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This edition of Audit Insights is targeted at Australian Government officials who have responsibility for overseeing or preparing performance information under the Commonwealth Performance Framework. The aim of Audit Insights is to communicate lessons from our audit work and to make it easier for people working within the Australian public sector to apply those lessons. This edition is drawn from audit reports tabled from 2015–16 to 2022–23 into the implementation of the corporate planning and annual performance statements requirements.


The Commonwealth Performance Framework (the framework) gives effect to legal obligations under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). It places obligations on accountable authorities for the quality and reliability of performance information provided to the Parliament and the public. The framework is linked to the Australian Government Budget by the Finance Secretary Direction 2022 and portfolio budget statement guidance.

Good performance information is important because it:

  • provides the Parliament and the public with meaningful information on what government does and the results that are achieved;
  • provides government with a sound basis for future investment and policy decisions and for allocating limited resources to where they have the most impact;
  • ensures Commonwealth entities focus on outcomes and enables them to improve policy and program performance and provide evidence-based advice to government; and
  • enables accountable authorities to demonstrate effective stewardship of public resources, including through the conduct of robust evaluations.

The ANAO’s audit program has identified the following six key areas within the framework where lessons can support entities prepare useful and high-quality performance statements.


A description of the ANAO’s approach to auditing annual performance statements is available on the ANAO website.

1. Build a performance focus

The PGPA Act changed stewardship and accountability arrangements for Commonwealth entities. It sought to create momentum for change, whereby performance information became valued by Commonwealth entities as essential to good management and demonstrating the proper use of public resources.

Under subsection 15(1)(b) of the PGPA Act, the accountable authority of a Commonwealth entity must govern the entity in a way that promotes the achievement of the purposes of the entity.

Section 38 of the PGPA Act requires the accountable authority of a Commonwealth entity to measure and assess the performance of the entity in achieving its purposes. Section 39 requires the accountable authority to prepare annual performance statements that provide information on the entity’s performance in achieving its purposes.

  • Tone at the top – Direction and sponsorship from the top is crucial to building a valued and sustainable performance framework. Formal and informal incentives supporting the development and use of performance information are required. Encouraging learning from performance information is important.
  • Cultural change Integrating performance information into entity management, accountability and budgeting arrangements requires change in how an entity is managed. Performance information needs to become valued as essential to good management and stewardship of public resources and not seen as a compliance exercise.
  • Realistic expectations High quality performance information and evaluation takes time and perseverance. Ongoing commitment and effort are required to build quality. A central unit that oversees development and maintenance of the entity’s performance framework can help maintain momentum and continue to drive improvement. Implementation may be impacted when key people move on, governance structures change and priorities shift.
  • Systems and processes for measuring and reporting – Entities need systems and processes to ensure the accuracy and completeness of their performance information. Entity systems and processes should support all stages of the performance management cycle, including specifications for providing data. Entities should consider how existing data, IT systems and controls can be leveraged to support performance reporting.
  • Capability – A clear commitment by the entity to measuring and reporting performance will enhance the incentives for staff to invest in skills development. Development of performance information literacy, beyond those working on performance reporting, can support the development of data and related analytic and evaluation skills. These skills enable staff to best use performance information in policy and program development and advice to government.

2. Define purposes and key activities

Performance measurement and assessment works best when entities are clear on what needs to be measured and why.

Sections 16E and 16EA of the PGPA Rule require entities to measure performance having regard to the entity’s purposes and key activities, which sets the meaningful context for measurement.

  • Consider legislative responsibilities – Entities should consider the nature of legislative requirements, including administrative arrangements orders (AAO), and whether they are adequately described by the entity’s purposes and key activities.
  • Clear and measurable purposes – The purposes of an entity include its objectives, functions or role, which includes key matters covered in enabling legislation or the AAO. A purpose statement should be outcome focussed, clearly identify what is to be achieved and be informative to a wide range of users.
  • Identify key activities that significantly contribute to the entity’s purposes – A key activity is a distinct, significant program or area of work undertaken by an entity to achieve its purposes. Entities should identify all the important activities that make a significant contribution to achieving the entity’s purposes. Appropriations, public interest or government priorities can help entities decide which of their activities are key activities. It may not be sufficient to simply report on the programs identified in the portfolio budget statements.
  • Make key activities specific and uncomplicated – Key activities that are too broad or include too many elements may be confusing and difficult to measure.
  • Test what matters to users – What matters for an entity is not always what is most important to a user. Entities should ensure there is a way to test what is important to users.
  • Regularly assess completeness – Entities should regularly review their purposes and key activities to ensure they continue to represent the main policy and program goals the entity is seeking to achieve. Review should occur when new funding for a program or policy initiative is being considered by government and when there are machinery of government changes.

Case study 1. Identifying key activities

An enterprise level performance framework can assist entities to identify the key activities that make a significant contribution to an entity’s purposes. For example, the Department of Social Services has developed an internal policy for the selection of key activities. The policy establishes a ‘key activity framework’ to guide program owners to nominate and document the department’s key activities. It requires the responsible officer in divisions to document their decisions and the rationale for nominating a key activity. As this process matures it will provide clarity and consistency for both the department and users of the annual performance statements.

3. Design meaningful performance measures and targets

High quality performance measures and targets will underpin the needs of many different stakeholders. Section 16EA of the PGPA Rule sets out the requirements for the performance measures for a Commonwealth entity.

The PGPA Act requires entities to provide meaningful information to the Parliament and the public. Commonwealth entities should examine whether their measures, in combination, are sufficient to provide a complete and meaningful picture of achievement of the entity’s purposes. High quality performance measures will support robust evaluation processes. They have the following characteristics.

  • Relate directly – Measures should be relevant and have a clear link to the entity’s purposes or key activities. It is for each entity to decide on the appropriate suite of measures, taking into account the entity’s individual circumstances.
  • Reliable and verifiable – Performance measures should be supported by accurate data and specific methodologies. Entities should document how they calculate the result of each performance measure, the source and frequency of data collection and any other business rules and assumptions.
  • Complete and balanced – Measures should reflect all aspects of, and fairly represent, the entity’s purposes or key activities and provide an unbiased basis for measurement and assessment. This may result in specifying more than one measure for a purpose or key activity and having an appropriate mix of measures, to provide a better understanding of performance.
  • Clear – Measures should be easy to understand. The names and descriptions of measures should be clear and specific, to help people understand what they mean.
  • Logical – A clear program logic should inform the selection of measures. Measures should reflect what the entity is trying to achieve, not simply what is measurable or what processes are followed.
  • Contemporary – Entities should regularly review and assess whether measures remain fit for purpose or should be updated – for example, from output to outcome and impact measures as programs mature. Measures should be reviewed when government announces new initiatives or provides additional funding for existing initiatives. When measures change, entities should clearly explain the rationale.
  • Clear targets where practicable – Targets should be specific, realistic and measurable. They should be revised regularly to reflect increases or decreases in funding, historical achievement, or productivity gains resulting from continuous improvement. Where targets have not been met, there should be transparent discussion to explain the reasons.
  • Composite measures – A composite measure is a performance measure with several elements or targets. The entity should clearly set out in its corporate plan how the result for each element or target will be weighted in determining the overall result and explain the proportion of elements or targets that must be met for the measure as a whole to be considered achieved.
  • Owned by someone – Measures need an owner to promote accountability and transparency.

4. Maintain proper records

Section 37 of the PGPA Act requires the accountable authority to maintain records that properly record and explain the entity’s performance in achieving its purposes. The ANAO obtains audit evidence by examining entity records. Audit evidence includes information in entity records underlying the performance statements and other information such as:

  • entity corporate plans, strategic business plans and business cases;
  • governance outputs such as meeting minutes;
  • submissions that seek government support for policies and programs; and
  • performance data from operational systems and management reports.

The provision of complete, accurate and timely evidence by entities is essential if the ANAO is to provide robust and timely assurance to the Parliament. High quality evidence can lead to a reduction in the need for a large quantity of evidence.

To prepare for a successful annual performance statements audit, entities should consider the following.

  • Preparing early – Planning is crucial, and time needs to be taken to adequately prepare for an audit. Sufficient time should be allocated to gather relevant records and information. Entities should set up an early planning meeting with the auditor.
  • Developing an integrated control document – An integrated control document provides a mechanism for identifying information systems and databases that store data for performance measures. It should also clearly define and document business rules, including for the selection of performance measures and the calculation and sign-off of results. This overarching document should provide a single ‘source of truth’ on the entity’s performance framework, including the meaning, context, rationale and responsibility for each performance measure.
  • Raising awareness – Relevant staff and business units should be advised of the audit and assigned tasks to ensure they have reviewed their documentation and records and are prepared for the audit. Entities should establish an audit timeline and responsibility for compiling records.
  • Defining roles and responsibilities – It should be clear who is responsible for maintaining records to a standard that allows the auditor to verify their integrity. Entities should review the list of requirements from the auditors and assign each item, with a due date, to a capable and responsible person.
  • Assuring data quality – Entities should establish processes to obtain assurance on how data has been collected and how results have been calculated, including from third parties. Where a third party is responsible for the data, applying the methodology and/or calculating the result, appropriate records should be maintained to explain these arrangements (for example, contract or memorandum of understanding) and appropriate processes designed to validate results.
  • Maintaining a register of audit requests – The tracking of audit requests through a register allows monitoring on how the audit is progressing and what information requested by auditors is outstanding. Better practice entities ensure the register is updated on a regular basis and is shared with the ANAO before progress meetings.
  • Preparing a signing pack – Preparing signing packs that include all relevant evidence for a reported result can provide assurance to program owners and those with responsibility for signing off on reported results. Signing packs can also improve audit efficiency.

Case study 2. Resolving audit findings in-year

Performance statements audits are structured to enable auditees to resolve interim findings by year-end. At the end of the interim phase of the 2021–22 audits, there were 35 unresolved audit findings across six audited entities. At the end of the final phase of the audits, 23 of these findings (66 per cent) had been resolved.

5. Report clearly

Subsection 16F(2) of the PGPA Rule requires an entity to include the results of the measurement and assessment of the entity’s performance in the reporting period, and an analysis of the factors that may have contributed to the entity’s performance in achieving its purposes.

ANAO audits have identified five key areas in which entities can improve their performance reporting:

  • maintaining a clear line of sight in reporting;
  • keeping a focus on the completeness of reported information;
  • ensuring reporting is fair, balanced and understandable;
  • keeping reporting focused on material content; and
  • preparing performance statements that are comprehensive but concise.

Clear line of sight

Entities should ensure there is a clear read of performance information across the portfolio budget statements and the corporate plan at the beginning of the reporting period to the annual performance statements and annual report at the end of the reporting period. A clear line of sight across these documents improves transparency over the use of public resources and the outcomes achieved by Commonwealth entities. This means ensuring that measures and targets remain consistent between the four documents — or if there is a change, a clear justification is provided in reporting.


The PGPA Act provides that, by reading an entity’s annual performance statements, a reasonably knowledgeable person could form a view on the performance of an entity in achieving its purposes. Where an entity’s performance statements are not complete, even when individual performance measures comply with section 16EA of the PGPA Rule, there are gaps in an entity’s performance information.

In addition to measures being removed, and not replaced, in response to an audit qualification or finding, several factors can contribute to the incompleteness of entity performance statements, including:

  • Purposes – The description of the purposes of an entity can insufficiently cover the objectives, functions and role of the entity. For example, the purpose statement can fail to address one or more key matters identified in an entity’s enabling legislation or the AAO.
  • Key activities – The key activities identified by the entity may not include all the important activities that make a significant contribution to achieving the entity’s purposes. For example, the key activities can fail to identify a new priority of government, an area of public interest or a significant new program.
  • Performance measures – The performance measures may insufficiently cover the scope and complexity of the activity being measured. For example, it may be necessary to include more than a single measure for a purpose or key activity for the reporting to be meaningful.

Fair, balanced and understandable

Performance statements that are not fair, balanced and understandable undermine public sector accountability. ANAO audits have found that high quality performance statements have the following characteristics.

  • Provide context – Contextual and explanatory information in the analysis of performance results should be included to help readers understand and interpret the performance results. This includes an explanation of how the entity has (or may have) influenced the result relative to the contribution of other stakeholders and significant factors outside the entity’s control.
  • Avoid jargon – Plain language and consistent terminology should be used. Ensure technical terms are defined.
  • Are simple – Avoid unnecessary complexity that makes it difficult for stakeholders to understand the information. Good performance statements have clear, simple layouts and have a logical flow of information.
  • Report fairly – Performance statements must be trustworthy. Credible performance reporting requires a balanced account of favourable and unfavourable aspects of performance. Information should be presented in an unbiased way. Performance statements should be consistent with other elements of the annual report.
  • Use case studies appropriately – Case studies can be a good way of providing narrative to support reported results. They should be evidence based, reliable and robust. Entities should consider the risk of bias when determining the selection and scope of case studies in advance of the reporting period.
  • Benchmark results — Reporting trend data can help measure progress and build trust in the information presented. Good performance statements include an explanation of data trends, an analysis of causes and an exploration of possible solutions to problematic trends.
  • Present clear analysis – Be open about the extent of, and reasons for, the results achieved. In particular, whether the results are above or below the expected level of performance.

Disclosure of material information

Materiality is an overarching principle that applies to the preparation of performance statements. It is a concept commonly used by preparers, auditors and users of financial information. Information is material if its omission or misrepresentation could reasonably be expected to influence the decisions of users.

When deciding whether to include information in performance statements, entities should avoid unnecessary information and only include what is material to users.

  • Materiality is an entity-specific assessment and is both quantitative and qualitative (such as whether the information would be of public interest) in nature.
  • All performance measures reported in an entity’s portfolio budget statements and corporate plan are presumed to be material as the entity has determined that these are the best measures to demonstrate its performance. Consistent with the clear read principle described earlier, these measures should be reported in the annual performance statements unless there is a reasonable reason for exclusion.
  • Material disclosures are expected to provide a comprehensive picture of the entity’s performance in the reporting period. An entity should focus on providing the breadth and depth of information that will help users understand its performance and the impact of its activities.
  • Entities should avoid including information in performance statements that is of limited relevance to users. The exclusion of immaterial information helps users to focus on the more important aspects of the entity’s performance.

Comprehensive but concise

Unlike financial statements, there are no detailed reporting standards for annual performance statements. Each entity needs to prepare and customise its own performance statements, to reflect the nature of the entity and its operating context. The ANAO has found that more effective reporting may include the following elements.

  • Performance summary – A short summary outlining how the entity has performed can increase the usability of performance statements.
  • Tables and graphics – The use of tables, graphics and visual aids can increase usability and assist to keep the content concise.
  • A sensible balance – Making performance statements too long can make them unreadable and obscure important information. Too much information can be as unhelpful or misleading as too little information.
  • Signposting – Entities should consider whether to include cross references in performance statements to be concise and provide links to other relevant information.

6. Improve governance

Information on performance should be valued by entities to the same degree as financial information. Preparing performance statements should not be viewed as an annual compliance exercise. Knowing how well an entity is performing can help to guide operational and strategic decisions to improve policies and programs and identify potential risks.

ANAO audits have found that a robust governance framework has the following characteristics.

  • An enterprise-level performance framework – An enterprise-level performance framework can assist an entity to move beyond a narrow approach to compliance with the PGPA Act requirements to making performance information an integral part of the operation of an entity. An effective framework would incorporate program evaluation.
  • Clear roles and responsibilities – The roles and responsibilities within the organisation for performance monitoring, reporting and evaluation should be clearly documented, including accountability for results. Every purpose, key activity and performance measure should have an owner. Ideally the owner should be a person, not a committee or team. Reported results should be reviewed and signed off by senior management before publication.
  • Effective planning and preparation – Effective planning can support the timely preparation of entity corporate plans and performance statements, including to ensure that conduct of the performance statements audit aligns with annual reporting timelines. Effective processes can reduce the risk of untimely, inaccurate or unreliable reporting.
  • Regular monitoring and reporting to senior management – Regular performance monitoring and reporting to senior management can assist entities to assess progress towards achieving performance goals and help guide operational and strategic decisions. Monitoring processes can be designed to report on performance, inform ongoing improvement and support evaluation activities, including by improving data gathering and providing assurance on data quality.

Further reading


Department of Finance

Joint Committee of Public Accounts and Audit

Auditor-General reports

Audit Insights