Auditor-General’s foreword

The Australian National Audit Office (ANAO) Corporate Plan 2020–21 updates the previous corporate plan and outlines how the ANAO intends to deliver against its purpose. This plan sets out our approach and priorities for the next four years (2020–21 to 2023–24) and the measures by which we will be held to account. It recognises our commitment to continue building capability and highlights our desire to engage positively and transparently in delivering audit and support services to the Parliament.

The corporate plan is the ANAO’s primary planning document. Our strategic planning process allows us to continually improve practices and capabilities to demonstrate value in the delivery of services to the Parliament. The corporate plan is complemented by the annual audit work program, which reflects the ANAO’s audit strategy for the coming year.

The ANAO operates in a dynamic environment that can impact our ability to deliver our purpose. This plan outlines the key capability investments we will make over the next four years to achieve our purpose. In addition, the plan provides detail about our approach to risk management, which is critical to successfully meeting our responsibilities in providing professional and independent audits to the Parliament.

Statement of preparation

As the accountable authority of the Australian National Audit Office, I am pleased to present the ANAO Corporate Plan 2020–21, as required under paragraph 35(1)(b) of the Public Governance, Performance and Accountability Act 2013.

Grant Hehir
Auditor-General
1 July 2020

A summary of the ANAO’s purpose, outcomes and activities is shown in Figure 1.

Figure 1: ANAO’s purpose, outcomes and activities

Our purpose

The purpose of the Australian National Audit Office is to support accountability and transparency in the Australian Government sector through independent reporting to the Parliament, and thereby contribute to improved public sector performance.

The ANAO delivers its purpose under the Auditor-General’s mandate in accordance with the Auditor-General Act 1997, the Public Governance, Performance and Accountability Act 2013 and the Public Service Act 1999.

The executive arm of government is accountable to the Parliament for its use of public resources and the administration of legislation passed by the Parliament. The Auditor-General scrutinises and provides independent assurance as to whether the executive is operating and accounting for its performance in accordance with the Parliament’s intent (see Figure 2).

Figure 2: How the ANAO delivers its purpose

Our role

The Governor-General, on the recommendation of the Joint Committee of Public Accounts and Audit (JCPAA) and the Prime Minister, appoints the Auditor-General for a term of 10 years. As an independent officer of the Parliament, the Auditor-General has complete discretion in the performance or exercise of the functions or powers under the Auditor-General Act 1997 (the Act). In particular, the Auditor-General is not subject to direction in relation to:

• whether a particular audit is to be conducted;
• the way a particular audit is to be conducted; or
• the priority given to any particular matter.

In the exercise of the functions or powers under the Act, the Auditor-General must have regard to the audit priorities of the Parliament, as determined by the JCPAA.

Under the Act, the Auditor-General’s functions include:

• auditing the financial statements of Commonwealth entities, Commonwealth companies and their subsidiaries;
• conducting performance audits, assurance reviews, and audits of the performance statements and measures of Commonwealth entities and Commonwealth companies and their subsidiaries;
• conducting a performance audit of a Commonwealth partner as described in section 18B of the Act;
• providing other audit services as required by other legislation or allowed under section 20 of the Act; and
• reporting directly to the Parliament on any matter or to a minister on any important matter.

The ANAO supports the Auditor-General in this role.

ANAO 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 a manner that supports the Parliament.

Corporate structure

The ANAO is organised into five functional areas:

• Assurance Audit Services Group provides independent assurance on the financial statements and financial administration of all Australian Government entities. It also conducts assurance reviews.
• Corporate Management Group leads corporate strategy and change for the ANAO. It provides services based on specialised knowledge, best practices and technology that enable the delivery of the ANAO’s purpose and audit outcomes.
• Performance Audit Services Group conducts performance audits, audits of performance statements and measures, and assurance reviews of Australian Government entities and their activities, and produces related publications and other information reports.
• Professional Services and Relationships Group provides technical accounting, audit and legal advice and support to the Auditor-General; establishes, manages and monitors the implementation of the quality assurance framework; and manages the ANAO’s external relations.
• Systems Assurance and Data Analytics Group provides IT audit and data analytics support to the ANAO’s assurance and performance audit work and other information reports, with staff from a range of professional and technical backgrounds, including project management, engineering, system administration, database development, data analysis and financial systems management.

The ANAO website contains further information about the ANAO’s corporate structure.

Key relationships

The ANAO’s primary relationship is with the Australian Parliament and the ANAO’s key interaction with the Parliament is through the JCPAA. Among its responsibilities, the JCPAA considers the operations and resources of the ANAO, including the ANAO draft budget estimates, about which it makes recommendations to both houses of Parliament. The JCPAA is also required to review all ANAO reports that are tabled in Parliament and to report the results of its deliberations to both houses of Parliament.

The ANAO supports the work of the Parliament more broadly by providing independent assurance and opinions, including submissions, information, assistance and briefings to parliamentarians and parliamentary committees. The Parliament and its committees also scrutinise the work and administration of the ANAO.

The ANAO’s relationships with the accountable authorities of Australian Government entities are important as the accountable authorities have primary responsibility for, and control over, the operations of their entities. The ANAO supports these relationships by regularly engaging with officials of audited entities and by attending audit committees of Australian Government entities.

The ANAO 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. The ANAO also has close links with the international and regional auditing community through the International Organization of Supreme Audit Institutions 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 and the Auditing and Assurance Standards Board in their roles of setting and maintaining professional and ethical standards for the accounting and auditing professions.

The ANAO website contains further information about the ANAO’s relationships.

Strategic planning framework

The ANAO’s governance and strategic direction are underpinned by a strategic planning framework (see Figure 3). The corporate plan is the ANAO’s primary planning document and covers a rolling four-year period. From this plan, the ANAO’s annual priorities flow into the annual audit work program, business plans, and then to individual performance agreements. The ANAO reports on its activities through its annual report.

Figure 3: ANAO’s strategic planning framework

This section sets out the nature of the ANAO’s operating environment over the four-year period of this corporate plan. It outlines how factors and changes in the environment may affect and influence the focus of the ANAO’s annual audit work program.  Understanding, adapting and responding to changes in our operating environment is critical to delivering on the ANAO’s purpose.

Supporting the Australian Parliament

The ANAO will seek to achieve its purposes by supporting the Auditor-General’s independent exercise of functions under the Auditor-General Act 1997. Key activities will include a program of audit and assurance engagements undertaken to provide assurance to the Australian Parliament on entities’ administration and financial statements, and the preparation of reports to inform the Parliament on aspects of Commonwealth administration.

The ANAO will further support the Parliament through ongoing assistance to parliamentarians and committees, particularly the Joint Committee of Public Accounts and Audit (JCPAA), which has statutory duties relating to the ANAO under the Public Accounts and Audit Committee Act 1951. These duties include the examination of all reports of the Auditor-General that are tabled in the Parliament.

In 2019 the Minister for Finance, Senator the Hon Mathias Cormann, requested that the Auditor-General conduct a program of pilot assurance audits of annual performance statements of Commonwealth entities subject to the PGPA Act, in consultation with the JCPAA. The Auditor-General agreed to the request and a pilot audit of the 2019–20 performance statements of three entities is underway. Subject to the outcome of the pilot, the full implementation of mandatory auditing of entity performance statements would give the Parliament the same level of assurance over non-financial performance information that it currently receives for financial performance information. This should also result in improvements in the quality of performance information provided to Parliament.

The ANAO’s support to the Parliament in 2020–21 will be affected by the impact of the COVID-19 pandemic on the public sector as entities continue to implement the government’s response agenda and adjust working arrangements to meet health requirements. Our financial auditing will continue as planned, with improved remote access to agencies’ financial systems providing an opportunity to minimise some onsite procedures. This will ensure that we complete financial statement audits in time for ministers to present annual reports to the Parliament within statutory timeframes.

We expect performance audits to operate as normal during 2020–21, albeit with consideration given to topic selection where travel restrictions may affect evidence gathering. Additionally, during 2019–20, a pause in our engagement with entities on performance audits and delays by entities in providing evidence due to COVID-19, meant the Auditor-General tabled 42 audit reports in the Parliament instead of the forecast 46. The flow-on effect on starting new performance audits will impact our delivery of the 2020–21 performance audit program.

During the first half of 2020–21, the ANAO will conduct assurance reviews of Advances to the Finance Minister, in accordance with section 19A of the Auditor-General Act 1997. The reviews will provide timely assurance to the Parliament in the current circumstances, in which the appropriation for Advances to the Finance Minister has increased significantly to support Australian Government activities. These reviews will be tabled monthly in the Parliament.

Budget

The ANAO is operating in an environment of:

• growing complexity of government entities and transactions;
• increasing market costs for qualified resources; and
• increasing volumes of data collected and analysed during audits.

To respond to resourcing pressures, the ANAO has implemented several initiatives to improve efficiency and productivity. While the programs have been successful, the gains have not kept pace with saving requirements and ongoing cost increases. As a result, it is increasingly difficult for the ANAO to sustain mandatory financial statement audits, as well as a suite of performance audit and other reports to Parliament with adequate coverage in depth and breadth, within available funding. Without supplementary funding the number of performance audit reports tabled in Parliament will progressively decline over the next four years. Fewer performance audits will reduce transparency and accountability to the Parliament due to less scrutiny of government’s effective, efficient, economical and ethical use of resources.

Impact of COVID-19 pandemic on government service delivery

The ANAO must maintain a contemporary understanding of the public sector. This understanding is critical in supporting the delivery of an integrated audit work program that provides assurance on public sector performance to the Parliament. Failure to adequately respond to changes in the government sector could negatively impact:

• confidence in the ANAO;
• the ability to contribute to improved performance and accountability in the public sector; and
• the effective and professional operation of the ANAO.

The COVID-19 pandemic has brought changes to how the public sector operates, both in terms of service delivery and working arrangements. New approaches and innovations in service delivery models and working arrangements create opportunities for the public sector to improve services in the longer term, but also create risks. In this environment, the ANAO must remain cognisant of new approaches and their associated risks in order to provide high-quality, insightful audits to the Parliament. The ANAO will engage with the sector through our audit work to identify and report on advances in service delivery and working arrangements that have emerged during the pandemic.

Technology and data analysis

Technological advances over the last decade have enabled the collection and analysis of large datasets to reveal trends, patterns and associations, and change the interface between citizens, businesses and government. In pursuing advances in technology and data analysis, government continues to improve how it delivers services online — an approach that has been readily adopted throughout the pandemic response. At the same time, the ongoing shift to digital services brings additional risks to stability and security of systems, management of data privacy and integrity, and business continuity. As such, technology and data analysis play an important role in the work of the ANAO.

Adequate security and privacy measures are critical in managing the proliferation of data capture and storage. At a global level, data breaches are illustrating the importance of maintaining personal privacy when managing large datasets. With growing cybersecurity threats, it is necessary for organisations to understand their information and data risks and protect their critical information assets — including private, sensitive and security-classified data — from malicious actors. This is particularly relevant during the COVID-19 pandemic, where fast-paced program implementation has seen increased reliance on, and utilisation of, online services to support government action. For the ANAO, appropriate security remains a priority for entity data collected and stored during the audit process. Appropriate cybersecurity, driven by auditing against the mandatory Australian Government frameworks in place, remains a focus in audit work.

Data analytics can inform evidence-based policy, drive risk-based compliance and regulatory activities, and enable performance monitoring and measurement. Data analytics is also enabling the ANAO to better identify financial reporting, fraud and operational business risks, and tailor our approaches to deliver more targeted risk-based audits. We are able to improve audit outcomes by using a data-enabled approach that automates procedures and analysis of relationships between variables.

The effective use of technology by the ANAO to support cooperation and communication with entities remains a key focus of the ANAO. We are working closely with public sector entities to increase opportunities for remote access to entity systems. The ANAO will continue to leverage technology to support the delivery of our work, maintain connection with entities, and increase the flexibility of our audit approach.

In delivering our work to the Parliament, it is critical that the ANAO remains responsive to technology and data changes, specifically in analysing how government is using technological advances to support program implementation and manage risk. Understanding changes in the use of technology and data across the sector is a key focus. Equally, building our capability in data analytics will enable the ANAO to use better use data to strengthen audit outcomes and present data in a more accessible way to the Parliament.

Investing in a capable workforce that is skilled in utilising data as part of auditing is a key priority for the ANAO.

Audit profession

The ANAO is a professional organisation of people with strong technical and specialist skills who produce quality audits. It is through our high-quality, high-performing people that the ANAO delivers its purpose to the Parliament. The ANAO must continue to invest in our people, place and technology to support audit now and into the future. As the external environment changes, the ANAO must ensure that it remains contemporary and effective.

Continuous improvement of staff skills will be a key requirement over the next four years, through the office’s ability to attract, retain and develop quality people.

Auditors will always need deep knowledge and experience in traditional areas such as auditing standards, financial accounting and reporting, internal controls, IT, managerial accounting, and taxation. ANAO auditors, now and in the future, will also have:

• good communication skills;
• deep industry expertise;
• strong digital skills;
• the ability to think critically and creatively; and
• the ability to use technology to collect and analyse audit data.

The ANAO is alert to changes in the auditing profession and their impact on the ANAO workforce. Globally, the importance of the quality of audit work is increasingly recognised due to the reliance that is placed on that work. Quality auditing is equally important in both the public and private sectors. The community’s expectations about the performance of public and private entities increasingly sees it turning to the audit profession to give independent and robust assurance.

Further, increased public interest in the ethics and integrity of government decision-making has seen a shift in the profession towards developing audit frameworks to highlight the fundamental requirements of good governance and public sector performance. In response to the community’s high expectations of the audit profession to perform its functions independently and professionally, integrity, ethics and quality in auditing will remain cornerstones of the ANAO’s work.

As previously noted, the ANAO upholds the Australian Public Service values, with a particular focus on integrity, respect and excellence. The ANAO stresses high standards to ensure independence and accountability across all levels of the organisation, which is essential in the ‘glasshouse’ context that the ANAO operates in.

The ANAO will continue to embed a culture of professionalism and quality, retaining a strong cohort of leaders that can effectively respond to current and emerging challenges. We will continue to build capability in the areas of data analytics, cybersecurity, digital communication, and risk identification and management. Failing to maintain and develop an appropriately skilled workforce would have a direct impact on the office’s risk management and ability to deliver its audit work.

The ongoing development of the ANAO’s capability ensures that we are able to continue to achieve and deliver on our purpose. Investments in capability support the ANAO to uphold public sector principles and values, while building sufficient flexibility and expertise to meet future needs.

Over the next four years, the ANAO will make further investments in our workforce, quality and culture, including our approach to integrity. Focusing on these key areas will allow the ANAO to continue to build capability, remain contemporary and accelerate business improvement.

Workforce

The ANAO is a professional organisation of people with strong technical and specialist skills.

Over recent years, the ANAO has implemented change programs to strengthen the capability of our workforce. We are starting to realise the benefits of our investments into an integrated and collaborative approach to audit, as well as productivity gains associated with flexible ways of working and the use of modern, secure and robust technology. For example, the ANAO was able to respond quickly to the implementation of COVID-19 health measures by having staff work effectively from home. The ANAO will continue to explore new ways of working, developing existing areas of capability to find and embed efficiencies in our organisational design and processes.

To support audit now and into the future, the ANAO will continue to identify strategic opportunities in the areas of people, productivity and technology.

People

The ANAO must continue to invest in the specialist and technical capability of our workforce to ensure we are suitably skilled to deliver on our purpose to the Parliament.

The ANAO is invested in building and maintaining an environment for our people to work effectively. Our smooth transition to activity-based working within our building, and remote work arrangements throughout the pandemic has revealed the capability within our IT infrastructure to support staff – both in and out of the office. We will continue to shape our environment to enable our auditors to work effectively anytime, anywhere.

The ANAO further recognises that by recruiting, developing, and retaining the capability of our people we are able to deliver on our purpose. Attrition in the profession, whether in public or private sector auditing, is typically high. For the ANAO, retention and training will be a focus over the life of this plan. The ANAO remains focused on attracting the talented, skilled and professional people required to produce quality audits. As knowledge and expertise are critical to our work, the ANAO remains similarly focused on delivering the training required to develop efficient auditors, across all our audit products. Over the next four years, to support the capability, skills and performance of our people, the ANAO will:

• develop the next workforce strategy focused on recruitment, retention and development of high performance;
• develop a revised recruitment and onboarding strategy, focused on flexible and remote working arrangements; and
• refresh our approach to learning and development, to provide effective online training and improve the remote working and technical skills of our people.

Productivity

The ANAO maintains an ongoing focus on building productivity as a key capability. We recognise that improved productivity is critical to demonstrating the efficient use of taxpayer funds in the delivery of our work to the Parliament and the public. Improving operational processes and organisational design will ensure the ANAO keeps pace in a contestable environment with reliable, adaptive and professional business practices.

We will achieve productivity improvements through a focus on using resources strategically, streamlining our business practices, and modernising our ways of working. These activities will become part of our business-as-usual processes, enabling continued improvement and enhanced capability.

Over the next four years, to support improvements in productivity, the ANAO will:

• review approaches to supporting entity engagement and cooperation;
• develop a new resourcing model for assurance audits;
• implement new audit tools (part of the TeamMate+ audit management software)
• introduce more productivity technology to support efficiency (new time recording and scheduling);
• continue investments in our existing data analytics strategy; and
• develop a cross-skilling pathway for ANAO graduate recruits.

Technology

The ANAO is focused on keeping pace with advances in technology. Our technology infrastructure enables the way we work, the outcomes we produce, how we connect to each other and how we engage the public sector.

From 2018, we have invested in and implemented several IT, data and security strategies that focus on leveraging technology to enable our staff to work with greater mobility and flexibility. These strategies have empowered our workforce to work remotely — anywhere, anytime. By maintaining our focus on the use of contemporary technology, the ANAO will continue to build efficiencies and productivity in the work we do and how we deliver it.

Over the next four years, the ANAO will make investments in technology through:

• improving the ANAO’s connective technology, to support increasingly flexible working patterns as well as stronger collaboration between staff and enhanced engagement with entities;
• investing in modern consumption based cloud computing to enable a robust, flexible, cost effective technology environment which can readily scale to support peak work patterns;
• building high capacity data storage and compute platforms to support enhanced data analytics, modelling and automation;
• enhancing the ANAO’s security environment with a focus on maintaining strong organisational cyber resilience and streamlining secure data governance, collection and classification methods; and
• increasing the technical confidence of our people through learning and development.

Quality

The ANAO maintains a strong and ongoing focus on its quality framework as a core business investment. A sound quality framework supports delivery of high-quality audit work and enables the Auditor-General to have confidence in the opinions and conclusions presented in our reports to the Parliament. This in turn facilitates the Parliament’s confidence that the ANAO operates with independence, and that the audit approach meets the auditing standards set by the Auditor-General.

The ANAO quality framework is in accordance with the requirements of Auditing Standard ASQC 1 – Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements. The framework encompasses a number of elements, including learning and development, delegations, methodology development and review, escalation of accounting policy and qualifications risk, supervisory and arm’s-length internal review, and external review.

The ANAO is subject to external review, both through peer review arrangements with international colleagues and external audits. Section 41 of the Auditor-General Act 1997 establishes the position of the Independent Auditor, appointed by the Governor-General. Under subsection 45(1) of the Act, the Independent Auditor may at any time conduct a performance audit of the ANAO (having regard to the audit priorities of the Parliament as determined by the JCPAA), and audits the ANAO financial statements annually.

The ANAO published its first quality assurance framework and plan in July 2019. The report against this plan will be published in August 2020.

Over the next four years, the ANAO will continue its focus on the implementation of the quality assurance plan and further enhancements to the quality framework with particular emphasis on:

• expanding its root cause analysis program. This program was successfully piloted during 2019-20. The ANAO will build on the pilot program to ensure the quality framework continues to support the delivery of high-quality audit work;
• continuing to enhance the quality framework to include good practice recommendations form external reviews and changes in auditing standards; and
• continuing to increase transparency around audit quality through reporting of audit quality indicators and results of implementing the quality assurance plan.

The Quality Assurance Framework and Plan 2020–21 outlines the current framework and activities for the next 12 months.

Culture and integrity

The ANAO is committed to building a workforce culture driven by our values and focused on high performance, quality and professionalism. Our unique role and purpose in the public sector means we must continue to promote a culture that reflects the professional and independent posture expected of us — from the Parliament, the public sector and the audit community.

We recognise that strong values and shared culture is fundamental to supporting the performance and engagement of our people. The ANAO will place an increased focus on our value of integrity, which demands not only quality in our products but also in the behaviours of our people. As an independent arm of government focused on integrity, we must lead by example, through best practice, at all times. The ANAO will continue to elevate our culture towards these ideals through clear organisational expectations, ongoing development of employee capability, and a consistent approach to performance management. Our focus on integrity in our culture will draw heavily from the international public audit sector.

Over the next four years, we will continue to promote a values-driven culture throughout our organisation and within our people by:

• developing an integrity framework, supported by clear communication and training content;
• delivering a series of culture dialogue sessions for all staff, focused on our values and behaviours;
• reviewing and improving the ANAO’s existing suite of health and wellbeing processes; and
• increasing training accessibility and materials related to soft skills, resilience, leadership and people management.

Performance measurement informs the Parliament about how well the ANAO is delivering its purpose, and provides accountability to the Parliament. Our performance framework also helps the ANAO’s leadership and staff to understand the impact of the activities they are responsible for in delivering the ANAO’s purpose.

The ANAO’s performance measures provide information about what we expect to achieve in the next four years. We will report annually on our performance against the measures, and will review the measures annually to ensure they remain relevant and appropriate.

The performance measurement framework is based on measuring:

• what we did (output);
• how well we did it (quality and/or efficiency); and
• what the benefits were (impact).

Taken together, the performance measures tell a story of the ANAO’s achievement of our purpose. The output measures relay progress in the delivery of the ANAO’s audit work. This audit work generates findings and recommendations for improvement that are directed at entities and tabled in the Parliament. The impact measures seek to provide information on entities’ implementation of audit findings and recommendations, and the extent to which the Parliament’s engagement with our work leads to improvements in public sector administration.

The ANAO performance measures also include measures relating to quality and/or efficiency. The ANAO operates in a contestable environment and is committed to demonstrating transparency in our operations. The quality and efficiency measures are intended to demonstrate efficient use of taxpayer resources and the ANAO’s commitment to quality in our work. We use information from public audit offices in other jurisdictions to benchmark much of our performance.

The ANAO’s annual report contains our annual performance statements, which assess our performance against the performance measures and provide narrative and analysis. The annual performance statements tell a cohesive story on the extent to which the ANAO is meeting our purpose through the activities we undertake.

The three broad activities that contribute to achieving the ANAO’s purpose are:

• assurance audit services;
• performance audit services; and
• relationships and corporate and professional services.

Assurance audit services

Assurance audit services contribute to achieving the ANAO’s purpose through:

• providing assurance on the fair presentation of financial statements of the Australian Government and its controlled entities by providing independent audit opinions for the Parliament, the executive and the public;
• presenting two reports annually addressing the outcomes of the financial statement audits of Australian Government entities and the consolidated financial statements of the Australian Government, to provide the Parliament with an independent examination of the financial accounting and reporting of public sector entities; and
• contributing to improvements in the financial administration of Australian Government entities.

The ANAO audits the annual financial statements of Australian Government entities and the consolidated financial statements of the Australian Government. The consolidated financial statements present the consolidated whole-of-government financial result inclusive of all Australian Government–controlled entities, including entities outside the general government sector. These audits are designed to give assurance to the Parliament that an entity’s and the whole-of-government’s financial statements fairly represent its financial operations and financial position at year-end.

The ANAO also undertakes a range of assurance reviews by arrangement with entities, and in accordance with section 20 of the Auditor-General Act 1997. The ANAO conducts an annual assurance review of defence major projects.

More detail on the ANAO’s assurance audit services is contained in the annual audit work program.

To assess our performance against our purpose in relation to assurance audit activities, the ANAO measures:

• the number of financial statements audit opinions issued;
• the number of other assurance reports produced;
• the number of financial statements–related reports produced;
• the timeliness of issuing the auditor’s opinions;
• the average cost of financial statement audits; and
• the percentage of recommendations agreed and implemented by audited entities.

The performance measures and targets for assurance audit services from 2020–21 to 2023–24 are shown below.

Performance audit services

Performance audit services contribute to achieving the ANAO’s purpose through:

• audits of the performance of Australian Government programs and entities, including identifying opportunities for improvement and lessons for the sector; and
• other assurance reviews and information reports to the Parliament.

The ANAO’s performance audit activities involve the audit of all or part of an entity’s operations to assess its economy, efficiency, effectiveness, ethics, and 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. Entities indicate their agreement to implement ANAO recommendations in the audit report, which is tabled in the Parliament. In this way, entities inform the Parliament of improvements they intend to make as a result of ANAO audits. More detail on the ANAO’s performance audit services is contained in the annual audit work program.

To assess our performance against our purpose in relation to performance audit activities, the ANAO measures:

• the number of performance audits presented;
• the timeliness of completing performance audits;
• the average cost of performance audits; and
• the percentage of recommendations agreed and implemented by audited entities.

The performance measures and targets for performance audit services from 2020–21 to 2023–24 are shown below.

Relationships and corporate and professional services

Relationships and corporate and professional services are not a separate program in the ANAO’s portfolio budget statements, and performance measures in this area are shared across the ANAO. This area of activity contributes to achieving the ANAO’s purpose through:

• facilitating dissemination of the ANAO’s findings to members of parliament, the executive and the public;
• providing organisation-wide support services for the ANAO, based on specialised knowledge, professional practice and technology; and
• ensuring ANAO audits are of high quality and compliant with auditing standards.

To assess our performance against our purpose in the area of relationships and corporate and professional services, the ANAO measures our performance in delivering audit services through our key relationship with the Parliament; and the publication of audit insights and key learnings from audit work. The ANAO also evaluates whether the independent quality assurance program indicates that audit conclusions are appropriately supported by evidence.

The performance measures and targets for relationships and corporate and professional services from 2020–21 to 2023–24 are shown below.

The effective management of risk is integral to achieving our objectives and supporting our purpose over the life of this plan. The ANAO’s management of risk is embedded into business-as-usual practices, using consistent language, approaches and documentation, with the adoption of both qualitative and quantitative risk analysis tools across all operations and groups.

Operational risk management occurs in line with the defined roles and responsibilities in the ANAO’s Risk Management Framework. The framework is consistent with the Commonwealth Risk Management Policy and the international standards set out in ISO 31000 – Risk Management. The Auditor-General, taking into account the advice of the Executive Board of Management and the Audit Committee, establishes the ANAO’s appetite and tolerance for risk and oversees the Risk Management Framework.

The Risk Management Framework identifies specific responsibilities for key personnel across the ANAO, and the enterprise risk register assigns owners and tolerances for identified enterprise-level risk. In addition, all ANAO staff have a general responsibility to practise active risk management — a responsibility that staff are prepared for through ongoing mandatory training.

Risk management within the ANAO is one of our core strengths, supported by multi-level and independent review across all major audits, procurements and projects. Risk is integrated into our governance structure through all of our committees, and the chair of each committee ensures that risks are sufficiently managed, analysed, captured and reported, and efficiently escalated as required to the Auditor-General.

The Executive Board of Management recently reassessed the ANAO’s risk appetite and tolerances in the light of the changes and challenges within our current operating environment. The review resulted in the implementation of risk mitigation plans to bring a number of enterprise risks — rated above our tolerance levels — back to an acceptable level.

The Audit Committee, supported by our internal audit function, receives all internal audit reports and directs senior leaders to provide information as necessary, to ensure that risk is being managed proactively. The Audit Committee provides advice and assurance and reports directly to the Auditor-General.

The ANAO defines strategic risks as those that can arise due to factors outside of the ANAO’s control. We have identified two strategic risks, which are managed in line with the Risk Management Framework and addressed in our performance measures. The strategic risks are:

1. a reduction in the ANAO’s capacity for independent reporting; and
2. a loss of confidence by the Parliament in the ANAO’s ability to execute the Auditor-General’s mandate.

The ANAO further recognises that the risk environment for Commonwealth entities may have changed as a result of Australia’s response to the COVID-19 pandemic. The ANAO will continue to monitor this emerging risk to assess entities’ ability to provide accurate evidence for audits. Where appropriate, the ANAO may adjust audit plans to ensure that quality is retained and auditing standards are not compromised. The ANAO has also increased its contact with contracted audit service providers to ensure a consistent application of the audit standards.