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Portfolio overview
The Treasury Portfolio is responsible for a range of activities aimed at achieving strong sustainable economic growth for the good of Australians.
The Department of the Treasury (the Treasury) is the lead entity in the portfolio and provides policy advice, analysis and the delivery of economic policies and programs, including legislation, administrative payments and regulatory functions, which support the effective management of the Australian economy. Further information is available from the department’s website.
In addition to the department, there are 16 entities within the portfolio with a broad range of responsibilities, including revenue collection, consumer protection, financial regulation and the provision of official statistics. The portfolio includes the Australian Taxation Office (ATO) – audit considerations for the ATO are discussed in a separate overview.
In the 2023–24 Portfolio Budget Statements (PBS) for the Treasury portfolio — excluding the ATO — the aggregated budgeted expenses for 2023–24 total $220.9 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 the Treasury represents the largest proportion of the portfolio’s expenses, and administered expenses of the portfolio are the most material component, representing 99 per cent of the entire portfolio’s expenses.Figure 1: Treasury portfolio – total expenses and average staffing level by entity

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 risks identified for the portfolio relate to the management of the Australian Government’s balance sheet, including debt and the increasing use of ‘alternative financing’ approaches.
Specific risks in the Treasury portfolio relate to governance, policy development, regulation, asset management and sustainment, and financial management.
Governance
Performance audits in the portfolio have highlighted the importance of reviewing and updating risk frameworks and risk assessments; implementing rigorous performance measurement, monitoring and reporting; and giving greater assurance over the quality of, and compliance with legislation, policies and procedures.
Governance arrangements need to extend to cross-portfolio engagement
, including establishing the Treasury’s role across the portfolio; mitigating overarching risk for the portfolio; and co-ordinating issues, such as the management of cyber and data security, across the portfolio.Policy development
The implementation of policy requires effective arrangements to support delivery, including governance and monitoring and reporting
. Without these, there is a risk that the policy will not achieve its objectives. As part of implementation, the Government should be provided with timely and accurate reporting and decisions should be sought, as appropriate.Regulation
A number of government outcomes in the Treasury portfolio are delivered through portfolio entities, including financial regulators such as the Australian Prudential Regulation Authority, the Reserve Bank of Australia and the Australian Securities and Investments Commission. The risk is whether regulatory activities, including probity management and compliance, remain effective while balancing competing policy objectives around robustness, flexibility and compliance costs.
Asset management and sustainment
Financial statements and performance audit activities are identifying an increase in the use of financial instruments such as concessional debt and equity to fund major government initiatives, often through government business enterprises. This emphasises the need for transparency on the longer-term costs and risks of these types of arrangements and of debt management plans.
Financial management
Given the significant increase in Australian Government debt in recent years, the management of debt is a risk area for the Treasury portfolio.
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 Treasury portfolio were included in tabled ANAO performance audits 22 times . The conclusions directed toward entities within this portfolio were as follows:
- seven were unqualified;
- five were qualified (largely positive);
- nine were qualified (partly positive); and
- one was adverse.
Figure 2 shows the number of audit conclusions for entities within the Treasury 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 Treasury 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 Treasury portfolio.
Figure 3: Audit conclusions by activity for audits involving entities within the Treasury portfolio, 2018–19 to 2022–23
Source: ANAO data.
Performance statements audit
The audit of the 2022–23 Treasury annual performance statements is being conducted following a request from the Minister for Finance on 16 January 2023, under section 40 of the Public Governance, Performance and Accountability Act 2013. The audit is conducted under section 15 of the Auditor-General Act 1997.
The overall risk of material misstatement in the 2022–23 performance statements has been assessed as moderate.
Key risks for the Treasury’s performance statements that the ANAO has highlighted include:
- whether the methodology for reporting the results of performance measures and targets is designed to meet the requirements of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule), particularly where internal analysis is relied on to assess the quality of work produced by the department; and
- whether the stakeholder surveys have been designed to report on appropriately on performance measures identified in the corporate plan and are underpinned by a quality assurance framework to completely and accurately identify survey participants.
Financial statements audits
Overview
Entities within the Treasury portfolio, and the risk profile of each entity, are shown in Table 1.
Table 1: Treasury portfolio entities and risk profile
|
Type of entity |
Engagement risk |
Number of higher risks |
Number of moderate risks |
Material entities |
||||
Department of the Treasury |
Non-corporate |
Moderate |
1 |
1 |
Australian Bureau of Statistics |
Non-corporate |
Low |
1 |
1 |
Australian Office of Financial Management |
Non-corporate |
Moderate |
1 |
- |
Australian Prudential Regulation Authority |
Non-corporate |
Low |
0 |
2 |
Australian Reinsurance Pool Corporation |
Corporate |
Moderate |
0 |
2 |
Australian Securities and Investments Commission |
Non-corporate |
Moderate |
0 |
2 |
National Housing Finance and Investment Corporation |
Corporate |
Moderate |
0 |
2 |
Reserve Bank of Australia |
Corporate |
Moderate |
2 |
1 |
Non-material entities |
||||
Australian Competition and Consumer Commission |
Non-corporate |
Low |
|
|
Commonwealth Grants Commission |
Non-corporate |
Low |
||
Inspector-General of Taxation |
Non-corporate |
Low |
||
National Competition Council |
Non-corporate |
Low |
||
Office of the Auditing and Assurance Standards Board |
Non-corporate |
Low |
||
Office of the Australian Accounting Standards Board |
Non-corporate |
Low |
||
Productivity Commission |
Non-corporate |
low |
||
Royal Australian Mint |
Non-corporate |
Moderate |
||
Material entities
Department of the Treasury
The Department of the Treasury (the Treasury) is responsible for the development, delivery and implementation of economic analysis and authoritative policy advice on issues such as the economy, the budget, taxation, financial systems, foreign investment, retirement income, superannuation, small business and international economic policy. The Treasury also works with state and territory governments on key policy areas and manages federal financial relations.
The Treasury’s total budgeted liabilities for 2023–24 are just over $30.5 billion, with seven per cent attributable to other provisions. Total budgeted expenses are $195.8 billion, with 75 per cent of these expenses attributable to grants, as shown in Figure 4.
Figure 4: Department of the Treasury’s total budgeted financial statements by category ($’000)
Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.
There are two key risks for Treasury’s 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 management and valuation of the Disaster Relief Funding Arrangements provision, due to the judgement involved in estimating costs expected to be incurred for those eligible for assistance under these arrangements. The Treasury is also reliant on state and territory governments to provide information to support these estimates. (KAM – Valuation of the Disaster Relief Funding Arrangements provision)
- The stewardship over grant payments to states and territories under the Federal Financial Relations Act 2009, due to reliance on other Australian Government entities and state and territory governments to administer the programs and provide information to support payments. (KAM – Accuracy and occurrence of grants expense)
Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) is Australia’s national statistical agency. It provides independent and trusted official statistics on a range of economic, social, population and environmental matters of importance to governments, industry, and the wider Australian community.
The ABS’s total budgeted assets for 2023–24 are just over $296.2 million, with 18 per cent of these assets attributable to intangibles. The sale of goods and services contribute to 14 per cent of total budgeted revenues, as shown in Figure 5.
Figure 5: Australian Bureau of Statistics budgeted financial statements by category ($’000)
Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.
There are two key risks for the ABS’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage.
- The valuation and impairment assessments of intangibles (software).
- The recognition of revenue from the rendering of services.
Australian Office of Financial Management
The Australian Office of Financial Management (AOFM) is responsible for managing Australian Government debt and financial assets. It issues Treasury Bonds, Treasury Indexed Bonds and Treasury Notes, manages the government’s cash balances and invests in high quality financial assets under the Australian Business Securitisation Fund and the Structured Finance Support Fund.
AOFM’s total budgeted liabilities for 2023–24 are just under $903.0 billion. Nearly all of these liabilities are attributable to Treasury Bonds and Notes, as shown in Figure 6.
Figure 6: Australian Office of Financial Management’s budgeted financial statements by category ($’000)
Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.
There is one key risk for AOFM’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage, which the ANAO considers a potential key audit matter (KAM), being the management and financial reporting of Australian Government securities, which are impacted by external market factors. (KAM – Valuation of Australian Government securities)
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority (APRA) is responsible for the prudential regulation of the Australian financial services industry through the oversight of banks, credit unions, building societies, friendly societies, general insurers, life insurers, private health insurers, reinsurance companies and most of the superannuation industry. APRA is funded largely by the industries that it regulates.
APRA’s total budgeted revenues for 2023–24 are attributed to private health insurance risk equalisation receipts and financial institutions supervision levies. Private health insurance risk equalisation receipts of $400.0 million are forecast to be collected and paid as part of APRA’s administration of the scheme. Financial institutions supervision levies are forecast to be $264.8 million, of which $223.2 million is forecast to be retained as departmental operational funding for the agency (Figure 7). Total budgeted assets for 2023–24 are just under $166.3 million, with intangibles contributing to 26 per cent.
Figure 7: Australian Prudential Regulation Authority’s budgeted financial statements by category ($’000)
Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.
There are two key risks for APRA’s 2022–23 financial statements.
- The calculation and recognition of administered levy revenue, including the financial institutions supervisory levies, financial assistance levies and the private health insurance risk equalisation levy revenue and associated payments. This involves complex calculations that are prescribed by legislation.
- The recognition and valuation of internally developed software. Assessing the nature and extent of costs that can be capitalised under Australian accounting standards can be complex and subject to management judgement.
Australian Reinsurance Pool Corporation
The Australian Reinsurance Pool Corporation (ARPC), established by the Terrorism and Cyclone Insurance Act 2003, is responsible for administering the Terrorism Reinsurance Pool, providing primary insurers with reinsurance for commercial property and associated business interruption losses arising from a declared terrorist incident and the Cyclone Reinsurance Pool, providing insurers with reinsurance for household, strata and small business property insurance for losses arising from cyclone and cyclone related flooding for declared cyclone events. The Cyclone Pool commenced operations on 1 July 2022 and is backed by a Commonwealth guarantee.
ARPC’s total actual revenues for 2021–22 were $284.6 million, of which 99 per cent were attributable to premium revenue, as shown in Figure 8. Outwards retrocession premium expenses contributed to 38 per cent of total actual expenses.
Figure 8: Australian Reinsurance Pool Corporation’s actual financial statements by category ($’000)
Source: ANAO analysis of Australian Reinsurance Pool Corporation’s 2021-22 Annual Report.
There are two key risks for ARPC’s 2022–23 financial statements.
- The recognition and reporting of premium revenue and unearned premium liability, which involves complex calculations and reliance on third-party information.
- The recognition of retrocession costs on reinsurance and its deferral.
Australian Securities and Investments Commission
The Australian Securities and Investments Commission (ASIC) is Australia’s integrated corporate, financial services, markets and consumer credit regulator, supporting a fair, strong and efficient financial system for all Australians. ASIC’s core responsibility is to maintain and facilitate the performance of Australia’s financial system and promote confident and informed participation by investors and consumers.
ASIC’s total budgeted liabilities for 2023–24 are just over $870.9 million, with 62 per cent of these liabilities attributable to other provisions, as shown in Figure 9. Revenues, other than Revenue from Government, contribute to 83 per cent of total budgeted revenues.
Figure 9: Australian Securities and Investments Commission’s budgeted financial statements by category ($’000)
Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.
There are two key risks for ASIC’s 2022–23 financial statements.
- The estimation of the Commonwealth’s future liability for repayment of unclaimed monies, which uses a complex valuation model.
- The recognition of ASIC’s diverse administered revenue streams, involving complex calculations that are prescribed in a number of Acts and regulations.
National Housing Finance and Investment Corporation
NHFIC is responsible for: the establishment and operation of an Affordable Housing Bond Aggregator (AHBA), which provides finance to registered community housing providers by aggregating their lending requirements and issuing bonds to institutional investors and; the establishment and operation of the National Housing Infrastructure Facility (NHIF) to provide loans, grants and investments for social and affordable housing as well as to overcome impediments to the provision of housing that is due to the lack of necessary infrastructure. It also administers the Home Guarantee Scheme (HGS) to support first home buyers and single parents to access the housing market sooner and undertakes research into housing supply, demand and affordability in Australia.
NHFIC’s total actual assets for 2021–22 were just over $2.8 billion, with 71 per cent of these attributable to loans and advances, as shown in Figure 10. Other interest-bearing liabilities contribute to the majority of the total actual liabilities, at 99 per cent.
Figure 10: National Housing Finance and Investment Corporation’s actual financial statements by category ($’000)
Source: ANAO analysis of National Housing Finance and Investment Corporation’s 2021-22 Annual Report.
There are two key risks for NHFIC’s 2022–23 financial statements.
- The accounting for, and assessment of, concessional loans, which are complex and involve the application of judgement surrounding the selection and application of indices such as market rates. NHFIC’s aim is to improve housing outcomes by reducing pressure on housing affordability, which will be undertaken by providing concessional finance to registered community housing providers.
- The significant value of bonds issued under the Affordable Housing Bond Aggregator and the subsequent fair value measurement, which may require the use of judgement for the valuation and accounting for bonds.
Reserve Bank of Australia
The Reserve Bank of Australia (RBA) is responsible for determining and implementing monetary policy that seeks to contribute to the stability of the currency and maintains full employment, works to maintain a strong financial system and efficient payments system and issue the nation’s banknotes. As well as being a policymaking body, the RBA provides selected banking services to a range of Australian Government entities and to a number of overseas central banks and official institutions. The RBA is also responsible for the management of Australia’s gold and foreign exchange reserves.
RBA’s total actual assets for 2021–22 were just under $613.8 billion, of which 88 per cent were attributable to Australian dollar investments and 11 per cent were attributable to foreign currency investments, as shown in Figure 11. Australian banknotes on issue represent 16 per cent of total actual liabilities.
Figure 11: Reserve Bank of Australia’s actual financial statements by category ($’000)
Source: ANAO analysis of Reserve Bank of Australia 2021-22 Annual Report.
There are three key risks for the RBA’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage, including one risk that the ANAO considers a potential key audit matters (KAM).
- The valuation of Australian dollar securities and foreign currency investments, due to the complexity in determining the fair value of a range of investments. In addition, there is an inherent risk of significant financial impact due to fluctuations in the value of the Australian dollar and the volume of Australian bond holdings. (KAM – Valuation of Australian dollar securities and foreign currency investments)
- The accuracy of the liability for Australian banknotes on issue, due to the dependence on the assumption that all Australian banknotes on issue retain their legal tender status.
- The valuation of superannuation obligations, due to the estimation uncertainty in the selection of parameters used and assumptions made in the valuation of the future value of the defined benefit liabilities.