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Portfolio overview
The Prime Minister and Cabinet portfolio is responsible for providing support and policy advice to the Prime Minister, the Cabinet and ministers on public and government administration matters, including policy development and whole-of-government coordination, and providing services to Indigenous Australians.
The Department of the Prime Minister and Cabinet (PM&C) is the lead entity in the portfolio. The department’s key purposes are to support the Prime Minister as the head of the Australian Government and the Cabinet, and to provide advice on major domestic policy and international and national security matters. Further information is available from the department’s website at pmc.gov.au.
In addition to PM&C, there are 18 entities within the portfolio (excluding subsidiaries), which cover a broad range of functions and policy areas. These entities include the National Indigenous Australians Agency (NIAA).
The NIAA was established on 1 July 2019. Its functions include leading and coordinating policy development, program design and implementation, and service delivery for Aboriginal and Torres Strait Islander peoples, as well as providing advice to the Prime Minister and the Minister for Indigenous Australians on whole-of-government priorities for Aboriginal and Torres Strait Islander peoples.
On 1 July 2022 an Administrative Arrangements Order took effect which changed some of the responsibilities of the Prime Minister and Cabinet Portfolio. In the October 2022–23 Portfolio Budget Statements (PBS) for the Prime Minister and Cabinet’s portfolio, the aggregated budgeted expenses for 2022–23 total $3.9 billion. The October PBS contains budgets for those entities in the general government sector (GGS) that receive appropriation 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 National Indigenous Australians Agency represents the largest proportion of the portfolio’s expenses, and administered expenses of the portfolio are the most material component, representing 60 per cent of the entire portfolio’s expenses.
Figure 1: Prime Minister and Cabinet’s – total expenses and average staffing level by entity
Audit focus
In determining the 2022–23 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, reforms or changes in the operating environment.
The primary risk identified for the department is effective risk preparedness for whole of government crisis management. The primary risks identified for NIAA relate to demonstrating that the delivery of services to Aboriginal and Torres Strait Islander peoples is achieving desired outcomes and ensuring good governance of the corporate entities through which many services are delivered.
The department and its portfolio entities continue to have a key role in managing the government’s response to the COVID-19 pandemic and natural disasters. This environment creates significant additional risks that need to be considered and managed to achieve the right balance between rapid policy advice and implementation, and governance and compliance controls and management of longer-term business impacts.
Specific risks in the Prime Minister and Cabinet portfolio relate to governance, service delivery, grants administration and policy development.
Governance
The portfolio has a leadership function for the Australian Public Service (APS) in relation to its role facilitating whole-of-government coordination and intergovernmental relations to ensure that the APS delivers the priorities of government.
The portfolio includes 11 entities that have been established as either corporate Commonwealth entities or Commonwealth companies to serve the interests of Aboriginal and Torres Strait Islander peoples. Audits have highlighted increased governance and transparency risks for these entities, including in managing conflicts of interest, executive remuneration and the timeliness of reporting to Parliament.
The ANAO’s program of audits examining the government’s COVID-19 response have highlighted the risk that inadequate crisis preparedness may result in resources, capabilities and services not being efficiently mobilised and deployed when a crisis occurs.
Service delivery
Audit work has identified areas for improvement in the portfolio’s ability to demonstrate value for money and impact of programs for the benefit of Aboriginal and Torres Strait Islander peoples. This risk is evidenced through issues in program implementation oversight, establishing clear performance targets, and managing and measuring outcomes for Aboriginal and Torres Strait Islander grants and programs.
Supporting Indigenous communities during the COVID-19 pandemic and through the impacts of widespread natural disasters (including bushfires, cyclones and floods) has brought additional access, communication and service delivery risks.
Grants administration
The ANAO’s audits have also identified risks with grants management, including with regard to assessing applications, justifying the selection of grant recipients and managing provider compliance. While the Commonwealth Grants Rules and Guidelines (CGRGs) intend to provide entities with flexibility to administer grants, this flexibility should not be used to the detriment of the principles of accountability and value for money that are at the core of the CGRGs. When non-competitive approaches are used, they should be supported by a robust and up-to-date business case that demonstrates how value with relevant money will be achieved.
Policy development
As a frontline policy development portfolio during periods of emergency there is a need to ensure the provision of timely, evidence-based advice when coordinating the development of policy. This requires clear articulation to government of the evidence relied on and likely impacts of proposals, including through use of relevant data.
Risk management is a critical consideration in periods of rapid response involving the implementation of new policy changes. This should include considering the impact of changes to risk tolerances and documenting this consideration. In addition, entities need to work together effectively to manage shared risks.
Financial statements and other audit engagements
Overview
On 1 July 2022 an Administrative Arrangements Order (AAO) took effect which included changes to the Prime Minister and Cabinet portfolio. Entities which are now part of this portfolio are shown in Table 1. The risk profile for each entity is based on the 2021–22 financial statements which were prepared prior to the AAO on 1 July 2022 taking effect.
Table 1: Prime Minister and Cabinet portfolio entities and risk profile
|
|
Type of entity |
Risk of material misstatement |
Number of higher risks |
Number of moderate risks |
|
Material entities |
||||
|
Department of the Prime Minister and Cabinet |
Non-corporate |
Moderate |
0 |
1 |
|
Indigenous Business Australia |
Corporate |
Moderate |
0 |
3 |
|
Indigenous Land and Sea Corporation |
Corporate |
Moderate |
1 |
7 |
|
National Indigenous Australians Agency |
Non-corporate |
Moderate |
1 |
3 |
|
Non-material entities |
||||
|
Aboriginal Hostels Limited |
Company |
Moderate |
|
|
|
Anindilyakwa Land Council |
Corporate |
Low |
||
|
Australian Institute of Aboriginal and Torres Strait Islander Studies |
Corporate |
Low |
||
|
Australian Public Service Commission |
Non-corporate |
Low |
||
|
Central Land Council |
Corporate |
Low |
||
|
National Australia Day Council Limited |
Company |
Low |
||
|
Northern Land Council |
Corporate |
Moderate |
||
|
Office of National Intelligence |
Non-corporate |
Low |
||
|
Office of the Official Secretary to the Governor-General |
Non-corporate |
Low |
||
|
Outback Stores Pty Ltd |
Company |
Low |
||
|
Tiwi Land Council |
Corporate |
Low |
||
|
Torres Strait Regional Authority |
Corporate |
Low |
||
|
Workplace Gender Equality Agency |
Non-corporate |
Low |
||
|
Wreck Bay Aboriginal Community Council |
Corporate |
Low |
||
|
Other audit engagements (including Auditor-General Act 1997 section 20 engagements) |
||||
|
Aboriginals Benefit Account |
||||
|
Central Land Council Native Title Representative Body |
||||
|
Northern Land Council Native Title Representative Body |
||||
Material entities
Department of the Prime Minister and Cabinet
The Department of the Prime Minister and Cabinet (PM&C) is responsible for public service stewardship and for coordinating policy development across government in economic, domestic and international affairs.
On 1 July 2022 an Administrative Arrangements Order (AAO) took effect which included changes to the responsibilities of PM&C. The department’s total budgeted assets for 2022-23 are just under $3.3 billion, with other investments representing 92 per cent, as shown in Figure 2.
Figure 2: Department of Prime Minister and Cabinet’s total budgeted financial statements by category ($’000)
Source: ANAO analysis of 25 October 2022–23 PBS.
Financial Statements Audit
The key risk for PM&C’s 2021–22 financial statements that the ANAO has highlighted for specific audit coverage, and that the ANAO considers a potential key audit matter (KAM), is the fair value measurement of administered investments in 13 Commonwealth entities and companies in the PM&C portfolio.
Indigenous Business Australia
Under its enabling legislation, the Aboriginal and Torres Strait Islander Act 2005, Indigenous Business Australia’s (IBA’s) purposes are to assist and enhance Aboriginal and Torres Strait Islander self-management and economic self-sufficiency, and to advance the commercial and economic interests of Aboriginal and Torres Strait Islander peoples by accumulating and using a substantial capital base for their benefit. IBA has 17 actively trading subsidiaries, which are audited by the ANAO.
IBA’s total budgeted assets for 2022–23 are just over $2.1 billion. Of this, 51 per cent is attributable to trade and other receivables, 28 per cent are attributable to other investments and 9 per cent is attributable to investment property, as shown in Figure 1.
Figure 3: Indigenous Business Australia’s total budgeted financial statements by category ($’000)
Source: ANAO analysis of 2022–23 PBS.
There are three key risks for IBA’s 2021–22 financial statements.
- The valuation of the loan portfolio, including fair value assessment and amortised cost, which requires the use of judgement and estimates.
- The valuation of expected credit losses relating to the loan portfolio, which requires the use of judgement and estimates.
- The valuation of investment properties, land and buildings, and investments in associate entities, due to the judgements and assumptions involved in these valuations.
Indigenous Land and Sea Corporation
The Indigenous Land and Sea Corporation’s (ILSC’s) purpose is to assist Aboriginal and Torres Strait Islander peoples to acquire and manage land so as to provide economic, environmental, social and cultural benefits; and to provide land management assistance to support the delivery of sustainable benefits from land acquisition. The ILSC’s purpose also includes investing in water-based projects to generate social, cultural, environmental and economic opportunities that land and water ownership can bring to Indigenous Australians.
The ILSC’s total budgeted assets for 2022–23 are just under $592.5 million, with around 14 per cent attributable to other assets, encompassing biological assets, intangible assets, land and buildings and property, plant and equipment. Trade and other receivables account for 50 per cent of total budgeted assets, as shown in Figure 2.
Figure 4: Indigenous Land and Sea Corporation’s total budgeted financial statements by category ($’000)
Source: ANAO analysis of 29 March 2022–23 PBS.
There is one higher key risk for the ILSC’s 2021–22 financial statements.
- The valuation and management of property, plant and equipment, and intangibles held by the ILSC’s subsidiary, Voyages Indigenous Tourism Australia Pty Ltd, in relation to the Ayers Rock Resort. This is due to the judgements and assumptions involved in the valuation of these assets.
National Indigenous Australians Agency
The National Indigenous Australians Agency (NIAA) was established on 1 July 2019 by an executive order of the Governor-General. The primary functions of the NIAA are to:
- lead and coordinate Commonwealth policy development, program design and implementation, and service delivery for Aboriginal and Torres Strait Islander peoples;
- provide advice to the Prime Minister and the Minister for Indigenous Australians on whole-of-government priorities for Aboriginal and Torres Strait Islander peoples;
- lead and coordinate the development and implementation of Australia’s Closing the Gap targets in partnership with Indigenous Australians; and
- lead Commonwealth activities to promote reconciliation.
The NIAA’s total budgeted expenses for 2022–23 are just under $2.5 billion, with around 68 per cent of these expenses attributable to grants, as shown in Figure 3. Property, plant and equipment contributes to 9 per cent of total budgeted assets.
Figure 5: National Indigenous Australians Agency’s total budget financial statements by category ($’000)
Source: ANAO analysis of 29 March 2022–23 PBS.
There are four key risks for the NIAA’s 2021–22 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).
- The effectiveness of internal control activities and financial reporting arrangements for the administered grants programs, due to the grants being disbursed across Australia, often in remote areas, with the NIAA making payments through a number of different information technology systems operated by several other government agencies. (KAM – Occurrence and accuracy of grant expenses)
- The compliance by providers of services under the Community Development Program with their roles and responsibilities under the program. (KAM – Occurrence and accuracy of Community Development Program expenses)
- Accounting for the Stolen Generation Redress Scheme. The NIAA is responsible for assessing applicants and making payments and building IT software to facilitate processing of the payments.
- The valuation of land, building, infrastructure, and plant and equipment assets, due to the location of many of these assets in remote and regional Australia where market data on comparable assets is limited.
Potential audits
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