National Disability Insurance Agency portfolio

The National Disability Insurance Agency (NDIA) is part of the Social Services portfolio. It was established under the National Disability Insurance Scheme Act 2013. The NDIA has responsibility for delivering the National Disability Insurance Scheme (the Scheme). The Scheme is designed to: provide individual control and choice in the delivery of reasonable and necessary care and support; improve the independence, social and economic participation of eligible people with disability, their families and carers; and provide associated referral services and activities. Further information is available from the National Disability Insurance Scheme website.

In the 2023–24 Portfolio Budget Statements (PBS) for the Social Services portfolio, the aggregated budgeted expenses for the NDIA for 2023–24 total $42.1 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  expenses, and the average staffing levels are shown in Figure 1. The NDIA only receives departmental appropriations.

Figure 1: National Disability Insurance Agency – total expenses and average staffing level by entity

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

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 risks identified for the NDIA relate to its ability to maintain scheme integrity and financial sustainability in the context of achieving the government’s eight per cent growth target.

Specific risks in the National Disability Insurance Agency relate to governance, service delivery, procurement and financial management.

Governance

The Scheme represents a significant financial commitment by all Australian governments. In 2021–22, the NDIA made $28.6 billion in payments to 534,655 participants for NDIS supports and the NDIA has predicted the Scheme will grow to 1,017,522 participants and $89.4 billion for the year ending 30 June 2032 . The NDIA needs to manage the financial sustainability risks of the Scheme through effective fraud and decision-making controls, including ensuring supports approved in participant plans are reasonable and necessary. 

The NDIA will require robust governance and risk management processes to effectively manage the substantial change in senior leadership and Board membership during 2022–23 and to implement recommendations made by the NDIS Review (due to report to the Australian Government in October 2023)  while maintaining quality standards and meeting Participant Service Guarantees.

The NDIA manages a significant volume of taxpayer funding through payments to individuals, and providers. This involves assurance of payment accuracy, as well as the management of compliance risks to reduce fraud.  Audit work has identified that the NDIA’s risk based business assurance practices and data analytics and data matching capabilities were still developing and it has not fully implemented recommendations from a 2018–19 ANAO audit relating to fraud controls.  The NDIA is the first agency of focus for the Australian Government’s multi agency Fraud Fusion Taskforce established in 2022. The NDIA’s effective detection and prevention of fraud is integral to maintain scheme integrity and sustainability.

It is important for entities to have effective risk management practices for cyber security. This includes conducting assessments of the effectiveness of security controls, security awareness training, and adopting a risk-based approach to prioritise improvements to cyber security. Weaknesses in the implementation and operation of governance and monitoring processes relating to cyber security increase the risk of unauthorised access to systems and data held by entities. 

Regulation of the disability services market is aimed at improving national consistency and promoting safety and quality. The NDIA needs to work effectively with the NDIS Quality and Safeguards Commission in relation to monitoring and mitigating disability provider-related risks.

Service delivery

The NDIA needs to provide assurance that its systems, workforce and data capabilities are effectively supporting participants. Audit work has identified:

• deficiencies in the NDIA’s analysis of feedback and collected data to drive continuous improvement, particularly in relation to participant outcomes; and
• incomplete implementation of prior ANAO recommendations relating to decision making controls, particularly in relation to the development of participant plans. 

Outsourcing service delivery, such as the National Contact Centre, and use of information technology (IT) systems operated by third parties does not reduce accountability. The NDIA needs to ensure that service and quality control expectations and performance measures are agreed, documented in fit for purpose agreements and regularly monitored, and that its business is appropriately prioritised to provide assurance that policy objectives are being met.  The NDIA will need to closely monitor third party service delivery as it implements its new ICT system, known as PACE, across its national operations by the end of 2023.

Procurement

The ‘Independent Review of Services Australia and NDIA Procurement and Contracting’  report published in March 2023 contains 12 recommendations for the NDIA relating to the use of limited tenders, transparency, conflict of interest, documentation of the rationale for decisions, use of probity and legal advisors, ministerial briefings and procurement training.

Delivery of the Scheme is supported by Local Area Coordinators and early childhood partners who are engaged through the Partners in the Community Program. The total value of the 30 Partners in the Community Program contracts reported in 2021–22 was $2.226 billion. The NDIA is expected to release a request for tender for this program following the NDIS review due to be completed in October 2023. Procurement of service delivery partners needs to demonstrate value for money and comply with relevant frameworks. While the NDIA (as a non-prescribed Corporate Commonwealth Entity for the purposes of section 30 of the PGPA Rule ) is not bound by the Commonwealth Procurement Rules (CPRs), it largely adopts the use of the CPRs.

Financial management

Actuarial forecasts for the scheme have been variable and usually adjusted upwards, above original estimates. There is considerable growth in the cost attributable to higher volumes of participants and the rate of plan costs year on year. Reliable measurement and monitoring of assumptions and calculations underpinning the costs of the Scheme will be critical to meeting the Australian Government’s growth target for the NDIS of no more than eight per cent by 2026.

Risks in the preparation of financial statements arise from the volume and complexity of payments made to participants and providers, the valuation of participant plan provisions and the accounting for in-kind contributions provided by the Commonwealth or state and territory governments.

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 the National Disability Insurance Agency was included in five performance audits. The conclusions directed toward the National Disability Insurance Agency were as follows:

• none were unqualified;
• three were qualified (largely positive);
• two was qualified (partly positive); and
• none were adverse.

Figure 2 shows the number of audit conclusions for the National Disability Insurance Agency 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: the National Disability Insurance Agency 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 the National Disability Insurance Agency.

Figure 3: Audit conclusions by activity for audits involving the National Disability Insurance Agency, 2018–19 to 2022–23

Source: ANAO data.

Overview

The National Disability Insurance Agency is part of the Social Services portfolio. The National Disability Insurance Agency’s risk profile is shown in Table 1.

Table 1: National Disability Insurance Agency risk profile

National Disability Insurance Agency

The NDIA was established under the National Disability Insurance Scheme Act 2013. The NDIA has responsibility for delivering the Scheme. The Scheme is designed to: provide individual control and choice in the delivery of reasonable and necessary care and support; to improve the independence, social and economic participation of eligible people with a disability, their families and carers; and provide associated referral services and activities.

The NDIA’s total budgeted expenses for 2023–24 are just over $42.1 billion, with 95 per cent of these attributable to participant plan expenses, as shown in Figure 4. Participant plan provisions account for 77 per cent of total liabilities.

Figure 4: National Disability Insurance Agency’s budgeted financial statements by category ($’000)

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

There are three key risks for the National Disability Insurance Agency’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage and consideration as potential key audit matters (KAMs).

• The volume and complexity of payments made to participants and providers. (KAM – Accuracy and occurrence of participant plan expenses)
• The significant judgement and assumptions required in the actuarial estimate of outstanding claims at year-end. (KAM – Valuation of participant plan provisions)
• The recognition of in-kind contributions due to reliance on data from the States and Territories around agreed services provided to people with a disability. Contributions are accounted for as revenue received free of charge at the date the services are provided. The use of these services is also recognised as an equivalent expense. Terms and conditions for determining the cash and in-kind contributions for the funding of the Scheme are set out in the bilateral agreements between each State and Territory and the Commonwealth. (KAM – Completeness, occurrence and accuracy of in-kind revenue and expenses)