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Insights: Audit lessons
Insights from Performance Audit Reports Tabled July to September 2017
Published
Wednesday 13 December 2017
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This edition of audit insights draws together key learnings from Australian National Audit Office (ANAO) performance audit reports tabled in the Parliament of Australia from July to September 2017. It provides insights into entities’ operational implementation of government policies and frameworks, drawing on a number of common findings and key learnings on policy and program design, governance, performance and impact measurement, and risk management.
Introduction
This edition of audit insights draws together key learnings from the Australian National Audit Office (ANAO) performance audit reports tabled in the Parliament during the first quarter of 2017-18.
The reports covered are:
A recent edition of audit insights, Corporate planning, performance statements and risk management under the PGPA Act, looked at performance audit activity reviewing entities implementation of key components of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The focus was on entities’ implementation of the framework requirements around:
- Risk management
- Corporate planning
- Performance statements
This edition provides insights into entities’ operational implementation of government policies and frameworks, drawing on a number of common findings and key learnings on:
- Governance and risk management
- Performance and impact measurement
- Policy and program design
References to relevant audit reports are included to illustrate where areas of good practice or improvement were identified, and to provide a link to relevant reports for further reading.
Three of the reports covered by this edition of audit insights included a new section summarising key learnings and opportunities for improvement identified during the audit. In future editions, we will use the key learnings to draw out quarterly audit insights.
Governance and risk management
Eight of the twelve audits had findings that related to the extent to which entities had embedded systematic risk management into business processes . Collectively these findings demonstrate how entities' consideration of risk in day-to-day activities can lead to well informed decision-making. One of these eight audits also reported on the effectiveness of governance arrangements that supported the management of costs and achieving value for money.
Key learnings for all Government entities
Entities can learn from the experiences of others, and should consider the benefits of:
Fit-for-purpose risk management systems
- Implementing fit-for-purpose risk management systems to improve the management of risk
Actively managing risk
- Demonstrating that risks are being actively managed in accordance with organisational risk appetite, risk management policies and guidelines, including the implementation of risk treatments
Risk-based assessments and approaches
- Applying risk-based assessments to organisational priorities to best allocate and utilise resources
- Taking a risk-based approach to regulatory intervention for more structured regulatory decision making
Effective oversight of key areas of spending
- Ensuring governance arrangements include effective oversight of key areas of spending, such as procurement, contracting, staffing and property, to monitor the achievement of value for money
Performance and impact measurement
The reports contain a number of audit insights into entities': preparation and collection of performance information; quality assurance processes that underpin performance assessment; and monitoring, reporting and evaluation activities that support management and external scrutiny. Performance measurement enables entities to assess the effectiveness and efficiency of their performance, monitor progress towards achievement of outcomes and the ongoing costs and benefits of activities, and evaluate if the intended outcomes have been achieved. Performance measures also enable an agency to learn and apply these learnings to future programs and policies.
Key learnings for all Government entities
Entities can learn from the experiences of others, and should consider the benefits of:
Accurate performance reporting frameworks
- Ensuring that performance reporting frameworks provide assurance over the accuracy of performance reporting information
- developing a plan for the preparation and reporting of performance information can provide assurance to those responsible for approving performance reports that all relevant considerations have been taken into account
- establishing quality assurance processes for information included in performance reports, ensures the accuracy, completeness and relevance of the information included
Monitoring and evaluation arrangements
- Identifying monitoring and evaluation arrangements early in the design phase, including baseline data and access to reliable sources of data, to help measure and evaluate the intended impact
Management and external scrutiny
- Ensuring that performance monitoring, reporting and evaluation activities support management and external scrutiny
- performance reporting systems are more useful to decision-makers when they define the different categories used to describe implementation status and, when applied, the categorisation reflects the actual status of implementation
- including quantitative figures and qualitative analysis, such as a breakdown of any monitoring and evaluation findings and recommendations, and an analysis of how figures have changed from the previous periods, to identify areas for improvement
- progress reporting needs to be timely to assist with monitoring implementation milestones and informing any necessary adaptions to programs and activities
Evaluating outcomes
- Evaluating outcomes to enable an assessment of whether the measures and activities are having an impact on their desired outcomes
Program and policy design
Two audits examined the effectiveness of entities program and policy design processes. One of these audits concluded that the design processes had been effectively managed, and the other concluded that the design process allowed the Government to make decisions within short timeframes. Where there is short timeframes for new program and policy development, quality frank advice should be provided to government about the risks involved, the level of evidence that would and would not be possible to consider given the required implementation timeframes, and what mitigation strategies could be adopted to offset the lack of evidence.
The audit insights represent a number of well-established elements which contribute to effective program and policy design.
Key learnings for all Government entities
Entities can learn from the experiences of others, and should consider the benefits of:
Review, evaluation and engagement in the design process
- Reviewing and evaluating existing arrangements and future needs to inform the design process
- Engaging in broad consultation with the community and stakeholders to inform the design
Appropriate organisational governance and structure
- Establishing appropriate governance frameworks that include strong senior executive engagement
- Considering the right organisational structures to support the design process
Providing sound advice to government
- Providing sound advice to government on design options, recommendations and implementation risks
- in the design phase (pre-decision), providing clear and objective advice can assist with:
- contextualising the nature and extent of the problem;
- setting out the best available evidence for and against the proposal;
- providing a clear rationale, including identifying the likely net benefits
- clearly articulating any gaps or limitations with the available evidence base, and providing advice on whether the risks can be accepted, or proposing mitigation measures, such as:
- deferring consideration until better evidence is obtained;
- trialling a smaller-scale or more targeted initiative;
- consulting further on the detailed design of a measure;
- conducting a post-implementation review or evaluation
- in the design phase (pre-decision), providing clear and objective advice can assist with:
Preparing an implementation plan with achievable timeframes
- Preparing an implementation plan prior to actual commencement to govern the implementation processes
- Considering the timeframes for implementation so that proposed implementation dates and milestones are achievable
Ensuring good management processes
- Considering the appropriate oversight arrangements, risk management frameworks, monitoring and evaluation arrangements to ensure good management processes will be in place