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Insights from Reports Tabled October to December 2018
This edition of audit insights focuses on quality in the public sector. Quality is an important concept that can be applied to all areas of government business. Quality applied through policy, services, regulations and program design and delivery supports community trust in government. A positive approach to quality, implemented through a quality framework that is embedded into the organisational culture at all levels of a government agency, is essential to meeting community and parliamentary expectations.
What is quality?
The concept of quality runs through almost everything we experience in our personal and work lives. Quality in a government context relates to the way in which government activities such as policy development, service delivery, or program design and implementation consistently meet the expectations of stakeholders. A focus on quality is demonstrated through the names of government agencies (Tertiary Education Quality and Standards Agency), the titles of government programs (Quality Schools Package) and legislation enacted by the Parliament (Aged Care (Single Quality Framework) Reform Act 2018). Government agencies use quality frameworks to ensure their decisions and transactions are accurate, consistent, and comply with relevant legislation and policies.
The successful implementation of fit-for-purpose quality systems and processes into a government agency provides a basis for those that interact with the agency to have confidence in the advice and services provided.
Recent audits have highlighted that Australian Government agencies with an embedded quality framework — which guide their system of controls and processes — are more likely to know that their actions are consistent with their purpose. It is important that these quality frameworks are designed in a way that is relevant to the work of the agency. Depending on the role and operating environment of the agency, this might mean that the framework ensures compliance with legislative and policy requirements, that they are as accurate as possible with transactions such as payments, or that decisions that affect citizens are made in a consistent way.
Another important aspect of quality is the extent to which it is embedded into the culture of an agency. Strong executive leadership and frequent messaging on quality is central to influencing organisational culture, but the leadership of an agency need to do more than just set requirements. They need to actively monitor the implementation of these requirements and refine processes when required. When staff have a clear understanding of what is expected of them, as well as clear and unambiguous processes refined through monitoring and continuous improvement, they are more likely to deliver what is expected.
A quality framework operating within a government agency is typically a system of quality control and monitoring programs that support, and sometimes improve, the delivery of the agency’s purpose. The quality standards should be fit-for-purpose and relevant to the operating context of the agency, having regard to the risk appetite and the costs and benefits of quality activities. Setting quality objectives too high can lead to inefficiency; there is a balance to be struck and it should be informed by risk. The framework will have clear governance arrangements with an appropriate level of senior management visibility and oversight, supported by regular management reporting.
Different agencies have different purposes and so quality frameworks can take many forms. A quality framework that works within one agency, or even one area within an agency, might not be appropriate for another. Some agencies might be directly involved in delivering payments to citizens, for example, and an appropriate quality framework would monitor that payments complied with accuracy, timeliness and validity requirements. The framework would also enable identification and monitoring of any inaccuracies so they can be remedied.
As outlined in the Design and Implementation of the Quality Framework audit report, the Department of Human Services (Human Services) developed a quality framework with the intention of increasing accountability for how quality is managed, and ensure that the work of the department meets the quality expectations of customers and the government. Human Services has service commitments to provide customers and other stakeholders with a set of expectations about the services and products that the department delivers. The service commitments relate to respect, quality information, honesty and integrity, and efficiency. Each commitment is supported by business improvement priorities for the period 2015 to 2019.
The quality framework used within Human Services incorporates a methodology of continuous improvement, which the department defines as an ongoing effort to improve the quality of products and services delivered. The department developed an agency-wide framework that improved quality arrangements in some operational areas that comprehensively implemented the framework (such as service delivery areas), but there was less comprehensive implementation in other areas that were more internally-focussed. A key message from the audit was that quality arrangements need to be fit-for-purpose for the different business areas within an agency, and what is fit-for-purpose in one business area may not be in another. Trialling of approaches, project planning and clear monitoring of milestones and achievements are crucial elements in the design and implementation of quality frameworks and processes, if they are to achieve the intended objectives.
External scrutiny over quality frameworks can be a useful way to test their effectiveness, as shown in our audit of the Australian Taxation Office’s (ATO) use of settlements audit report. The report of the audit, tabled in December 2017, outlined the importance of using reviews by independent experts as a method to improve quality assurance and continuous improvement.
Quality in policy development and advice
Quality assurance processes are important when developing policy and providing advice, because government expects that the advice provided will be evidence-based and reflect the needs of those impacted by the policy or advice. Our September 2017 audit report assessing the effectiveness of the design process and monitoring arrangements for the National Innovation and Science Agenda (NISA), identified that the quality of advice provided to government is enhanced through a clear description of the evidence used and the likely impacts of proposals. It can be useful for staff developing policy advice to have a framework, training and a set of guidelines to establish quality expectations for evidence-based policy development, including outlining what reliable and sufficient evidence looks like. A review process can further enhance the quality of policy-advice provided.
An audit assessing whether the Department of Finance had effective arrangements for the management of Commonwealth leased office property, the report of which tabled in October 2018, featured a key learning that where new policy advice to government includes savings estimates, agencies should ensure that the estimates are supported by a suitable model or methodology. Government should be advised of any limitations or assumptions within the estimates as well as timeframes for updating this advice once the assumptions are tested. A September 2016 report of an audit assessing the effectiveness of the ATO in achieving revenue commitments, found that the accurate attribution of revenue and expenses to compliance measures would have assured the government that the agreed amount of additional revenue was actually being raised, and that the additional resources provided were used as agreed. Implementing quality standards for budget related advice, which required a clear outline of the basis of the assumptions used in revenue models, evidence to support key assumptions used and an up-to-date register of how assumptions are determined, would help to ensure that assumptions are suitable and promote consistency in their application. A June 2018 report on the Department of Health’s design, implementation and monitoring of selected budget measures highlighted the importance of applying a consistent method to developing costings for efficiency measures, quantifying potential savings and establishing baselines for measuring their impact during implementation. These examples from our audits reinforce the importance of evidence and review in establishing quality standards for policy advice.
Using the knowledge, insights and lessons from past failure and success is important in policy development, and a robust quality framework can assist in guiding staff to use these lessons to increase the likelihood of success. Our September 2018 audit report of the management of the Regional Network by the Department of the Prime Minister and Cabinet, highlighted the importance of a strong interaction between the policy and delivery functions within the agency. This strong interaction can ensure that lessons learned from previous program implementation and policy design are incorporated into the design of new policies or programs. Appropriately targeted consultation can also result in useful information to better inform program design and implementation.
Quality in program and service delivery
Implementation plans are useful tools to support the quality of program delivery. An audit assessing the effectiveness of the Department of Defence’s (Defence) preparations for the introduction of the Joint Strike Fighter (JSF) demonstrated the benefits that can be realised from setting quality expectations early. Defence had a framework of plans and agreements to clearly set out the Chief of Air Force’s requirements for the JSF and the strategy for their introduction into service and sustainment. These documents set the quality expectations for staff working on the project.
When applied to program and service delivery, quality usually encompasses accuracy and consistency standards. Quality checks and monitoring processes over processing timeframes and decision-making is important where there is a balance to be struck between the quality, quantity and timing of the delivery of services. This was highlighted in the report of an audit assessing the efficiency of the processing of applications for citizenship by conferral.
An audit from 2018 examining the effectiveness of the Department of the Treasury’s (Treasury) role in monitoring and making payments under National Partnership Agreements, found that Treasury had implemented sufficient quality controls to gain assurance over the accuracy and timeliness of payments. While Treasury placed some reliance on assessments done by portfolio departments in certifying payments, they also performed standard quality-assurance checks before authorising final payment. Treasury also performed additional checks for payments that had been rated as high risk.
Another example of the importance of transaction quality was highlighted in an audit of the Department of Veterans Affairs, which found that accuracy in client records was critical to delivering quality services to veterans and their dependents. A minority of claims were found to take an excessively long time to process due to inefficient handling and extended periods of inactivity in claim processing, and these delays can have a significant impact on veterans. The accuracy of data was also a theme in a July 2017 report of an audit of Australia’s greenhouse gas emissions. The audit concluded that appropriate quality assurance and control procedures were in place for the preparation of most of the emissions estimates and projections.
A follow-up audit of domestic passenger screening highlighted that having meaningful compliance and performance monitoring programs were important quality-control processes to ensure that the activities were effective, and that they complied with regulation.
The audit of the design and implementation of the VET Student Loans program, administered by the Department of Education and Training, demonstrated that learning from previous experience enhances the quality of new program design.
Quality at the ANAO
The ANAO has a quality assurance framework that is the foundation of all of our work. We define audit quality as being the provision of timely, accurate and relevant audits that are valued by the Parliament, and which are conducted in accordance with the Auditor-General Act 1997, ANAO Auditing Standards and methodologies. Delivering quality audits allows us to effectively deliver against our purpose of supporting accountability and transparency in the Australian Government sector through independent reporting to the Parliament, and thereby contribute to improved public sector performance. Our focus on quality is further strengthened through our risk management framework, which recognises failure to achieve the quality standards required to support our work as a key operational risk.
The Auditor-General sets the ANAO Auditing Standards, requiring the ANAO to have a quality assurance framework comprised of leadership responsibilities, ethical requirements, audit processes, monitoring and our people. The ANAO Auditing Standards describe the requirements for performing an audit, with a focus on what the auditor needs to do to obtain sufficient and appropriate evidence to support their findings, and to express a conclusion against the objective of the audit. This requires the auditor to understand the agency and the activity being audited, plan the audit appropriately and document their work.
The ANAO’s quality framework promotes an internal culture based on the recognition that quality is essential in performing our work. Our quality framework includes internal monitoring through annual quality assurance reviews, real time quality reviews and progress reviews. External scrutiny over the quality of our work includes peer reviews, independent audits and reviews of the quality framework itself. More information about our commitment to increasing external oversight and scrutiny over our quality framework is available at .
Quality is everyone’s responsibility
Quality is an important concept that can be applied to all areas of government business. Quality applied through policy, services, regulations and program design and delivery supports community trust in government. A positive approach to quality, implemented through a quality framework that is embedded into the organisational culture at all levels of a government agency, is essential to meeting community and parliamentary expectations.
The consequences of failing to take quality seriously are potentially severe, with agencies at risk of being non-compliant with laws and regulations, reputational damage and a loss of confidence from the Parliament and the public. This would likely impact on the ability of the agency to effectively deliver against its purpose.
Executive-level (EL) staff are particularly well-positioned to ensure that any work performed under their direction meets the requirements of relevant quality frameworks within their agency. They should also engage with their senior leadership in regular conversations about how quality is supported, managed and reported.
A number of recent audits have highlighted the importance of implementation when it comes to policies and frameworks. It is not enough to develop these policies and frameworks, they need to be fit-for-purpose, implemented, monitored and have appropriate reporting arrangements for them to be effective in supporting quality. Quality is everyone’s responsibility.