Veterans’ Affairs | Australian National Audit Office (ANAO)

Portfolio overview

The Veterans’ Affairs Portfolio is responsible for developing government policy and implementing programs to fulfil Australia’s obligations to veterans, war widows or widowers, families, serving and former members of the Australian Defence Force, certain Australian Federal Police officers with overseas service and Australian participants in British nuclear tests in Australia and their families and dependents.

The Department of Veterans’ Affairs (DVA) is responsible for supporting the wellbeing of those who serve or have served in the defence of our nation and their families, through the development and implementation of programs that assist the veteran and ex-service communities. The programs and services can be broadly grouped into three main areas: care, compensation and commemoration. Further information is available from the department’s website.

The Australian War Memorial (AWM) is responsible for maintaining and developing the national memorial to Australians who have died in wars or warlike operations. It also develops, maintains and exhibits a national collection of historical material and conducts research into Australian military history.

DVA and the AWM are formally part of the Defence Portfolio.

In the 2026–27 Portfolio Budget Statements (PBS) for the Veterans’ Affairs portfolio, the aggregated budgeted expenses for 2026–27 total $23.3 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. DVA represents the largest proportion of the portfolio’s expenses, and of this, administered expenses are the most material component, representing 96 per cent of the entire portfolio’s expenses.

Figure 1: Veterans’ Affairs portfolio – total expenses and average staffing level by entity

Source: ANAO analysis of 2026–27 Portfolio Budget Statements.

Audit focus

In determining the 2026–27 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 ANAO had regard to the Royal Commission into Defence and Veteran Suicide final report, the capability review of the Department of Veterans’ Affairs (DVA) report, and departmental documents such as the Corporate Plan, Annual Reports, data on claims processing and progress on implementation of royal commission recommendations.

The primary risks for the portfolio, identified by the ANAO, relate to DVA’s ability to maintain decision making quality as it processes claims for compensation and implements legislative, policy and program changes and modernises its ICT systems. Specific risks in the Veterans’ Affairs portfolio relate to governance, service delivery, asset management and sustainment, and financial management.

Governance

DVA is undertaking a modernisation program, in response to the Royal Commission into Defence and Veteran Suicide, with the aim of significantly improving the effectiveness and efficiency of veterans’ services. Legislation has also been established to simplify and harmonise the existing tri-Act framework of legislation governing veterans’ entitlements, rehabilitation and compensation arrangements, which came into effect on 1 July 2026. Successful delivery of change programs requires robust planning, stakeholder engagement, change management practices and evaluation activities.

Demand for benefits and services has increased significantly, with over 101,000 new claims in 2024-25, annual claim lodgements up nearly 53 percent since June 2022 and claim complexity rising as average conditions per claim grew from 2.6 to 4.26, totalling 156,261 conditions for the year. Effective management of claims requires strong compliance controls and quality assurance processes, particularly with the number of new claims received each week.

The Defence and Veterans’ Service Commission was established in September 2025 to provide independent oversight and advice to the Australian Government on reforms to improve suicide prevention and wellbeing outcomes for serving and ex-serving Australian Defence Force members. DVA is also establishing a new agency to focus on veteran wellbeing in response to the Royal Commission into Defence and Veteran Suicide. Effective engagement and management across entities is essential to ensure coordinated activities, timely information sharing and consistent decisions, reducing service gaps and improving outcomes for veterans and their families.

Controls to detect and prevent fraud are essential in maintaining the integrity of all government agencies. DVA will receive $203.1 million over four years from 2025-26 to strengthen its program integrity capability by improving the prevention, detection and response to service provider and advocate fraud.

DVA issued contracts worth over $2.5 billion in 2024–25. Effective procurement and contract management are therefore critical to ensuring value for money, compliance with law and policy, and protection against fraud, corruption, and service failure.

Protective security measures, including systems controls, risk assessments and education and training, are essential to ensure that personal and sensitive information held by DVA is safeguarded from unauthorised access, disclosure, loss or misuse. It is also critical that adequate protections are in place for data integration projects where the risk of identification of veterans is increased through the amalgamation of deidentified data sets.

Service delivery

As at 28 February 2026 DVA had 95,650 claims on hand, of which 29,989 were unallocated, a 285 per cent increase in unallocated claims from the same time last year. To address capacity pressures, the 2025–26 Mid-Year Economic and Fiscal Outlook provided $408.8 million over four years and $94.4 million per year ongoing to sustain staffing and core services for veterans and their families.

DVA supports veterans and their families by enabling access to a wide range of physical and mental health services delivered through public and private providers, with 127,816 service providers engaged in 2024–25. Effective management of these provider markets is essential to ensuring service quality, sustainability, and value for money in veteran support services.

Psychosocial risks are important considerations in service delivery because they directly affect staff wellbeing, decision-making and continuity of care, which in turn influences service quality, safety and outcomes for clients. DVA finalised a Psychosocial Risk Management Framework in 2025 which aims to provide a consistent approach, clear expectations and requirements when managing psychosocial hazards and risks.

DVA’s reliance on the Department of Defence to provide data to support claims requires active management to address the risk that decisions are delayed when required data is not obtained in a timely manner. Robust governance arrangements will be important as DVA and the Department of Defence develop and embed the improved information sharing arrangements recommended by the Royal Commission and rebuild the trust of the community following the testimony to the Royal Commission into Veteran Suicide.

Poor workforce planning and organisational change management impacts an entity’s ability to deliver effective and efficient services, and risks staff psychological safety and retention. The 2024 DVA Capability Review found that the department’s strategic workforce planning capability did not meet the agency’s current needs.

Outsourcing service delivery, and use of information technology (IT) systems in another agency such as Services Australia means DVA needs to ensure that service and quality control expectations are agreed and maintained, and that its business is appropriately prioritised to provide assurance that policy objectives are being met.

Asset management and sustainment

Automated payment systems introduce risks in IT asset management, embedded compliance controls, and governance, particularly where technology capability does not meet operational needs, as identified in the 2024 DVA Capability Review. In response, the 2023–24 Federal Budget allocated $253.7 million over four years to modernise and maintain DVA’s ICT systems, including replacing the payments system for veterans, families, and service providers.

Maintaining effective monitoring and reporting arrangements are essential to continue to ensure achievement of value for money and project outcomes as the Australian War Memorial progresses its $550 million development project, due for completion in June 2028.

Financial management

Reliable measurement and monitoring of the assumptions underpinning military compensation—such as medical cost trends, permanent incapacity, inflation, and the impact of rehabilitation—are critical to the effective performance and long-term financial sustainability of the scheme for Defence and DVA. Following revised provisions at the start of the financial year, DVA’s total liabilities have increased to $152 billion.

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 2021–22 and 2025–26 entities within the Veterans’ Affairs portfolio were included in tabled ANAO performance audits three times. The conclusions directed toward entities within this portfolio were as follows:

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

Figure 2 shows the number of audit conclusions for entities within the Veterans’ Affairs portfolio that were included in ANAO performance audits between 2021–22 and 2025–26 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2021–22 and 2025–26: entities within the Veterans’ Affairs 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 Veterans’ Affairs portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Veterans’ Affairs portfolio, 2021–22 to 2025–26

Source: ANAO data.

Performance statements audit

The audit of the 2025-26 Department of Veterans’ Affairs (DVA) annual performance statements is being conducted following a request from the Minister for Finance on 29 September 2025, 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.

DVA has been included in the annual performance statements audit program since the commencement of the pilot in 2019–20.

The ANAO considers the risk associated with DVA’s performance statements audit as moderate. This is due to changes within DVA and its operating environment that have implications for the performance statements, including the consolidation/revision of DVA’s performance information presented in the corporate plan and continued heightened public scrutiny and interest following the Royal Commission into Defence and Veteran Suicide. The maturing performance statements processes, and fragmented and legacy IT systems, also contribute to this risk. There are one significant, one moderate and two low-risk unresolved findings from last year’s audit, including one qualification regarding its reporting on War Graves.

Key risks for DVA’s performance statements that the ANAO has highlighted include:

the completeness and balance of performance information in providing a basis for assessing DVA’s performance in achieving its purpose
the appropriateness of individual performance measures with a particular focus on quality assurance over data flows to produce complete and accurate information
performance statements preparation processes to provide timely, complete and accurate audit evidence.

Financial statements audits

Overview

Entities within the Veterans’ Affairs portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Veterans’ Affairs portfolio entities and risk profile

	Type of entity	Engagement risk	Number of higher risks	Number of moderate risks
Material entities
Department of Veterans’ Affairs	Non-corporate	Moderate	2	1
Australian War Memorial	Corporate	Low	2	1
Other audit engagements (including Auditor-General Act 1997 sections 15 and 20 engagements)
Defence Services Home Insurance Scheme

Material entities

Department of Veterans’ Affairs

The Department of Veterans’ Affairs (DVA) is responsible for developing and implementing programs to assist the veteran and ex-service communities. This includes granting pensions, allowances and other benefits, and providing treatment under the Veterans’ Entitlements Act 1986; the administration of benefits and arrangements under the Military Rehabilitation and Compensation Act 2004; determining and managing claims relating to defence service under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1998 (DRCA); administering the Defence Service Homes Act 1918 and the War Graves Act 1980; and conducting commemorative programs to acknowledge the service and sacrifice of Australian servicemen and women.

From July 1, 2026, the Veterans’ Entitlements Act 1986 (VEA) and the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) will be closed to new claims, with all compensation and rehabilitation claims being determined under the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Act 2025 (VETS Act) passed in February 2025 and effective from 1 July 2026.DVA’s total budgeted liabilities for 2026–27 are $167.8 billion, with personal benefits provisions and health and other provisions representing just under 50 per cent and just under 50 per cent, respectively, as shown in Figure 4. Personal benefits expenses account for 38 per cent of total budgeted expenses, and health care payments account for 24 per cent.

Figure 4: Department of Veterans’ Affairs’ total budgeted financial statements by category ($’000)

Source: ANAO analysis of 2026–27 Portfolio Budget Statements.

There are three key risks for the Department of Veterans’ Affairs 2025-26 financial statements that the ANAO has highlighted for specific audit coverage, including one risk that the ANAO considers a potential key audit matter (KAM).

The judgements involved in the selection of data, assumptions and calculations underpinning the actuarial assessment of the personal benefits and health care (military compensation) provision balances including assumptions relating to future trends in medical costs, permanent incapacity, and inflation rates. (KAM – Valuation of personal benefit and healthcare provisions)
The accuracy of personal benefit and health care expenses based on a complex legislative environment and information provided by veterans and their dependants
Implementation of the new Financial Management Information System from November 2025 which impacts the financial records and financial reporting process of the entity

Australian War Memorial

The Australian War Memorial (AWM) has responsibility for commemorating, interpreting and understanding the Australian experience of war and its enduring impact through maintaining and developing the national memorial and its collection, and exhibiting historical material, and undertaking commemorative ceremonies and research.

The AWM’s total budgeted assets for 2026–27 are $2.2 billion, with property, plant and equipment and land and buildings representing 53 per cent and 44 per cent, respectively, as shown in Figure 5.

Figure 5: The Australian War Memorial’s budgeted financial statements by category ($’000)

Source: ANAO analysis of 2026–27 Portfolio Budget Statements.

There are three key risks for the AWM’s 2025–26 financial statements that the ANAO has highlighted for specific audit coverage.

The valuation of the national collection, due to the complexity in valuing a large collection of unique heritage and cultural items of significant value.
The valuation of AWM’s land and building and exhibition assets, due to the complexity in valuing assets of a specialised nature.
The capitalisation of redevelopment costs in view of the significant expansion of gallery spaces, improvement and modernisation of memorial buildings, and enhancement of visitor experience.