of Home Affairs is the lead entity in the portfolio and is responsible for managing the movement of non-citizens; implementing visa, citizenship, multicultural affairs, and refugee and humanitarian assistance programs; and facilitating international trade and collecting border revenue. The department also deals with national security and law enforcement policy and operations, transport security, critical infrastructure protection coordination, protective services at Commonwealth establishments and diplomatic and consular premises in Australia, cyber policy coordination, as well as emergency management and natural disaster assistance.

The Department of Home Affairs includes the Australian Border Force, which is responsible for border, investigations, compliance, detention (facilities and centres) and enforcement functions, as well as Australia’s customs functions. In light of the portfolio’s focus on law enforcement and security, maintaining a high integrity culture is critical. Further information is available from the department’s website at www.homeaffairs.gov.au.

In addition to the Department of Home Affairs, there are five entities within the portfolio: the Australian Federal Police, the Australian Criminal Intelligence Commission, the Australian Institute of Criminology, the Australian Security Intelligence Organisation (ASIO) and the Australian Transaction Reports and Analysis Centre.

In the 2019–20 Portfolio Budget Statements (PBS) for the Home Affairs portfolio, the aggregated budgeted expenses for 2019–20 total $7.07 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 Home Affairs represents the largest proportion of the portfolio’s expenses, and departmental expenses are the most material component, representing 79 per cent of the entire portfolio’s expenses.

Figure 1: Home Affairs 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 Home Affairs portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Home Affairs portfolio entities and risk profile

 

Type of entity

Risk of material misstatement

Number of higher risks

Number of moderate risks

Material entities 

Department of Home Affairs

Non-corporate

High

3

3

Australian Federal Police

Non-corporate

Moderate

0

2

Australian Security Intelligence Organisation

Non-corporate

Moderate

0

1

Non-material entities 

Australian Criminal Intelligence Commission

Non-corporate

Low

 

Australian Institute of Criminology

Non-corporate

Low

Australian Transaction Reports and Analysis Centre

Non-corporate

Low

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

ACT Community Policing statement of financial performance

ACT Community Policing statement of performance

         

Material entities

Department of Home Affairs

The Department of Home Affairs coordinates policy and operations for Australia’s national and transport security, federal law enforcement, criminal justice, cyber security, border, immigration, multicultural affairs, emergency management and trade-related functions.

The department’s total budgeted expenses for 2019–20 are just over $4.6 billion, with 51 per cent of these expenses attributable to supplier expenses, as shown in Figure 2.

Figure 2: Department of Home Affairs’ 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 six key risks for the department’s 2018–19 financial statements that the ANAO has highlighted for specific audit coverage in 2019–20, including those that the ANAO considers potential Key Audit Matters (KAMs), are the:

  • accuracy and completeness of customs duty collections and refunds, due to the self-assessment regime and complexity of the related IT systems (KAM – Completeness and accuracy of customs duty);
  • accuracy and completeness of visa revenue, as this is collected through a number of domestic and international locations, by both departmental staff and third parties under service level agreements, using a number of IT systems (KAM – Completeness and accuracy of visa application charges);
  • management of, and accounting for, the onshore and offshore detention network and processing centres. Third-party providers are engaged for health services, centre management and the construction of assets under a variety of complex service delivery contract arrangements. In addition, the valuation of land and buildings associated with the detention and processing centres is subject to judgement and estimation (KAM – Accuracy of detention and regional processing centre expenses and valuation of the associated non-financial assets);
  • payment of personal benefits to specific visa holders under third-party arrangements with Services Australia and other providers, where the eligibility criteria for the categories of allowable personal benefits are complex and subject to change;
  • accounting for employee benefits, due to selected departmental staff being entitled to a range of allowances, subject to a number of varying conditions. Staff are also located both in Australia and overseas, including locally engaged staff who may be entitled to varying employment conditions and benefits based on local laws and regulations; and
  • reporting of overseas transactions managed under third-party arrangements through service level agreements with the Department of Foreign Affairs and Trade, and the Australian Trade and Investment Commission.

Australian Federal Police

The Australian Federal Police (AFP) is responsible for the provision of police services in relation to laws of the Commonwealth, the provision of policing services to the Australian Capital Territory and external territories, combatting transnational serious organised crime and terrorism, disrupting crime offshore, supporting regional security, and protecting Australian interests and assets.

The AFP’s total budgeted expenses for 2019–20 are just over $1.5 billion, with 59 per cent of these expenses attributable to employee benefits, as shown in Figure 3.

Figure 3: Australian Federal Police’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 AFP’s two key risks for its financial statements are:

  • the recognition and measurement of payroll, due to its size and complexity and the underpayment of superannuation on allowances in prior years; and
  • IT general controls, due to unresolved audit findings from prior years.

Australian Security Intelligence Organisation

The Australian Security Intelligence Organisation (ASIO) is responsible for protecting Australia, its people and its interests from threats to security through intelligence collection, assessment, and advice to the government.

ASIO’s total budgeted expenses for 2019–20 are just over $579 million, with 48 per cent of these expenses attributable to employee benefits, as shown in Figure 4.

Figure 4: Australian Security Intelligence Organisation’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.

ASIO’s key risk for its financial statements is the accuracy and completeness of employee benefits, due to reliance on manual calculations because of limitations in the current payroll system.

Potential performance audits

In progress performance audits

Recently tabled

Tabled Performance audit report
Activity