In determining the 2020–21 audit work program, ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement, and emerging risks from new investments, reforms or changes in the operating environment. In Services Australia, delivery depends to a significant extent on effective governance and oversight processes, managing current information and communications technology (ICT) assets while developing new systems, and implementing services on behalf of other agencies. In 2019–20 and into 2020–21, Services Australia was delivering services and reforming IT systems in an environment of significant demand for services due to the COVID-19 pandemic. This creates additional compliance and control risks, and also resourcing and health risks, particularly in Centrelink offices.

Governance

The delivery of public funds to individuals, for multiple programs, requires Services Australia to maintain high levels of quality, integrity, security, assurance and management oversight of its activities. Weaknesses in the implementation and operation of the governance and monitoring processes that support Services Australia’s information security framework, compliance and quality assurance activities, and payment integrity processes, increase the risk of fraud and inaccurate payments. This risk is heightened in an environment of emergency response involving rapid changes in policy parameters and the coordination and deployment of large numbers of new staff to assist in the response.

Services Australia must also ensure the adequacy of performance information.  Collecting, analysing and reporting program data and performance information to management, client departments, the parliament and the public is necessary for Services Australia to deliver initiatives effectively and retain accountability.

The delivery of services on behalf of other entities places a responsibility on Services Australia to provide adequate assurance to the accountable authority of other entities of payment accuracy and timeliness to meet the accountable authority’s responsibilities under the Public Governance, Performance and Accountability Act 2013. 

Service delivery

Services Australia delivers a range of services on behalf of policy agencies. While some of these programs may be small in comparison to others, their priority and associated risk and compliance management approach should be developed with the policy department so its view of appropriate compliance management can be balanced with Services Australia’s whole-of-operations view. Audits have highlighted the need for a comprehensive set of performance measures that tell an accurate performance story, including with regards to efficiency and cost-effectiveness. 

Asset management

Services Australia faces challenges around the effective implementation of new ICT systems while also maintaining the entity’s current ICT infrastructure. Not all planned elements of recent ICT redevelopment projects have been delivered and significant further investment is planned to design, build and transition to a new integrated welfare payment platform. Under-delivery or overspending in this area will put pressure on planned expenditures or delivery in other areas. The ANAO’s audit work will therefore focus on Services Australia’s ICT general control environment, financial expenditure and the performance of ICT project management and delivery. 

Services Australia

Services Australia is responsible for delivering a range of payments and services to support individuals, families and communities, as well as providers and businesses. These include income support payments and services; aged care payments; Medicare payments and services; and child support services. Social and health-related payments and services delivered by Services Australia on behalf of other entities in 2019–20 is forecast to be $190 billion. These expenses are recognised within each of the individual policy agencies’ financial statements.

Services Australia’s total budgeted expenses for 2019–20 are just over $6.9 billion, with 39 per cent of these expenses attributable to employee benefits, as shown in Figure 2.

Figure 2: Services Australia’s total budgeted expenses by category ($’000)

Source: ANAO analysis of 2019–20 PAES.

The two key risks for Services Australia’s 2019–20 financial statements that the ANAO has highlighted for specific audit coverage in 2019–20, both of which the ANAO considers potential key audit matters (KAMs), are the:

• value of child support payments yet to be paid by non-custodial parents at the end of each financial year, which involves an actuarial estimation process and requires significant judgement and assumptions (KAM – Valuation of receivables related to the Child Support Scheme); and
• complexities in capturing the actual costs of various internally developed software applications and their accounting treatment in accordance with relevant accounting standards (KAM – Valuation of intangible assets).