Home Affairs | Australian National Audit Office (ANAO)

Portfolio overview

The Home Affairs portfolio comprises a range of national security and national resilience functions these include: managing Australia’s migration program; cyber security policy and protection of critical infrastructure; countering terrorism and foreign interference; emergency management and disaster preparedness, response and recovery; border protection and the facilitation of legitimate trade and travel.

The Department of Home Affairs is the lead entity in the portfolio and is responsible for central coordination, strategy and policy in relation to: cyber and critical infrastructure resilience and security; immigration, border security and management; and counter-terrorism. It also deals with the management and delivery of the migration, humanitarian and refugee programs, along with multicultural programs, citizenship and settlement services. The department includes the Australian Border Force, which is responsible for border, investigatory, compliance, detention (facilities and centres) and enforcement functions, as well as Australia’s customs functions. Considering the portfolio’s focus on national security, maintaining a high-integrity culture, including compliance, is critical. Further information is available from the department’s website.

In addition to the Department of Home Affairs, there are two entities in the portfolio: the Australian Security Intelligence Organisation and the National Emergency Management Agency (NEMA).

In the 2024–25 Portfolio Budget Statements (PBS) for the Home Affairs portfolio, the aggregated budgeted expenses for 2024–25 total $7.4 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through annual appropriation Acts.

The level of budgeted departmental and administered expenses, and the average staffing level for entities in the GGS within this portfolio are shown in Figure 1. The Department of Home Affairs represents the largest proportion of the portfolio’s expenses, and departmental expenses of the portfolio are the most material component, representing 68 per cent of the entire portfolio’s expenses.

Figure 1: Home Affairs portfolio – total expenses and average staffing level by entity

Note: The Australian Security Intelligence Organisation staffing levels are not for publication.

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

Audit focus

In determining the 2024–25 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments or changes in the operating environment.

The ANAO had regard to the final report of the capability review of the Department of Home Affairs that was endorsed by the Australian Public Service Commissioner in May 2024. The review recognised that the department has a dedicated workforce that is mission focussed. The three most important changes identified by the review were:

bridging the current division between the Australian Border Force and the rest of department, and building a better-coordinated and more cohesive organisation;
developing a better set of governance arrangements and embedding them; and
developing a stronger leadership team with better leadership capability .

The primary risk identified for the portfolio relates to the conduct of procurements and management of the resulting contracts.

Other risks in the Home Affairs portfolio relate to service delivery, grants administration, regulation and financial management.

Service delivery

The portfolio has important service delivery responsibilities including in relation to facilitating the flow of travellers through the international border, migration, and emergency management and disaster response. Audits of service delivery, including in the Home Affairs portfolio, highlight the importance of implementing plans in order to deliver consistent and timely performance . The importance of an appropriate emphasis on resource and workforce planning has also been evident in audits of the crewing of patrol boats and intelligence collection, assessment and advice .

Grants administration

The portfolio is responsible for significant grant programs, with $2.7 billion in grants awarded to commence in 2022–23, through the National Emergency Management Agency and the Department of Home Affairs. Grant programs may be delivered through grant hub arrangements, an approach that does not diminish the program owning entity’s responsibility for program design and delivery including the standard of application assessments . It is also important that decision making on the award of grant funding be informed by appropriate advice .

Procurement

Substantial procurement and contract management activity takes place across the portfolio, with the Department of Home Affairs responsible for a significant proportion of the amount contracted by the Australian Government . Across the portfolio, 1583 contracts valued at $1.6 billion were reported on AusTender to commence in 2022–23. Audits have identified shortcomings in the conduct of procurement processes and the management of the resulting contracts .

Regulation

The department is responsible for critical infrastructure policy, regulatory and strategy functions. Its regulatory responsibilities also include the Protective Security Policy Framework and the registration of migration agents . Audit work has identified that the department’s administration and regulation of critical infrastructure required improvement in relation to risk management, coordination with stakeholders, and ensuring the compliance framework reflected current policy and legislative settings .

Financial management

The Department of Home Affairs is the largest collector of revenue for the Australian Government after the Australian Taxation Office. Its large and widely distributed information and communications technology environment to support revenue collection activities means there are associated risks in achieving completeness and accuracy of activities such as customs duty and visa fees.

Previous performance audit coverage

The ANAO’s performance audit activities involve the independent and objective assessment of all or part of an entity’s operations and administrative support systems. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service.

During the performance audit process, the ANAO gathers and analyses the evidence necessary to draw a conclusion on the audit objective. Audit conclusions can be grouped into four categories:

unqualified;
qualified (largely positive);
qualified (partly positive); and
adverse.

In the period between 2019–20 and 2023–24 entities within the Home Affairs portfolio were included in tabled ANAO performance audits 24 times . The conclusions directed toward entities within this portfolio were as follows:

one was unqualified;
12 were qualified (largely positive);
seven were qualified (partly positive); and
four were adverse.

Figure 2 shows the number of audit conclusions for entities within the Home Affairs portfolio that were included in ANAO performance audits between 2019–20 and 2023–24 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2019–20 to 2023–24: entities within the Home Affairs portfolio compared with all audits tabled

Source: ANAO data

The ANAO’s annual audit work program is intended to deliver a mix of performance audits across seven audit activities: governance; service delivery; grants administration; procurement; policy development; regulation and asset management and sustainment. These activities are intended to cover the scope of activities undertaken by the public sector. Each performance audit considers a primary audit activity. Figure 3 shows audit conclusions by primary audit activity for audits involving entities in the Home Affairs portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Home Affairs portfolio, 2019–20 to 2023–24

Source: ANAO data.

Performance statements audit

The audit of the 2023–24 Department of Home Affairs annual performance statements is being conducted following a request from the Minister for Finance on 18 July 2023, under section 40 of the Public Governance, Performance and Accountability Act 2013. The audit is conducted under section 15 of the Auditor-General Act 1997.

The 2023–24 Department of Home Affairs audit is a first year audit in the annual performance statements audit program. Given the high level of complexity of the Department of Home Affairs’ operating environment and risks associated with capturing data and measuring performance particularly where there is reliance on bespoke systems and third part data systems, the engagement has been assessed as high risk.

Key risks for performance statements that the ANAO has highlighted include:

completeness of performance information as presented in the 2023–24 Corporate Plan and Portfolio Budget Statements to support a complete and balanced assessment of Home Affairs’ performance;
the relevance of individual performance measures and targets to assist the reader understand the department’s performance in achieving its purposes;
the appropriateness of individual performance measures and targets and the reliability and verifiability of data sources and methodologies for a number of performance measures; and
the maturity of the performance statements preparation processes.

Financial statements audits

Overview

Entities within the Home Affairs portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Home Affairs portfolio entities and risk profile

	Type of entity	Engagement risk	Number of higher risks	Number of moderate risks
Material entities
Department of Home Affairs	Non-corporate	High	1	3
Australian Security Intelligence Organisation	Non-corporate	Moderate	0	2
Non-material entity
National Emergency Management Agency	Non-corporate	Low

Note a: Sourced from Public Governance, Performance and Accountability Act 2013 (Flipchart of PGPA Act) Commonwealth entities and companies (Department of Finance) as at 1 March 2024.

Material entities

Department of Home Affairs

The Department of Home Affairs coordinates policy and operations for Australia’s national and transport security, cyber security, immigration, border security, multicultural affairs, counter-terrorism and customs-related functions.

The Department of Home Affairs total budgeted revenues for 2024–25 are $25.6 billion, with customs duty and other taxes accounting for 63 per cent and 22 per cent, respectively, as shown in Figure 4. Supplier expenses represent 51 per cent of total budgeted expenses, and buildings and property, plant and equipment account for 51 per cent and 15 per cent, respectively, of total budgeted assets.

Figure 4: Department of Home Affairs’ total budgeted financial statements by category ($’000)

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

The Department of Home Affairs has been classified by the ANAO as a high risk engagement. This engagement risk rating reflects the number and quantum of key areas of financial statements risk that will be a focus of the audit, as well as the: high value of customs revenue; geographically dispersed operations; and level of reliance on IT systems in managing programs and collecting revenue. In addition the Department manages a number of high value contracts, including detention centres and regional processing centres which requires management of people and goods across Australia’s borders.

There are four key risks for the Department of Home Affairs 2023–24 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).

The accuracy of customs duty collections and refunds, due to the self-assessment regime and complexity of the related information technology (IT) systems, processes and inputs. (KAM – Accuracy of customs duty)
The accuracy of visa revenue, which is collected through numerous domestic and international locations, by both departmental staff and third parties under service level agreements using various IT systems. (KAM – Accuracy of visa application charges)
The management of the onshore and offshore detention network and processing centres. Third-party providers are engaged for health services and centre management under a variety of complex service delivery contract arrangements to undertake services on behalf of the department.
The accuracy and valuation of non-financial assets which is a significant balance, geographically dispersed around Australia and internationally across several different asset classes. This diversity of asset classes, including specialised asset such as vessels which are subject to judgement and estimation.

Australian Security Intelligence Organisation

The Australian Security Intelligence Organisation (ASIO) is responsible for protecting Australia, its people and its interests from threats to security through intelligence collection, assessment and advice to the government.

ASIO’s total budgeted expenses for 2024–25 are $729.5 million, as shown in Figure 5. Included in this amount is employee expenses, among other expenses. Non-financial assets are just over $946.5 million, representing 83 per cent of total budgeted assets.

Figure 5: Australian Security Intelligence Organisation’s budgeted financial statements by category ($’000)

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

There are two key risks for the Australian Security Intelligence Organisation’s 2023–24 financial statements that the ANAO has highlighted for specific audit coverage.

The accuracy and completeness of employee expenses and provisions due to reliance on manual calculations because of limitations in the current payroll system.
The accuracy and valuation of non-financial assets which is a significant balance.