Introduction

1.1 Performance audits and parliamentary committee inquiries identify risks to the successful delivery of outcomes and provide recommendations to address them. Successful implementation of agreed recommendations requires strong senior management oversight and monitoring, along with timely implementation approaches, which set clear responsibilities and timelines for addressing the required actions.

1.2 The primary role of the Auditor-General for Australia is to assist the Parliament in its role of scrutinising the exercise of authority and the expenditure of public funds by the Executive arm of the Commonwealth.³ Australian National Audit Office (ANAO) performance audit activities involve the audit of all or part of an entity’s operations to assess its economy, efficiency, effectiveness, ethicality or legislative and policy compliance. The ANAO identifies areas where improvements can be made to aspects of public administration and makes specific recommendations to assist public sector entities to improve their program management.⁴

1.3 The Joint Committee of Public Accounts and Audit (JCPAA) reviews all Auditor-General reports tabled in Parliament, including the agreed recommendations and proposed actions, and reports the results of its deliberations to both Houses of the Parliament. Parliamentary committees investigate specific matters of policy, government administration or performance and make recommendations for government.⁵ Parliamentary committees consist of groups of members or senators (or in the case of joint committees, both). Committees have both government and non-government members and have considerable powers to undertake work on behalf of the Parliament.

1.4 The JCPAA is the ANAO’s parliamentary oversight committee. Among its responsibilities, the JCPAA approves the proposed appointment of the Auditor-General⁶, advises the Auditor-General on the Parliament’s audit priorities, and considers the operations and resources of the ANAO, including consideration of the ANAO draft budget estimates and making recommendations on it to both Houses of Parliament.

1.5 The JCPAA is required to review all reports of the Auditor-General tabled in Parliament and to report the results of its deliberations to both Houses of Parliament. A key aspect of JCPAA inquiries into reports of the Auditor-General is to hold Commonwealth entities accountable for the implementation of audit recommendations.⁷ The JCPAA also initiates its own inquiries into public administration matters and can conduct inquiries into matters referred to it by either House of Parliament.⁸

Responsibilities of accountable authorities

1.6 The objects of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), require the Commonwealth and Commonwealth entities:

• to meet high standards of governance, performance and accountability;
• to provide meaningful information to the Parliament and the public;
• to use and manage public resources properly; and
• to work cooperatively with others to achieve common objectives⁹ …

1.7 In addition, the accountable authority of a Commonwealth entity must govern the entity in a way that:

• promotes the proper use and management of public resources for which the authority is responsible¹⁰; and
• promotes the achievement of the purposes of the entity¹¹ …

1.8 The accountable authority of a non-corporate Commonwealth entity must govern the entity in accordance with paragraph 15(1)(a) of the PGPA Act, promoting the proper use and management of public resources, in a way that is not inconsistent with the policies of the Australian Government.¹² For secretaries of departments, similar obligations are imposed by section 57 of the Public Service Act 1999, including the obligation for secretaries of departments and heads of executive agencies to provide factual information to the parliament, in relation to the operation and administration of the department or agency (sections 57 and 66).

1.9 In addition, non-corporate Commonwealth entities are required to include in annual reporting the particulars of the most significant developments in external scrutiny of the entity and the entity’s response to that scrutiny. This includes reports of the Auditor-General or a committee of either or both Houses of Parliament.¹³

1.10 Corporate Commonwealth entities are required to include in their annual reporting the particulars of any report on the entity given during the period, by the Auditor-General or a committee of either House or of both Houses of Parliament.¹⁴

ANAO, JCPAA and other parliamentary committee recommendations

ANAO recommendations

1.11 The ANAO issues draft reports to entities prior to final reports being tabled in the Parliament. The Auditor-General Act 1997 provides that if the recipient (accountable authority) of the proposed report gives written comments to the Auditor-General within 28 days of receiving the proposed report, the Auditor-General must consider those comments before preparing the final report.¹⁵

1.12 The response to each of the report’s recommendations is reproduced under the recommendation in the body of the report. It is expected that the response should indicate whether the entity agrees or disagrees with each recommendation and the actions that they intend to take in response to each of the recommendations. The JCPAA notes that, although Commonwealth entities are not required to indicate agreement or disagreement with [ANAO] recommendations, transparency and clarity are critical aspects in public sector accountability to the Parliament and the Australian people. Entities should clearly state their position on audit recommendations.¹⁶

1.13 The JCPAA reviews all Auditor-General reports tabled in Parliament, including the agreed recommendations and proposed actions, and reports the results of its deliberations to both Houses of the Parliament. As noted above, accountable authorities are required to provide meaningful information to the Parliament and the public. In relation to the responses to ANAO recommendations, it would be expected that agreed recommendations are implemented as intended and within a reasonable timeframe.¹⁷ Unless otherwise stated, a reasonable timeframe for the implementation of an agreed ANAO recommendation is taken as within two calendar years of a tabled report, which forms the basis of the audit procedures undertaken in this report.

1.14 Notwithstanding the above, accountable authorities may determine shorter timeframes for the implementation of ANAO recommendations within their respective entities. Accountable authorities may also advise of other impediments to implementation, for example, the requirement to achieve legislative change in relation to a particular program.

JCPAA and other parliamentary committee recommendations

1.15 After a committee report is tabled in Parliament, the tabling officer from the Department of the Prime Minister and Cabinet (PM&C) approaches the department responsible for the subject matter covered by the report, to advise them that a government response is required. The approval and tabling process for government responses is outlined in the PM&C Guidelines for the Presentation of Documents to the Parliament (including government documents, government responses to committee reports, ministerial statements, annual reports and other instruments) (the Guidelines).¹⁸

1.16 The Guidelines include that government responses to committee reports may contain a preamble outlining the government’s policy position, but must address all of the recommendations and provide reasons for not accepting any of them. In addition, unless approved by the Prime Minister, government responses are required to be approved by Cabinet or the Prime Minister.

1.17 Once approved, departments need to have the government response tabled within the relevant required timeframes and must provide a covering minute to the PM&C tabling officer indicating that the response has been approved for tabling.¹⁹ The Guidelines state that responses to committee reports should be presented to the relevant committee within the following timeframes:

• three months — for Senate Committee reports and Joint Parliamentary Committee reports; and
• six months — for House of Representatives Committee reports.²⁰

1.18 Tabling documents keeps the Parliament informed of government activities. It demonstrates the accountability of the Government to the Parliament and the public, and provides an important primary source of information to senators and members, as well as placing information on the public record.²¹ It also formalises the commitment made to implement the recommendations, including the intended actions that will be performed by the relevant government entity.

Types of parliamentary recommendations

1.19 Recommendations made by the JCPAA may be either policy recommendations or administrative recommendations.²² The PM&C Guidelines also apply when responding to policy recommendations from a JCPAA report, however, the responsibility for informing an entity of the requirement for a response sits with the Department of Finance. A response to a policy recommendation must be in the form of a government response that is tabled in the Parliament by the government minister.

1.20 Where the committee has made administrative recommendations, an ‘Executive Minute’ is prepared and delivered directly to the committee secretary by the responsible accountable authority. The receipt and tabling of executive minutes gives the committee an opportunity to comment on departmental responses, and if the committee is dissatisfied with the contents of a particular executive minute, it may decide to re-open its inquiry.

1.21 Both policy and administrative recommendations must be responded to within six months of the tabling of the relevant JCPAA report.²³

1.22 As noted above, accountable authorities are required to meet high standards of governance, performance and accountability, and provide meaningful information to the Parliament. In relation to the responses to parliamentary committees, it would be expected that agreed recommendations are implemented as intended and within a reasonable timeframe. Unless otherwise stated, a reasonable timeframe for the implementation of an agreed parliamentary recommendation is taken as within two calendar years from the report being tabled, which forms the basis of the audit procedures undertaken in this report.

1.23 Notwithstanding the above, government or the accountable authorities may require the implementation of parliamentary recommendations in a lesser timeframe. Government or accountable authorities may also advise of other impediments to implementation, for example, the requirement to achieve legislative change in relation to a particular program.

Timeliness of responses to parliamentary committees

1.24 The JCPAA and other parliamentary committees publish information on their websites relating to the government responses that are received. In addition, twice a year, the President of the Senate provides a report to the Senate on the status of government responses to Senate and joint committee reports.²⁴

1.25 The Speaker of the House of Representatives also presents a report to the House approximately every six months. The report lists tabled reports and government responses to House and joint committee reports, as well as reports for which the House has not received a government response.²⁵ Reports are to remain on this schedule until a response is received, the relevant committee agrees that a response is no longer expected, or a request to remove is received. The listing can then be removed following a consideration of the reasons put forward for removal and a formal resolution is made by the relevant committee.²⁶

1.26 The President of the Senate and the Speaker of the House of Representatives reports provide detail of the volume of committee reports and the timeliness of government responses.²⁷ The ANAO’s review of the most recently published reports highlights that the majority of committee reports have not been responded to and when a response is received, very few are received within the required timeframe.

1.27 Table 1.1 outlines the key results from the President of the Senate report as at 31 December 2018. Responses to these reports are required within three months from the presentation of the report in the Senate and lateness is measured as the months that have passed from the date of report tabling to the reference date (31 December 2018), minus three months (the period allowed for responding to Senate committee reports). Only two per cent of the reports had received a response within the required time frame.

Table 1.1: President of the Senate report — Outstanding responses as at 31 December 2018

Note a: There are eight responses in this report schedule referring to eight reports of the JCPAA. One of the eight reports was recorded as having been responded to but was late; two were late and incomplete; and two reports had no response (however, one was not due).

Source: ANAO analysis.

1.28 Table 1.2 outlines the key results from the Speaker of the House of Representatives report as at 5 December 2018. Responses to these reports are required within six months from the presentation of the report in the House and lateness is measured as the ‘months’ that have passed from the date of report tabling to the reference date (05 December 2018), minus six months (the period allowed for responding to House of Representatives Committee reports). Over 80 per cent of the reports from this House had not yet received a response.

Table 1.2: Speaker of the House of Representatives report — Outstanding responses as at 5 December 2018

Note a: Total numbers include two partial responses. Partial responses occur where responses have been received for some but not all recommendations. This typically occurs where recommendations are directed at multiple entities.

Note b: The time allowed for responding had not yet expired for 30 of the 82 reports with no response.

Note c: Seven of the responses in this report schedule referred to eight reports of the JCPAA. One report had been responded to but was late; one had a partial response but was late; four reports have had no response and another two were not due.

Source: ANAO analysis.

Previous scrutiny

1.29 This audit examined entities within the Agriculture and Water Resources portfolio and the Infrastructure, Regional Development and Cities portfolio. The specific entities examined were:

• Department of Agriculture (Agriculture);
• Airservices Australia (Airservices);
• Australian Pesticides and Veterinary Medicines Authority (APVMA); and
• Department of Infrastructure, Transport, Cities and Regional Development (Infrastructure).

1.30 Of the four entities covered by this audit, the ANAO has completed two audits in recent years, which assessed the effectiveness of Agriculture and Infrastructure’s arrangements for monitoring and implementing ANAO performance audit recommendations.

1.31 Agriculture’s implementation of ANAO performance audit recommendations was examined in Auditor-General Report No.34 2013–14 Implementation of ANAO Performance Audit Recommendations.²⁸ The ANAO made one recommendation, to which Agriculture agreed, for the department to provide a higher level of support to its audit committee, by:

• developing appropriate internal requirements for the implementation of ANAO recommendations and sign-off on completion; and
• enhancing its internal reporting to give greater focus to the status of implementation, including timeliness.

1.32 The Department of Infrastructure, Transport, Cities and Regional Development’s (the then Department of Infrastructure and Transport, (Infrastructure)) implementation of ANAO performance audit recommendations was examined in Auditor-General Report No.53 2012–13 Agencies Implementation of Performance Audit Recommendations.²⁹ The ANAO made two recommendations at that time, to which Infrastructure agreed:

• to better support the application of relevant recommendations, the ANAO recommends that agencies establish, or review existing procedures for assessing the relevance of recommendations from ANAO cross-agency audits, and subsequent monitoring; and
• in order to support timely and complete implementation of ANAO performance audit recommendations, the ANAO recommends that agencies establish, or strengthen implementation approaches, including documenting intended actions, timelines and setting out clear responsibilities for the outcome.

1.33 These performance audits highlighted that a considered and planned approach to the oversight and implementation of audit recommendations allows progress to be clearly targeted and monitored, and therefore assists entities to manage timeliness, completeness and adequacy of implementation.

1.34 This audit is the first in a series of planned audits that will cover entities’ implementation of ANAO, JCPAA and other parliamentary committee recommendations.

Rationale for undertaking the audit

1.35 The ANAO’s performance audit activities involve the audit of all or part of an entity’s operations to assess its economy, efficiency, effectiveness, ethicality and legislative and policy compliance.³⁰

1.36 Reports of the ANAO, the JCPAA and other parliamentary committees identify risks to the successful delivery of outcomes and areas where administrative or other improvements can be made. Entities indicate their agreement to implement ANAO recommendations in the audit report, which is tabled in Parliament. In this way, entities inform Parliament of improvements they intend to make as a result of ANAO audits.³¹

1.37 JCPAA and other parliamentary committee recommendations are directed to government or entities to improve their delivery of programs and services. Once entities have agreed to implement performance audit and administrative recommendations or in the case of government responses, when the government has committed to the implementation of recommendations, timely implementation in line with the intended outcome of those recommendations is important in achieving the full benefit of the audit or parliamentary inquiry.

1.38 This audit will highlight to the Parliament and the public where entities have implemented recommendations in line with intended commitments made to the Parliament. This will support a key function of parliamentary committees, which is to undertake inquiries and provide the Parliament with reports on the outcomes of their considerations, including recommendations to improve program delivery and effective management of the use of Commonwealth resources.

Audit approach

Audit objective, criteria and scope

1.39 The objective of the audit was to examine whether selected entities implemented agreed ANAO performance audit, JCPAA and other parliamentary committee recommendations.

1.40 The audit used a two-staged approach. The first stage involved a limited (negative) assurance engagement and the second stage, where required, a reasonable (positive) assurance engagement.

1.41 The procedures performed in a limited (negative) assurance engagement may vary in nature and timing from, and are less in extent than, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. A limited assurance approach was initiated to provide for greater efficiency in the use of resources and allowed for greater audit coverage at a reduced level of assurance.

1.42 To form a conclusion against the audit objective, the ANAO adopted the following high level audit criteria:

• Does the entity have appropriate governance arrangements in place to respond to, monitor and implement recommendations?

1.43 Where this criterion was met, the audit could conclude that, based on the procedures performed and the evidence obtained, nothing came to the ANAO’s attention that the governance arrangements in place were not effective for responding to, monitoring and implementing agreed recommendations.

1.44 Where the evidence obtained was insufficient to conclude on the appropriateness of the governance arrangements in place (stage one), an additional criterion was adopted (stage two):

• Were agreed recommendations implemented effectively in a timely manner?

1.45 Audit procedures were performed to determine whether agreed recommendations were implemented effectively and in a timely manner, focussing on the substantive evidence available within the entity.

1.46 As noted above, and unless stated to the contrary, the recommendations selected for review in this audit are those within reports tabled in 2016–17. This allows for an appropriate period from the time of the recommendation to formal implementation and ensures relevance of entity activities.

Audit methodology

1.47 The major audit tasks in stage one included:

• examination of entity documentation, such as guidelines, procedures, management reports, briefing materials, information relating to implementation progress and reporting against agreed recommendations;
• review of involvement by the audit committees and other internal governance bodies based on the documented procedural and meeting conduct evidence;
• examination and assessment of IT system controls and supporting documentation for those systems used by the entity to manage recommendations; and
• undertaking interviews with relevant entity staff, including internal audit and representatives from the business areas responsible for the implementation of recommendations.

1.48 Where required, the major audit tasks in stage two included additional controls and substantive testing to gain reasonable assurance against the implementation of agreed recommendations. This included:

• examination of entity documentation such as implementation plans and supporting evidence; and
• undertaking further interviews with relevant entity staff, including internal audit and representatives from the business areas responsible for the implementation of recommendations.

1.49 The audit was conducted in accordance with ANAO auditing standards at a cost to the ANAO of $406,000.

1.50 The team members for this audit were Jacqueline Hedditch, Jillian Blow, Kate Wilson, Hayley Ferreira and Michael White.

Are there established processes and responsibilities for responding to recommendations?

2.1 All entities should respond in a considered manner to ANAO performance audit recommendations to ensure agreed actions of the entity are consistent with and meet the objects of the Public Governance, Performance and Accountability Act 2013 (the PGPA Act). The PGPA Act requires the Commonwealth and Commonwealth entities to use and manage public resources properly.³² This approach was reflected in Auditor-General Report No.37 2016–17 Australian Taxation Office’s Implementation of Recommendations, which included the suggestion that the ATO:

consider, on a case-by-case basis, the likely impact of recommendations being implemented – for specific business areas and ATO wide – before providing a management response to any performance audit or parliamentary committee recommendation.³³

2.2 The ANAO expects that this approach would vary between entities, depending on entity size and frequency of audit activity. The ANAO takes into account these factors and considers whether the arrangements in place are fit for purpose.

2.3 The ANAO previously examined Agriculture’s arrangements for implementing and monitoring ANAO performance audit recommendations in Auditor-General Report No.34 2013–14 Implementation of ANAO Performance Audit Recommendations. The ANAO recommended that Agriculture develop appropriate internal requirements for the implementation of ANAO recommendations and enhance internal reporting to give greater focus to the status of implementation.

2.4 Agriculture has since established processes and responsibilities for responding to ANAO recommendations. Agriculture has developed an internal protocol relating to ANAO performance audits, which outlines the roles and responsibilities of various departmental staff through the stages of a performance audit. This includes defining responsibility for responding to recommendations. Agriculture’s internal audit team supports business areas throughout the audit process.

2.5 Airservices does not have a documented process in place for responding to ANAO performance audit recommendations.³⁴ In 2016–17, recommendations were agreed to and actions and timeframes to implement each of the recommendations were developed and presented to the Chief Executive Officer (CEO) and the Board prior to the time of tabling of the audit report on 31 August 2016. There is scope for Airservices to more clearly articulate roles and responsibilities throughout the process of responding to and implementing ANAO recommendations noting that Airservices continues to be included in ANAO performance audits.

2.6 Until April 2019, APVMA did not have established processes in place for responding to ANAO recommendations. The draft report and recommendations were discussed by the Executive Leadership Team, and the CEO responded to the recommendations. However, during the course of this audit, the APVMA drafted and endorsed a governance process to guide the response to, and implementation of, ANAO recommendations.

2.7 Infrastructure does not have a specific protocol or documented process that defines roles and responsibilities for receiving and responding to ANAO recommendations. Infrastructure advised the ANAO that the relevant business areas consider draft reports and recommendations during the audit and the Secretary formally responds to reports and recommendations.

Did entities clearly assign management responsibility for the progression of individual recommendations?

2.8 Successful implementation of audit recommendations requires strong senior management oversight and implementation planning to set clear responsibilities and timeframes for addressing the required action.

2.9 Agriculture clearly assigned management responsibility for progress against each of the individual recommendations. Evidence provided by Agriculture demonstrated that management responsibility for implementing the recommendations from the 2016–17 period was consistent with internal requirements.

2.10 Airservices assigned responsibility for the individual recommendations from Auditor-General Report No.1 2016–17 Procurement of the International Centre for Complex Project Management to Assist on the OneSKY Australia Program (the ICCPM audit) to the Procurement and Supplier Relationships Manager (as the responsible manager), and oversight of implementation was assigned to the Chief Financial Officer (CFO). The responsible manager gave an update on progress against the actions to the CEO on 6 September 2016. In October 2016, the Chair of Airservices’ Board advised the Minister for Infrastructure and Transport that all ANAO recommendations had been addressed by 30 September 2016.

2.11 APVMA assigned overall management accountability for implementation to the Deputy CEO. Responsibility for implementation of individual ANAO recommendations was not clearly documented.

2.12 Infrastructure assigned and recorded management responsibility to progress the recommendation from Auditor-General Report No.30 2016–17 Design and Implementation of Round Two of the National Stronger Regions Fund. It was not evident that management responsibility was assigned and recorded for the recommendation from Auditor-General Report No.38 2016–17 The Approval and Administration of the Commonwealth Funding for the WestConnex Project (the WestConnex audit).

2.13 During the course of this audit, the Infrastructure Investment Division advised that it accepted responsibility for implementation of the recommendation. In March 2019, Infrastructure acknowledged this inconsistency and has since added the recommendation from the WestConnex audit to its audit tracking database. Infrastructure’s internal audit team advised the ANAO it will commence monitoring implementation of the relevant recommendation.

Do entities have a system in place to track the progress of recommendations?

2.14 Effective monitoring requires a system that accurately tracks progress and records the actions of the business area responsible for progressing action against timeframes.³⁵

2.15 Agriculture used an IT system (eTrac) to track the progress of ANAO recommendations. Agriculture utilised eTrac for the period that 2016–17 ANAO performance audit recommendations were being tracked. Agriculture advised the ANAO that eTrac was developed on behalf of the Executive Management Committee to ensure that high level actions and decisions were transparent and accountable.³⁶ Agriculture has since transitioned to a new system, Planning Hub, for tracking recommendations, including ANAO performance audit recommendations. Agriculture had a complete and accurate list of ANAO recommendations from 2016–17.

2.16 Airservices uses an IT system, the Corporate Integrated Reporting and Risk Information System (CIRRIS), to track the progress of recommendations.³⁷ The ANAO performance audit recommendations, responsible officers and due dates for the ICCPM audit were recorded in CIRRIS on 10 October 2016 and recorded as complete by internal audit officers on 20 October 2016. This was after the recommendations had been endorsed as completed by the executive and reported by the Chair to the Minister for Infrastructure and Transport on 30 September 2016 as completed.

2.17 As such, the recommendations were not tracked through CIRRIS during their implementation phase. Following the ICCPM audit, Airservices developed a revised process to track recommendations and agreed actions from future ANAO performance audits in CIRRIS and provide progress status reports as part of standard internal audit reporting to its Board Audit and Risk Committee (BARC).

2.18 Within AVPMA, an officer performs the coordination role for ANAO recommendations as well as other audit committee reporting.³⁸ APVMA’s existing governance arrangements were used to provide oversight of the implementation of recommendations by the Executive Leadership Team.³⁹ Some reporting to the audit committee occurred.

2.19 Infrastructure uses an IT system — the Audit Recommendations Database (ARD) — to track progress of ANAO performance audit recommendations. The ARD is intended to track progress, record action taken and produce reports on the implementation of both internal audit and ANAO performance audit recommendations. ARD reports are intended to assist Infrastructure’s audit committee to fulfil its obligations to provide oversight of audit activities undertaken in the department.

2.20 Infrastructure utilised ARD for the period that the 2016–17 recommendations were being tracked. As recommendations are intended to be entered and tracked in one central system, Infrastructure should have a complete and accurate list of ANAO recommendations. However, it was found that although the WestConnex audit was noted at the March 2017 audit committee meeting, following tabling of the report in February 2017, it was not added to the ARD. As such, Infrastructure did not have a complete and accurate list of ANAO recommendations.

Are there sufficient controls over the system to maintain complete and accurate data?

2.21 Appropriate IT controls uphold the integrity of the data and processes that a system supports. Entities should ensure that adequate controls are in place over recommendation tracking systems to maintain complete and accurate data for reporting and oversight.

2.22 The ANAO examined the user access and controls for Agriculture’s recommendation tracking systems, which encompassed both the eTrac system — utilised until March 2019 and Planning Hub, which has replaced eTrac for tracking recommendations.

2.23 Access levels for both systems are defined based on user type, however administrative access to eTrac was more tightly restricted than current arrangements for Planning Hub. Access arrangements for Planning Hub remain under development following the introduction of the system.⁴⁰

2.24 eTrac was designed as a management tool for Agriculture’s governance committee meetings and had a small number of administrative users. General user access enabled users to perform only certain tasks as per their level and view only those recommendations assigned to them. Records could not be deleted from eTrac.

2.25 Planning Hub however, is used more widely in the department and has multiple modules for risk management, project management and governance (including recommendations tracking) with a larger number of administrative users who can access multiple modules within the system, simultaneously if required. These users can access the governance module (recommendations) and delete records as they would in others modules if they are assigned to them. General users however cannot delete records.

2.26 Planning Hub also does not currently have the ability to produce a user access report to track access to the system and relies on manual processes such as secondary checking of inputs by the internal audit team to ensure completeness. As such, Planning Hub’s access management has some weaknesses. Agriculture has indicated its intention to address these weaknesses.

2.27 Airservices has defined access controls to support the input of complete and accurate data within its recommendation and action tracking system. However, this system was not used for monitoring the implementation of the ICCPM recommendations.⁴¹ As such, further testing of IT controls was not conducted.

2.28 Infrastructure has established access controls on the ARD. Administrator access to the ARD is restricted to the internal audit team to facilitate its role as secretariat to the audit committee. General access to the ARD is restricted to users who require access. Infrastructure advised the ANAO that the system can track who has made edits and users can only make edits to those items that are assigned to them. However, the controls framework failed to ensure that the system information was complete. As the process failed to capture all recommendations, the ANAO did not further test Infrastructure’s ARD IT controls.

Is the audit committee provided with appropriate advice to support the monitoring and scrutiny of recommendation implementation?

2.29 Audit committees provide independent advice and assurance to an entity’s accountable authority on financial and performance reporting, risk oversight management and internal controls.⁴² The PGPA Rule requires that entity’s audit committees review the appropriateness of the accountable authority’s system of internal control.⁴³

2.30 The Department of Finance model charter for audit committees suggests that accountable authorities may wish to consider including other functions in their audit committee charter, such as consideration of parliamentary committee reports, external reviews and evaluations. This would include the audit committee satisfying itself ‘that the entity has appropriate mechanisms for reviewing relevant parliamentary committee reports, external reviews and evaluations of the entity and implementing, where appropriate, any resultant recommendations’.⁴⁴

2.31 Agriculture’s audit committee charter states that the committee is responsible for monitoring the implementation of ANAO performance audit recommendations. The audit committee receives quarterly updates on the progress of audit and assurance activities and the requirement to provide regular reporting has been documented in internal documentation.

2.32 The audit committee also provides a quarterly report to the Executive Management Committee (EMC) which is Agriculture’s primary governance and decision making body. As part of these reports, the EMC is provided with an update on the status of internal audit and ANAO recommendations.

2.33 Airservices’ Board Audit and Risk Committee (BARC) is responsible for advising Airservices’ Board on action taken on significant issues raised in relevant external audit reports. The BARC must also report to the Board a summary of Airservices’ progress in addressing the findings and recommendations made in internal and external audit and parliamentary committee reports. However, this process was not followed. Airservices reported directly to the Board on the progress of implementation of ANAO recommendations from the ICCPM audit, rather than through the BARC.

2.34 Airservices should consider clarifying the BARC charter for the different approaches that are actually taken on significant issues raised in external audit reports as the current charter is not reflective of business practices.

2.35 While a process was not clearly documented, APVMA provided several updates on activities related to the implementation of ANAO recommendations to its audit committee. However, these were not always explicitly linked back to the original ANAO recommendations. For example, February 2018 reporting against an external review of operational performance was not clearly linked back to the ANAO recommendations and findings. While the audit committee charter defines functions relating to ANAO financial statements audits and APVMA internal audits, it does not specifically refer to ANAO performance audits. APVMA also regularly discussed the implementation of recommendations at its Executive Leadership Team meetings.

2.36 Infrastructure’s audit committee charter does not specifically refer to responsibility for monitoring the implementation of ANAO performance audit recommendations, however regular reporting on the implementation of recommendations from ANAO performance audits is included in the audit work plan. Further, as discussed in paragraph 2.20, Infrastructure’s processes failed to capture the WestConnex audit in its central database. As such, the recommendation from the WestConnex audit was not subject to regular tracking or reporting to the audit committee. A revised internal audit charter, which explicitly includes the monitoring of agreed recommendations, was presented to the audit committee for consideration in March 2019. Infrastructure advised that the charter was endorsed by the Secretary in June 2019.

Did the entities develop an implementation plan?

3.1 Successful implementation of audit recommendations requires implementation planning to set clear responsibilities and timeframes for addressing the required action. Implementation planning should involve key stakeholders, including the internal audit function.

3.2 Airservices Australia (Airservices) agreed to the six recommendations arising from Auditor-General Report No.1 2016–17 Procurement of the International Centre for Complex Project Management to Assist on the OneSKY Australia Program (the ICCPM audit). Airservices advised the ANAO that, as the entity was working to quickly address the recommendations, implementation plans were not developed to monitor the progress of agreed actions. Rather, Airservices relied on a table of initiatives to assess progress, provide status updates, and describe planned actions to address the recommendations. Airservices has acknowledged that affecting cultural change within the organisation will take time. The evidence reviewed by the ANAO indicates that, as at May 2019, actions against the ICCPM audit recommendations, particularly against recommendation one, remain ongoing.

3.3 The Australian Pesticides and Veterinary Medicines Authority (APVMA) agreed to all four recommendations arising from Auditor-General Report No.56 2016–17 Pesticide and Veterinary Medicine Regulatory Reform. The APVMA did not provide the ANAO with evidence of documented implementation plans for the four recommendations. However, actions have been completed against two of the recommendations, and commenced against the remaining two recommendations.

3.4 While the Department of Infrastructure, Transport, Cities and Regional Development (Infrastructure) has a formal governance process for monitoring ANAO recommendations, the process did not require the development of implementation plans, as recommended, and agreed by Infrastructure, in Auditor-General Report No.53 2012–13 Agencies Implementation of Performance Audit Recommendations.⁴⁵

3.5 Infrastructure agreed to the recommendation arising from Auditor-General Report No.38 2016-17 The Approval and Administration of the Commonwealth Funding for the WestConnex Project (the WestConnex audit). The ANAO was advised that responsibility for the implementation of that recommendation sat with the relevant business area—Infrastructure Investment Division. Implementation plans were not developed for this recommendation, however some actions have been taken to address the recommendation.

3.6 Infrastructure also agreed to the recommendation arising from Auditor-General Report No.30 2016–17 Design and Implementation of Round Two of the National Stronger Regions Fund (the National Stronger Regions Fund audit). The department did not provide evidence of an implementation plan in response to this recommendation, however action did occur in response to the recommendation.

Did entities maintain evidence to confirm the implementation of ANAO recommendations?

3.7 Airservices agreed to the six recommendations arising from the ICCPM audit. In October 2016, the Chair of Airservices’ Board advised the Minister for Infrastructure and Transport that all ANAO recommendations had been addressed by 30 September 2016. Further, Airservices’ 2016–17 Annual Report stated that implementation of all six recommendations was completed by 30 September 2016.⁴⁶

3.8 Airservices provided evidence of a range of actions taken in response to the recommendations, many of which remain ongoing at May 2019. Further, Airservices has undertaken a number of internal audits and reviews which highlight that weaknesses remain in Airservices’ procurement policies and procedures which has impacted on the achievement of the agreed culture shift.

3.9 As Airservices did not develop implementation plans to respond to the recommendations, there is no evidence of intended outcomes, including benchmarks and targets or robust measures to assess progress achieved. As such, Airservices has not been able to evaluate its performance against the implementation of the recommendations or identify when the intended result has been achieved.

3.10 APVMA provided evidence of actions against each of the recommendations demonstrating the completion of two of the four recommendations.

3.11 Infrastructure was unable to provide appropriate evidence of complete implementation of the recommendation from the WestConnex audit. The ANAO assessed Infrastructure’s implementation of recommendations from the National Stronger Regions Fund audit as implemented and partially implemented for the WestConnex audit.

Did entities effectively implement agreed recommendations?

3.12 In examining the evidence entities maintained to support the implementation of recommendations, the ANAO assessed whether recommendations had been implemented. The ANAO has not undertaken additional substantive examination of Agriculture’s implementation of ANAO recommendations as nothing came to our attention in auditing their governance processes which would lead us to believe that Agriculture’s reported status of implementation was not correct. Agriculture’s view of the status of implementation is presented at Table 3.2 and Table 3.3.

3.13 The definitions used by the ANAO to assess the extent to which recommendations had been implemented are provided in Table 3.1. The audit recommendations, including the ANAO’s assessment of each entity’s implementation, are provided in Table 3.2 to Table 3.7.

Table 3.1: ANAO’s categorisation of implementation status

Source: ANAO.

3.14 Overall, Airservices’ reporting of the recommendations as completed by 30 September 2016 more accurately reflected the commencement of actions to address the recommendations, rather than the intended outcomes being achieved and therefore the completion of implementation. While action has occurred against each of the recommendations, Airservices has only partially or not fully implemented the recommendations from the ICCPM audit. Refer to Table 3.4 for further detail.

3.15 APVMA has implemented recommendations three and four. The actions undertaken against recommendation one have not yet been completed and as such this recommendation is not fully implemented. The actions taken against recommendation two have not yet fully addressed the intent of the original recommendation. As such this recommendation is also not fully implemented.

3.16 Infrastructure’s internal audit team and audit committee considered and endorsed a recommendation closure report as well as program guidelines and an assessment report template developed in response to the recommendation from the National Stronger Regions Fund audit. However, the closure of the recommendation at this time was based on evidence related to one program only and did not provide an indication of how the recommendation and findings would be considered in future programs as agreed by the department. Infrastructure has subsequently given consideration to broader ANAO findings in the development of other grants programs.

Department of Agriculture

Airservices Australia

Australian Pesticides and Veterinary Medicines Authority

Department of Infrastructure, Transport, Cities and Regional Development

Was the implementation of the recommendations tested?

3.21 Airservices has undertaken several reviews and evaluation activities, which, while not directly aligned to the individual recommendations from the ICCPM audit, have addressed some key aspects of the recommendations. These reviews made a number of key findings:

• For high value procurement activities undertaken within Airservices, the majority of activities reviewed had failed to demonstrate that procurement strategy, documentation, evaluation, risk management and record keeping requirements were met.
• Control weaknesses exist relating to conflict of interest declarations. Specifically, the procurement framework process does not require confirmation of the completion of conflict of interest declarations for sole source procurements.
• Poor alignment of fourteen significant long term contracts and to the newly established Contract Management Risk and Control Map. A review identified several issues, including relating to the management of records, risks and issues, financial control and variations and extensions.

3.22 Combined, the outcomes of these internal reviews highlight that Airservices’ has partially implemented recommendation one, which was to ‘address systemic failures in the adherence to the organisation’s procurement policies and procedures and the cultural underpinnings of those failures.’ Further, Airservices has partially or not fully implemented each of the recommendations, as key elements remain unaddressed against each recommendation, notwithstanding the advice to the Minister, the Board and the BARC.

3.23 APVMA provided evidence of review of the implementation of recommendations three and four. Relating to recommendation three a minute was presented to the Executive Leadership Team in December 2018 noting that although the 2018–19 corporate plan retained the Relocation Program Board while APVMA had also established a Change Management Board, there was an opportunity to streamline governance arrangements by consolidating the two boards. The APVMA has since consolidated these two boards.

3.24 Relating to recommendation four, the Executive Leadership Team approved a review of APVMA’s risk register in September 2017. APVMA provided evidence of updates to the Executive Leadership Team on the progress of this review. The APVMA has not reviewed the implementation of recommendations one and two as implementation of these recommendations remains in progress.

3.25 Infrastructure has considered the recommendation from the National Stronger Regions Fund in pre-implementation audits for the Regional Growth Fund and Regional Jobs and Investment Package. As implementation of the recommendation from the WestConnex audit remains underway, the department has not undertaken or been able to provide evidence of testing of the recommendation.

Do the selected entities have formalised governance arrangements in place to respond to, monitor and implement JCPAA and other parliamentary committee recommendations?

4.1 The approval and tabling process for government responses to committee reports is outlined in the Department of the Prime Minister and Cabinet Guidelines for the Presentation of Documents to the Parliament (including government documents, government responses to committee reports, ministerial statements, annual reports and other instruments)(the Guidelines).⁴⁷ Once approved, departments need to have the government response tabled within the required timeframes and must provide a covering minute to the Department of the Prime Minister and Cabinet (PM&C) tabling officer indicating that the response has been approved for tabling.⁴⁸ The Guidelines state that responses to committee reports should be presented to the relevant committee within:

• three months — for Senate Committee reports and Joint Parliamentary Committee reports; and
• six months — for House of Representatives Committee reports.⁴⁹

4.2 The current guidance available to Commonwealth entities relating to Joint Committee of Public Accounts and Audit (JCPAA) and other parliamentary recommendations is limited to responding to reports and recommendations. The guidance does not extend to monitoring and implementing recommendations. As such, the guidance does not provide a strong signal to entities and accountable authorities of the expectation and importance of implementing agreed JCPAA and other parliamentary recommendations.

4.3 The Department of Agriculture’s (Agriculture) written responses to parliamentary committee reports are coordinated through the parliamentary liaison services team. The parliamentary liaison services team’s responsibility ceases once the response to the committee report has been tabled.

4.4 A process for formal allocation of responsibility for monitoring and implementing recommendations has not been documented. In March 2019, Agriculture acknowledged that there is a gap in its governance arrangements. Agriculture is considering the need to develop a process to manage the implementation of JCPAA and other parliamentary committee recommendations.

4.5 Documented processes are not in place to support Airservices Australia’s (Airservices) response to JCPAA and other parliamentary committee recommendations. A framework for monitoring implementation of JCPAA and other parliamentary committee recommendations is also not in place. Standard procedures for recording agreed actions from other audits and reviews into Airservices’ recommendation tracking system including assigning responsibility, monitoring and implementing were not followed for the JCPAA recommendations. Despite the lack of a documented process, Airservices responded to JCPAA Report 465: Commonwealth Procurement - Inquiry based on Auditor-General’s Reports 1, 13 and 16 (2016–17) within the required timeframes.⁵⁰

4.6 As the JCPAA inquiry was undertaken after the 2016–17 period examined in this audit, further analysis of Airservices’ implementation of the JCPAA recommendations was not undertaken. Airservices was not subject to any parliamentary committee inquiries in the 2016–17 period.

4.7 On 11 December 2017 the JCPAA wrote to the Chief Executive Officer (CEO) of the Australian Pesticides and Veterinary Medicines Authority (APVMA). The JCPAA advised that while it was not conducting a formal inquiry into the ANAO report, it was requesting updated information from the APVMA on the activities undertaken to address the ‘areas for improvement’ identified; and progress and fully implement the ANAO recommendations.

4.8 Processes are in place to support APVMA’s written responses to inquiries by the JCPAA and other parliamentary committees. However, these governance arrangements were not documented at the time of the JCPAA’s request. During the course of this audit, APVMA drafted and endorsed a governance procedure that outlines the steps to respond to recommendations and the corresponding APVMA roles involved.

4.9 The advice provided by APVMA to the JCPAA in relation to the four ANAO recommendations was consistent with evidence provided by APVMA. As the APVMA was responding to a review by correspondence rather than new recommendations from the JCPAA, this audit has not conducted any further testing against the monitoring and implementation processes.

4.10 The Department of Infrastructure, Transport, Cities and Regional Development’s (Infrastructure) written responses to JCPAA and other parliamentary committee reports are not coordinated through consistent and centralised processes. Varying processes are applied depending on how a request to respond to a report is received by the department.

4.11 Infrastructure was unable to confirm what, if any, coordination arrangements were applied to the recommendations from JCPAA Report 462: Commonwealth Infrastructure Spending – Inquiry based on Auditor-General’s reports 14 (2015–16) and 38 (2016–17) following the provision of the response. Formal allocation of responsibilities for monitoring and implementing recommendations has not been documented.

4.12 During this audit, Infrastructure acknowledged the gap in its governance arrangements for managing the implementation of JCPAA and other parliamentary committee recommendations. Infrastructure advised the ANAO that the existing governance arrangements for the monitoring of implementation of ANAO performance audit recommendations have recently been extended to monitoring the implementation of recommendations from the JCPAA and the recommendations examined in the audit have been added to the Audit Recommendation Database.

Did the entities develop an implementation plan?

5.1 In 2017, the House of Representatives Standing Committee on Agriculture and Water Resources conducted an inquiry Safe Keeping: Inquiry into the biosecurity of Australian Honey Bees and made six recommendations.⁵¹ The government response to the report from this inquiry ‘supported’ five of the recommendations and supported one recommendation in principle.^{52 53} There were no JCPAA recommendations directed at Agriculture for 2016–17.

5.2 The Australian Chief Plant Protection Office (ACPP Office) within Agriculture confirmed that it was responsible for responding to the report and recommendations, as well as providing oversight of the implementation of recommendations arising from the report. However, during this audit, the ACPP Office was initially unable to confirm whether it or other business areas held responsibility for implementation of the recommendations. The ACPP Office also noted that implementation of recommendations one and three was likely to fall under the National Bee Pest Surveillance Program, managed by Plant Health Australia.⁵⁴

5.3 Agriculture subsequently advised the ANAO that implementation plans were not developed in response to the recommendations. Agriculture further advised that it believed that actions against some recommendations were underway prior to the report being finalised and the government providing its response.

5.4 Infrastructure responded to five recommendations from JCPAA Report No. 462 Commonwealth Infrastructure Spending. Infrastructure agreed to four of the five recommendations. Recommendation three was agreed with qualification. Infrastructure did not develop implementation plans in response to these recommendations.

5.5 The government responded to nine recommendations arising from the Senate Standing Committee on Rural and Regional Affairs and Transport Report: Airport and Aviation Security. The government agreed to three of the nine recommendations and recommendation four was agreed in principle.⁵⁵ Infrastructure advised that responsibility for implementation of these recommendations was directed to the Office of Transport Security (OTS), which was within the department at the time of the response. However, following the machinery of government change that occurred creating the Department of Home Affairs (Home Affairs), transport security functions and the responsibility for implementing the recommendations were transferred to Home Affairs. Infrastructure further advised that records were transferred with the OTS and so Infrastructure was not able to provide any evidence of actions that occurred between responding and transferring of the recommendations. This audit has not considered actions against these recommendations as responsibility was transferred to the Department of Home Affairs which is outside the scope of this audit.

Did entities maintain evidence to confirm the implementation of JCPAA and other parliamentary committee recommendations?

5.6 Agriculture advised the ANAO that its monitoring of the recommendations was ‘on the periphery’ and that the ACPP Office maintained, to varying degrees depending on the recommendation, oversight of the implementation of the recommendations.

5.7 Infrastructure did not have a coordinated process for monitoring implementation of JCPAA and other parliamentary committee recommendations. The ANAO was advised that parliamentary recommendations remain with the responsible business areas to manage following the presentation of the response. Infrastructure had not provided evidence that the accountable authority has any oversight over the progress of implementation.

5.8 As outlined in paragraph 4.12, Infrastructure advised the ANAO that the existing governance arrangements for the monitoring of implementation of ANAO performance audit recommendations have recently been extended to monitoring the implementation of recommendations from the JCPAA.

5.9 As there was no coordinated process, Infrastructure was also unable to provide advice on the status of the recommendations. Infrastructure was able to provide evidence that some action has occurred, however this action has only partially implemented the five recommendations. Infrastructure commenced reporting to its audit and risk committee against JCPAA recommendations in June 2019.

Did entities effectively implement agreed recommendations?

5.10 In examining the evidence entities maintained to support the implementation of recommendations, the ANAO assessed whether recommendations had been implemented. The definitions used to assess the extent to which recommendations had been implemented are provided in Table 3.1.

5.11 Of the six recommendations from the Safe Keeping: Inquiry into the biosecurity of Australian Honey Bees inquiry report, one has been implemented, one has been partially implemented and four have not been implemented. The ANAO’s assessment of the implementation of recommendations is provided in Table 5.1.

5.12 Of the five recommendations from JCPAA Report No. 462 Commonwealth Infrastructure Spending, Infrastructure has implemented two recommendations and partially implemented the other three recommendations. The ANAO’s assessment of the implementation of recommendations is provided in Table 5.2.

Department of Agriculture

Department of Infrastructure, Transport, Cities and Regional Development

Was implementation of JCPAA and other parliamentary committee recommendations tested?

5.13 Agriculture’s internal audit team and audit committee do not have any oversight of the JCPAA or other parliamentary committee recommendations and as such had not planned for the review of recommendation implementation. Agriculture has not provided any evidence of testing of the implementation of recommendations.

5.14 Infrastructure’s internal audit team and audit committee do not have oversight of JCPAA and other parliamentary committee recommendations and, as such, had not planned for the review of recommendation implementation and closure reports have not been submitted. Infrastructure has also not been able to provide evidence of another form of executive oversight process across these recommendations or confirm if risk management plans have been updated to reflect necessary changes to address the recommendations.

5.15 As at March 2019, Infrastructure considered all recommendations from the JCPAA in 2016–17 to be open, and therefore unable to be tested at that time. Infrastructure has advised that it has commenced monitoring these recommendations, with a view to implementing recommendations from JCPAA Report No. 462 Commonwealth Infrastructure Spending.

Was the appropriate parliamentary committee advised of implementation?

5.16 Two of the recommendations from the Safe Keeping: Inquiry into the biosecurity of Australian Honey Bees explicitly required a report back to the Committee. Recommendation four required that an assessment of pest bee risk ratings should be completed for Australian ports that do not have such ratings and a copy of the completed assessment be provide to the Committee. Agriculture advised that the assessment has not been completed and as such there has been no report back to the committee.

5.17 Recommendation five required that a copy of the analysis of the smuggling of bees into Australia be provided to the Committee upon completion. Agriculture advised the ANAO that it was unable to provide an analysis of cases because there has been no detections or prosecutions of alleged illegally imported bees since 2000. As no analysis was completed, Agriculture advised that no further reporting to the Committee was deemed necessary.

5.18 Agriculture has not provided any evidence of reporting to the committee against any of the other recommendations. Agriculture has not provided any evidence of other internal reporting to provide oversight of the implementation of recommendations.

5.19 The recommendations from JCPAA Report No. 462 Commonwealth Infrastructure Spending did not contain an explicit requirement to report to the committee following implementation. The Senate Standing Committee on Rural and Regional Affairs and Transport requested that Infrastructure update the committee in early 2018 on the progress and outcomes following the implementation of Stage Two of the Visitor Identification Card enhancements. However, the responsibility to address these recommendations had been transferred to the Department of Home Affairs by that time.

5.20 Infrastructure has not provided evidence of reporting to either committee against any of the recommendations. Infrastructure has also not provided any evidence of other internal reporting to demonstrate executive oversight of the implementation of parliamentary committee recommendations.

Appendix 1 Entity responses

Attachment 1 to Airservices Australia response

Attachment 1 to Airservices Australia response

Recommendation	Airservices action taken by 30 September 2016	ANAO assessment of implementation	Airservices comments in relation to ANAO assessment
Recommendation No. 1: The ANAO recommends that Airservices Australia address systemic failures in the adherence to the organisation’s procurement policies and procedures and the cultural underpinnings of those failures.	Airservices has implemented a number of initiatives to enhance the awareness of, and adherence to, the organisation’s procurement policies. These include: Awareness Targeted communications to senior managers clarifying responsibilities within the existing procurement frameworks, including the fundamentals of competitive sourcing and consideration of probity All staff communications regarding the importance of compliance with the organisation’s procurement policies A factsheet provided to staff as new procurement activities are raised focusing on probity considerations and the benefits of running competitive procurement processes. Training An education program aimed at improving commercial decision-making and outcomes in the organisation has commenced. Monitoring Improved monitoring and oversight by the Executive and Board in relation to project delivery and governance Improved procurement compliance reporting Audits into how contracts and projects are being managed Adoption of best practice program management principles (P3M) in all projects which will improve project governance.	Partially implemented The outcomes of internal reviews, combined with the status of recommendations 2 to 6, indicate that Airservices has not yet fully shifted the entity’s procurement culture. Further, Airservices has not identified a target state to measure performance against this shift.	The changes made by Airservices to the governance frameworks coupled with the cultural change activities (training, awareness etc.) have addressed the systemic failures that were previously identified in the ANAO performance audit. This is best demonstrated by the compliance levels to the organisation’s procurement policies and procedures. The only identified non-compliances in 2017/18 (8 in total; 3%) were administrative in nature and do not evidence any systemic or wider cultural issues across Airservices. The percent shift is demonstrated in the following graph.     Where non-compliances have been identified these have been highlighted with the issuance of formal breach notices to the respective business groups to ensure appropriate action is taken. In addition, the internal and external reviews that Airservices have performed since 30 September 2016 reflect a commitment to continuous improvement. Examples of these reviews include: KPMG: Engaged to audit Airservices active contracts to assess that procurement methods and record management approaches were appropriate; Callida Indigenous Consulting Pty Ltd: Review of Airservices significant long term contracts against best practice contract management principles Ngamuru: Engaged to perform an assurance review of the Phase 5 record keeping activity for the OneSKY program; and Airservices internal audit have conducted eight (8) separate procurement and contract management related audits over the period. None of these reviews identified significant or systemic issues but have instead identified areas for continued development and enhancement. All improvement initiatives identified as part of these reviews have been accepted and actioned by Airservices.
Recommendation No. 2: The ANAO recommends that Airservices Australia improve the value for money it obtains from major and strategic procurement activities by: requiring that, except in genuinely rare circumstances, competitive procurement processes are to be employed; and on those rare occasions when competitive procurement processes have not been able to be employed: documenting the reasons why a competitive approach was not employed; benchmarking the quoted rates/fee and making records of the basis on which it was decided that the contracted rate/fee represented value for money; and reporting any such instances to the Airservices Australia Board.	Airservices has updated its procurement processes to include clearer guidance on assessing value for money, the importance of competitive processes and record keeping requirements that are commensurate with the scale, scope and risk of the procurement. Reporting to executive management on procurement activities, profiles and trends has also been enhanced.	Partially implemented Airservices has updated internal procurement guidance to outline key procurement principles including value for money and competitive market approaches. 11 types of goods and services and 19 different suppliers have been classified as exempt from normal procurement processes. Examples include occupancy cost (rent), licence or subscription fees, superannuation or private health payments, vehicle registration and utilities. It is unclear whether any external advice was sought in exemption of these activities, or how frequently exemptions are reviewed. Further, reporting on compliant and non-compliant procurement activities is at too high a level and does not provide sufficient detail to support detailed analysis and decision making.	The updates made by Airservices have had the following demonstrable impact on the utilisation of non-competitive procurement activities;     Of the non-competitive procurements, a significant proportion of these are based on the following: Additional goods and services by the original supplier when a change of supplier would result in compatibility issues with existing services (24%) Exercising extension options within contracts (4%) Regulated or monopoly markets (6.5%) Labour Hire arrangements (34%) Variations to contracts established through a competitive process (9%) Irrespective of the nature of the direct engagement, a value for money justification still has to be established and approved before entering in to the contract. The exemptions noted by the ANAO, excluding licence and subscription fees, all relate to regulated and non-contestable goods and /or services. The exemption relates only to a requirement to run a competitive process or seek CFO approval for direct engagement. The other procurement concepts and governance requirements including Value for Money still apply. For licences and subscriptions, the exemption relates to the calculation of Whole of Life Cost and the determination that the annual renewal cost for support or membership/subscription renewals. The other procurement concepts and governance requirements including Value for Money still apply.
Recommendation No. 3: The ANAO recommends that Airservices Australia improve its procurement framework by including enhanced guidance in relation to: the different roles performed by probity advisors and probity auditors; determining the circumstances in which the engagement of an independent probity auditor would be appropriate; and the manner in which such decisions are to be documented.	Airservices has updated its procurement processes to include clearer guidance in relation to the active management of probity during procurement processes, including: articulating the different roles performed by probity advisors and probity auditors guidance on how to determine the need for a probity auditor and to document the decision appropriately Airservices has established a panel of independent probity advisors and auditors which can be utilised across the business where required in the course of procurement activities.	Partially implemented Overall, the information provided within the finance manual provides limited guidance to staff in determining when to engage the services of a probity advisor or auditor. The procurement workflow includes several references to probity, however these are not supported by clear guidance within the workflow or finance manual. The workflow includes a reference to a probity plan template, which includes greater detail as to when probity advice should be sought. However, the probity plan is not required for all procurement activities and so this information is not clearly and readily available to all staff for consideration when commencing a procurement.	The updates at the time of implementation were based on Airservices review of public sector practices on guidance material for probity advisors and auditors. This included the Commonwealth Procurement Rules and Department of Finance. As a result of the increased guidance and awareness of requirements for probity advisors and auditors external probity engagements have been established across a number of significant projects. To ensure Airservices continues to address emerging risks and operate better practice processes and procedures in relation to probity we recently engaged a specialist firm (O’Connor Marsden) to perform a probity audit of Airservices significant procurement activities commenced but not yet completed in the last 12 months to assess whether they adhered to prescribed probity requirements. No issues of significance were identified, with improvement opportunities identified and being actively implemented by Airservices.
Recommendation No. 4: The ANAO recommends that Airservices Australia proactively manage probity in procurement activities by: ensuring conflict of interest declarations are updated regularly or their ongoing currency confirmed; reviewing existing declarations when the rote being performed by an individual changes; and regular review of program participants’ reporting of contact with industry respondents in order to monitor compliance with reporting obligations.	Airservices has updated its procurement processes to include clearer guidance in relation to the active management of probity during procurement processes, including specific requirements for longer term procurements to update and review declarations on a regular basis.	Partially implemented There is no evidence within the finance manual of a requirement to record contact with industry, respondents or monitoring of any instances of contact. An internal audit activity conducted in January 2019 indicated that although Airservices has defined assurance processes within its finance manual to confirm the compliance of procurement documentation, this process does not incorporate non-competitive or direct source procurements. Further, there is no requirement for formal review of conflict of interest declarations either by management, staff or Airservices’ procurement support team. The absence of advice on contact with industry respondents combined with the control weaknesses identified in the internal audit demonstrates that actions to address this recommendation have not been fully effective.	The area of focus for Airservices in the period following the ANAO report centred on ensuring that participants in the OneSKY program were effectively discharging their probity responsibilities. In support of this Airservices engaged O’Connor Marsden to undertake an independent assurance review that all policies and procedures relating to the OneSKY Australia program have been actively applied and adhered to. This review identified that there are no issues of significance to raise around the application to the Program of policies and procedures already in place for the Program’s effective governance and probity. The report also made the following broader reference; We have reviewed the documented actions set out in the Minute to the Board (dated 28 September 2016) on the ANAO Performance Audit Recommendations. We are of the view that the listed actions should address the ANAO audit recommendations. We have also sighted evidence (e.g. updating Probity protocols and Plan and Finance manual) that supports implementation of the ANAO audit recommendations. The improvement areas identified in the recent internal audit, upon which Airservices has acted, are evidence of a clear commitment to continuous improvement in all area of probity governance.
Recommendation No. 5: The ANAO recommends that Airservices Australia ‘s governance arrangements address: whether individuals proposed to be employed in key probity management roles possess the understanding and capabilities required to undertake the role effectively; and the appropriate separation of duties between key probity management roles associated with a procurement activity.	Airservices has updated its procurement governance framework to clarify expectations regarding the various probity roles within a procurement. Furthermore, explicit guidance has been made in respect of the requirement to engage appropriately skilled and qualified professionals in key probity and procurement roles. To address any future capability and/or capacity gaps in the key roles of probity management, a panel of independent probity advisors and auditors is being established to provide ready access to suitably qualified and experienced professionals.	Not fully implemented The circumstances in which a probity advisor or auditor should be engaged are not clearly articulated in the finance manual. This level of detail is only discussed in a template which is not required for all activities. Airservices has documented the required capabilities of probity auditors but not probity advisors.	In addition to enhancing the governance arrangements to address the recommendations of the ANAO Airservices also took targeted action in regards to the OneSKY program. In specific response to the issues identified in the ANAO 2016-17 Performance Audit, the role of the Probity Manager was separated from the Manager Acquisition role with the creation of a dedicated Probity Manager (and Commercial Coordinator) within the OneSKY program. This response was identified as a positive initiative within an externally instructed Probity Audit on OneSKY and in their opinion enabled a more effective discharge of responsibilities for key probity functions. To ensure the assigned individual possessed the required capabilities to perform the role Airservices engaged the services of the Australian Government Solicitor (AGS) to provide training and support to the Probity Manager upon separation of the roles. The Finance Manual is only one tool used in developing the understanding across the organisation of probity considerations and the requirements to engage advisors and / or auditors. In addition to the Finance Manual Airservices also has a comprehensive training suite which also addresses probity considerations and awareness. To date 340 employees have attended training courses where probity considerations are explored. As a result of the increased guidance and awareness of requirements for probity advisors and auditors external probity engagements have been established across the significant projects.
Recommendation No. 6: The ANAO recommends that Airservices Australia enhance its procedures for managing probity in procurement processes to require documented consideration of the potential for actual or perceived conflicts of interest to arise when engaging external contractors to participate in tender evaluations and contract negotiations and, where relevant, the management strategies that are to be applied.	Airservices has updated its procurement governance framework and guidance documentation to ensure a clear understanding that conflict of interest declarations are to be completed by all individuals, including external contractors, involved in the evaluation and subsequent negotiation activities for Airservices procurements. This also outlines the considerations to be made in the establishment and ongoing management of any mitigation strategies for any identified conflicts of interest.	Partially implemented Airservices advised the ANAO that it undertook activities to clarify the procurement framework and guidance relating to conflict of interest declarations, and applying ongoing management and mitigation strategies for identified conflicts. Airservices’ finance manual specifies that all members of the evaluation panel are required to declare conflicts of interest. This includes any specialist advisors and contractors. There is no requirement for formal review of conflict of interest declarations either by management, staff or Airservices’ procurement support team. ln June 2018. Airservices initiated monthly compliance checks of completed procurements. Airservices’ guide to compliance checks states that they must verify, amongst other requirements, that conflict of interest forms have been completed and, for longer term procurement, regularly updated as required.	Airservices addressed the findings from the ANAO audit through the enhancements made to the Finance Manual. Airservices has continued to strengthen its approach to managing probity in procurement activities through increased assurance activities. Airservices welcomes the additional improvements suggested In this report and intends to further enhance the guidance provided to employees undertaking procurement activities and in management oversight roles.