Home Affairs | Australian National Audit Office (ANAO)

Portfolio overview

The Home Affairs portfolio brings together the functions of: counter-terrorism; cyber security policy and coordination; countering foreign interference; transport security; emergency management and critical infrastructure protection; border protection and the facilitation of legitimate trade and travel; immigration, citizenship and multicultural affairs; and natural disaster response and mitigation.

The Department of Home Affairs is the lead entity in the portfolio and is responsible for central coordination, strategy and policy in relation to: cyber and critical infrastructure resilience and security; immigration, border security and management; and counter-terrorism. It also deals with the management and delivery of the migration, humanitarian and refugee programs, along with multicultural programs, citizenship and settlement services. The department includes the Australian Border Force, which is responsible for border, investigatory, compliance, detention (facilities and centres) and enforcement functions, as well as Australia’s customs functions. Considering the portfolio’s focus on national security, maintaining a high-integrity culture, including compliance, is critical. Further information is available from the department’s website.

In addition to the Department of Home Affairs, there are two entities in the portfolio: the Australian Security Intelligence Organisation and the National Emergency Management Agency (NEMA).

In the 2023–24 Portfolio Budget Statements (PBS) for the Home Affairs portfolio, the aggregated budgeted expenses for 2023–24 total $6.8 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 Home Affairs represents the largest proportion of the portfolio’s expenses, and departmental expenses of the portfolio are the most material component, representing 65 per cent of the entire portfolio’s expenses.

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

Note: The Australian Security Intelligence Organisation staffing levels are not for publication.

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

Audit focus

In determining the 2023–24 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 primary risk identified for the portfolio relates to the conduct of procurements and management of the resulting contracts.

Specific risks in the Home Affairs portfolio relate to service delivery, procurement, regulation and financial management.

Service delivery

The portfolio has important service delivery responsibilities including in relation to facilitating the flow of travellers through the international border, migration, and emergency management and disaster response. Audits of service delivery, including in the Home Affairs portfolio, highlight the importance of implementing plans in order to deliver consistent and timely performance. The importance of an appropriate emphasis on resource and workforce planning has also been evident in audits of the crewing of patrol boats and intelligence collection, assessment and advice.

Procurement

Substantial procurement and contract management activity takes place across the portfolio, with the Department of Home Affairs responsible for a significant proportion of the amount contracted by the Australian Government. Audits often identify shortcomings in the conduct of procurement processes and the management of the resulting contracts.

Regulation

The department is responsible for critical infrastructure policy, regulatory and strategy functions. Its regulatory responsibilities also include the registration and management of migration agents. Audit work has identified that the department’s administration and regulation of critical infrastructure required improvement in relation to risk management, coordination with stakeholders, and ensuring the compliance framework reflected current policy and legislative settings.

Financial management

The Department of Home Affairs is the largest collector of revenue for the Australian Government after the Australian Taxation Office. Its large and widely distributed information and communications technology environment to support revenue collection activities means there are associated risks in achieving completeness and accuracy of activities such as customs duty and visa fees.

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 2018–19 to 2022–23 entities within the Home Affairs portfolio were included in tabled ANAO performance audits 25 times. The conclusions directed toward entities within this portfolio were as follows:

two were unqualified;
12 were qualified (largely positive);
eight were qualified (partly positive); and
three were adverse.

Figure 2 shows the number of audit conclusions for entities within the Home Affairs portfolio that were included in ANAO performance audits between 2018–19 and 2022–23 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2018–19 to 2022–23: entities within the Home Affairs 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 Home Affairs portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Home Affairs portfolio, 2018–19 to 2022–23

Source: ANAO data.

Financial statements audits

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	Engagement risk	Number of higher risks	Number of moderate risks
Material entities
Department of Home Affairs	Non-corporate	High	2	2
Australian Security Intelligence Organisation	Non-corporate	Moderate	0	2
Non-material entities
National Emergency Management Agency	Non-corporate	Moderate

Material entities

Department of Home Affairs

The Department of Home Affairs coordinates policy and operations for Australia’s national and transport security, cyber security, immigration, border security, multicultural affairs, counter-terrorism and customs-related functions.

The Department of Home Affairs total budgeted revenues for 2023–24 are just under $25.2 billion, with customs duty and other taxes accounting for 69 per cent and 18 per cent, respectively, as shown in Figure 4. Supplier expenses represent 52 per cent of total budgeted expenses, and buildings and property, plant and equipment account for 52 per cent and 15 per cent, respectively, of total budgeted assets.

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

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

There are four key risks for the Department of Home Affairs 2022–23 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).

The accuracy of customs duty collections and refunds, due to the self-assessment regime and complexity of the related information technology (IT) systems, processes and inputs (KAM – Accuracy of customs duty)
The accuracy of visa revenue, which is collected through numerous domestic and international locations, by both departmental staff and third parties under service level agreements using various IT systems. (KAM – Accuracy of visa application charges)
The management of the onshore and offshore detention network and processing centres. Third-party providers are engaged for health services and centre management under a variety of complex service delivery contract arrangements to undertake services on behalf of the department.
The accuracy and valuation of non-financial assets which is a significant balance, geographically dispersed around Australia and internationally across several different asset classes. This diversity of asset classes, including specialised asset such as vessels which are subject to judgement and estimation.

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 are just over $655.8 million, as shown in Figure 5. Included in this amount is employee expenses, among other expenses. Non-financial assets are just under $836.8 million, representing 86 per cent of total budgeted assets.

Figure 5: Australian Security Intelligence Organisation’s budgeted financial statements by category ($’000)

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

There are two key risks for the Australian Security Intelligence Organisation’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage.

The accuracy and completeness of employee expenses and provisions due to reliance on manual calculations because of limitations in the current payroll system.
The accuracy and valuation of non-financial assets which is a significant balance.