Introduction

1.1 The Australian National University (ANU), established in 1946, is an accredited higher education provider under the Higher Education Support Act 2003 and a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).⁷ Its functions include: undertaking research and teaching; encouraging and providing facilities for research and postgraduate study; providing facilities and courses for higher education, including education appropriate to professional and other occupations; and awarding and conferring degrees, diplomas and certificates.⁸ In October 2021, the ANU had an equivalent full-time student load of 17,695.⁹

1.2 The ANU is also authorised to engage in commercial and investment activities.¹⁰ In 2020, the ANU reported $1.330 billion in revenue and $4.683 billion in controlled assets. Of the $1.330 billion in revenue, $700 million (53 per cent) was received from the Australian Government.

Senior management and academic leadership

1.3 The 15 member ANU Council (the Council) established under section 8 of the Australian National University Act 1991 (ANU Act) is the ANU’s accountable authority and responsible for the control and management of the ANU.

1.4 The Vice-Chancellor in addition to being a member of the Council, is the Chief Executive Officer. The Vice-Chancellor is supported by a senior management team that includes four Deputy Vice-Chancellors¹¹, one Pro Vice-Chancellor¹², two Vice-Presidents¹³, a Chief Operating Officer and a Chief Financial Officer.

1.5 Academic leadership is provided by the Deans of the seven colleges of the ANU¹⁴, the College of Arts and Social Sciences, the College of Asia and the Pacific, the College of Business and Economics, the College of Engineering and Computer Science, the College of Health and Medicine, the College of Law, and the College of Science.¹⁵ The ANU’s senior management and academic leadership structure is illustrated in Figure A3.1 at Appendix 3 and the governance arrangements are illustrated at Figure 1.1.

Governance and accountability framework

1.6 The ANU’s governance requirements are set out in legislation.

• ANU Act — the founding legislation and enabling Act, establishing the ANU and detailing its purpose/s and governance structure.
• PGPA Act and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) — the PGPA Act details the general duties of accountable authorities and officials, with the PGPA Rule establishing the requirements and procedures necessary to give effect to the governance, performance and accountability matters covered by the PGPA Act. The framework establishes obligations relating to the proper use and management of public resources (defined in section 8 of the Act as efficient, effective, economical and ethical).
• Higher Education Support Act 2003 — sets out quality and accountability requirements that the ANU must comply with as a higher education provider, in relation to:
  • financial viability¹⁶;
  • quality¹⁷;
  • fairness (equity)¹⁸;
  • compliance¹⁹;
  • contributions and fees²⁰; and
  • the ‘mission based compact’ and academic freedom.²¹
• Higher Education Standards Framework (Threshold Standards) 2021 — issued under the Tertiary Education Quality Standards Agency Act 2011 (TEQSA Act).²² The standards address: student participation and attainment; learning environment; teaching; research and research training; institutional quality assurance; governance and accountability; and representation, information and information management. The governance and accountability requirements include corporate governance; corporate monitoring and accountability; and academic governance.

Recent changes to higher education in Australia

1.7 Across the period examined (2018 to 2021), a number of changes to the environment of higher education providers occurred. These changes have impacted the risk profile of higher education providers, including imposing additional compliance obligations. The changes that have been made include the:

• the Model Code on freedom of speech and academic freedom (French Model Code);
• the Job-ready Graduate’s package; and
• the Guidelines to Counter Foreign Interference across the Australian University sector and the requirements of the Foreign Relations (State and Territory Arrangements) Bill 2020.

Model code on freedom of speech and academic freedom (French Model Code)

1.8 On 14 November 2018, the Minister for Education announced an independent review into freedom of speech in higher education to be undertaken by the Hon Robert French AC. The focus of the review was to assess the effectiveness of university policies and practices to address the requirements of the Higher Education Standards Framework to promote and protect freedom of expression and intellectual inquiry on Australian campuses. The results of the review were released in April 2019.

Higher education reform package (Job-ready Graduates Package) 2020

1.9 On 19 June 2020, the Minister for Education announced the Job-ready Graduates Package. The legislation to enact the reforms of the Job-ready graduates package the Higher Education Support Amendment (Job-Ready Graduates and Supporting Regional and Remote Students) Bill 2020 was introduced into Parliament in September 2020 and came into effect on 27 October 2020. The Job-ready Graduates Package was introduced to reform higher education funding in Australia and to strengthen and extend provider integrity measures.

Foreign interference in the Australian university sector

1.10 In November 2019, guidelines to counter foreign interference across the Australian university sector were released by the University Foreign Interference Taskforce.²³ On 10 December 2020, Australia’s Foreign Relations (State and Territory Arrangements) Bill 2020 received royal assent and came into effect. The legislation has implications for the university sector, particularly in relation to entering into arrangements with a foreign government, or with a foreign university that does not have institutional autonomy.²⁴ An Australian public university is required to notify the Minister (via the Department of Foreign Affairs and Trade) about arrangements within the scope of the scheme²⁵, however it does not require the university to seek approval to enter into arrangements.

Rationale for undertaking the audit

1.11 The Auditor-General released a series of audits in April and May 2019 that reviewed whether the boards of four corporate Commonwealth entities had established effective arrangements to comply with selected legislative and policy requirements and had adopted practices to support effective governance.²⁶ The key messages and observations from this series of audits were included in the ANAO’s Audit Insights released in May 2019.²⁷ These insights are relevant to the ANU as a corporate Commonwealth entity.

1.12 Fit-for-purpose governance arrangements supported by effective systems of control and accountability: assist entities oversee the management of the entity; monitor and accurately report on performance; ensure the entity complies with its legal obligations; and respond to disruptive events. In 2020, the ANU was subjected to several disruptive events, including the impact of bushfire smoke, a hailstorm and the COVID-19 pandemic. All of these events have had an impact on the ANU’s operations, revenue and resources.

1.13 The audit provides independent assurance to the Parliament on the effectiveness of the governance arrangements of the ANU and its systems of control and accountability, including the arrangements established to respond to the COVID-19 pandemic.

Audit approach

Audit objective, criteria and scope

1.14 The audit objective was to assess the effectiveness of ANU’s governance and control framework. To form a conclusion against the audit objective the following high-level criteria were adopted.

• Is the design of ANU’s high level governance arrangements consistent with legislative, policy and regulatory requirements?
• Are the governance arrangements fit-for-purpose and supported by effective systems of control and accountability?

1.15 The audit examined the operations of the ANU Council, its Council Committees and the Academic Board from January 2018 to July 2021.

Audit methodology

1.16 In undertaking the audit the ANAO:

• reviewed relevant legislation, regulations, policies and best practice standards;
• reviewed ANU Council, Council Committee and Academic Board papers and minutes;
• reviewed ANU documentation, including strategic and corporate plans, annual reports, performance reports and audited financial statements for 2018, 2019 and 2020;
• reviewed the operations of the ANU Council, Council Committees and Academic Board against their charters;
• met with ANU Council and Academic Board members;
• met with the Chair of the ANU’s Audit and Risk Management Committee;
• observed an ANU Council planning day and two ANU Council meetings, two Audit and Risk Management Committee meetings, one Finance Committee meeting, one Campus Planning Committee meeting, one Nominations Committee meeting and one Remuneration Committee meeting;
• attended as an observer at two Academic Board meetings, one University Research Committee meeting, one Academic Quality Assurance Committee meeting and one Teaching, Learning and Development Committee meeting between October 2020 and February 2021;
• reviewed internal audit reports and control reviews and examined the current status of work being undertaken by the ANU to rectify identified deficiencies with regard to the implementation of the systems of accountability and control established by the ANU Council; and
• reviewed the systems of control and accountability established by the ANU to respond to the COVID-19 pandemic.

1.17 The audit was conducted in accordance with ANAO auditing standards at a cost to the ANAO of $728,135.

1.18 The audit team members were Joyce Knight, Laura Trobbiani, Olivia Robbins, David Van Schoten, Johanna Bradley and Alex Wilkinson.

2.1 As a corporate Commonwealth entity and an accredited higher education provider, the Australian National University (ANU) is required to have governance arrangements in place that are consistent with: the relevant provisions of the Australian National University Act 1991 (ANU Act); the principles-based framework established by the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and Public Governance, Performance and Accountability Rule 2014 (PGPA Rule); the Higher Education Support Act 2003; and the Higher Education Standards Framework. In addition to these legislative, regulatory and policy requirements, a series of reviews, including the Hayne Royal Commission²⁸ have highlighted the importance of having governance arrangements that are supported by appropriate information, records management, communication practices, and are periodically reviewed and evaluated.

2.2 To assess if the design of the ANU’s governance arrangements are consistent with the legislative, regulatory and policy requirements, the ANAO examined the extent to which the ANU’s governance arrangements:

• comply with legislative, regulatory, and policy requirements and applicable best practice standards;
• are supported by appropriate information management, security and reliable records;
• are transparent and underpinned by effective communication practices to support informed decision making; and
• are periodically reviewed, evaluated and adapted where necessary.

Do the governance arrangements comply with the legislative, regulatory and policy requirements including applicable best practice standards?

2.3 To assess if the ANU’s governance arrangements comply with the legislative, regulatory and policy requirements, including applicable best practice standards, the ANAO examined the structure, membership, nomination, appointment, induction, disclosure of interests and remuneration arrangements of the ANU Council (the Council), its Council Committees and the Academic Board to determine if they comply with the requirements of the:

• ANU Act;
• PGPA Act;
• PGPA Rule;
• Higher Education Standards Framework; and
• Voluntary Code (Voluntary Code) of Best Practice for Australian Public Universities.²⁹

Structure

2.4 The ANU’s high-level governance arrangements, illustrated in Figure 1.1, consists of the Council, its Council Committees and the Academic Board.

The Council

2.5 The Council is responsible for the control and management of the ANU.³⁰ It is authorised to issue statutes and rules (regulatory instruments) to govern the ANU³¹ and is able to delegate a broad range of its functions and powers, with the exception of the:

• appointment of the Chancellor, Pro-Chancellor and Vice-Chancellor;
• approval of the ANU’s annual budget or its business plan;
• approval of the annual report;
• monitoring of the university’s commercial activities, its subsidiaries and any other entities that it controls, to the extent required to ensure they do not have any significant adverse impact on, or pose any reasonable risk to, the university’s finances and operations; and
• reviewing and monitoring the management of the university as a whole or the university’s performance as a university (as defined by the Higher Education Support Act 2003).³²

Council Committees

2.6 To assist in the discharge of its functions, the Council is authorised to and has established seven Council Committees.³³ Table 2.1 lists the roles and responsibilities and composition of each of the Council Committees and the Academic Board³⁴ as per its current Council approved charter.

Academic Board

2.7 The Council established the Academic Board under statute.³⁵ The Academic Board, led by the Chair is the academic governance body of the ANU. Its functions are detailed in the Academic Rule 2017 and reflected in its Charter.³⁶ The objective of the Academic Board is ‘to ensure the university maintains the highest standards in teaching, scholarship and research.’ According to its Charter, its stated roles and responsibilities do not include providing assurance to the Council that the ANU, as a registered higher education provider, complies with the academic, teaching, learning and research requirements of the Higher Education Support Act 2003 and the Higher Education Standards Framework.37 However, in October 2021, the Charter for the Academic Board was updated to specify that its Annual Report³⁸ must provide assurance to the Council ‘that the University has complied with the Higher Education Support Act 2003 and the Higher Education Standards Framework (Threshold Standards) 2015.’³⁹

2.8 The Academic Board is authorised to establish sub-committees and working groups to assist it exercise its functions. The Academic Board has established four sub-committees and the function of each sub-committee is detailed below:

• Academic Quality Assurance Committee, responsible for advising the ANU Executive and the Academic Board on the higher education standard environment;
• University Research Committee, responsible for advising the Academic Board or the Vice-Chancellor on matters relating to research, research performance and integrity;
• Teaching, Learning and Development Committee, responsible for advising the Academic Board and ANU Executive on the higher education, teaching and learning environment; and
• Academic Board Steering Committee, responsible for shaping the strategic direction of the Academic Board, determining the agenda for meetings and resolving urgent matters which require approval or endorsement on behalf of the Academic Board out-of-session.

2.9 Each sub-committee has a Charter that has been approved by the Academic Board. The charters detail the objective, authority, composition and tenure, roles and responsibilities, responsibilities of members, reporting requirements and administrative arrangements, including assessment and review requirements.

Membership, composition, nomination and appointment processes

2.10 The membership, composition, nomination and appointment requirements of the Council, Council Committees and the Academic Board are outlined in the ANU Act, the Council (Elections) Statute 2016, the Council (Elections) Rule 2016⁴⁰, Academic Board Rule 201741 and the Council approved charters.

The Council

2.11 The ANAO examined the nomination and appointment process for the current Council members and found that:

• the appointment of the Chancellor and re-appointment of the Pro-Chancellor and Vice-Chancellor⁴² complied with the requirements of the ANU Act;
• the seven members appointed by the Minister, were appointed on the basis of recommendations from the Nominations Committee⁴³, in line with the relevant provisions of the ANU Act⁴⁴ and Principle 8 of the Voluntary Code⁴⁵; and
• the processes to elect the four ANU staff members and the two student representatives complied with the requirements of the ANU Act, the Council (Elections) Statute 2016 and the Council (Elections) Rule 2016.⁴⁶

2.12 The Council and Council Committee members are not remunerated, except for the Chancellor, who receives an honorarium of $75,000 per annum. However, the ANU meets travel, accommodation and incidental costs associated with attendance at meetings. In May 2020, the Council approved making an offer of a $35,000 per annum honorarium to external members. However, in light of the impact of COVID-19 on the finances of the ANU, all honorariums for 2020 were waived.

Council Committees

2.13 The ANU Act does not specify any requirements with regard to the membership or composition of Council Committees, except for the Nominations Committee. The ANU Act states that the Nominations Committee is to consist of the Chancellor and six other members appointed by the Chancellor in accordance with guidelines determined by the Council.⁴⁷ The guidelines for the appointment of members to the Nominations Committee were established in 2004 and are reflected in its current Charter.

2.14 The ANU Act authorises the Council to appoint members to Council Committees.⁴⁸ Between 1 January 2018 and 31 December 2020, the Council appointed and/or re-appointed 28 members to Council Committees.⁴⁹ Actions regarding appointments to Council Committees are recorded in the Council meeting minutes, however the process to identify and select external members has not been documented.

2.15 The role of the Nominations Committee, as outlined at Table 2.1, does not include providing recommendations to the Council for the appointment of external members to Council Committees. There would be benefit in the ANU expanding the role and responsibilities of the Nominations Committee to include making recommendations to the Council in relation to the appointment of external members to Council Committees. Adopting this approach would ensure that the appointment of external members to Council Committees is consistent with Principle 8 of the Voluntary Code.⁵⁰

Academic Board

2.16 The Academic Board has a total of 51 members and is comprised of a mix of ex-officio⁵¹ and elected positions. The Chair of the Academic Board is appointed by the Council on the recommendation of the Vice-Chancellor.⁵² All Deputy Vice-Chancellors and College Deans are appointed as ex-officio members, with academic and professional staff elected in accordance with the procedures outlined in the Academic Board Rule 2017. Appointments for elected members are for two years and student members are appointed for one year. All elected members are eligible for re-election.

2.17 The ANAO’s examination of the appointments process and composition of the Academic Board found that it complies with the requirements of the Academic Board Rule 2017. The current Chair of the Academic Board was appointed by the Council in February 2020 for a two-year term. To select the Chair, the Academic Board established a committee to manage the process and provided its recommendation to the Vice-Chancellor for Council approval as required. Elections were held for academic and professional staff members of the Academic Board in March 2020. Elections were conducted by the colleges with support provided by the Corporate Governance and Risk Office and complied with the requirements of the Academic Board Rule 2017.

Skills and expertise

2.18 The ANU Act requires that at least two Council members, appointed by the Minister, must have a high level of relevant financial expertise and at least one member must have a high level of relevant commercial expertise.⁵³ The Higher Education Standards Framework, states that governing boards should include members that are: independent; fit and proper persons; and meet Australian residency requirements, if any.⁵⁴ The Voluntary Code recommends that governing boards should include members with strong expertise and knowledge of higher education and/or other education sectors.⁵⁵

2.19 In line with the requirements of the ANU Act, the Higher Education Standards Framework and the Voluntary Code, the Nominations Committee maintains a skills matrix that identifies mandatory and desirable skill sets, other relevant qualities including gender, state of residence and if the member identifies as an indigenous Australian. Out of the 15 Council members:

• five members have financial expertise;
• of the five members that have financial expertise, four are ministerial appointments;
• five members have commercial expertise;
• of the five members that have commercial expertise, four are ministerial appointments;
• eleven of the fifteen members of Council have skills, expertise or qualifications in higher education;
• eleven of the fifteen members of Council are female; and
• two members identify as indigenous Australians.

Council Committees

2.20 The ANU Act does not specify the skills and expertise required to be appointed to Council Committees, however the PGPA Rule requires the Audit and Risk Management Committee to consist of:

at least three persons who have appropriate qualifications, knowledge, skills or experience to assist the Committee perform its functions.⁵⁶

2.21 Of the seven Council Committees, only the charters of the Audit and Risk Management and Finance Committees specify the skills and expertise required. Table 2.2 illustrates the compliance of these two committees with their respective charters.

Table 2.2: Analysis of current Council Committee skill and expertise requirements

Key: ◆ Fully compliant. ▲ Partially compliant. ■ Not compliant.

Source: ANAO analysis of Council Committee Charters.

2.22 The charters of the Campus Planning, Nominations, Remuneration, Honorary Degrees and COVID-19 Committees do not establish requirements in relation to the skills and expertise of members. While the Nominations Committee has documented the skills and expertise that current Council Committee members hold in the skills matrix it maintains (see paragraph 2.19), there would be benefit in the ANU amending the Charter for the Campus Planning Committee to specify the skills and expertise required particularly noting its role and responsibilities (see Table 2.1). During the course of the audit, the ANU advised the ANAO that all charters are currently under review, with the reviews scheduled to be completed by December 2021.

Academic Board

2.23 The membership of the Academic Board and its sub-committees are a mix of ex-officio and elected positions. All members are staff or students of the ANU, and the charters do not specify the skills and expertise required. However, upon appointment, new members of the Academic Board are to attend an induction session. From 2018 to 2020, the Academic Board held four induction sessions. One session was held in 2018, two in 2019 and one in 2020.⁵⁷

Disclosure of interests

2.24 The charters for the Council, Council Committees and Academic Board specify that members are deemed ‘officials’ under the PGPA Act. Under the PGPA Act officials have a range of general duties, including a duty to disclose interests (section 29).

2.25 The ANAO examined the extent to which the Council, Council Committees and Academic Board comply with the requirements of section 29 of the PGPA Act and Division 2 of the PGPA Rule. The findings of this analysis are detailed below.

• As part of the appointment and induction processes, new Council and Council Committee members are required to complete a new Council member disclosure and declaration form.⁵⁸ The form requests new members to disclose potential conflicts of interest, complete a ‘fit and proper person’ questionnaire and confirm that they have been provided with a current copy of the Council or Council Committee members handbook.
• On an annual basis, Council and Council Committee members are requested to review and update a register of interests. The register of interests is then provided to Council for noting. As at August 2021, all Council and Council members had provided a declaration of interest as required.
• At each Council, Council Committee and Academic Board meeting, in line with the requirements of the PGPA Rule, members are reminded of their duties under the PGPA Act and asked to disclose any interest and/or conflict of interest. Any interests that have been disclosed are recorded in the meeting minutes.
• Members of ANU staff that are also members of the Academic Board are to comply with the code of conduct, conflict of interest and commitment, paid outside work — the 52–day rule⁵⁹, outside work for professional staff and the company directorships, secretaryships and partnerships policies. However, unlike the Council and Council Committee members, a register of interests is not maintained or provided to the Academic Board for ‘noting’ or ‘information’ on a regular basis. There would be benefit in the Academic Board developing and maintaining a register of disclosed interests and including an annual review and update process to provide assurance that members comply with the relevant policies and support Academic Board members to recognise and manage conflicts of interest.

Are the high-level governance arrangements supported by appropriate information management, information security and reliable records?

2.26 Governing bodies require accurate and timely information to hold management to account, oversee an organisation’s activities and support informed decision making.⁶⁰ To determine if the high-level governance arrangements are supported by appropriate information management, information security and reliable records, the ANAO examined:

• information management policies, procedures and systems;
• records management; and
• information security.

Information management policies, procedures and systems

2.27 The policies and procedures that detail how the ANU manages its information include: the Enterprise Systems Management Standard; Records and Archives Policy; Information Technology Security Policy; Privacy Policy; Freedom of Information Procedure; and the ANU Staff and Student Codes of Conduct. While these policies and procedures address discrete components of information management the ANU does not have an overarching information management policy. There would be benefit in the ANU developing and implementing an information management policy to provide guidance, set expectations and establish clear requirements that staff are to comply with when creating, capturing and managing information across the ANU.

2.28 The ANU uses a range of systems and applications to generate, store, distribute and manage information, including information provided to the Council, Council Committees and the Academic Board. The ANU categorises its information communication and technology (ICT) systems, including its information management systems, into three tiers:

• tier one systems are critical to the core business of the ANU;
• tier two systems are non-core ANU-wide systems; and
• tier three, or ‘other’ systems are not business critical.⁶¹

2.29 The ANU Enterprise Systems Management Standard identifies tier one systems to be authoritative sources of information which can be used to assist the ANU meet its statutory requirements.⁶² The tier one systems of the ANU include its records, financial, human resources and research information management systems.⁶³

2.30 In May 2019, the ANU engaged KPMG to review its data and information management maturity. The report found that the ANU needed to radically change its digital environment and develop a digital master plan. In February 2020, to address the identified deficiencies in the ANU’s information technology strategy and structure, the Council agreed to pursue a digital strategy.⁶⁴

2.31 As part of developing the digital strategy, the ANU has established a technology governance framework, developed an application and data roadmap, investment strategy and a digital master plan.⁶⁵

2.32 The technology governance framework was established in mid-2020.⁶⁶ The application and data roadmap was completed in June 2021 and identified 13 ‘pain points’ including: uncontrolled storage formats; inability to make evidence-based decisions; lack of an enterprise system; lack of key integrations between corporate systems; and lack of strategic and operational data and/or process governance. The work also identified data confidentiality, integrity and availability risks in relation to research, assessment, personnel (staff and students), curriculum, legal and compliance and services and operational activities. The digital master plan was endorsed by the Audit and Risk Management Committee and approved by the Council in July 2021⁶⁷, and is expected to be in place until 2030.

Records management

2.33 The ANU’s Electronic Records Management System (ERMS) is the ANU’s primary records management system. It was implemented in 2015 to meet legislative and regulatory record keeping requirements and is a tier one system. The ANU Records and Archives Policy identifies that the use of ERMS is encouraged, but not mandatory.⁶⁸ ANU officers indicated to the ANAO that they were not comfortable using the ERMS, stating that it was not ‘user friendly’. As a result, a combination of group folders, network drives and SharePoint sites are used to generate, store and distribute information, with information either not transferred into the ERMS, or not transferred in a timely manner.

2.34 The National Archives of Australia identifies that group folders, network drives and SharePoint sites are not appropriate records management systems as:

• anyone with access can alter or delete records;
• authenticity, integrity and trustworthiness cannot be demonstrated;
• identification of the record’s status or version is difficult;
• information is uncontrolled, taking up large volumes of network space; and
• metadata is often missing, or inaccurate.⁶⁹

2.35 In October 2021, the ANU advised the ANAO that it had introduced a solution to integrate SharePoint with its ERMS. The solution, once it is installed, automates the transfer of information from SharePoint to the ERMS. Nevertheless, the ANU’s continuing use of network drives:

• is not consistent with best practice standards;
• undermines the quality and completeness of information; and
• creates a risk that the information provided to the Council, Council Committees, the Academic Board and its sub-committees is not based on reliable records.

Information security

2.37 The Information Technology Security and Acceptable use of Information Technology policies are the two main policies relating to information security at the ANU. The acceptable use of information technology has been issued under the Information Infrastructure and Services Rule 2020.⁷⁰ The policies state that the ANU recognises and is consistent with standards and regulations that apply to information security including the Protective Security Policy Framework.⁷¹

2.38 In response to data breaches in 2018⁷², the ANU commenced two programs of work. One to address immediate vulnerabilities and implement the recommendations made by the Australian Cyber Security Centre. The second to develop and implement a strategic approach to information security.⁷³

2.39 In 2018 and 2019, the Audit and Risk Management Committee and the Council were provided with updates on the work being undertaken to address the immediate vulnerabilities identified. In February 2020, the Council approved the development of the Information Security Program 2020–2024.⁷⁴ Throughout 2020, the Audit and Risk Management Committee received information security updates at five of its six meetings and the Council was provided with two updates. In April 2021, the Council approved continuing the information security program of work and the associated target of achieving compliance with the Australian Signals Directorate Top 37. The 2021 ANU budget has also allocated $29 million to improve and strengthen the ANU’s information technology and cyber security.⁷⁵

Are the governance arrangements transparent and underpinned by effective communication to support informed decision making?

2.40 Effective communication is required to support informed decision making, monitor the implementation of the Council’s decisions and disseminate outcomes. This is particularly important where roles and responsibilities overlap and there are multiple reporting lines between the Council, its Council Committees, Academic Board and Senior Management Group.

2.41 To determine if the governance arrangements are transparent and underpinned by effective communication the ANAO examined the:

• coordination and support arrangements;
• flow of information up to, between and from the high-level governing bodies and the Senior Management Group;
• communication of outcomes; and
• culture of the Council, Council Committees and the Academic Board.

Coordination and support

2.42 Communication between the ANU governing bodies is coordinated by the Corporate Governance and Risk Office (CGRO).⁷⁶ The CGRO develops the annual forward work plans in consultation with the Chairs of the Council, Academic Board and Council Committees. The work plans are ‘live’ documents and are updated throughout the year.

2.43 Agenda papers are distributed seven days in advance of the relevant Council, Council Committee and/or Academic Board meeting. Decisions and outcomes are recorded in the meeting minutes and any action items are communicated to the relevant business area for their review and/or implementation using group mailboxes. The ANU has advised that tracking action items is the responsibility of CGRO while implementation of action items is the responsibility of the relevant business area.

2.44 The charters of the Council, Council Committees, the Academic Board and the Terms of Reference for the Senior Management Group provide limited guidance on how communication to the Council and/or between Council Committees and the Academic Board is to be managed.

2.45 Communication between the Council, Council Committees, Academic Board and the Senior Management Group of the ANU is supported through common membership with 33 per cent of the Council members also appointed to Council Committees. Similarly, 78 per cent of members of the Senior Management Group are also members of the Academic Board. In 2018, an Australian Prudential Regulation Authority inquiry found that despite overlapping Committee memberships, the linkages between Committees were inadequate.⁷⁷ In 2019, the Australian Securities and Investments Commissions’ Corporate Governance Taskforce Report noted that ‘simply having cross-committee membership is not enough to ensure efficient information flows between board committees’ and ‘cross-committee information flow should be formalised’.⁷⁸

Reporting

Reporting between the Council, Council Committees and Academic Board

2.46 Council Committees and the Academic Board are required to submit annual reports to Council. The purpose of these reports is to demonstrate the extent to which the Council Committees and Academic Board have acquitted their responsibilities against their Charter. Table 2.3 illustrates that over the period (2018 to 2020) 16 out of the 18 annual reports required have been provided. The Academic Board provides an Annual Report to the Council in February of each year⁷⁹ and the Council Committees provide annual reports in March or April.

Table 2.3: Reports and executive summaries provided to the Council from the Council Committees and Academic Board for 2018 to 2020

Note a: The Remuneration and Nominations Committees meet once per year, therefore the Executive Summary and Annual Report are a single document.

Source: ANAO analysis.

2.47 The Council is also provided with executive summaries from the Council Committees and Academic Board as a standing agenda item. The Council uses the executive summaries to maintain awareness, support oversight of activities undertaken, and matters considered by the Council Committees and the Academic Board. Across the period (2018 to 2020) each Council Committee and the Academic Board provided an Executive Summary to the Council, except where the Council Committee had not met, or had met less than seven business days, prior to a scheduled Council meeting. In 2020, this exception was extended to special meetings of the Council that were held.⁸⁰ While the provision of the executive summaries is not a formal requirement, there would be benefit in formalising this process through either a communications protocol, or an update to the charters of the Academic Board and Council Committees.

2.48 Regular updates regarding decisions of the Council are provided as a standing agenda item to the Finance Committee, Audit and Risk Management Committee and Campus Planning Committee. The Academic Board receives updates on recent decisions and/or deliberations of the Council through the Vice-Chancellor’s report⁸¹, or the Chair of the Academic Board’s report.⁸² The Chair of the Academic Board is also a non-voting member of the Council.

Reporting between Council Committees and between Council Committees and the Academic Board

2.49 There are no reporting requirements between the Council Committees or between Council Committees and the Academic Board. The ANAO observed that across the period (2018 to 2020), items were often considered by multiple Council Committees and/or the Academic Board before progressing to the Council. The ANAO examined 18 Council agenda items over the period 2018 to 2020 and found that 22 per cent were endorsed or noted by multiple Council Committees and/or the Academic Board. While items are often considered by multiple Council Committees and/or the Academic Board, only two of the seven Council Committees have charters that require the referral of items to other Council Committees⁸³ and these requirements have not been met. Case study 1 provides an example.

Reporting between Senior Management Group, the Council and Academic Board

2.50 Reporting between the Senior Management Group⁸⁵, the Council and the Academic Board occurs through regular reports and agenda papers on specific issues. The Senior Management Group communicates with the Council, Council Committees and Academic Board through regular reports from individual portfolios and updates on executive and college plans. For example, the Deputy Vice-Chancellor (Academic) has provided a report to every Academic Board meeting from 2018 to 2020.

2.51 The Academic Board and Senior Management Group communicate through regular two-way reporting, supported by common membership. The ANU advised the ANAO that the Academic Board does not consider the financial implications of academic matters that it is asked to endorse or approve. Instead, the financial implications are addressed by the Senior Management Group. The majority of Senior Management Group members are also members of the Academic Board, nevertheless, there would be benefit in formalising and clarifying the roles, responsibilities and relationship between the Senior Management Group and the Academic Board.

2.52 Communication at the higher levels of governance within the ANU relies on informal practices that are not consistently documented. Communication is aided by common (cross-committee) membership, rather than formalised processes that establish clear lines of accountability and responsibility and embed appropriate reporting lines between the Senior Management Group, the Council, Council Committees and the Academic Board. As discussed at paragraph 2.45, in 2019, the Australian Securities and Investments Commissions’ Corporate Governance Taskforce Report noted that ‘simply having cross-committee membership is not enough to ensure efficient information flows between board committees’ and ‘cross-committee information flow should be formalised’.⁸⁶

2.53 Consistently documenting the existing communication practices and formalising the relationships and reporting requirements between the Council, Council Committees, Academic Board and the Senior Management Group should:

• provide greater clarity and consistency in relation to the information provided to and shared between Council Committees and between Council Committees and the Academic Board;
• clarify the relationships and reporting lines between Council Committees and the Academic Board;
• support Council Committees to identify matters that should be referred to other Council Committees; and
• enable accurate identification and tracking of matters that progress to the Council.

Transparency of governance arrangements and outcomes

2.54 All ANU high-level governance bodies publish their respective charters, membership and meeting schedules on the ANU website. The Council publishes the outcomes of non-confidential items discussed and releases a newsletter that summarises the activities and actions of the Council. The Academic Board also publishes a newsletter summarising outcomes, deliberations and decisions.⁸⁷

Culture

2.55 The Council and Academic Board members interviewed by the ANAO stated that the culture of both the Council and the Academic Board encouraged the discussion of issues. This was observed by the ANAO during the audit team’s attendance meetings of the Council. Council members are invited to nominate additional items for discussion and consensus, though not required, is sought for all decisions. The ANAO also observed the Council challenging the information and recommendations provided by management.⁸⁸ A recent example is provided in Case study 2.

2.56 Interviews with Academic Board members indicated the Academic Board also has a culture that encourages the discussion of dissenting views, which was supported by the ANAO’s observation of Academic Board meetings.

Are the high-level governance arrangements periodically reviewed, evaluated and adapted where necessary?

2.57 The Higher Education Standards Framework and the Voluntary Code establish requirements and guidelines for universities in relation to undertaking reviews and evaluations of its governance arrangements.

2.58 To determine if the ANU’s high-level governance arrangements are periodically reviewed, evaluated and adapted where necessary, the ANAO examined the extent to which:

• the review and evaluation activities complied with the applicable legislative, regulatory requirements and best practice guidance; and
• the ANU has implemented the recommendations of review and/or evaluation activities.

Performance evaluations and self-assessments

2.59 The Higher Education Standards Framework establishes review requirements stating that (the Council) is to:

undertake periodic (at least every seven years) independent reviews of the effectiveness of the governing body and academic governance processes … ensuring that the findings of such reviews are considered by a competent body or officer(s) and that agreed actions are implemented.

2.60 The Voluntary Code states that:

on a regular basis, at least once every two years, the governing body should assess its performance, the performance of its members and performance of its committees.

2.61 The charters of the Council, Council Committees, the Academic Board and its sub-committees include self-assessment requirements. The Council Charter states that it evaluates its performance through an annual self-assessment and one-on-one consultations between the Chancellor and individual Council members every second year.⁹⁰ The charters for the Audit and Risk Management and Finance Committees state that self-assessments will be conducted on an annual basis, whereas the Campus Planning, Remuneration, Nominations Committees and Academic Board are to undertake biennial self-assessments. During the course of the audit, the ANU advised the ANAO that the charters of the Council, Council Committees and Academic Board are currently under review, with work scheduled for completion by December 2021 (see paragraph 2.22).⁹¹

Self-assessments of the Council and Council Committees

2.62 The ANAO examined whether the Council, Audit and Risk Management, Finance, Campus Planning, Nominations and Remuneration Committees and the Academic Board have met the self-assessment elements of the Voluntary Code. The results are detailed at Table 2.4.

Table 2.4: The Council, Council Committees and the Academic Board’s compliance with the self-assessment elements of the Voluntary Code

Key: ◆ Fully compliant. ▲ Partially compliant. ■ Not compliant.

Note a: The ANU advised the ANAO that due to the need to move the entire governance apparatus online in 2020 and as its content was highly focussed on emerging financial and COVID related priorities, the 2020 self-assessment activity was rescheduled to 2021.

Note b: Over the period examined (2018 to 2020), the Nominations Committee has met four times. Once in 2018, twice in 2019 and once in 2020.

Note c: Over the period examined (2018 to 2020), the Remuneration Committee has met three times, in February of each year.

Note d: The Academic Board has postponed its 2020 self-assessment to 2021.

Source: ANAO analysis.

2.63 Across the period examined (2018 to 2020), according to its Charter, the Council should have completed three online self-assessment surveys and a one-on-one consultation session. The results of its 2017 self-assessment survey were reported to the Council in April 2018. A self-assessment using an online survey was not used in 2019, however, the Chancellor held one-on-one consultations with each Council member in June and July 2019, reporting the results to the Council in October 2019. This practice, while not consistent with its Charter requirements, meets the guidance as outlined in the Voluntary Code.

2.64 Over the period examined (2018 to 2020), the Remuneration and Nominations Committee have not conducted a self-assessment in line with the Voluntary Code. The ANU advised the ANAO in February 2021 that the Secretary of the Remuneration Committee (the Director, Human Resources) held a face-to-face meeting in December 2019 with the incoming Chancellor and Pro-Chancellor to discuss the operations of the Committee, however confirmed that a formal self-assessment had not been conducted. In relation to the Nominations Committee, the ANU confirmed that a self-assessment had not been undertaken across the period examined. It also advised that due to the cycle of Council membership changes emerging in 2021 and expected for 2022, it may be more beneficial to conduct a self-assessment in late 2021 or 2022.

2.65 The ANAO also examined the self-assessment surveys of the Council and its Council Committees to assess whether the:

• survey questions aligned with charter requirements; and
• actions were taken in response to the results.

2.66 Across the period examined (2018 to 2020), the ANAO found that while the survey questions aligned with the requirements in the Charter and provided an accurate assessment of performance, the questions were not weighted or prioritised. The self-assessments identified weaknesses in legislative and policy compliance, policies and practices and external accountability.

2.67 Across the period examined (2018 to 2020) the Council has ‘endorsed’ and implemented recommendations from its self-assessment activities, with the results used to inform the forward work plan. Council Committees have ‘noted’ the results from the self-assessments, with meeting minutes documenting any resolutions or agreed actions.⁹² Additionally, the Council, Audit and Risk Management and Finance Committees, as well as the Academic Board have made amendments to their charters in response to findings from self-assessment and other review activities.

Self-assessments of Academic Board and its sub-committees

2.68 Between 2018 and 2020, the Academic Board was required to complete two self-assessments, one in 2018 and one in 2020. The Academic Board completed a self-assessment survey in 2018 and results were submitted to the Academic Board for discussion in October 2018. The Academic Board postponed its 2020 self-assessment to 2021 ‘due to COVID-19 and the relatively large number of new members’. The Academic Board’s sub-committees⁹³ were required to complete at least one self-assessment over the three year period examined and these were completed in 2019. While the Academic Board has not fully complied with requirements, its sub-committees have fully complied with the self-assessment requirements as outlined in their charters.

2.69 The ANAO also examined the Academic Board and its sub-committees’ self-assessment surveys, in order to assess:

• whether survey questions align with Charter requirements; and
• outcomes and/or actions have been taken in response to results from the surveys.

2.70 Across the period examined (2018 to 2020), the ANAO found that: the self-assessment questions aligned with requirements in the charters; provided an accurate assessment of performance; resolutions and/or any agreed actions were consistently documented; and amendments to the governance arrangements have been implemented.

External reviews

2.71 The ANU has undergone two external reviews of its high-level governance arrangements: the 2014 ‘Review of the Australian National University Act 1991 and the governance arrangements of the ANU’ (Walker Review); and the 2018 ‘Australian National University Review of Academic Governance’ (Winchester Review).

Walker Review

2.72 The Walker Review was commissioned by the Minister for Education and conducted in 2014 to assess whether the ANU’s legislative and governance arrangements were fit-for-purpose and aligned with best practices. The review made 29 recommendations in relation to the enabling legislation; composition, roles and responsibilities of the Council; and induction and training programs for members, including annual evaluations. In August 2018, the ANU reported to the Council that 20 of the 29 recommendations had been fully implemented. The ANAO examined the remaining nine recommendations. Four relate to governance statutes that are no longer in effect. The remaining five recommendations relate to proposed changes to the ANU Act and require approval from the Government before they can be implemented.⁹⁴

Winchester Review

2.73 In June 2018, the ANU engaged Hilary Winchester to evaluate academic governance structures and processes and examine the extent to which the ANU complied with the academic governance requirements of the Higher Education Standards Framework.⁹⁵ The Winchester Review was completed in February 2019 and concluded that the academic governance structures fully or partially complied with 77 per cent of the Higher Education Standards Framework requirements and made 20 recommendations. The ANU agreed with 11 recommendations, partially agreed with two, did not agree with two and noted the remaining five. In April 2021, the ANU reported to the Council that it had implemented all agreed recommendations.

2.74 One of the two Winchester Review recommendations with which the ANU did not agree recommended that the ANU ‘develop a benchmarking policy and that the setting and monitoring of benchmarks be included in the [Terms of Reference] of either or both of the Academic Board or its sub-committees.’ The ANU responded that:

the ANU participates in many collective benchmarking exercises, such as the Group of Eight Quality Verification System … and that the primary focus of such activities is to assist Group of Eight Universities to maintain and improve their academic standards.

2.75 The ANAO reviewed the recommendation and the ANU’s response and found that while the ANU contributes to and participates in benchmarking exercises conducted by the Group of Eight to support comparisons, it has not established institutional benchmarks for academic quality and outcomes in line with the requirements of the Higher Education Standards Framework. The status of implementation of the recommendations from the Walker and Winchester reviews, as reported to the Council in August 2018 and April 2021, are listed in Appendix 4. The effectiveness of the ANU’s performance reporting arrangements is examined in more detail in Chapter 3, see paragraphs 3.42 to 3.70.

3.1 The Australian National University (ANU) Council (as the accountable authority) is required under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) to establish and maintain appropriate: oversight arrangements⁹⁶; planning and performance reporting arrangements⁹⁷; and systems of risk management, oversight and internal control.⁹⁸

3.2 To assess if the governance arrangements of the ANU are fit-for-purpose and supported by effective systems of control and accountability the ANAO examined:

• the extent to which the arrangements provide effective oversight of the management of the ANU, including its subsidiaries;
• the performance reporting arrangements and extent to which the performance measures comply with sections 16E, 16EA and 16F of the Public Governance, Performance and Accountability Rule 2014 ( PGPA Rule); and
• the financial and risk management arrangements, including those established to respond to the COVID-19 pandemic.

Do the governance arrangements provide effective oversight of the management of the ANU, including its subsidiaries?

3.3 As the accountable authority, the ANU Council (the Council) is responsible for overseeing the management of the ANU, including its subsidiaries. To assess whether appropriate arrangements have been established to effectively monitor the management of the ANU and its subsidiaries, the ANAO examined:

• how the Council has responded to changes in its operating environment;
• how the Council maintains oversight of the management of the ANU; and
• how the Council maintains oversight of its subsidiary the ANU Enterprise Pty Ltd (ANUE).⁹⁹

Changes in the operating environment

3.4 As discussed in paragraphs 1.7 to 1.10, there have been three changes to the operating environment of all higher education providers in addition to the impact of COVID-19. The changes include the introduction of:

• the Model Code on freedom of speech and academic freedom (French Model Code);
• the Job-ready Graduate’s package; and
• the Guidelines to Counter Foreign Interference across the Australian University sector and the requirements of the Foreign Relations (State and Territory Arrangements) Bill 2020.

Implementation of the French Model Code

3.5 In October 2019, the Council provided ‘in-principle’ approval to adopt the Model Code on freedom of speech and academic freedom. It noted that the ANU would develop a specific statement on freedom of speech and further address the Code’s implementation over the course of 2020. Work to develop a statement on freedom of speech¹⁰⁰ and oversee the review and updating of policies to embed the principles of the Model Code was delegated to the Academic Board.

3.6 In August 2020, a review into the implementation of the Model Code, commissioned by the Government and conducted by Professor Sally Walker AM¹⁰¹, found that the ANU ‘did not yet have policies or draft policies that were fully aligned, and that it had not yet completed its work to implement the Model Code.’ The Vice-Chancellor subsequently tasked the Academic Board to align its statements on Academic Freedom and Freedom of Speech with the Model Code and progress the necessary policy reviews.

3.7 In May 2021, the Council approved the revised Academic Freedom and Freedom of Expression Policy and assigned responsibility for the implementation, monitoring and reporting of the policy to the Academic Board.¹⁰² The Council was also advised that work to update the relevant policies and procedures of the ANU and embed the principles of the Model Code was not complete, with 15 out of 18 policies still to be reviewed and updated in order to comply.

3.8 In June 2021, the Government released its response to the Review of Adoption of the Model Code on Freedom of Speech and Academic Freedom in Higher Education. The Government agreed to the five recommendations and endorsed the seven suggestions of the report. One of the five recommendations from the review is to expand the reporting requirements of universities to include an annual attestation statement. The annual attestation statement must identify the university’s main policy and/or policies regarding freedom of speech and academic freedom and state whether, in the opinion of the governing board, they are consistent with the Model Code.

3.9 In October 2021, the ANU advised that: of the 18 policies identified, 12 did not require any change in order to comply; work to review and update two policies had been completed, with work on the remaining four at various stages of completion; and that work to develop an annual attestation process to confirm adherence to the Code had not yet commenced.

Job-ready Graduates package

3.10 In October 2020, the Vice-Chancellor as part of his regular report to the Council, briefed the Council on the package and concerns that had been raised. The report stated that the ANU had provided a submission to the Parliament on the proposed changes and that the ANU’s position had been broadly represented in the submissions provided by the Group of Eight¹⁰³ and Universities Australia. The report did not indicate that any significant risks to the financial viability and/or operations of the ANU were likely to eventuate. The Council noted the report and no further action was requested.¹⁰⁴

Foreign interference at Australian Universities

3.11 The Council was advised in April 2020 that work to develop the ANU’s response to the guidelines released in November 2019 had commenced. Work to develop and implement the ANU’s response has been led by the Deputy Vice-Chancellor (Research and Innovation) and the Chief Information Security Officer with oversight provided by the University Research Committee (URC).¹⁰⁵ In June 2020, the URC approved the establishment of a Foreign Interference Advisory Committee (FIAC).¹⁰⁶ A progress update was provided to the Academic Board in December 2020 where it was noted that the research services division and international strategy and partnerships team would be responsible for referring matters to the FIAC. In March 2021, the Vice-Chancellor and Chief Information Security Officer advised the Parliament that all external engagements have been declared to the FIAC and vetted accordingly.

3.12 The risk of foreign interference has also been included on the Strategic Risk Register ‘endorsed’ by the Audit and Risk Management Committee and ‘approved’ by the Council in July 2021. The risk is rated as high, with the treatments identified¹⁰⁷ to reduce the risk indicating that the treatment proposed has not yet been fully implemented.

Oversight of ANU management

3.13 Oversight of management at the ANU is conducted through annual evaluations and performance assessments of the Vice-Chancellor and the provision of progress reports, briefings and updates from senior management. The mechanisms used by the Council to oversee the management of the ANU are detailed in Appendix 5.

Vice-Chancellor

3.14 From 2018 to 2020, the Vice-Chancellor provided a report to and presented at all 20 Council meetings. The reports addressed the ANU’s finances, executive changes, changes in the political landscape and to higher education in Australia. Other matters included in these reports include industry engagement, the ANU’s rankings, notable achievements and highlights.

3.15 The Council, assisted by the Remuneration Committee, has developed 20 Key Performance Indicators (KPIs) against which the Vice-Chancellor undertakes an annual self-assessment.¹⁰⁸ Twelve of the Vice-Chancellor’s KPIs align with those of the ANU’s Strategic Plan. The remaining eight are specific to the Vice-Chancellor’s management of the ANU and include a KPI on maintaining an effective senior leadership team. The Vice-Chancellor provides a written self-assessment report to the Remuneration Committee which considers the Vice-Chancellor’s self-assessment and provides a resolution and summary report to the Council.

3.16 From 2018 to 2020, three performance reports for the calendar years 2017, 2018 and 2019 should have been submitted by the Vice-Chancellor. Two performance reports were provided to the Council (one in 2017 and one in 2019) and an oral report was provided to the Council in 2018. During the course of the audit, the Vice-Chancellor’s performance assessment for 2020 was considered by the Remuneration Committee and a report provided to the Council in February 2021.

3.17 The ANAO reviewed the self-assessments provided by the Vice-Chancellor and found that they addressed the KPIs and provided a reasonable basis of assessment. The ANAO also observed the Remuneration Committee and the Council’s discussion of the Vice-Chancellor’s 2020 self-assessment and found that it appropriately evaluated the Vice-Chancellor’s report and performance.

Senior management of the ANU

3.18 The Council has delegated to the Vice-Chancellor its authority to appoint and oversee senior management.¹⁰⁹ The Vice-Chancellor provides regular reports to meetings of the Council regarding changes to the senior management team. From 2018 to 2020, 85 per cent of the reports provided to the Council discussed the composition of the senior management team.

3.19 Individual senior managers report directly to the Council on the implementation of strategic initiatives and provide regular updates on progress against the Strategic Plan and/or relevant supporting executive and college plans. From 2018 to 2020, progress updates and reports were provided to the Council, except for the 2020 mid-year reports.¹¹⁰ These reports provide the Council with visibility of key risks, identify focus areas and assist to set the Council’s forward agenda for the coming year.

3.20 For high-risk projects and/or strategic initiatives, the Council requested and was provided with more frequent updates. For example, for the College of Engineering and Computer Sciences ‘Reimagine’ project, six monthly progress reports have been provided to the Council as requested. Following the Council’s approval in December 2019 for the College of Health and Medicine to continue to develop the ‘Transform’ project, the Council has requested and been provided with two updates on the progress of this project.¹¹¹

Supporting systems

3.21 To improve the quality of reporting against the college and executive plans, in December 2018, the ANU entered into an agreement to purchase a new management tracking and reporting tool.¹¹² The tool was to provide:

• an executive dashboard and reporting;
• strategy and business planning; and
• risk management.¹¹³

3.22 Work to develop and implement the tool continued throughout 2019 and into 2020. In February 2020, the Council was advised that it had been launched. In July 2020, the ANU entered into a service agreement to host, support and maintain the program until July 2022. The contract value is approximately $1 million, including program support. The required functionality of the program has not been achieved, as the colleges and service divisions of the ANU have not uploaded their respective business plans and risk assessments. In October 2021, the ANU advised that college and portfolio plans were being drafted and will be uploaded by December 2021.

Remuneration

3.23 As discussed at paragraph 3.18, the Council has delegated to the Vice-Chancellor its authority to appoint and oversee senior management. While the Vice-Chancellor provides regular reports to the Council on the recruitment and appointment of senior management to the ANU, these reports do not address remuneration.

3.24 The Council has established a Remuneration Committee. The responsibilities of this committee include monitoring, reviewing and where appropriate making recommendations to the Vice-Chancellor on the remuneration and conditions of employment of the ANU’s senior management. The Remuneration Committee endorses the executive remuneration report for approval by the Council and its inclusion in the annual report in February of each year. The executive remuneration reports identify the components of the remuneration package, the period of engagement within the year, and contract end date.

3.25 The PGPA Rule¹¹⁴ requires that the entity include in its annual reporting: the policies and practices regarding the remuneration of key management personnel, senior executives and other highly paid staff; the governance arrangements under which the policies operate; and the basis on which the remuneration of the key management personnel, senior executives and other highly paid staff of the entity has been determined.¹¹⁵

3.26 The ANAO examined the annual reports of the ANU (2018 to 2020) and found that while the reports include the remuneration of key management personnel, senior executives and other highly paid staff, the reports are silent in relation to the policies that apply, and the basis on which remuneration has been determined. Except for the Vice-Chancellor, where it is noted that the salary of the Vice-Chancellor has been benchmarked against comparable international higher education institutions.

3.27 The Hayne Royal Commission observed that it is important that governing boards are clear on what the remuneration framework is and how it applies.¹¹⁶ The ANU’s 2019 Annual Report stated that:

the Chancellor, as Chair of the Committee, gives an annual written assurance to Council that the committee has ensured contractual arrangements are in order, remuneration has been properly developed, and performance objectives have been formulated and measured.¹¹⁷

3.28 The assurance provided was limited to the role of Vice-Chancellor and did not include key management personnel or other highly paid staff.

Oversight of subsidiaries

3.30 The ANU has two subsidiaries:

• ANUE — ANUE was incorporated in 1979 as a company limited by shares. It is wholly owned by the ANU and is comprised of three other subsidiaries: Australian Scientific Instruments Pty Ltd; the Social Research Centre acquired in 2014; and ANU Limited (PNG) established in 2018; and
• ANU (UK) Foundation — the Foundation was incorporated in 2007 as a private company limited by guarantee. As it is incorporated in England and Wales, and is not trading, it has not been examined in this audit.

3.31 Under the PGPA Act, the Council has obligations in relation to the management and oversight of its subsidiaries, including:

• keeping the responsible Minister and the Minister for Finance informed of the activities, significant decisions related to, and any significant issues that may affect its subsidiaries¹¹⁸;
• ensuring that the ANU’s Corporate Plan covers both the ANU and its subsidiaries¹¹⁹, and includes details of any matters prescribed by the rules¹²⁰;
• ensuring that any subsidiary’s financial statements are audited¹²¹; and
• ensuring that none of the ANU’s subsidiaries does anything that the ANU does not itself have the power to do.¹²²

Audit and corporate plan

3.32 The Council, through the Finance Committee, monitors the ANUE’s financial position, approves its business plan and endorses its financial statements. The Council has also ensured that the ANUE’s financial statements are audited. The ANU’s Strategic Plan 2020–2023 (the ANU’s 2020 Corporate Plan) does not detail how the ANUE contributes to the achievement of the ANU’s purposes, and it was not until April 2021 when the ANU released its Annual Report for 2020, that the ANU identified how the ANUE contributes to the achievement of its purposes.

Governance, appointment and remuneration arrangements

3.33 The Council approved the ANUE governance principles in 2004¹²³ and the revised constitution in December 2008.¹²⁴ The ANUE’s constitution and governance principles set out high-level requirements in relation to the appointment of directors. The constitution allows for remuneration to be provided, however does not establish a remuneration framework.¹²⁵ The governance principles are also silent with regard to remuneration, however an annual remuneration package of $70,000 for the Chairman, $35,000 for independent non-executive directors and $17,500 for the Chair of the Audit Committee was approved in 2012.¹²⁶

3.34 The ANAO examined the papers and letters appointing two new directors to the ANUE Board in 2020 and observed that, in practice, prospective members are recommended by the ANUE Board, approved by the Vice-Chancellor and ratified by the ANUE Board. The letters approving the appointment were signed by the Chief Operating Officer and the Vice-Chancellor. The letters contained the type of appointment and the term of the engagement but did not address remuneration.¹²⁷ Instead, the appointment letters issued by the ANUE identify if the director is to be remunerated and the amount. In November 2021, the ANUE advised the ANAO that an annual remuneration package of $55,000 is provided to the current Chairman, $35,000 to independent non-executive directors and $17,500 for the Chair of the Audit Committee.

3.35 As at November 2021 there is no evidence that the Council has been asked to ‘endorse’ and/or ‘approve’ the remuneration framework. As discussed at paragraph 3.27, the Hayne Royal Commission identified that it is important that governing boards are clear on what the remuneration framework is and how it applies.¹²⁸

Monitoring arrangements

3.36 The Australian National University Act 1991 (ANU Act) states that the Council must not delegate its power to monitor:

its subsidiaries and any other entities that it controls, to the extent required to ensure they do not have any significant adverse impact on, or pose any reasonable risk to, the University’s finances and operations.¹²⁹

3.37 Monitoring arrangements for the ANUE are detailed below.

• The Council, with the assistance of the Finance and the Audit and Risk Management Committees, monitors the performance of the ANUE and its subsidiaries.¹³⁰
• The Finance Committee reviews and endorses the ANUE’s annual budget for approval by the Council. The Finance Committee is also provided with a quarterly update and mid-year report for noting.
• The Audit and Risk Management and Finance Committees review and endorse the ANUE’s financial statements for approval by the Council.
• The Audit and Risk Management Committee is also provided with an annual governance statement for noting.

3.38 The ANAO reviewed papers and minutes provided to the Finance Committee, the Audit and Risk Management Committee and the Council and found that across the period examined (2018 to 2020), the ANUE has provided quarterly and mid-year reports to the Finance Committee. The ANUE has also provided annual governance statements to the Audit and Risk Management Committee. The governance statements include the following items:

• summary of work performed by the ANUE’s Audit Committee;
• summary of ANUE’s progress to address findings and recommendations from internal and external audit reports;
• an assessment of the risk, control and compliance framework; and
• details of meetings and attendance at meetings during the period.¹³¹

3.39 The governance statements are copies of the annual ANUE Audit Committee reports that it is required to provide to the ANUE Board under its Charter. These statements do not address the appointment of board members, remuneration, skills and expertise, summaries of board meetings and/or key decisions.

3.40 The ANUE has provided an annual update on the implementation of its business plan for noting to the Finance Committee since July 2019. In July 2020, as part of a regular update of progress against its approved business plan, the Finance Committee identified inconsistencies and risks in relation to the ANUE’s activities as reported. As a result, it was noted that ‘there is a need for greater visibility of ANUE’s projects and the risks associated with them … including information on the management of those risks’. In response to the Finance Committee’s concerns:

• in September 2020, the Finance Committee was provided with an overview of the ANUE’s risk framework and requested a list of all of the ANUE’s partnerships and a forward map of investment and divestment activities;
• in October 2020, the overview of the ANUE’s risk framework was provided to and noted by the Council;
• in November 2020, a list of all commercial partnerships that the ANUE had entered into was provided to the Finance Committee; and
• in April 2021, the Council and Audit and Risk Management Committee were provided with a governance statement and forward work plan for the ANUE.

Has the ANU implemented effective performance reporting arrangements?

3.42 To assess whether the ANU has implemented effective performance reporting arrangements, the ANAO examined:

• its compliance with the Commonwealth performance framework; and
• the appropriateness of its performance measures.

Commonwealth performance framework

3.43 In accordance with the Commonwealth performance framework¹³², as a corporate Commonwealth entity, the ANU is required to publish:

• a corporate plan, which meets the minimum requirements outlined in section 35 of the PGPA Act and section 16E of the PGPA Rule, setting out the entity’s purposes, key activities, operating context, and how performance will be measured and assessed, through measures that meet the requirements of section 16EA of the PGPA Rule, and specified targets for each of those performance measures for which it is reasonably practicable to set a target; and
• annual performance statements that present the entity’s results against its performance measures as identified in its corporate plan¹³³ and an analysis of the factors contributing to the results.

3.44 The ANAO examined the ANU’s Corporate Plan and Performance Statements for 2020 against the key components of the Commonwealth performance framework¹³⁴ and found they:

• largely meet the requirements of the PGPA Act¹³⁵;
• partially meet the requirements of the PGPA Rule¹³⁶; and
• are not consistent with the clear read principle.¹³⁷

3.45 The ANAO’s assessment of the extent to which the ANU meets key components of the Commonwealth performance framework is summarised in Table 3.1.

Corporate plan

3.46 In 2020, the Corporate Plan for the ANU was the Strategic Plan 2020–2023.¹³⁸ The current corporate plan (the 2021 Corporate Plan) is the Strategic Plan 2021–2024.¹³⁹

3.47 The ANAO assessed the ANU’s 2020 Corporate Plan (Strategic Plan 2020–2023) and found that it does not fully meet the requirements of the PGPA Act, or the minimum standards outlined in the PGPA Rule as it:

• does not identify how its subsidiaries contribute to the achievement of its purposes, and/or key initiatives¹⁴⁰;
• uses terminology that does not align with the requirements of section 16E of the PGPA Rule, for example using terms such as key initiatives, instead of key activities; and key performance indicators (KPIs) instead of performance measures;
• has not established a clear link between the key initiatives (key activities) and KPIs (performance measures);
• uses KPIs (performance measures) that do not clearly identify how the measure relates to, and/or can be used to assess the extent to which the ANU has implemented and/or achieved its key initiatives (key activities); and
• includes information in relation to the risk oversight and management systems of the ANU, however does not identify the strategic risks that the ANU is subject to and how the ANU intends to manage them.

3.48 There would also be benefit in the ANU identifying how its strategies for change will support the ANU to deliver its functions as outlined in its enabling Act.

3.49 During the course of the audit, the ANU advised the ANAO that it will be splitting the new Strategic Plan (ANU 2025) from its Corporate Plan to improve its alignment with its performance statements. The ANU also advised that it is has engaged expertise from the Department of Finance to assist in the review and development of its Corporate Plan for 2022.

Annual performance statements

3.50 As outlined in Table 2.1, the role and responsibilities of the Audit and Risk Management Committee of the ANU include advising on and providing recommendations to the Council (the accountable authority under the PGPA Act) in relation to performance reporting. Specifically, the Audit and Risk Management Committee ‘endorses’ the performance statements for the Council’s approval.

3.51 In September 2019, an internal audit of the ANU’s Annual Performance Statements found that:

the ANU had not implemented sufficient control processes to provide assurance that the performance statements were reliable and supported by accurate performance information.

3.52 The ANU’s 2019 annual report assessed its performance using 12 KPIs. The ANU also developed an assurance plan to implement its revised approach, see Figure 3.1.¹⁴¹

Figure 3.1: ANU’s assurance process to prepare performance statements

 

 

Source: ANU’s 2019 Assurance Plan: Annual Report and Performance Statement, Version 2.0, p. 13.

3.53 The Assurance Plan was used to prepare the 2019 performance statements. In September 2020 a post implementation review of the process was undertaken and three proposed improvements from the 2019 process were identified. The proposed improvements included:

• improving the efficiency of the process to implement a collect once, utilise twice methodology to avoid inconsistency and duplication;
• expanding data gathering and review responsibilities; and
• ensuring greater alignment between the data source and performance criteria statement.

3.54 In addition to the process improvements, the ANU stated that it would be implementing an enhanced clearance process, supported by a quality assurance process.

3.55 In September 2020, the Audit and Risk Management Committee endorsed the approach outlined in the Assurance Plan to prepare the 2020 performance statements. In March 2021, the Audit and Risk Management Committee were advised that the 2020 performance statements had been prepared in line with the assurance plan, were provided with a copy of the executive sign-off table and subsequently endorsed the 2020 performance statements for the Council’s approval. In April 2021, the Council approved the 2020 performance statements and released the 2020 Annual Report.

Performance measures

3.56 As a corporate Commonwealth entity, the performance measures selected by the ANU are to meet the requirements of the PGPA Rule.¹⁴² The ANAO analysed the ANU’s performance measures against the requirements of the PGPA Rule, using guidance material issued by the Department of Finance that details the characteristics of good performance information¹⁴³ and identifies the information entities are to include in their annual performance statements.¹⁴⁴ The results of the analysis are illustrated in Table 3.2.

Related

3.57 The ANAO examined if the KPIs (performance measures) relate directly to one or more of the entity’s purposes or key activities. As all 12 KPIs (performance measures) have been linked in the 2020 performance statements to the purpose/s of the ANU, the ANAO has assessed the KPIs (performance measures) as fully and/or mostly meeting the requirements of section 16EA of the PGPA Rule.

Measurable

3.58 To determine the extent to which the KPIs meet the requirements of sections 16E and 16EA of the PGPA Rule, the ANAO has assessed if the KPIs are:

• reliable and verifiable — use sources of information and methodologies that are reliable and verifiable; and
• free from bias — provide an unbiased basis for the measurement and assessment of the entity’s performance.

3.59 Two of the 12 KPIs have been assessed as ‘reliable’. Six of the 12 KPIs have been assessed as ‘partially reliable’, three of the 12 KPIs have been assessed as ‘not reliable’ and one measure was unable to be assessed. The measures that have been assessed as ‘not and/or partially reliable’ have not: defined key terms; identified a target and/or timeframe; the ANU has stated that the activity to make an assessment against the measure has not been undertaken; or the data and methodology is still being developed.

3.60 One of the 12 KPIs was assessed as ‘verifiable’. One KPI was unable to be assessed and the remaining 10 KPIs were assessed as ‘partially verifiable’ or ‘not verifiable’. The ‘partially’ and ‘not verifiable’ assessments are those measures that have not: identified the methodology used to generate the results; have used a proxy measure, where the results illustrated refer to the previous measure; the process used to generate the data cannot be substantiated and/or the results validated; and source data is not clearly identified and/or accurately reflected.

3.61 None of the 12 KPIs have been assessed as being free from bias, with five KPIs assessed as ‘partially free from bias’, six assessed as ‘not free from bias’ and one measure unable to be assessed. The ‘not and partially free from bias’ KPIs are those measures:

• where the result has not been put into context and does not accurately reflect the performance of the ANU;
• does not allow for clear interpretation of the results, as other factors or constraints that may have impacted results are not disclosed;
• where risks of sampling¹⁴⁵ and interaction¹⁴⁶ bias exist that have not been identified;
• where the ANU has stated that it has smoothed out areas where it has not performed well; and
• where timeframes and other constraints on the ongoing validity of the result have not been disclosed.

Completeness

3.62 To determine the completeness of the ANU’s KPIs, the ANAO examined whether they:

• where reasonably practical, comprise a mix of quantitative and qualitative measures;
• include measures of the entity’s outputs, effectiveness and efficiency measures; and
• provide a basis for an assessment of the entity’s performance over time.

3.63 All of the KPIs are effectiveness measures. There would be benefit in the ANU reviewing its mix of KPIs to consider the scope for the inclusion of any efficiency based measures. The KPIs presented an appropriate balance of quantitative and qualitative information, including six quantitative and six qualitative measures. Of the 12 KPIs:

• seven do not identify if the measure is a short, medium or long-term measure¹⁴⁷;
• four are short-term measures that are assessed annually¹⁴⁸; and
• one is a long-term measure.¹⁴⁹

3.64 Further, source data which does not provide information in a timely manner may not accurately reflect the entity’s performance for annual reporting purposes. An example of a timeliness issue encountered is addressed in Case study 3 below.

3.65 In October 2021, the ANU advised the ANAO that given the context of a University most ANU measures are necessarily based on data submissions and methodologies supplied as part of statutory reporting to the Department of Education, Skills and Employment (DESE)¹⁵⁰, Quality Indicators for Learning and Teaching (QILT)¹⁵¹, and the ARC. The ANU also advised that many of the measures within the higher education sector lag because of the time required to complete verification and publication processes.

3.66 The data sources and methodologies utilised by the ANU to meet its statutory reporting requirements under the Higher Education Support Act 2013 can be used to assess the performance of the ANU against the measures identified in its Corporate Plan. However, to meet the requirements of the Commonwealth performance framework, the ANU must identify in its Corporate Plan and Performance Statement the methodology behind its KPIs (performance measures), and the reasoning for its approach.

3.67 As discussed in paragraph 3.47, the ANU’s Corporate Plan does not clearly link its key initiatives (key activities) and KPIs (performance measures). Additionally, the KPIs (performance measures) identified in the ANU’s Corporate Plan and reported on in its performance statements do not collectively address the extent to which the university has achieved its purpose/s, partially comply with the requirements of sections 16E, 16EA and 16F of the PGPA Rule and do not reflect the characteristics of good performance information as identified by the Department of Finance.

Academic performance

3.69 The ANAO examined Academic Board agenda papers, submissions and minutes for 2018 to 2020 and found that the Academic Board monitors the academic environment; is alert to emerging issues; reviews and accredits programs and courses as required; and engages in sector wide analyses to compare its academic performance against other domestic and international universities.

3.70 As discussed at paragraph 2.75, while the ANU participates in a range of benchmarking activities conducted across the academic sector it has not set institutional benchmarks for academic quality and outcomes. As a result, the ANU’s academic performance reporting arrangements do not fully comply with the requirements of the Higher Education Standards Framework.¹⁵²

Has the ANU implemented financial and risk management arrangements that are fit-for-purpose, including those established to respond to the COVID-19 pandemic?

3.72 Under the PGPA Act, the accountable authority is required to govern the entity in a way that promotes: the proper use and management of public resources; the achievement of the entities purposes; and its financial sustainability.¹⁵³ The PGPA Act also requires the accountable authority to establish and maintain appropriate systems of risk oversight and management.¹⁵⁴

3.73 To determine if the ANU’s financial and risk management arrangements are fit-for-purpose, including those established to respond to the COVID-19 pandemic, the ANAO examined the:

• financial management arrangements, including capital works, budget and delegations management;
• risk management and fraud control arrangements; and
• the ANU’s response to the COVID-19 pandemic.

Financial management arrangements

3.74 Across the period examined (2018 to 2020), a series of internal and external reviews have identified a range of deficiencies in relation to capital works, budget and delegations management. The deficiencies identified and the current status of work to resolve the issues are examined in more detail below.

Capital works

3.75 Despite the total value of approved capital works exceeding $900 million over a six-year rolling program (2019 to 2025)¹⁵⁵ a 2020 controls review, commissioned by the ANU and conducted by EY found fit-for-purpose capital planning, approval and monitoring processes were not in place (see Case study 4).

3.76 The controls review was completed in September 2020.¹⁵⁶ The review found that:

• key planning documentation including a business case, risk register, governance and stakeholder engagement plans, procurement methodology, financial analysis and approval pathway were not developed;
• guidelines for the development of a business case for capital works proposals do not exist for commercial projects;
• there was no detailed capital investment plan for the ANU¹⁵⁷; and
• a comprehensive capital infrastructure strategy for the campus would assist in guiding decision making and project development.

3.77 The report made 19 recommendations, which the Council has accepted.

3.78 Approval to purchase the land was provided by the Council in October 2020. In December 2020, the Council was advised that the land had been acquired.

3.79 In December 2020, a revised Capital Expenditure Plan (2021 to 2023) as part of the financial health strategy and the recovery plan was provided to the Council for noting. At this time, the Council was advised that:

In the past, the University’s approach to capital investment has led to projects being reviewed and funded in isolation, and without always allocating funding for the full scope of the project. In addition, consideration of the full life cycle costs of facilities assets means that operating resourcing and maintenance work are often neglected. This has led to substantial investments in projects – both time and money – without a sufficiently clear capital strategy for the end-to-end management of the capital investment.

3.80 The ANU has commenced a program of work to implement the agreed recommendations from the controls review to address the shortcomings, including developing a prioritisation framework for capital expenditure and a suite of guidance material to support the development of business cases for capital works proposals. Progress is being monitored by the Council and Council Committees. In May 2021, the Council was advised that the development of strategic policies for capital investment, a business case framework and guidance material was on track for completion by September 2021.

Budget management

3.81 In December 2018, Deloitte was engaged to investigate a fraudulent transaction identified by the ANU in 2017. The report found deficiencies in the budget processes of the ANU including: limitations in, and a lack of integration between the supporting ICT systems¹⁵⁸ used for budget management; financial policies and processes that were not fit-for-purpose; and inadequate oversight of financial delegations. The report made six recommendations that the ANU agreed to implement.¹⁵⁹

3.82 Work to implement the recommendations was incorporated into an existing program, the Budget and Reporting Framework (BRF).¹⁶⁰ The BRF consisted of three workstreams intended to deliver: a new resource management model¹⁶¹; finance and budget policies and processes¹⁶²; and improved finance and budget management systems.¹⁶³ The BRF was implemented, in part, to address the limitations of the budget model. The most significant limitations identified included: that the model was not linked to and did not support achievement of the strategic plan; and did not allow the reallocation of funds on the basis of need.

3.83 At the end of March 2020, the ANU reported that products from the budget framework and calculation methodology had been successfully trialled and a new resource management model developed, however deliverables of the BRF that were in-progress or had not been started, included:

• a capital planning and budgeting framework;
• implementation of an updated financial policy framework and associated financial delegations;
• implementation of budget management software, including a budget tracking system; and
• enhancement of the existing costing and pricing tools.

3.84 In April 2020, due to the impact of COVID-19, the ANU developed the Financial Health Strategy to: implement immediate liquidity measures; an expenditure control framework that established expenditure caps and savings targets for 2020; and supported improved financial performance.¹⁶⁴ Subsequently, the BRF was brought to an early close, its activities ‘paused’, and outstanding deliverables transferred to the responsible business unit for implementation. While deliverables across the finance and budget policies and processes and finance and budget systems workstreams of the BRF are still to be implemented, in October 2021, the ANU advised the ANAO that the financial health strategy and subsequent recovery plan, discussed at paragraph 3.113, had:

• implemented clear budget principles and model for the 2021 budget, with further enhancements being implemented for the 2022 budget;
• introduced a quarterly forecast process in 2021;
• introduced monthly financial management reporting to enable the Senior Management Group to monitor performance, take corrective actions and redirect funding as required; and
• introduced minimum cash requirements and liquidity ratios that are reported on each month.

3.85 The ANU also advised the ANAO that work had commenced on target debt metrics as outlined in the Financial Strategy (Debt) approved by the Council in December 2020.

Delegations management

3.86 The delegations framework at the ANU is comprised of 413 delegations. The framework categorises delegations into three types: legislative; specialist; and banded. Legislative delegations are those prescribed in the enabling Act or a statute approved by the Council and allocated to the holder of an office such as College and Associate Deans. Specialist delegations are held by designated positions, for example, the Vice-Chancellor, Chief Operating Officer, Director of Human Resources and Registrar. Banded delegations are grouped into profiles based on the level of responsibility. The ANAO reviewed the ANU’s delegations policy, procedure and matrix and observed that the delegations procedure identifies six bands (D1 to D6). However, in practice there are eight bands (D1 to D8).

3.87 The ANU’s authority of delegations policy states that the delegations framework devolves authority to appropriate levels within the ANU’s organisational structure. Under the delegations framework, senior delegates (those that hold a D1 to D3 delegation)¹⁶⁵ are authorised to assign delegations within their area of responsibility.¹⁶⁶ For example, D3 delegates are able to assign delegations (D4 to D8) to individual positions and all of the delegations profiles (D4 to D8) include authority to expend funds up to a predetermined limit.¹⁶⁷ Due to the use of this decentralised model, the delegations of authority policy and procedure requires senior delegates to provide annual assurances that the policies of the ANU have been adhered to and financial controls exercised. These assurances were not provided across the period examined (2018 to 2020).

3.88 The ANU runs regular reports on the delegations held across all of its business units and is able to identify which delegations are held by which position number. However, the reports do not provide any information in regard to the use of the delegations, including the total value of funds and/or number of transactions approved by the delegate.

3.89 The Higher Education Standards Framework requires that academic governance includes confirming that delegations of academic authority are implemented and monitored. Delegations of academic authority at the ANU have been allocated to designated positions identified in the relevant Statute or Rule, such as the Coursework Awards Rule 2019 and the Research Awards Rule 2018. The ANU does not track the use of academic delegations, provide assurance or report to the Council on the use of delegations of academic authority and any non-compliance identified. During the course of the audit, the ANU advised the ANAO that it is implementing an annual reporting requirement on the assignment of academic delegations. In October 2021, the ANU advised that the first annual report on the assignment of academic delegations in colleges was presented to the Audit and Risk Management Committee on 9 September 2021 and was considered by the Academic Board on 19 October 2021.

3.90 As part of the BRF program, the financial policies and processes stream included a review and update of financial delegations. The review identified 85 financial delegations and found that the existing financial delegations are:

• fractured and fragmented — with delegations to purchase goods and services spread across more than 31 topic areas;
• inconsistent — with values for common transactions differing across topic areas;
• inadequate — in that they fail to address specific financial risks, including material indemnities, guarantees and warranties;
• have poor control points — where approval occurs at the point of expenditure rather than commitment¹⁶⁸; and
• limited to using monetary values as control limits.

3.91 As at August 2021, work to implement the recommendations from the review had commenced, however, the updates to the financial delegations framework had not been completed.

3.92 The control issues identified have not resulted in any known issues with regard to the accuracy of the financial statements, with controls testing demonstrating that expenditure has been appropriately authorised. Nevertheless, exercising the financial delegation at the point of expenditure is not consistent with the PGPA Act¹⁶⁹, Rule¹⁷⁰, or better practice. Guidance material issued by the Department of Finance states that:

A commitment of relevant money is an activity that creates an obligation to pay relevant money. A common way to commit relevant money is by entering into an arrangement. This includes an obligation that is contingent upon certain events occurring (for example, indemnities, guarantees and warranties. An arrangement includes a contract, agreement, deed or understanding.¹⁷¹

Risk management and fraud control

3.93 The Risk Management Policy that was in effect between 2018 and 2020 required colleges and service divisions to: integrate risk management principles into operational plans; develop and maintain strategic and fraud risk profiles; and develop and maintain business continuity plans.

3.94 While annual updates against college plans have been provided to the Council, see paragraphs 3.18 to 3.20 the strategic and fraud risk profiles, as well as the business continuity plans required to be developed by the colleges and service divisions of the ANU have not been maintained.

3.95 In March 2018, an internal audit of the business continuity arrangements found there was an absence of a business continuity policy and operational framework to lead effective business continuity across the ANU, with colleges and service divisions either having not identified or not documented their business continuity measures. In September 2020, it was noted that a weakness of the ANU’s response to COVID-19 related to the lack of comprehensive business continuity plans. In May 2021, the ANU engaged Fulcrum Risk Services to undertake a gap analysis, develop business impact assessments, a university wide business continuity plan and business continuity templates. The first phase of this program of work was delivered in June 2021.

Strategic risk register

3.96 Across 2018 to 2020, the ANU updated and reviewed its strategic risk register as required, except for the review which was due in November 2019.¹⁷² In 2020, the ANU replaced its strategic risk register, with a COVID-19 risk register to identify risks, treatments, owners and monitoring activities to be implemented as part of its response to the COVID-19 pandemic.

3.97 In December 2020, the Council approved the Enterprise Risk Management Framework. The new framework requires that the ANU maintains a strategic risk register and for all colleges, service divisions and controlled entities to maintain a local level operational risk register. All high and extreme risks, with accompanying treatment plans are to be reported annually to the Executive and risk profiles are to be recorded in a dedicated software program. The Enterprise Risk Management Framework also states that the strategic risk register is to be reviewed annually, with a mid-year status report provided to the Audit and Risk Management Committee and to the Council.

3.98 The updated strategic risk register was provided to the Audit and Risk Management Committee and approved by the Council in July 2021. As at October 2021, the dedicated software program has not been fully implemented (see paragraphs 3.21 and 3.22) and risk profiles and assessments for each of the colleges and service divisions of the ANU and its controlled entities (including its subsidiary ANUE) have not been uploaded.

Fraud control framework

3.99 In March 2019, an internal audit found that: fraud risks have not been sufficiently identified and assessed; the fraud control plan does not address identified risks; a lack of fraud awareness amongst staff; potential incidences of fraud are not being reported through the appropriate channels, or at all; and a lack of documented processes and procedures for investigating, recording and tracking potential fraud instances. The audit made six recommendations which the ANU agreed to implement. In July 2020, the Audit and Risk Management Committee was advised that five recommendations from the internal audit had not yet been implemented.

3.100 As at October 2021, five of the six recommendations remain outstanding. The planned revision of the fraud risk framework planned for 2019 to 2021 has not yet been undertaken. Additionally, fraud risk assessments, fraud control testing, reporting and controls self-assessment activities have not been completed as required.¹⁷³

Assurance arrangements

3.101 The internal audit work program is the primary mechanism to provide the Council with assurance that the systems relating to risk management, oversight and internal control have been implemented and are effective. The internal audit work program is endorsed by the Audit and Risk Management Committee and approved by the Council on an annual basis. Across the period examined (2018 to 2020), an average of 12 audits have been planned each year, with an average of 10 audits conducted. Copies of the internal audit reports and management response are provided to the Audit and Risk Management Committee for endorsing and in February and July of each year the Audit and Risk Management Committee is provided with a report on outstanding audit recommendations.

3.102 In addition to the internal audit program, the Council is provided with an annual governance conformance statement where the Council ‘confirms’ that it has complied with the ANU Act, the PGPA Act and Rule, the Higher Education Standards Framework and the Voluntary Code. The statement focuses on the operations of the Council and the discharge of its duties. The statement identifies the frameworks that have been established in line with the requirements of the PGPA Act and Rule, however, it does not require the colleges and service divisions of the ANU to certify that the frameworks and systems established by the Council that relate to risk management, oversight and internal control, have been implemented, are being complied with and managed effectively.

COVID-19 pandemic

3.105 The COVID-19 pandemic continues to pose a risk to the liquidity and financial sustainability of the ANU due to the decline in overseas student numbers and forecasted decrease in revenue. It has also had a significant impact on teaching, research and academic activities of the ANU, due to the closure of the campus and the move to remote working and teaching arrangements. To provide a timely response to these issues, on 28 January 2020, the ANU stood up a Crisis Incident Management Team (CIMT).¹⁷⁴ The CIMT was chaired by the Chief Operating Officer, included members from across the Senior Management Group and sought input from relevant subject matter experts from across the ANU and externally.

3.106 The early activities of the CIMT (January to March 2020) focused on identifying the extent of the ANU’s exposure, its legal powers to enforce self-isolation requirements, establishing remote teaching and learning options, designing support packages for affected students, communication with relevant ACT and federal government agencies, and exploring options to obtain data.¹⁷⁵ In April 2020, the Council established the COVID-19 Committee. The purpose, roles and responsibilities of the Committee as stated in its charter are below.

For the purpose of supporting the University’s response to COVID-19, and to advise Council. The Committee’s responsibilities, subject to revision by Council are to monitor, review, and where appropriate, make recommendations and endorse actions to Council in relation to any aspect of the response to the COVID-19 situation, especially including in relation to financial matters and strategies to manage liquidity issues.

3.107 The COVID-19 Committee played a key role in overseeing the development and implementation of the expenditure control framework, financial health strategy and ANU Recovery Plan. A timeline of the key events and activities that the ANU undertook to address the immediate financial risks in 2020 is detailed at Figure 3.2.

3.108 The authority, role and activities of the COVID-19 Committee are illustrated below in Case study 5.

3.109 The ANU’s response to the non-financial impacts of COVID-19 was led by the Vice-Chancellor, supported by the Senior Management Group and the Academic Board.

Response phase

3.110 In March 2020, the Vice-Chancellor, on the advice of the Senior Management Group, approved the ANU’s move to remote working. This included: a one-week teaching pause; closing the campus, with access restricted to essential staff; shifting to remote teaching and learning; and modifying the ANU’s grading system to allow students to opt into a grading system of did or did not meet course requirements to mitigate the academic impact of issues encountered as part of shifting to remote learning.¹⁷⁶ In April 2020, the Council was advised of the activities that had been undertaken, approved the initial liquidity measures and the development of a financial health strategy.

3.111 In May 2020, the Council was presented with a range of initiatives that had been developed to respond to the COVID-19 pandemic (the response phase). The response phase was in place throughout 2020 and into 2021. The initiatives of the response phase, in addition to the measures outlined at Case study 5¹⁷⁷, included the development of a COVID-19 specific risk register and the establishment of a COVID-19 response office.

3.112 The COVID-19 risk register initially identified 10 risks including: the inability to maintain sufficient liquidity; poor student support; compromise of academic integrity; inability to meet research funding and regulatory obligations; staff morale, productivity and mental health impacts; and compromise of information assets, systems, information and data. Updates and revisions to the risk register were provided at each Audit and Risk Management Committee held between July 2020 and July 2021.

Recovery phase

3.113 As at October 2021, the ANU has moved into its recovery phase. Planning for the recovery phase commenced in 2020. In September 2020, the Council approved the Financial Health Strategy 2021–23 (now known as the ANU Recovery Plan). The ANU and each college of the ANU released a recovery plan in October 2020. The ANU Recovery Plan sets out the strategic context, financial situation, college and portfolio budget allocations and initiatives that will be pursued across the period. As part of the ANU Recovery Plan, in November 2020 the Senior Management Group endorsed the implementation of a mixed resource (budget) allocation model, revised debt strategy, prioritisation framework for capital expenditure and financing and procurement strategies to introduce stronger internal controls. To complement the recovery plans, the ANU has also released a range of change management and implementation plans for each college that are to remain in place until 2023. The recovery plans for the ANU and each of the colleges are available to staff, students and the general public on the ANU’s website.

Appendix 1 Australian National University’s Response

 

 

 

 

Appendix 2 Performance improvements observed by the ANAO

1. The fact that independent external audit exists, and the accompanying potential for scrutiny, improves performance. Program-level improvements usually occur: in anticipation of ANAO audit activity; during an audit engagement as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s 2021–22 Corporate Plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• initiating reviews or investigations; and
• introducing or revising policies or guidelines.

4. In this context, the below improvements were observed by the ANAO during the course of the audit. It is not clear these actions and/or the timing of these actions were already planned before this audit commenced. The ANAO has not sought to obtain reasonable assurance over the source of these improvements or whether they have been appropriately implemented.

5. In respect to a range of issues identified by the ANAO in the course of the audit — the ANU advised it has:

• updated the reporting requirements of the Academic Board, as outlined in its charter, to include providing assurance to the Council that the ANU has complied with the Higher Education Support Act 2003 and the Higher Education Standards Framework (Threshold Standards) 2015 (see paragraph 2.7);
• commenced a review of all of the charters for the Council and its Council Committees, the review is scheduled for completion by December 2021, (see paragraphs 2.22 and 2.61);
• implemented an ICT solution that integrates SharePoint with its Electronic Records Management System (ERMS) system. Once the solution has been installed it automates the transfer of records from SharePoint into ERMS (see paragraph 2.35);
• released its Policy on Academic Freedom and Freedom of Speech and reported to the Minister for Education and Youth that the ANU is now in alignment with the French Model Code (paragraph 3.7);
• advised that it will be splitting the Strategic Plan from the Corporate Plan to improve alignment with the performance statements and has sought guidance from the Department of Finance to assist review and develop its Corporate Plan for 2022 (see paragraph 3.49);
• has commenced a program of work to develop strategic policies for capital investment, a prioritisation and business case framework as well as guidance material to support the development of business cases for capital works proposals, (see paragraph 3.80); and
• has implemented an annual reporting requirement with regard to the assignment of academic delegations to be provided to the Audit and Risk Management Committee (see paragraph 3.89).

Appendix 3 ANU Senior Management Structure

Appendix 4 Status of implementation — Walker and Winchester Reviews

Table A.1: Implementation of the recommendations from the Walker Review, as reported to the Council

Note a: Implementation status of recommendations from the Walker Review as reported to the Council. The last update with regard to the implementation of the recommendations of the Walker Review was provided in August 2018.

Note b: The Council approved the Australian National University (Governance) Statute 2020 on 2 October 2020. The new Statute came into effect on 1 January 2021.

Source: ANAO analysis of ANU’s implementation of Walker Review recommendations.

Table A.2: Implementation of the recommendations from the Winchester Review, as reported to the Council

Note a: Implementation status of recommendations from the Winchester Review as reported to the Council. The last update with regard to the implementation status of Winchester Review recommendations and the closure of the Winchester Review was provided in April 2021.

Source: ANAO analysis of ANU’s implementation of Winchester Review recommendations.

Appendix 5 Council mechanisms for monitoring the performance of the ANU

1. Table A.3 provides an analysis of the mechanisms established by Council to monitor the performance of the Australian National University (ANU) and the extent to which the reporting requirements have been complied with.

Table A.3: Council mechanisms used to monitor the performance of the ANU

Source: ANAO Analysis.

Appendix 6 Methodology for the assessment of the performance reporting of the ANU

1. An assessment was conducted against the requirements of section 35 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), sections 16E, 16EA and 16F of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) and corresponding guidance material issued by the Department of Finance:

• Developing good performance information: Resource Management Guide No.131, Department of Finance, Canberra, May 2020;
• Corporate plans for Commonwealth entities: Resource Management Guide No.132, Department of Finance, Canberra, February 2020; and
• Annual performance statements for Commonwealth entities: Resource Management Guide No.134, Department of Finance, Canberra, March 2020.

2. The methodology that has been applied by the ANAO aligns with the amendments made by the Public Governance, Performance and Accountability Amendment (2020 Measures No.1) Rules 2020. These amendments came into effect on 28 February 2020 and included the insertion of a new section (section 16EA) into the PGPA Rule 2014. Section 16EA sets out requirements that all performance measures must meet.

3. For entities with a calendar-based reporting cycle, compliance with the requirements of section 16EA of the Rule do not take effect until the 2021 reporting period.

4. The new framework has been used to analyse the ANU’s 2020 Corporate Plan and Performance Statements in order to assist the ANU ensure its corporate plan and performance statements for the 2022 performance cycle meet the new requirements.

5. In applying the ‘related’ criterion, ANAO assessed whether the entity’s performance measures relate directly to one or more of the entity’s purposes or key activities.

6. In applying the ‘measurable’ criterion, ANAO assessed whether the entity’s performance measures were:

• reliable and verifiable — use sources of information and methodologies that are reliable and verifiable; and
• free from bias — provide an unbiased basis for the measurement and assessment of the entity’s performance.

7. In assessing the ANU’s performance criteria for completeness, ANAO considered whether the performance criteria present a basis for collective and balanced assessment of the ANU against its purpose/s, including those articulated in its enabling Act and noting that the ANU has identified its purposes in its corporate plan as strategies for change. In particular, the ANAO considered whether the ANU’s performance criteria:

• where reasonably practical, comprise a mix of quantitative and qualitative measures;
• include measures of the entity’s outputs, effectiveness and efficiency measures; and
• provide a basis for an assessment of the entity’s performance over time.

8. The Rule requires that each of the entity’s performance measures must meet the requirements of each limb of section 16EA. For the purpose of presenting the analysis as part of this audit, the scale used to rate the performance measures/key performance indicators is as follows:

• fully or mostly meet the requirements of section 16EA of the PGPA Rule;
• partially meets the requirements of section 16EA of the PGPA Rule; and
• did not meet the requirements of section 16EA of the PGPA Rule.