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This audit would examine the Australian Reinsurance Pool Corporation’s (ARPC’s) administration of the Terrorism Reinsurance Scheme.
ARPC, which was established in response to the terrorist events of 11 September 2001 and subsequent global withdrawal of insurance, provides cover for eligible terrorism losses. Eligible losses can involve commercial property, associated business interruption losses and public liability. Through the Terrorism Reinsurance Scheme, insurance companies can reinsure the risk of terrorism losses by paying premiums to ARPC. Insurers are required to meet these claims in accordance with the terms and conditions of individual policies, with claims against the scheme met once an individual insurance company’s risk retention is exhausted. ARPC’s pool of retained earnings is to be used to fund the payment of eligible claims until co-reinsurance thresholds are reached and accessed, after which claims will be met by Commonwealth guarantee. The total value of the scheme is over $13 billion.
This audit would examine the implementation of the Farm Management Deposits Scheme by the Department of Agriculture and Water Resources, the Treasury and the Australian Taxation Office. The audit would include an assessment of the extent to which objectives of the scheme are being achieved.
The scheme, which was established in 1999, aims to assist primary producers to deal more effectively with fluctuations in cash flows by allowing eligible primary producers to set aside pre-tax income in years of high income, which can be drawn upon in future years. Deposits are tax deductible in the year they are made, and included as taxable income in the year they are withdrawn. Deposits must remain in the account for at least 12 months, unless the withdrawal is made in exceptional circumstances. On 1 July 2016, the following changes were made to the operation of the scheme: the cap on deposits was doubled from $400 000 to $800 000; an early trigger during times of drought was re-established; and deposits can be used to offset the interest costs on primary production business debt. The total holdings in the scheme were $4.35 billion at 31 May 2017.
The objective of the audit is to assess whether the Australian Bureau of Statistics (ABS) has established effective risk management arrangements to support the implementation of the Statistical Business Transformation Program.