Services Australia Audit focus In determining the audit work program the ANAO considers prior year audit and other review findings and what these indicate about portfolio risks and areas for improvement as well as emerging risks from new investments reforms or operating environment changes In Services Australia delivery depends to a significant extent on effective governance and oversight processes managing current information and communications technology ICT assets while developing new systems and implementing services on behalf of other agencies Governance The delivery of significant public funds to individuals for multiple programs requires Services Australia to maintain high levels of quality integrity security assurance and management oversight of its activities Without these elements the risk of fraud and inaccurate payments increases Services Australia must also ensure the adequacy of performance information Collecting analysing and reporting program data and performance information to management client departments the parliament and the public is necessary for Services Australia to deliver initiatives effectively and retain accountability The delivery of services on behalf of other entities places a responsibility on Services Australia to provide adequate assurance to the accountable authority of other entities of payment accuracy and timeliness to meet the accountable authority responsibilities under the Public Governance Performance and Accountability Act Asset management Services Australia faces challenges around the effective implementation of new ICT systems while also maintaining the department current ICT infrastructure Not all planned elements of recent ICT redevelopment projects have been delivered and significant further investment is planned to design build and transition to a new integrated welfare payment platform Under delivery or overspending in this area will put pressure on planned expenditures or delivery in other areas The ANAO audit work will therefore focus on Services Australia ICT general control environment financial expenditure and the performance of ICT project management and delivery Service delivery Services Australia delivers a range of services on behalf of policy agencies While some of these programs may be small in comparison to others their priority and associated risk and compliance management approach should be developed with the policy department so that other departments views of appropriate compliance management can be balanced with Services Australia view Audits have highlighted the need for a comprehensive set of performance measures that tell an accurate performance story including with regards to efficiency and cost effectiveness Portfolio overview Services Australia? and Australian Hearing Services Australian Hearing are part of the Social Services portfolio Services Australia has responsibility for delivering a range of payments and services to support individuals families and communities as well as providers and businesses These include income support payments and services aged care payments Medicare payments and services and child support services Further information is available from the department website at www servicesaustralia gov au Services Australia role is to support individuals families and communities to achieve greater self sufficiency through the delivery of policy advice and high quality accessible social health and child support services and other payments and to support providers and businesses through convenient and efficient service delivery In the Portfolio Budget Statements PBS the aggregated budgeted expenses for Services Australia and Australian Hearing for total billion The PBS contain budgets for those entities in the general government sector GGS that receive appropriations directly or indirectly through the 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 Services Australia represents the largest proportion of the portfolio expenses and of this departmental expenses are the most material component representing per cent of the total budgeted expenses Figure Services Australia — total expenses and average staffing level Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May Financial statements and other audit engagements Overview Entities within the Services Australia portfolio and the risk profile of each entity are shown in Table Table Services Australia entities and risk profile Type of entity? Risk of material misstatement? Number of higher risks? Number of moderate risks? Material entities Services Australia Non corporate Moderate Australian Hearing Services Corporate Low Non material entities Digital Transformation Agency Non corporate Low Other audit engagements including Auditor General Act section engagements Nil Material entities Services Australia Services Australia is responsible for delivering a range of payments and services to support individuals families and communities as well as providers and businesses These include income support payments and services aged care payments Medicare payments and services and child support services Social and health related payments and services delivered by Services Australia on behalf of other entities in are forecast to be billion These expenses are recognised within each of the individual policy agencies financial statements Services Australia total budgeted expenses for are just over billion with per cent of these expenses attributable to employee benefits as shown in Figure Figure Services Australia total budgeted expenses by category Source ANAO analysis of PBS Budget related papers pre machinery of government changes announced on May The two key risks for Services Australia financial statements that the ANAO has highlighted for specific audit coverage in including those that the ANAO considers potential Key Audit Matters KAMs are the value of child support payments yet to be paid by non custodial parents at the end of each financial year which involves an actuarial estimation process and requires significant judgement and assumptions KAM Valuation of receivables related to the Child Support Scheme and complexities in capturing the actual costs of various internally developed software applications and their accounting treatment in accordance with relevant accounting standards KAM Valuation of intangible assets Australian Hearing Services Australian Hearing Services Australian Hearing is responsible for the provision of government funded hearing services through a national network of hearing centres to eligible clients under the Australian Government Hearing Services Program Australian Hearing is managed by a board of directors appointed by the Minister for Government Services and is constituted under the Australian Hearing Services Act Australian Hearing total actual expenses for were just over million with per cent of these expenses attributable to employee expenses as shown in Figure Figure Australian Hearing Services total actual expenses by category Source ANAO analysis of Australian Hearing Services annual report The three key risks for Australian Hearing financial statements are the estimates of deferred revenue provision for make good employee provisions and accruals due to the application of significant judgement by management in determining these balances accounting for the recognition and valuation of property plant and equipment and intangibles which include internally generated software as these balances involve the application of judgement by management to determine the amount that can be appropriately capitalised and recognition of revenue due to the complexity and timing of the recording of revenue