The objective of this audit was to assess the effectiveness of arrangements for implementing and monitoring the implementation of ANAO performance audit recommendations in the Department of Agriculture and the Department of Human Services.



1. Australian National Audit Office (ANAO) performance audits play an important role in stimulating improvements in public administration through audit recommendations. Performance audits also provide assurance to the Parliament about the administration of Australian Government entities and programs. Typically, performance audits give consideration to the efficiency and effectiveness of program delivery and whether relevant policy and legislative requirements have been met.

2. Audit recommendations generally address risks to the successful delivery of programs, services or functions. Entities are not compelled to implement the recommendations of performance audits.1 However, where an entity has agreed to a recommendation, implementation of that recommendation should be timely and in line with its intended outcome to achieve the full benefit of the recommendation.

3. In general, the primary responsibility for implementing recommendations lies with senior managers in the program or business area of the entity that was subject to the audit. In this context, implementation of recommendations should be treated in the same way as the implementation of other policies, programs and business improvement initiatives, with clearly defined implementation and oversight roles, and clear expectations about quality and timeliness. Additionally, audit committees through their role in an entity’s governance framework can assist in the oversight of implementation. Audit committees are not a substitute for program management control and accountability, but instead provide advice to the Chief Executive2 to enable the entity to derive the anticipated benefits from, and respond appropriately to the findings and recommendations of audits. An audit committee is well placed to review the adequacy of actions in response to audit recommendations, and to advise chief executives. The audit committee relies on the timely provision of accurate information about progress in the implementation of recommendations, upon which to make these assessments.

4. Entity managers need to make judgements about how best to address recommendations, including allowing a reasonable timeframe for implementation which may be modified over time, due to changing priorities or circumstances. It is general practice for audit committees to consider the steps that entity management has taken to address risks identified in performance audits. Audit committees receive regular reporting, usually from internal audit on the status of implementation and it is important that adequate documentation is available to support the closure of recommendations.

Audit objective, criteria and scope

5. The objective of this audit was to assess the effectiveness of arrangements for implementing and monitoring the implementation of ANAO performance audit recommendations in the Department of Agriculture (formerly the Department of Agriculture, Fisheries and Forestry), and the Department of Human Services (DHS). To form a conclusion against this audit objective, the ANAO adopted the following high‐level criteria:

  • recommendations were implemented as agreed, with adequate oversight from executive management and responsible program management areas;
  • implementation reporting for recommendations was accurate and timely, with established mechanisms for intervention if required; and
  • comprehensive governance systems were in place to monitor ANAO performance audit reports and oversee the implementation of recommendations.

6. The audit examined the implementation of recommendations from nine earlier ANAO performance audits. Five of the audits and 11 recommendations involved the Department of Agriculture, while four audits and 17 recommendations were directed towards DHS.

Overall conclusion

7. Successful implementation of audit recommendations requires strong senior management oversight and monitoring along with timely implementation approaches that set clear responsibilities and timelines for addressing the required actions. Overall, of the 28 ANAO recommendations examined as part of this audit, 18 recommendations (five in the Department of Agriculture and 13 in DHS) were assessed by the ANAO as being adequately implemented. Seven were partially implemented (four in the Department of Agriculture and three in DHS) and two (one in each department) were assessed as being not adequately implemented.3

8. Audit recommendations assessed as partially implemented generally showed that implementation either: fell short of the intent of the recommendation; only addressed some of the risks to which the recommendation was directed; or was ongoing at the time of this audit. In these cases risks can remain not addressed or outcomes affected. While the detail of recommendations was different in each department, the audits examined commonly made recommendations directed at improving approaches to performance measurement and the assessment of program outcomes. In both departments some changes have been made in reporting arrangements, however these changes fell short of the full intent of the recommendation highlighting the need for departments to continue to focus on their approaches to performance measurement.

9. Data from departmental systems show that in relation to the 28 recommendations considered as part of this audit, the average time taken to implement recommendations was 12 months (the average reported time for implementation in the Department of Agriculture was one year and 26 days, and in DHS it was one year and three days). A timetable for implementation was generally not established by the departments and timeliness of implementation was not closely monitored. Furthermore, there were nine recommendations noted as complete in the records of internal audit of both departments that have been assessed as less than fully implemented by the ANAO.

10. In both departments there were examples of sound approaches to the implementation of ANAO recommendations, including appropriate oversight by senior executives, and coordination of arrangements within entities to ensure consistency with broader Commonwealth policies. A feature of both departments approach to implementation was to engage external consultants or establish internal reviews to provide additional advice in relation to ANAO recommendations. This approach may be appropriate in certain circumstances, although the reviews often had the effect of delaying implementation, in some cases by up to two years.

11. To effectively oversee the implementation of audit recommendations, entities need to have appropriate systems for tracking and managing implementation. Both departments in this audit have established systems for recording, monitoring and reporting the implementation of ANAO performance audit recommendations to provide for oversight by entity management and the audit committee. DHS’s monitoring and reporting processes were reasonably well developed. The Department of Agriculture has recently introduced improvements to its monitoring and reporting system to address its concerns around a lack of visibility and accountability of program management area actions in the implementation of ANAO performance audit recommendations. The results of the audit suggest there is scope for the Department of Agriculture to further improve the information provided to the audit committee and to periodically review the adequacy of actions taken by management to implement audit recommendations. The ANAO has made one recommendation in this regard.

Key findings by chapter

Implementation of performance audit recommendations—Department of Agriculture (Chapter 2)

12. The Department of Agriculture’s implementation of agreed ANAO performance audit recommendations has been variable, particularly in terms of timeliness, approach and adequacy of implementation by program areas. The variability observed reinforces the need for responsible program managers to put in place comprehensive approaches to addressing agreed recommendations. Overall, the ANAO has assessed five of the 11 recommendations as adequately implemented, four as partially implemented, and one as not adequately implemented. One recommendation was assessed as not applicable, due to program changes that occurred since the initial recommendation was made.

13. Programs relating to grants management processes in the Department of Agriculture have been the subject of several ANAO performance audits. Of the 11 recommendations considered as part of this audit, five related to grants administration. As part of broader efforts to improve grants administration across the organisation, the department has invested resources and taken reasonable steps to address the risks identified in these recommendations. At the same time, four other recommendations examined during this audit were directed towards previously identified shortcomings in performance information and measures of program effectiveness. The ANAO’s assessment of these recommendations conducted as part of this audit was that all four recommendations have only been partially implemented, two or more years after the initial recommendations were made.

14. Policy changes and other developments not foreseen at the time a recommendation is agreed can influence how an entity might implement a recommendation. It is important for entities to ensure that where significant program or policy changes occur, consideration in any new arrangement is given to the risks identified in the initial audit recommendation.

Implementation of performance audit recommendations—Department of Human Services (Chapter 3)

15. Overall the ANAO has assessed 13 of the 17 recommendations applicable to DHS as adequately implemented, three as partially implemented, and one as not adequately implemented.

16. DHS has undergone significant organisational change over the past five years, including the integration of portfolio functions in 20114, which previously had separate internal audit support. In some cases, where implementation of recommendations was assessed as partial, or not adequate, the recommendation related to the period prior to the establishment of the department. However, in the period following its establishment, DHS’s response to a recommendation relating to the provision of a higher level of assurance on the validity of claims paid for disaster recovery assistance was not fully implemented. The recommendation was designed to improve payment integrity, through better risk analysis and management. The risk assessment did not achieve the full intent of the recommendation.

17. The audit of Centrelink’s approach to fraud investigations found areas for improvement to support the management of fraud. A sound approach was taken by DHS in its implementation of the four ANAO recommendations relating to DHS fraud investigations. The implementation approach included the allocation of necessary resources, appropriate oversight by senior executives, coordination of functions within the department, and consultations to allow for consistency of approach within the Commonwealth. The department also invested in improved management information systems and developed performance measures to assist in higher levels of oversight and accountability. As well, the updates provided to internal audit and the audit committee accurately reflected the progress being made with implementation. There is scope to apply this approach more broadly in the department.

Monitoring and Reporting (Chapter 4)

18. Effective monitoring and reporting arrangements are a necessary part of verifying that ANAO performance audit recommendations are fully implemented. DHS has well developed monitoring and reporting processes which provide oversight of the implementation of audit recommendations, such as placing a high priority on systematic reporting on progress by the entity’s audit division and clearly assigning responsibility for implementation. These processes are generally supported by a clear allocation of roles, responsibilities and oversight from senior executives at General Manager level. Although this audit identified some inaccurate and incomplete reports and records, these related to a period of time prior to the integration of separate business functions into the department in 2011. Overall, DHS’s monitoring and reporting system gave responsible senior management appropriate visibility over progress and enabled the entity’s internal audit to provide relevant information to the audit committee.

19. The Department of Agriculture’s, internal audit and audit committee have relied on program manager certification that recommendations have been implemented. Recent changes to internal audit processes and the enhancement of reports to the audit committee are addressing concerns over visibility of actions taken in relation to ANAO recommendations. There is scope for further improvements in the department, including endorsement at the senior executive level of plans for the implementation of ANAO recommendations, and provision of supporting documentation prior to audit committee acceptance of the closure of recommendations.

20. In both agencies, recommendations were reported as having been implemented approximately 12 months after the ANAO report was tabled (the average reported time for implementation in the Department of Agriculture was one year and 26 days, and in DHS it was one year and three days). However, a timetable for implementation was generally not established and timeliness was not closely monitored by either entity. To provide a higher level of assurance over the timeliness of implementation of recommendations, appropriate internal requirements should be developed by agencies. These could include senior management setting expectations of timeframes for finalising recommendations.

Summary of agencies’ responses

21. The proposed audit report was provided to the Department of Agriculture and the Department of Human Services. Both agencies provided a formal response to the proposed report and the Department of Agriculture provided a response to the recommendation. The audited agencies’ summary responses to the audit are provided below. The agencies’ responses to the recommendation are contained in the body of the report following the relevant recommendation. Formal responses from the agencies are included at Appendix 1.

Department of Agriculture

22. The Department of Agriculture agrees with the recommendation of the report. The department notes the report’s positive comments in relation to the grants management framework, supporting documentation and training material that supports grants processes, and the findings that identify areas for improvement in relation to the timely development and implementation of outcomes based performance indicators.

23. The department notes the development of outcomes-based performance indicators can present challenges when undertaking certain programs, such as those in the area of natural resource management given the long timeframes required to demonstrate measurable outcomes. Furthermore, for the recommendations where performance indicators were examined, in most cases the underlying program objectives changed following the completion of the relevant audits. This complicated the circumstances for implementing the associated performance indicator recommendations.

Department of Human Services

24. The Department of Human Services (the department) welcomes the ANAO audit report on the Implementation of ANAO Performance Audit Recommendations.

25. The department notes the audit report acknowledgement of its well developed monitoring and reporting processes that govern the implementation of audit recommendations since the integration of the former Medicare Australia and Centrelink into the department on 1 July 2011 (integration). While there are no ANAO recommendations pertaining to the department in the audit report, the department will continue to focus on further enhancing audit monitoring governance by including management agreed timeframes for implementing agreed ANAO audit recommendations as suggested in the audit report. The department will also continue to maintain its close attention to addressing all agreed ANAO audit recommendations as a matter of priority.

26. The department acknowledges the ANAO findings on the status of the audit recommendations included in the ANAO sample for the audit, noting that the audit recommendations sampled were raised in audits prior to integration referred to above.

27. The department also advises that since the completion of ANAO field work, Recommendation 2 – Planning the Improving Compliance Plan—from ANAO Report No.19 2009–10 Child Support Reforms: Stage One of the Child Support Scheme Reforms and Improving Compliance is now fully implemented.


Recommendation No. 1

Paragraph 4.47

In order to provide a higher level of support to its audit committee, the ANAO recommends that the Department of Agriculture:

(a) develop appropriate internal requirements setting out senior management responsibilities for implementation of ANAO recommendations and sign off on completion; and

(b) enhance its internal reporting to give greater focus to the status of implementation, including information relating to timeliness and completion of each outstanding recommendation.

Department of Agriculture’s Response: Agreed.


[1] The majority of recommendations (over 98 per cent) made in ANAO performance audits are agreed by entities or agreed with some qualification since 2011.

[2] FMA Regulation 22C(4)(h)(i)(j). The Public Governance, Performance and Accountability Act 2013 (PGPA Act) will replace key provisions of the Financial Management and Accountability Act 1997 from 1 July 2014. Section 45 of the PGPA Act requires agencies to have an audit committee. Further guidance for audit committees is expected to be provided in rules that are under development.

[3] One recommendation in the Department of Agriculture was assessed by the ANAO as not applicable, due to program changes since the initial recommendation was made.

[4] The Human Services Legislation Amendment Act 2011 integrated the services of Medicare Australia and Centrelink on 1 July 2011 into DHS.