Auditor-General’s Foreword

As the accountable authority of the Australian National Audit Office (ANAO), I am pleased to present the ANAO 2017–18 Corporate Plan as required under clause 35(1)(b) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

This plan updates the previous plan and outlines how the ANAO intends to deliver against its purpose over the four year period from 2017–2021.

The ANAO 2017–18 Corporate Plan is the ANAO's key strategic planning document. It guides our operating environment and sets out how we will deliver on our purpose. The corporate plan is complemented by the annual audit work program which reflects the ANAO's strategy and deliverables for the coming year.

Our strategic planning process provides the opportunity to shape our future and focus our efforts on those areas that are most important to delivering against our purpose of improving public sector performance and promoting accountability and transparency. It also allows us to continue to improve our own practices and capabilities to demonstrate value for money and to support the delivery of services that are valued by the Parliament, the Executive and the public.

This plan recognises that we operate in a dynamic environment and that anticipating and responding to change, managing risks, building and sustaining strong relationships with the Parliament and auditees, and investing in key capabilities are central to delivering against the ANAO’s purpose.

Grant Hehir
Auditor-General
July 2017

Our purpose

The purpose of the Australian National Audit Office (ANAO) is to improve public sector performance and support accountability and transparency in the Australian Government sector through independent reporting to the Parliament, the Executive and the public.

The ANAO will deliver its purpose under the Auditor-General’s mandate in accordance with the Auditor-General Act 1997 (the Act).

Throughout the 2017–21 reporting period, the Auditor-General will continue to provide independent assurance to the Parliament on entities’ administration and use of public resources, through quality evidence-based audit services and objective reporting.

Our role

The Auditor‑General is an independent officer of the Australian Parliament whose functions, as set out in the Auditor‑General Act 1997 (the Act), include undertaking a range of audit activities of Australian Government sector entities.

Under the Act, the Auditor-General is responsible for:

• annual financial statements audits and assurance reviews of Australian Government entities
• performance audits of Australian Government programs and entities
• audits of annual performance statements of Australian Government entities as requested  
• provision of advice and sharing information, including better practice and insights

As an independent officer of the Parliament, the Auditor‑General has discretion in the performance or exercise of the functions or powers. The Auditor-General is not subject to direction in relation to: whether or not a particular audit is to be conducted; the way in which a particular audit is to be conducted; or the priority to be given to any particular matter. In the exercise of functions or powers, the Auditor‑General must, however, have regard to the audit priorities of the Parliament, as determined by the Joint Committee of Public Accounts and Audit (JCPAA). 

The Auditor‑General is assisted by the Australian National Audit Office (ANAO) in delivering against the mandate established by the Act. The ANAO’s work is also governed by auditing standards established by the Auditor‑General, which incorporate the standards made by the Auditing and Assurance Standards Board as applied by the auditing profession in Australia. In accordance with these standards, performance audits and financial statements audits are designed to provide a reasonable level of assurance. A number of reports, including the annual Defence major projects report and assurance reviews, provide a more limited level of assurance.

The ANAO aims to deliver an integrated program of high‑quality audit reports that are timely, cost‑effective and conducted in accordance with the Auditor-General’s Auditing Standards. Through this program, the ANAO aims to meet the needs and expectations of stakeholders including the Parliament, the Government, audited entities and the community and to add value to public sector performance, through accountability and transparency.

Our Values              

The ANAO upholds the Australian Public Service (APS) values as set out in the Public Service Act 1999. In addition to the APS values, the ANAO places particular focus on respect, integrity and excellence—values that align with the APS values and address the unique aspects of the ANAO’s business and operating environment. The ANAO’s values guide the office in performing its role objectively, with impartiality and in the best interests of the Parliament, the Executive and the public.

Our key relationships

The ANAO’s primary relationship is with the Australian Parliament, including through its ongoing interactions with the JCPAA—the ANAO’s oversight committee. Through the audit and related services the ANAO provides to the Parliament, the Australian public can have confidence that the Auditor-General is scrutinising and reporting on the actions of the Executive and whether public funds are being used economically, efficiently, effectively and ethically. The Parliament and its committees also scrutinise the work of the ANAO.

The ANAO has an important relationship with the Accountable Authorities of Australian Government Entities, who have primary responsibility for and control over entity operations. This relationship is also supported by the ongoing engagement undertaken with officials of audited entities.

The ANAO also invests in a number of key external relationships to support organisational learning through the exchange of information and practices. The ANAO contributes to the Australasian auditing community as a member of the Australasian Council of Auditors-General (ACAG). The ANAO also has close links with the international and regional auditing community through the International Organization of Supreme Audit Institutions (INTOSAI) and its regional working groups, and contributes to the delivery of the Australian Government’s aid program in the Indo-Pacific region. The ANAO values its relationships with the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board, (AUASB) in their roles of setting and maintaining professional and ethical standards for the accounting and auditing professions, which underpin the delivery of quality audit services.

Our strategic planning framework

The ANAO’s planning, governance and strategic direction is underpinned by a Strategic Planning Framework.

Critical to delivering against the ANAO’s purpose, is anticipating and responding to changes in a dynamic operating environment. This section sets out the nature of the ANAO’s operating environment over the four-year reporting period of this corporate plan and how it may affect the ANAO’s operations and influence the focus of the ANAO’s annual audit work program . There are five broad aspects of the operating environment that are relevant to the achievement of the ANAO’s purpose:

The Parliament

The Parliament, and the direction and priorities that it sets, shapes and determines the environment in which the public sector operates. Maintaining effective relationships with the Parliament, through a sound appreciation of the respective roles and by operating independently, objectively and transparently, is key to delivering on the ANAO’s purpose which is to support accountability and transparency in the Australian Government sector. The ANAO can influence how it maintains and enhances the confidence of the Parliament through clear communication of the outcomes of audit and related services, and delivering high-quality and evidence-based audit services through appropriate channels.

The Act provides that the Auditor-General must have regard to the audit priorities of the Parliament determined by the JCPAA. This requirement is factored into the ANAO’s planning for the annual audit work program.

New models of government service delivery

The ANAO remains alert to the external environmental factors that the Government faces, including the performance of the Australian economy; and the social and political environment. Fiscal constraint, greater contestability for service delivery and the ongoing implementation of the Government’s public sector agenda requires the public sector to continue evolving and seeking alternative models of service delivery that provide more cost-effective ways of delivering government services.

The Public Management Reform Agenda (PMRA), with the PGPA Act as its cornerstone, has sought to modernise the resource management framework of the Government. This regulatory framework is based upon a principles and risk management based approach to minimum and mandatory compliance with rules and guidance. In this context, compliance reporting by entities becomes increasingly important. Machinery of government changes impact on the formation of entities and new policies result in the redesign of services. These factors have a direct impact on the delivery of the Auditor-General’s mandate. This requires the ANAO to have a contemporary understanding of the public sector and to responsively deliver an integrated audit work program that provides assurance over public sector performance and the sustainability of an evolving public sector.

Over the four year reporting period and beyond the Digital Transformation Agenda will continue to transform the way public services are designed and delivered, making them simpler and easier to use whilst delivering a more streamlined and responsive government sector. The Government intent is that all new and redesigned services will be digital by default, by increasing the uptake of cloud systems and shared IT platforms to deliver secure services in a streamlined way. This means that everyone will be able to access public services digitally from start to finish on their mobile device or personal computer. Public sector entities must ensure services are simpler, faster and easier to use through digital channels. Meeting the digital transformation criteria means public sector entities can underpin high quality services and satisfy community and user needs.

The agenda will evolve over time as impediments are removed, strategies are delivered and benefits realised. The ANAO is keeping abreast of key initiatives being delivered under this significant change agenda.

Sustainability and the economy

Governments are continually asked to do more, but there are limitations on what governments can afford to deliver. The management of the macro-economic climate and the sustainability of government services for the future mean the Parliament needs assurance that government programs are providing value for money and are having the intended impact. The Government has looked at how it will sustain changes in how public sector entities operate and, over the four year reporting period, reforms to the public sector are likely to continue to assist in finding ways to deliver government services more effectively and efficiently. Initiatives such as the Smaller Government Agenda, Contestability reforms, Operation Tetris, the Shared and Common Services Program and the Digital Transformation Agenda, together with the Efficiency Dividend, are aimed at delivering a more streamlined and responsive government sector.

The Government has also made investments in a number of areas with a view to achieving savings over time.

Technology

Public sector entities are dependent on information and communication technology (ICT), particularly internet-enabled solutions to implement their policies and achieve their business objectives and outcomes. Fuelled by new technology initiatives, the amount of data available from business operations has increased significantly. Government will increase its expectation that public sector entities make sense of this information and inform decision makers about the effectiveness and efficiency of government services. The ability of public sector entities to adapt and keep up to speed with technology advancements, while appropriately safeguarding the information they collect and generate, will be an ongoing challenge. Government expects public sector entities to have the capability to capture, manage, analyse and apply this information for the benefit of all Australians.

Technology can be a driver of innovation as well as affecting costs and quality. There is substantial scope for efficiencies in service delivery through the use of technology and better targeted, evidence-based spending. Data analytics informs evidence-based policy development, drives risk based compliance and regulatory activities and enables performance monitoring and measurement. Over the four year reporting period, it is expected that public sector entities will continue to generate ever increasing volumes of information and data, and that they will manage and analyse data to inform decision making about the effectiveness and efficiency of government services. The adoption of multiple systems and new tools, and the management of data control and security, presents the ANAO with challenges in terms of accessing and mining data as part of the audit evidence base. Adapting and keeping up to speed with technology advancements, while also safeguarding data, remains an ongoing challenge for the ANAO.

Auditing profession and audit service delivery

As our external environment changes we need to ensure that we remain relevant and effective. Continuous improvement of staff skills will be a key requirement over the four year reporting period, through our ability to attract, retain and develop quality people. We also need to continuously update and maintain our business model to ensure we are adapting to the changes in the broader environment and our industry. The ANAO remains alert to global and national changes in the auditing profession and engages with a network of national and international public sector audit offices and professional bodies, providing the ANAO with the opportunity to collaborate and learn from others. Effectively leveraging these relationships and partnerships can support the methodologies underpinning quality operations and audit services.

In preparing the 2017–18 Annual Audit Work Program, the ANAO for the first time published and sought feedback from the public on proposed topics.

The performance of the ANAO is measured in terms of the audit and related services undertaken over the four-year reporting period of the corporate plan. Performance measurement informs the Parliament about the ANAO’s performance and delivery of its purpose. The performance framework is also designed for ANAO leadership and staff to understand the impact of the activities they are responsible for in delivering against the ANAO’s purpose.

The performance measures convey a coherent message about what the ANAO expects to achieve in the next four years. The measures will be reported annually over the life of the corporate plan and will be reviewed annually. The performance measurement framework is based on measuring what we did (delivery), how well we did it (quality and efficiency) and what the benefits were (impact).  The ANAO Portfolio Budget Statements (PBS) set targets to measure our progress against our performance measures.

The PBS notes that the ANAO has one outcome: To improve public sector performance and accountability through independent reporting on Australian Government administration to the Parliament, the Executive and the public.

The programs which contribute to achieving the ANAO’s outcome and purpose are:

Program 1.1 — Assurance Audit Services

This program contributes to achieving the ANAO’s outcome through:

• providing assurance on the fair presentation of financial statements of the Australian Government and its controlled entities by providing independent audit opinions and related reports for the information of the Parliament, the Executive and the public; and
• contributing to improvements in the financial administration of Australian Government entities.

Program 1.2 — Performance Audit Services

This program contributes to achieving the ANAO’s outcome through:

• reporting objectively on the performance of the Australian Government programs and entities, including opportunities for improvement, by undertaking a program of independent performance audits and related reports for the information of the Parliament, the Executive and the public; and
• contributing to improvements in Australian Government administration by identifying and promoting better practice.

The ANAO has a number of performance criteria that apply to both programs 1.1 and 1.2, and are reported on collectively. 

Both programs contribute to the outcome by contributing to the auditing profession and public sector developments nationally and internationally through:

• undertaking engagements that contribute to public sector auditing and support developing nations; and
• attending and preparing submissions to Parliamentary committees.

The following table presents the ANAO's performance measures and targets for the four-year reporting period of the corporate plan.

Table 1: ANAO Performance measures

The ANAO is committed to undertaking its role and achieving its purpose in an operationally sustainable way, by being an organisation that is: independent and responsive; providing value adding audit services; and confident in the delivery of audit services over the four years of this corporate plan.

To deliver on our purpose and deliver audit services to the Parliament and the Australian Government sector now and over the four year reporting period and further into the future, the ANAO is implementing the Future Ready Change Program (Future Ready). This program focuses on four capability areas that are improving the way we do our business and deliver against our corporate plan. These key capabilities include: New Models of Audit Service Delivery; Advanced Information and Communication Technology (ICT) Strategy and Systems; Contemporary Communication Capabilities; and Leadership Capabilities.

New models of audit service delivery

Develop and implement new models of audit service delivery that are responsive and cost-effective:

New models of audit service delivery: implementation timeline

Advanced ICT strategies and systems

Build ICT strategies and systems to ensure a flexible, responsive and connected environment that will support core analytics capability:

Advanced ICT strategies and systems: implementation timeline

Contemporary communication capabilities

Adopt and make use of new communication styles, services and applications:

Contemporary communication capabilities: implementation timeline

Leadership capabilities

Form strong relationships, shape and manage business strategy and provide a framework for people development:

Leadership capabilities: implementation timeline

The delivery of Future Ready is managed through the ANAO’s People and Change Committee; Quality Committee and ICT Strategic Committee. These committees report to the Executive Board of Management (EBOM) quarterly, to ensure that the ANAO remains a leading public sector audit practice, delivering quality audits through: a strong audit methodology; efficient and effective whole-of-organisation work practices; and clear communications with regards to the outcomes of our work.

The capability initiatives are being implemented over three years and are expected to be completed by 2018. The initiatives implemented will then continue to be embedded and consolidated as business as usual within the ANAO over the 2019–2021 periods.

Managing risk effectively is critical to the success of the ANAO in meeting its responsibilities to provide a professional and independent audit view of the performance and accountability of the Australian Government public sector agencies and entities.

The ANAO aims to foster a positive risk culture where the management of risk is built into business as usual practices. A positive risk culture promotes an open and proactive approach to managing risk that considers both threat and opportunity to the organisation. Risks can then be appropriately identified, assessed, communicated and managed across all levels of the ANAO.

The ANAO’s risk oversight and management over the four years of the corporate plan include:

• the ongoing documentation and identification, analysis and evaluation of risks, including risk response strategies for our organisation’s operations and all facets of our audit work;

• setting out risk management responsibilities;
• formal risk monitoring and review processes, primarily through ANAO governance committees, to:
  • ensure identified controls and mitigation strategies remain effective and efficient;
  • incorporate successes and failures from lessons learned from risk events into risk response strategies;
  • take into account organisational changes and the impact on existing or emerging risks, including their controls and treatments;
• review and update of the risk management policy framework and risk register annually, for review by the ANAO Audit Committee prior to endorsement by the Auditor-General, taking into account the advice of the EBOM;
• participating in the annual Comcover risk management benchmarking survey as an external assessment of comparative maturity levels;
• ANAO’s internal auditors providing assurance and insights into organisational risks; and
• the ANAO Audit Committee satisfying itself about the systems of risk oversight and management put in place.

The effective management of risks plays an important role in decision making and the successful delivery of the ANAO’s purpose. The ANAO 2017–18 Risk Management Framework aims to strengthen management practices and decision making associated with the ANAO’s business operations. The framework is regularly reviewed through the ANAO governance committee’s and is consistent with the international standard on Risk Management, AS/NZS ISO 31000:2009 Risk management — Principles and guidelines.

The objective of the ANAO’s risk management framework over the four years of this corporate plan is to communicate our approach to effective risk management and to implement a single framework that will contribute to strong management practices and decision-making associated with our business operations and contribute to the achievement of the ANAO’s purpose.

Strategic risks

Damage to reputation is the most significant consequence of risk management failing, as it goes to the core of the ANAO’s integrity as a professional audit organisation. This will continue to be a primary focus of the ANAO’s risk management over the four years of this corporate plan.

The ANAO’s strategic risks are outlined in Table 2 below.

Table 2: Strategic risks