I am pleased to present this annual report to the Parliament. The latter half of this year has been unprecedented in its disruption, but the Australian National Audit Office (ANAO) continues to meet its mandate under the Auditor-General Act 1997 through the delivery of high quality audit and assurance reports.

The ANAO Corporate Plan 2019–20 outlined the ANAO’s key performance measures for the activities which contribute to achieving its purpose, alongside its delivery strategy. Each year the corporate plan is complemented by an annual audit work program (AAWP), which is designed to include balanced coverage of portfolios and activities across the public sector.

The ANAO’s performance during 2019–20 is reported on in detail in Part 3: Report on Performance. A total of 184 findings were reported to entities as a result of financial statements audits. I am pleased to see that the quality of financial reporting remains strong throughout the sector. In 2019–20, 42 performance audit reports were tabled against a target of 48. The reduction was a reflection of budget constraints (which will continue to reduce the ANAO’s capacity to deliver performance audits into the future), delays due to the COVID-19 pandemic (which creates challenges in entity engagement on audits and accessing information) and funding allocated to pilot assurance audits of annual performance statements. This impact will flow into 2020–21. Of the performance audits commenced in 2019–20, we achieved the intended coverage outlined in the AAWP with a focus on service delivery, performance against objectives and the implementation of past recommendations. This year also included a focus on fraud, and integrity and probity in governance, following significant cultural issues in organisations highlighted in 2018–19 by the Financial Services Royal Commission. Performance audits in the future will continue to consider the cultural attributes impacting on entity performance. I expect this to include an increase in our focus on the ethical dimension in the proper use or management of public resources under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

In 2019 the Minister for Finance requested that the ANAO undertake a program of pilot assurance audits of annual performance statements of Commonwealth entities subject to the PGPA Act, in consultation with the Parliament’s Joint Committee of Public Accounts and Audit (JCPAA). I agreed to the request and a pilot audit of the 2019–20 performance statements of three entities is underway. Subject to the outcome of the pilot, the full implementation of mandatory auditing of entity performance statements would give the Parliament the same level of assurance over non-financial performance information that it currently receives for financial performance information. I expect this to result in improvements in the quality of performance information provided to Parliament. While the ANAO is meeting the costs of conducting the pilot program through a reduction in the number of performance audits undertaken, transition to full implementation will require additional budget funding.

As previously forecast, the ANAO budget is in loss for the third year in a row. This is in part due to investment in new ways of working, including technologies that will improve the efficiency of the ANAO. The deficit also reflects our transition to a lower funding base. Without supplementary appropriations, the number of performance audits tabled in the Parliament will continue to reduce. On this basis, I have written to the Prime Minister to propose that the ANAO’s funding is put on a more sustainable basis to meet both mandated financial statements audits and the suite of performance and other reports which are provided to Parliament to achieve transparency and accountability in the Australian Government sector.

On 16 March 2020 the ANAO’s Business Continuity Management Plan, and Pandemic Action Plan, were activated in response to the COVID-19 pandemic. I wrote to the Public Service Commissioner on 30 March, following a direction made to the Public Service by the APS Commissioner on 27 March, indicating that ANAO operations were critical to supporting accountability and transparency. As a result, ANAO staff were not redeployed to government pandemic response measures. Due to prior year investments in technology, staff were well placed to work remotely. Entities also assisted the ANAO by making remote access to financial systems available to enable audit work to continue. Auditor-General reports continued to be presented for tabling in the Parliament through out of session arrangements in the Senate. During April 2020 I implemented an engagement ‘pause’ for performance audits in recognition of the work that audited entities were undertaking to adjust to new working arrangements and, for many, implementing the COVID-19 related measures announced by the Australian Government.

The ANAO commenced monthly assurance reviews of Advances to the Finance Minister given the size of advances available (in the order of $40 billion), and to provide the Parliament with timely assurance and transparency of the Australian Government’s pandemic response. In 2019–20, the ANAO presented two assurance reviews. The ANAO has released a multi-year COVID-19 audit strategy as part of the 2020–21 AAWP consultation process. The strategy outlines how the ANAO will respond to the COVID-19 pandemic in three phases:

• Phase 1 – Four ‘in-flight’ topics that commenced before 30 June 2020. The four topics are:
  1. The ATOs management of risks related to the rapid implementation of COVID-19 economic response measures;
  2. Management of the Australian Public Service’s workforce response to COVID-19;
  3. Procurements to increase the National Medical Stockpile; and
  4. Services Australia COVID-19 measures and enterprise risk management.
• Phase 2 – will focus on: policy design; implementation (including risk management); and performance assessment including evaluation and dissemination of lessons learned.
• Phase 3 – will review the outcomes of the Australian Government’s COVID-19 response and consider whether government objectives were met through the response measures.

Early audits will have a strong focus on risk management in the sector: risk emerging from rapid design and implementation; how entity risk appetite has changed and how new risk tolerance levels have been articulated and actioned; and strategies being put in place to achieve acceptable levels of compliance.

The audit program will need to be flexible given the emergence of new policies developed or adjusted as the pandemic continues, including through the Federal Budget in October 2020. Nonetheless, the COVID-19 strategy outlined in the AAWP gives a sense of the broad scope of possible audits into government policies and programs. An important consideration in our program will be the opportunity to identify lessons learned. COVID-19 risk management will also be considered in the scope of, where relevant, those audits listed in the 2020–21 Annual Audit Work Program.

In the longer term, the audit program will need to address the delivery of the intended outcomes of the COVID-19 response, including at a macro level, and we will plan for audits of recovery programs. This will be documented in future AAWP.

Through our work to date on financial audits during the pandemic, we are seeing issues emerging which may well provide challenges to entities in preparation of financial statements. These issues include material uncertainties arising in asset valuations and difficulties in performing inventory stocktakes. We expect that entities and their audit committees will turn their minds to risks in financial management, and ensure that the accounting treatment and disclosures are appropriate for the Parliament to understand these risks and uncertainties.

During 2019–20 the ANAO appeared before, and responded to questions from, a range of parliamentary committees, including the Senate’s Select Committee on Administration of Sports Grants. The administration of grants is a regular performance audit focus for the ANAO. This program was selected because it was administered by a corporate commonwealth entity not subject to the Commonwealth Grants Rules and Guidelines. For the public sector there are strong lessons in grants management and general administration that come from this audit. They go to the core public sector values of being apolitical and providing the Australian Government with advice that is frank, honest, timely and based on the best available evidence. A major issue, which I believe remains unresolved, relates to how a minister can be the decision-maker with respect to the resources of a corporate entity. As corporate entities are established with the purpose of them being legally separate, this is a critical question for the operation of the public sector’s financial and resource management framework.

In the course of the select committee’s inquiry, numerous requests for audit information have been made. The legislative and policy framework in which the Auditor-General and ANAO operate reinforces that the Auditor-General and ANAO are custodians of documents belonging to others. The documents are collected for audit purposes in order for the Auditor-General to form conclusions against the objectives of the audit according to auditing standards. It would be inconsistent with this framework for the ANAO to become an alternate source for the release of information that is the subject of a public interest immunity claim by the information owners.

The ANAO regards integrity as a core value of the organisation — critical in sustaining the confidence of Parliament, strengthening public trust in government and delivering quality audit and assurance reports pursuant to the Auditor-General Act 1997. As part of the ANAO’s 2019–20 Corporate Plan, we committed to investing further in integrity as a key organisational capability through the development of an Integrity Framework. The framework consolidates and provides an overarching structure to the existing ANAO integrity control system and serves to assist in ethical decision making and effective management of risk, fraud and personal conduct.

Grant Hehir
Auditor-General

This part provides an overview of the ANAO’s purpose, role and values, our organisational structure, and our relationships with the Parliament and other national and international bodies.

About the ANAO

The Australian National Audit Office (ANAO) is a specialist public sector agency providing a full range of audit and assurance services to the Parliament and Commonwealth public sector entities and statutory bodies.

Purpose

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

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

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

Role

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

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

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

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

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

The ANAO supports the Auditor-General in this role.

Values

The ANAO upholds the Australian Public Service (APS) values as set out in the Public Service Act 1999. The ANAO places particular focus on respect, integrity and excellence — values that align with the APS values and address the unique aspects of the ANAO’s business and operating environment. The ANAO’s values guide the office in performing its role objectively, with impartiality and in a manner that supports the Parliament.

Organisational structure

To deliver on the ANAO’s purpose, the Auditor-General has organised the ANAO into five functional areas:

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

The ANAO’s organisational structure at 30 June 2020 is shown in Figure 2.1.

Relationships

In pursuing its purpose, the ANAO maintains important relationships with the Parliament, various national bodies and counterparts, as well as international counterparts, as described below.

The ANAO invests in a number of professional relationships through the two-way exchange and sharing of information and practices, and supports other nations through peer-to-peer institutional capacity development. The ANAO’s engagement strategy details the ANAO’s approach to key relationships with the public sector auditing community.

In recognition of the impact of the COVID-19 pandemic on the public sector auditing community, including changing work priorities and audit approaches, the ANAO has adapted the implementation of its engagement strategy to the circumstances arising from the pandemic. This includes engaging with both international and national peers and the public sector to stay informed on evolving approaches to auditing; finding new and innovative ways to continue to conduct its business with the public sector; and continuing to learn from and support other audit offices in other nations..

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

Parliament

The ANAO’s primary relationship is with the Australian Parliament and the ANAO’s key interaction with the Parliament is through the JCPAA. The Auditor-General’s reports assist the Parliament to hold government entities accountable and to drive improvements in public administration. The Auditor-General and ANAO support the work of the Parliament by providing independent reporting, assurance, and assistance. Assistance to the Parliament occurs through the provision of submissions and information to the Parliament, appearances before parliamentary committees, and briefings to parliamentarians. The Parliament and its committees also scrutinise the work and administration of the ANAO.

Joint Committee of Public Accounts and Audit

The JCPAA is established by the Public Accounts and Audit Committee Act 1951. The JCPAA formally links the Auditor-General and the ANAO to the Parliament. The committee approves the proposed appointment of the Auditor-General; advises the Auditor-General on the Parliament’s audit priorities; and considers the operations and resources of the ANAO. This includes considering the ANAO’s draft budget estimates and making recommendations on the ANAO’s budget to both houses of Parliament and to the Prime Minister. The JCPAA of the 46th Parliament commenced in July 2019.

The JCPAA is required to review all reports that the Auditor-General tables in the Parliament and to report the results of its deliberations to both houses of Parliament. The JCPAA conducted four inquiries throughout 2019–20, resulting in the tabling of one report, Report 481: Efficiency and Effectiveness, on its review of Auditor-General reports. In 2019–20, officers of the ANAO provided six private briefings, attended seven public hearings and made two submissions to assist the Committee in undertaking its functions. An outline of inquiries and reports is provided in Table 2.1.

Table 2.1: JCPAA inquiries and reports

National relationships

In addition to its relationship with the Parliament, the ANAO has important relationships in the national sphere with the accountable authorities of Australian Government entities, the Australasian Council of Auditors-General (which includes the state and territory auditors-general), and professional accounting bodies and standard-setting boards.

Accountable authorities

The ANAO has an important relationship with the accountable authorities of Australian Government entities, who have primary responsibility for and control over public sector entities’ operations. The ANAO engages with entities at a number of levels to strengthen relationships and promote improved financial reporting and public sector administration, including through attendance at entity audit committees.

The ANAO considers that its ongoing relationship with chief financial officers (CFOs), officials of audited entities and audit committees helps to achieve its purpose to both improve public sector performance and support accountability and transparency in the Australian Government sector. As part of this work, the ANAO conducts forums, with the Department of Finance, for CFOs and audit committee chairs to share insights on emerging and topical audit issues and requirements affecting Australian Government entities.

The ANAO hosted CFO forums in November 2019 and June 2020 that were each attended by approximately 110 CFOs and entity representatives. The June 2020 forum was presented by webinar in response to COVID-19 restrictions. In these forums, the ANAO shares information about issues arising in audits and key focus areas of the audit program, and provides insights and themes on the effectiveness of public administration. The broadcasts of the webinars are retained on the ANAO website after the live delivery.

Audit committees play an important role in entities’ governance frameworks. Audit committee chair forums were held in December 2019 and July 2020. In July 2020 the forum was presented by webinar in response to COVID-19 restrictions. Each forum was attended by approximately 65 audit committee chairs and representatives. The forums provide an opportunity to share insights from the audit program, and relevant updates and information, to assist committees to meet the requirements of the PGPA Act and associated rules. A communique is published on the ANAO website after these forums.

Australasian Council of Auditors-General

The Auditor-General is a member of the Australasian Council of Auditors-General (ACAG), which comprises the auditors-general of the Commonwealth of Australia, New Zealand, Papua New Guinea and Fiji, along with the auditors-general of each Australian state and territory. ACAG’s objective is to promote and strengthen public sector audit in Australasia through leadership, collaboration, engagement, advocacy and peer support. The ANAO contributes to ACAG’s work by attending business meetings and subcommittee meetings, preparing discussion papers, participating in information exchanges, undertaking annual benchmarking and client surveys, and conducting peer reviews. In 2020, in response to the COVID-19 pandemic, the frequency of the ACAG business meetings was increased to communicate audit and organisational approaches, and to share lessons on operational and emerging audit issues.

The Australasian Council of Public Accounts Committees (ACPAC) biennial conference, which is attended by ACAG members, was hosted by the JCPAA in November 2019. ACPAC exists to exchange information and opinions about public accounts committees, in order to improve their performance and increase the accountability of government expenditure. ACPAC also aims to improve how public accounts committees communicate with auditors-general. The Auditor-General’s presentation to the conference — ‘The role of the PACs and Auditors-General in enabling the Parliament to carry out its oversight function effectively, making governments accountable’ — focused on the role of the JCPAA and the Auditor-General in overseeing the development and implementation of reforms to the Commonwealth performance framework.

In 2018–19, the ANAO led ACAG’s engagement of the Canadian Audit and Accountability Foundation (CAAF) to deliver an advanced performance audit training program — Leading Successful Audits and Evidence Collection and Analysis. Following this investment, the ANAO, in collaboration with the ACT Audit Office, delivered the first CAAF Evidence Collection and Analysis module in-house in November 2019. The course is now mandatory for all newly appointed ANAO audit staff. In 2020, in response to COVID-19 restrictions, the training package was redeveloped for presentation in an online learning environment to ensure continued access to this scheduled learning and development opportunity.

Professional accounting bodies and standard-setting boards

The ANAO is actively involved in the work of two professional accounting bodies in Australia, CPA Australia and Chartered Accountants Australia and New Zealand. Ms Carla Jago, Group Executive Director, AASG, is the Vice Chair of Chartered Accountants Australia and New Zealand ACT Regional Council. The ANAO has recognised employer status under CPA Australia’s Recognised Employer Program, which includes organisations that are committed to providing their employees with the highest standard in professional development and support.

The ANAO contributes to the development of accounting and auditing standards through contributing to ACAG responses to exposure drafts for new or amended standards proposed by the Australian Accounting Standards Board, the Auditing and Assurance Standards Board, the Accounting Professional and Ethical Standards Board, and the International Public Sector Accounting Standards Board.

International relationships

The ANAO’s key international activities are engagement with other supreme audit institutions, and bilateral capacity-building partnerships with Indonesia and Papua New Guinea under Australia’s international aid program.

Supreme audit institutions

A supreme audit institution (SAI) is the lead public sector audit organisation in a country. Engagement with other SAIs allows the ANAO to participate in the international dialogue about best practice public administration and developments in public sector auditing. The ANAO also responds to requests from SAIs directly, including by hosting and presenting to visiting delegations, providing information and participating in surveys.

The ANAO is a member of the International Organization of Supreme Audit Institutions (INTOSAI), which is dedicated to promoting the exchange of information about audit and financial management among its member institutions and providing a network for the international public sector audit community.

The ANAO also contributes to the activities of two INTOSAI regional organisations:

• the Asian Organization of Supreme Audit Institutions (ASOSAI); and
• the Pacific Association of Supreme Audit Institutions (PASAI).

In 2019, the ANAO nominated Ms Jane Meade, Group Executive Director, Professional Services and Relationships Group, as a candidate for membership of the Forum for INTOSAI Professional Pronouncements (FIPP). The nomination was successful and her three-year membership commenced on 1 January 2020. The FIPP aims to support professional development by ensuring that INTOSAI provides a clear and consistent set of professional standards at issai.org. The FIPP achieves this through reviewing and monitoring INTOSAI’s framework of professional pronouncements. The ANAO participated in the forum via teleconference in March, April and June 2020.

In the first half of 2020, a number of planned INTOSAI events were cancelled or postponed due to COVID-19.

The ANAO’s key international engagements in 2019–20 included participating in the:

• Triennial INTOSAI Congress in Moscow in September 2019. The forum discussion focused on the importance of responding to rapid changes in public sector auditing and technology.
• International Conference of Indonesia State Finance and Accountability (InCISFA) in Bali, Indonesia, in October 2019. The topic of the conference was ‘Governance and accountability of state finance to accelerate sustainable development’. The ANAO presented a paper on how quality assurance systems can enhance SAIs’ impact in promoting transparency and accountability of governments, aligning with the focus on audit quality in the ANAO’s ongoing partnership activities with the Audit Board of the Republic of Indonesia.
• 22nd PASAI Congress in Natadola, Fiji, in August 2019. The theme of the congress was ‘The role of SAIs in helping to achieve governments’ sustainable development goals’, focusing on strong governance as key to improving the lives of citizens. The Auditor-General passed the position of Chair of the PASAI Governing Board to the Auditor-General of Fiji, remaining as a Governing Board member until the 23rd PASAI Congress.
• 14th Joint Strike Fighter Conference in Washington DC in November 2019. The conference focus was on methodologies and audit coverage of this specialised topic, as well as discussing and sharing findings from performance audits of the Joint Strike Fighter program.

In addition to the activities outlined above, the ANAO has increased its engagement specifically on COVID-19 auditing and organisational approaches with SAIs operating within a similar environment including: SAIs New Zealand, Canada, United Kingdom, and the United States of America.

Australia’s international aid program

The ANAO, through a partnership agreement with the Department of Foreign Affairs and Trade (DFAT), is participating in Australia’s international aid program to assist and support the audit offices of Indonesia and Papua New Guinea to build institutional capacity and facilitate the sharing of auditing knowledge across all three offices. The partnership supports the Australian Government’s sectoral aid initiative to develop effective governance institutions.

Both of the international aid programs delivery were impacted by the COVID-19 pandemic. On 17 March 2020, in response to the pandemic, the Minister for Foreign Affairs made an announcement offering voluntary departures to specific categories of staff attached to all overseas posts, which included the ANAO officers deployed to Indonesia and Papua New Guinea. Following this announcement, the ANAO recalled its deployees back to Australia. On return to Canberra, the deployees continued to engage with BPK and PNG AGO and provide ongoing audit and organisational development support through the programs.

Australia–Indonesia Partnership for Economic Development (PROSPERA) Program

The ANAO’s activities under the Australia–Indonesia Partnership for Economic Development (PROSPERA) program with the Audit Board of the Republic of Indonesia (Badan Pemeriksa Keuangan — BPK) continue to support BPK’s efforts to strengthen management of its audit functions. The program is aligned with the BPK strategic plan objectives of delivering beneficial and high-quality audits. The key 2019–20 program focus areas were on performance and financial audit management, quality assurance systems, and organisational development to support audit management and capability. Recognising the maturity of the partnership, in addition to supporting the development of audit and organisation capability, the ANAO engaged with BPK on topics of mutual interest and benefit to both the ANAO and BPK.

Principal modalities for the partnership program are the deployment in-country of a senior ANAO subject matter expert; short-term technical visits by subject matter experts from the ANAO; attachments and short-term visits by BPK staff to the ANAO; technical training and workshops; and long-term secondment.

In November 2019, the ANAO participated in a formative review of the first year of the PROSPERA program, commissioned by DFAT. Overall, the review findings were very positive about the program’s progress to date and Australian public sector agencies’ contribution to program objectives.

The ANAO, in partnership with BPK, delivered seven of 12 planned activities for 2019–20. In response to the travel restrictions imposed by the COVID-19 pandemic, three planned activities were deferred or cancelled and two were partially delivered by alternative methods. The ANAO adapted the 2019–20 work program, pivoting the focus of activities to the impact of COVID-19 on organisational and work program considerations, and technical implications, aligning with DFAT’s strategy for the focus of the program going forward.

Australia–Papua New Guinea Institutional Partnerships Program

The Institutional Partnerships Program (IPP) supports the development of long-term institutional relationships between Australian and Papua New Guinea (PNG) government entities. The ANAO’s activities under the program support the efforts of the PNG Auditor-General’s Office (AGO) to strengthen the management of its audit functions, in line with its Corporate Plan 2017–2021 strategic objectives. The key 2019–20 program focus areas were management of institutional linkages, information technology audit support, and organisational capacity development.

Principal modalities for the partnership program are the deployment in-country of an ANAO subject matter expert; short-term technical visits by ANAO subject matter experts; attachments of AGO staff to the ANAO, including in the ANAO graduate program and other Australian audit offices; and technical training and workshops.

The ANAO, in partnership with the AGO, delivered five of 10 planned activities for 2019–20. Due to the travel restrictions imposed by the COVID-19 pandemic, one planned activity for 2020 was deferred, one activity was partially delivered, and three activities were delivered by alternative methods. The deferred activity involved the return to Papua New Guinea of AGO staff who were taking part in the ANAO graduate program.

The ANAO, in partnership with the Queensland Audit Office, conducted a performance management framework assessment of the AGO in late 2019 to inform better targeting of IPP activities and reporting on outcomes. The assessment and the AGO’s next corporate plan will form the basis of the IPP going forward, along with a shift in focus of program activities in response to the COVID-19 pandemic.

The ANAO has continued to engage with the AGO and provide ongoing audit and organisational development support, with a focus on implementing the performance management framework recommendations.

Annual performance statements

As the accountable authority of the Australian National Audit Office, I present the 2019–20 annual performance statements of the Australian National Audit Office, as required under paragraphs 39(1)(a) and (b) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and section 16F of the Public Governance, Performance and Accountability Rule 2014. In my opinion, these annual performance statements are based on properly maintained records, accurately reflect the performance of the entity for the reporting period, and comply with subsection 39(2) of the PGPA Act.

Grant Hehir
Auditor-General
18 September 2020

Performance framework

The ANAO’s performance framework allows us to monitor and measure:

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

Taken together, the performance measures tell a story of the ANAO’s achievement of its purpose. The output measures relay progress in the delivery of the ANAO’s audit work. The quality and efficiency measures are intended to demonstrate efficient use of taxpayer resources and the ANAO’s commitment to quality and transparency in its work. The impact measures seek to provide information on entities’ implementation of audit findings and recommendations for the information of the Parliament and entities, and the extent to which Parliament’s engagement with our work leads to improvements in public sector administration.

Corporate plan and portfolio budget statements

The ANAO measures its performance against its purpose using a range of performance criteria, which are outlined in the Portfolio Budget Statements 2019–20 and the ANAO’s Corporate Plan 2019–20.

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

In its Portfolio Budget Statements 2019–20 the ANAO’s sole outcome (Outcome 1) is ‘to improve public sector performance and accountability through independent reporting on Australian Government administration to the Parliament, the Executive and the public’.

The ANAO seeks to achieve its purpose and outcome through its audit services, which include:

• financial statements audits of Australian Government entities (Program 1.1); and
• performance audits of Australian Government programs and entities (Program 1.2).

The ANAO’s outcome and programs framework for 2019–20 is shown in Table 3.1.

Table 3.1: ANAO’s outcome and programs framework for 2019–20

Assurance audits

The ANAO audits the annual financial statements of Australian Government entities and the Consolidated Financial Statements of the Australian Government. The Consolidated Financial Statements present the consolidated whole-of-government financial result inclusive of all Australian Government–controlled entities, including entities outside the general government sector. These audits are designed to give assurance to the Parliament that an entity’s financial statements fairly represent its financial operations and financial position at year end. The ANAO also undertakes a range of assurance reviews by arrangement with entities, and in accordance with section 20 of the Auditor-General Act 1997.

Performance audits

A performance audit is a review or examination of any aspect of the operations of an entity that is undertaken in accordance with the ANAO Auditing Standards. The ANAO’s performance audits are presented to the Parliament and identify areas where improvements can be made to aspects of public administration. They often make specific recommendations to assist public sector entities to improve performance. Performance audits may also involve multiple entities and examine common aspects of administration or the joint administration of a program or service. An assurance review of defence major projects is also undertaken annually.

Performance statements audits

In September 2018, the Independent Review into the operation of the PGPA Act recommended that the Finance Minister, in consultation with the JCPAA, should request that the Auditor-General pilot assurance audits of annual performance statements to trial an appropriate methodology for these audits. On 27 August 2019, the Minister for Finance requested that the Auditor-General conduct a pilot program of audits of annual performance statements in consultation with the Joint Committee of Public Accounts and Audit. Following the Auditor-General’s agreement, the ANAO commenced the pilot under section 15 of the Auditor-General Act 1997 and is applying the performance statements auditing methodology developed over recent years to the 2019–20 performance statements of three entities.

The intent of performance statements audits is to drive improvements in the transparency and quality of entities’ performance reporting and, in turn, increase entities’ accountability to the Parliament and public. The pilot is being conducted in accordance with ASAE 3000 Assurance Engagements Other than Audits or reviews of Historical Financial Information and will consider whether entity performance statements comply with the relevant requirements of the Public Governance, Performance and Accountability Act 2013 and Rule, the appropriateness of the performance criteria and whether results are complete, accurate and supported by sufficient records.

The performance statements audits will include interim and final fieldwork, with management letters outlining interim and final audit results and is expected to be completed in time for inclusion in entity 2019–20 annual reports. The final audit opinions will appear in independent assurance reports similarly to those prepared by the ANAO in relation to its annual financial statements audits, and will be provided to the Minister for Finance for tabling in the Parliament. The detailed outcomes of the pilot will also be reported to the Minister for Finance, the JCPAA and the Parliament.

Analysis of performance against our purpose

Overall in 2019–20, the ANAO achieved 9 measures out of 18, a reduction in the number of performance outcomes achieved in 2018–19:

• For Program 1.1: Assurance Audit Services, 1 out of 7 measures were met; a
• For Program 1.2: Performance Audit Services 3 out of the 5 measures were met; and
• For performance results for relationships and corporate and professional services 5 out of 6 measures were met.

A number of factors impacted the ANAO’s ability to meet its performance measures across both programs. This includes entities not providing the ANAO with a final set of financial statements for audit which impacts the percentage of mandatory financial statement auditors reports not completed. Other factors include the impact of budget constraints across both programs that impact the delivery of outcomes.

The ANAO successfully carried out its Annual Audit Work Program 2019–20 by responding to interests and priorities of the Parliament and providing a balanced program of activity that was informed by risk. Through the audit program, the ANAO promoted accountability, transparency and improvements to public administration; following up on past recommendations and identifying trends for improvement, or declines in performance across government; and applying all of the Auditor-General’s mandate. The ANAO also initiated four COVID-19 related performance audits and monthly assurance reviews of COVID-related advances to the Finance Minister reflecting the need to provide the Parliament with timely assurance and transparency of the Australian Government’s pandemic response measures.

In addition, the ANAO continued to respond to requests from Parliament, by briefing members of parliament and committees, and making submissions to and/or appearing before parliamentary committees. The ANAO engagement with Parliament continued to include requests for submissions and/or appearances from committees other than the JCPAA. Of particular note was ANAO’s support provided to the Parliament in relation to Auditor-General Report No.23 (2019–20) Award of Funding under the Community Sports Infrastructure Program. In relation to the audit ANAO provided a total of three private briefings; appeared as a witness before the Senate Select Committee on the Administration of Sports Grants inquiry hearing, and responding to eight questions on notice taken during this hearing. The audit was also a key focus of ANAO’s appearance before the Finance and Public Administration Committee Senate Estimates hearing in March 2020, with ANAO responding to a further four questions following the Estimates hearing.

The ANAO has also established a new section on the ANAO website providing access for parliamentarians to performance audit reports sorted by areas of coverage for Senate estimates committees.

In 2019–20, the ANAO presented 42 performance audits for tabling in the Parliament. The primary focus of ANAO performance audits was effectiveness and economy — the extent to which entities delivered on intended objectives and the value for money achieved in doing so. The year also saw continued emphasis on risk management and governance within entities with a focus on probity and fraud, grants and procurement management, cyber security, and efficiency. Performance audit work covered non-corporate and corporate government entities and government business enterprises (GBEs) reflecting the Auditor-General’s mandate.

In 2019–20, the ANAO published four Audit Insights reports to support its purpose and the focus of the annual audit work program. Topics addressed were: entities approach to managing the implementation of recommendations; management of conflicts of interest in procurement activity and grant programs; and fraud control arrangements. The ANAO published an audit insights product on 16 April 2020 setting out key messages from Auditor-General reports for rapid implementation of Australian Government initiatives as the Australian Public Service commenced implementation of stimulus and support measures in response to the COVID-19 pandemic.

The following sections provide more detailed analysis of the ANAO’s performance results for Program 1.1 (assurance audit services), Program 1.2 (performance audit services), and ANAO-wide activities relating to relationships, and corporate and professional services.

Performance results for Program 1.1: Assurance audit services

The primary purpose of financial statements is to provide relevant and reliable information to users about a reporting entity’s financial performance and position. In the public sector, the users of financial statements include ministers, the Parliament and the community. The preparation of timely and accurate audited financial statements is also an important indicator of the effectiveness of an entity’s financial management, which fosters confidence in an entity on the part of users.

The ANAO’s financial statements audits, undertaken in accordance with the ANAO Auditing Standards, provide an independent examination of the financial accounting and reporting of public sector entities. They provide independent assurance that financial statements have been prepared in accordance with the Australian Government’s financial reporting framework and Australian accounting standards. The ANAO’s assurance audits contribute to improvements in the financial administration of Australian Government entities.

The Auditor-General presents reports on audits of financial statements to the Parliament twice a year. The first of these reports, Interim Phase of the Audits of the Financial Statements of Major General Government Sector Entities, reports on ANAO coverage of key financial systems and controls in major Commonwealth entities. The second report, Audits of the Financial Statements of Australian Government Entities, reports on the results of the financial statements audits of all Commonwealth entities. The independent reporting to the Parliament on this activity supports accountability and transparency in the Australian Government sector.

Key to the ANAO’s audit process is an assessment of entities’ internal control frameworks as they apply to financial reporting. An effective internal control framework provides the ANAO with a level of assurance that entities are able to prepare financial statements that are free from material misstatement. In 2019–20, a total of 74 findings were reported to the entities included in the interim audit report to Parliament, comprising no significant, eight moderate, 65 minor findings. In addition one significant legislative breach was reported. This is an increase on the interim audit results of 2018–19, with a total of 70 reported findings comprising one significant, 12 moderate and 57 minor findings. Sixty-three per cent of findings are in the areas of:

• management of IT controls, particularly the management of privileged users; and
• human resources financial processing.

The Consolidated Financial Statements present the consolidated whole-of-government financial results inclusive of all Australian Government–controlled entities, as well as the general government sector financial report. The 2018–19 Consolidated Financial Statements were signed by the Minister for Finance on 14 November 2019 and an unmodified auditor’s report was issued on the same day.

A total of 184 findings were reported to entities as a result of the 2018–19 financial statements audits. These comprised three significant, 21 moderate and 160 minor findings. Most of the significant and moderate findings were in the areas of:

• compliance and quality assurance frameworks supporting program payments and financial reporting; and
• management of IT security and user access, in particular the management of privileged users.

Four legislative breaches were also reported to entities during 2018–19 financial statements audits. Of the legislative breaches, three were significant and one was non-significant. A significant breach is reported where a significant potential or actual breach of the Constitution occurs, or where noncompliance with an entity’s enabling legislation, legislation the entity is responsible for administering, or the PGPA Act is identified. A non-significant legislative breach is reported where instances of noncompliance with other legislation, or subordinate legislation, are identified.

Performance measures

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

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

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

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

The number of financial statements auditor’s reports issued is a key measure of the ANAO’s core business in achieving its purpose. Financial statements auditor’s reports provide assurance to the Parliament that the financial statements of an entity comply with Australian accounting standards and other reporting requirements (such as the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015), and present fairly the entity’s financial position and its financial performance and cash flows for the period.

During 2019–20, the ANAO completed 243 of 249 mandated¹ financial statements audits for the year ended 30 June 2019. This included the Consolidated Financial Statements of the Australian Government. There are 6 entities² that have not provided the ANAO with a set of financial statements for audit; and 243 entities that provided the ANAO with a set of financial statements for audit and have received an auditor’s report for tabling in Parliament.

In addition to financial statements audits, the ANAO also completed two mandated non–financial statements audits in 2019–20. These are compliance audits required by the Australian Postal (Performance Standards) Regulations 1998 and subsection 313(3) of the Bankruptcy Act 1966. These audits are reported under Criterion 3 below — Number of assurance audit reports by arrangement.

Details of issues identified during the financial statements audits are included in Auditor-General Report No.20 of 2019–20: Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2019.

The Auditor-General presents insights and findings from the outcomes of the financial statements audits of Australian Government entities and the consolidated financial statements of the Australian Government through independent reports to the Parliament. The reports support accountability and transparency in the Australian Government sector and provide Parliament with an independent examination of the financial accounting and reporting of public sector entities.

Auditor-General Report No.20 of 2019–20: Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2019 was tabled in December 2019. This report complemented the interim-phase report published in June 2019, and provided a summary of the final results of the audits of the Consolidated Financial Statements for the Australian Government and the financial statements of Australian Government entities.

Auditor-General Report No.38 of 2019–20: Interim Report on Key Financial Controls of Major Entities was tabled in May 2020. This report focused on the results of the interim audit phase — including an assessment of entities’ key internal controls — of the 2019–20 financial statements audits of 24 entities, including all departments of state and a number of major Australian Government entities. The work performed for the interim report pre-dated adjustments entities have made to their financial and risk management controls. These risks will be considered in the final audits of financial statements.

The target was based on an estimate of the number of audits and reviews by arrangement that the ANAO may be requested to undertake. This target was not achieved as the ANAO was not requested to undertake as many audits and reviews as originally estimated.

In addition to the conduct of mandated financial statements audits, the ANAO undertakes other assurance activities by arrangement with audited entities to support accountability and transparency in the Australian Government sector. Measuring section 20 audits (i.e. audits by arrangement) contributes to the delivery of Program 1.1 by independently identifying improvements in the financial administration of Australian Government entities. In 2019–20, the ANAO completed 39 other assurance activities.

These activities generally consist of audits or reviews conducted under section 20 of the Auditor-General Act 1997. They include financial statements audits and audits or reviews of compliance with legislative requirements. Once inquiries by the ANAO have been concluded, the outcomes and any findings from these individual assurance activities are communicated through the issue of a formal report or by other correspondence. The ANAO charges a fee for these audits and reviews.

Also reported against this criterion are two mandated non–financial statements audits completed by the ANAO in 2019–20. These are compliance audits required by the Australian Postal (Performance Standards) Regulations 1998 and subsection 313(3) of the Bankruptcy Act 1966.

In order to support timely reporting of entities’ financial performance to the Parliament through annual reports, the ANAO aims to issue 85 per cent of auditor’s reports within three months of the financial-year-end reporting date.

Providing timely auditor’s reports also supports entities in meeting requirements to provide audit-cleared financial information to the Department of Finance in accordance with deadlines that are set to assist the Australian Government to prepare the Final Budget Outcome by 30 September and the Consolidated Financial Statements by 30 November each year. The Consolidated Financial Statements present whole-of-government financial results, inclusive of all Australian Government–controlled entities.

Achievement of this measure relies on entities providing the ANAO with auditable financial statements within the required timeframe. In 2018–19, the ANAO assessed the timeliness and quality of financial statements preparation, the results of which are consistent with the increase in the number of financial statements preparation findings reported. Timeliness in preparation was assessed by comparing the date of delivery of the financial statements to agreed timeframes. The timeframe was established by entities and agreed with audit teams for the delivery of financial statements. Timeliness in financial statements preparation declined compared to the prior year. In November 2019 there were eight 2018–19 financial statements that had not been finalised and presented to the ANAO for audit compared to one in the previous year.³ The ANAO works closely with entities to facilitate the timely finalisation of the financial statements, with the objective of issuing auditor’s reports within two business days of the financial statements being signed. The ANAO issued 95 per cent (2018–19: 99 per cent) of auditors’ reports within two business days of the signing of the financial statements by the accountable authority.

The result of 81.9 percent of entities being issued a signed auditor’s report within three months of the financial year end is a decrease from 89.6 per cent in the prior year.

The ANAO is committed to delivering cost-effective audits through increased efficiency and effectiveness. One way of demonstrating this is to measure the cost of delivering audits over time. This measure is designed to track the ANAO’s organisational performance against the delivery of audit outcomes.

In 2019–20, the ANAO is reporting on audits of financial statements from the 2018–19 audit cycle, as the financial year ends on 30 June and the audit occurs after the end of the financial year. Therefore, the average cost per audit for the Assurance Audit Services Group is calculated by comparing the average cost of the 2018–19 audit cycle, which was completed in September 2019, to the average cost of the 2017–18 audit cycle, which was completed in September 2018. The 2018–19 average cost was $154,889 and the 2017–18 average cost was $153,913 (see footnote (c) below) representing a 0.63 per cent increase.

Table 3.2: Cost of assurance audit reports, 2016–17 to 2018–19

(a) Cost is calculated on a nominal cost recovery basis using an accrual-based costing model.

(b) Fees are charged on a cost recovery basis.

(c) Figure revised from 18-19 annual report. The 2017-18 average cost per mandated audit was reported in the 2018–19 annual report as $153,512. The ANAO subsequently identified a data integrity issue which resulted in this average cost being corrected to $153,913. This correction means that the 2018–19 annual report should have reported a 0.12% increase in the average cost of a mandated audit between 2016–17 and 2017–18 (against a target of a 0% increase), instead of the 0.14% decrease reported in the 2018–19 annual report. As a result, the 2018–19 annual report should have shown that the target was not achieved for criterion 5.

The ANAO adds value by providing entities with audit findings and recommendations to improve internal controls and business processes, based on observations noted during the conduct of financial statements audits. These matters are reported to the accountable authority and copied to the chair of the audit committee and the chief financial officer via an interim management letter, a closing report or a final management letter. The ANAO seeks to confirm all factual observations concerning the audit findings with entities before finalising these reports. Included in the measure of agreed recommendations are situations where the audited entity agrees with the ANAO’s factual observations, but the entity may suggest an alternative method to resolve the issue.

The audit findings and recommendations are reported using a rating scale whereby significant and moderate risk issues are reported individually to the audited entities, the relevant minister and the Parliament. Lower risk issues are also reported individually to each entity, and in aggregate in the ANAO’s reports to Parliament.⁴

All audit findings and recommendations are followed up as part of the audit of the following year’s financial statements.

The ANAO measures the percentage of moderate and significant findings that are implemented by entities in order to measure the impact that the ANAO’s audit work has on public administration. This criterion relates to the percentage of moderate or significant findings for material entity audits, addressed within 12 months of being reported to the entity. ‘Addressed’ means that the entity has responded to and actioned the ANAO finding.

Audit findings are reported to entities at the conclusion of each year’s financial statements audit. In order to determine whether these findings have been addressed by entities within one year of reporting, a full twelve month period is required from the end of the previous audit cycle. The audit cycle generally runs from October to September. Therefore, this performance measure for 2019–20 considers whether the audit findings reported at the conclusion of the 2017-18 audit cycle (in September 2018) had been addressed by entities at the conclusion of the 2018–19 audit cycle (in September 2019). At the conclusion of the 2017–18 audit cycle, 14 significant and moderate findings were reported to material entities. A number of these findings relate to complex areas and/or system changes that entities have needed additional time to address. Three of these findings (21 per cent) were resolved within one year of being reported.

Performance results for Program 1.2: Performance audit services

The ANAO reports to the Parliament on aspects of public administration, and makes specific recommendations to assist Parliament in holding government entities to account for meeting expectations of, and making improvements to, proper use of resources as required by the PGPA Act. Performance audits may report on one entity, or involve multiple entities on a common aspect of administration or policy implementation, or where there is joint administration of a program or service.

The ANAO’s performance audit services include audit activities that involve performance audits of all or part of an entity’s operations and result in independent performance audit reports to the Parliament. Other information and limited assurance reviews are also prepared, including the Defence Major Projects Report. These reports, along with performance audits, contribute to accountability and transparency of public sector administration.

In 2019–20, the primary focus of ANAO performance audits was both effectiveness (the extent to which entities delivered on intended objectives and their performance measurement against these objectives) and economy (the extent to which value for money is being achieved). In 2019–20, the focus on effectiveness included an examination of fraud management.

ANAO responded to the sector-wide risks emerging for public administration of the 2020 COVID-19 pandemic response by developing a strategy for a future program of audits on risks relating to the COVID-19 response package and by initiating four performance audits in key government response activity areas. In April 2020, the ANAO implemented a pause on engagement with entities in relation to performance audits underway. The pause was in recognition of the efforts entities were undertaking to both adjust their workforces to respond to health measures and to implement the Australian Government’s economic and social response measures. The pause, while well received within the sector, has had impacts on the delivery of the 2019–20 performance audit program, and will impact on the 2020–21 program due to the delayed start of new audits.

The year also saw the continuation of a series of audits on major investments by the Australian Government, including on the National Disability Insurance Scheme, major Defence procurements; Indigenous service delivery; cyber resilience; NBN; and the governance of Commonwealth corporate entities and government business enterprises.

In response to ongoing parliamentary interest in entities’ implementation of ANAO audit and parliamentary committee recommendations, the ANAO continued its audit series on the implementation of ANAO and parliamentary recommendations. In 2019–20, the Auditor-General tabled seven performance audits that either followed up on an entity’s progress in implementing recommendations, or followed on from other related audits.

In 2019–20, the ANAO began a pilot program of assurance audits of annual performance statements in consultation with the Joint Committee of Public Accounts and Audit. The pilot was commenced at the request of the Minister for Finance in response to a recommendation of the Independent Review of the PGPA Act. In agreeing to conduct the pilot, under section 15 of the Auditor-General Act 1997 the ANAO is applying the auditing methodology developed over recent years to the 2019–20 performance statements of three entities. The final audit opinions will appear in independent assurance reports, in the same timing as, and similar to, those prepared by the ANAO in relation to its annual financial statement audits. The reports will be provided to the Minister for Finance for tabling in the Parliament. The application of performance audit resources to this pilot also impacted on the number of performance audits that were tabled in Parliament in 2019–20 and into 2020–21.

Performance measures

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

• audits of the performance of Australian Government programs and entities, including identifying recommendations for improvement and key messages for all Australian Government entities; and
• other assurance reviews and information reports to Parliament.

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

• number of performance audits presented to Parliament;
• time and cost of these audits (our efficiency); and
• percentage of recommendations agreed to and the status of their implementation by entities (our impact and effectiveness).

In 2019–20, the Auditor-General presented 42 performance audits for the information of the Parliament (Table 3.3). A number of audits have experienced delays and could not be finalised in 2019–20 both because some audits have been more complex than expected, primarily due to poor record keeping in entities and the resulting need for extensive data extraction and analysis, and due to the impact of the COVID-19 pandemic. The COVID-19 pandemic limited the ability of government entities to fully engage with the performance audit process as they redirected resources to support the Australian Government’s pandemic response. The ANAO also decided to pause engagement across the sector on all performance audits during April, which while well received by the sector, caused delays to a number of audits. In addition, the commencement of a pilot program of assurance audits of annual performance statements diverted resources from performance audits.

In addition to the 42 performance audits presented to Parliament, the ANAO presented Auditor-General Report No.19 of 2019–20: 2018–19 Major Projects Report in December 2019. This is an annual publication that provides assurance regarding the progress of major Defence projects. The ANAO also presented Auditor-General Report No. 27 of 2019–20: Australian Government Procurement Contract Reporting Update. This is the second information report on this topic, which seeks to provide greater transparency on procurement activity in the Australian public sector. This information report is neither an audit nor an assurance review and presents no conclusions or opinions.

Table 3.3: Number of performance audit reports, 2015–16 to 2019–20

(a) The number of performance audits presented to the Parliament 2015–16 and 2016–17 was affected by the double dissolution of the Parliament on 9 May 2016, during which time Auditor-General reports could not be presented for tabling which caused a delay in publishing audits into 2016–17.

The duration of a performance audit (Table 3.4) is impacted by multiple factors, including the complexity of the activities examined, the depth of the audit scope, the number of entities selected for a particular audit, the experience of staff contributing to the audit and the timely and comprehensive provision of information by entities. When selecting audit topics from the Annual Audit Work Program, the ANAO seeks to achieve an appropriate balance of different audit types and complexities. This includes consideration of portfolio coverage, basic administration as well as complex program implementation, activity area (policy development, service delivery, asset management, grant management and so on) and whether a follow-up from a previous audit is timely.

Table 3.4: Duration of performance audits, 2015–16 to 2019–20

The ANAO is committed to delivering cost-effective audits and improving our efficiency and productivity over time. One way of demonstrating this is to measure the cost of delivering audits and comparing this to our prior-year costs (Table 3.5).

The average cost of audits delivered in 2019–20 has increased compared to audits delivered in 2018–19. This reflects that 2019–20 audits have required, on average, more hours per audit than audits tabled in 2018–19, which, when coupled with rising charge out rates (hourly cost of audit time), means audits will cost more. In addition, audits have required, on average, more senior staff time than audits in 2018–19. This is due in part to the complexity of audit topics selected in 2019–20, but also due to the need for greater resource investment in quality assurance given the increased staff turnover rate in 2019–20 and the need to invest in developing new staff and associated quality assurance work required.

Table 3.5: Cost of performance audit reports, 2015–16 to 2019–20

(a) Cost is calculated on a nominal cost recovery basis using an accrual-based costing model.

The ANAO makes recommendations in performance audit reports to support Parliament in its role in holding entities to account for quality and timely administration and service delivery. Throughout a performance audit, the ANAO keeps entities informed of findings and discusses potential recommendations to ensure entities understand the basis and intention of recommendations. Table 3.6 provides details of recommendations agreed against those made. Only recommendations that were agreed without qualification are included as ‘agreed’ recommendations. In 2019–20, 128 recommendations were agreed, 2 recommendations were agreed with qualification, 4 recommendations were not agreed and 7 recommendations were noted.

Table 3.6: Agreement to recommendations in performance audit reports, 2015–16 to 2019–20

(a) There were also four recommendations for which no response was provided.

The ANAO monitors entities’ implementation of performance audit recommendations by attending entity audit committees, and conducting audits that follow up on entity progress in implementing previously made recommendations. The ANAO also seeks advice annually from all relevant entities on progress in implementing audit recommendations over a two-year implementation period. The self-reported data for audit recommendations made in 2017-18 suggests that entities are implementing ANAO recommendations largely within 24 months of the recommendation being agreed (Table 3.7). For those recommendations that have not yet been implemented, the majority of entities have advised that work is underway.

Table 3.7: Percentage of 2015–16, 2016–17 and 2017-18 performance audit recommendations implemented within 24 months

Performance results for relationships and corporate and professional services

A number of performance measures are shared across the ANAO, generally relating to relationships, corporate, and professional services. These areas of activity contribute to achieving the ANAO’s purpose through:

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

Performance measures

To assess performance against our purpose in relation to ANAO-wide activities, the ANAO measures performance in delivering audit services through our key relationship with the Parliament; and the publication of audit insights and key learnings from audit work.

The ANAO also evaluates whether the independent Quality Assurance Program indicates that audit conclusions are appropriately supported by evidence.

The ANAO supports the work of parliamentary committees by providing private briefings on request, and making appearances before, and submissions to, committee inquiries. In 2019–20, the ANAO made 47 appearances before, and submissions to, parliamentary committees. Appendix A details ANAO appearances and submissions.

The 2019–20 result exceeded the target and is comparable to the 2018–19 result of 40. The relationship with the JCPAA remains the ANAO’s key parliamentary engagement. To support the work of the Parliament more broadly, the ANAO focused on proactively seeking opportunities to engage with the Parliament and improve the utilisation of audit reports in parliamentary proceedings. Engagement activities included:

• providing written briefs to incoming ministers and shadow ministers on the commencement of the 46th Parliament outlining the work of the ANAO specific to portfolio responsibilities;
• presenting to Senators of the 46th Parliament on the role of the ANAO during new senators’ orientation week;
• reviewing all Senate, House and joint committee inquiries and making submissions and being available to appear at hearings where there was relevant audit coverage to the committee inquiry terms of reference; and
• providing a summary before all estimates hearings to estimates committees, which includes information about all audit reports that have been tabled since the last estimates hearings and highlighting which audits are relevant to a committee’s portfolio of responsibilities.

In 2019–20, the ANAO provided 27 of 27 private briefings requested by parliamentarians. The total number of briefings provided in 2019–20 substantially exceeded the 12 briefings provided in 2018-19. This is consistent with an increase in requests for private briefings in previous years following the commencement of a new Parliament. Of the 27 briefings provided, 24 related to specific audit reports, two briefings provided a general outline of ANAO audit services provided to the Parliament, and one briefing related to a request for audit.

All private briefings provided by the ANAO to parliamentarians and parliamentary committees are published on the ANAO website as they occur.

Quality in the delivery of the ANAO’s audit services is critical in supporting the integrity of audit reports and maintaining the confidence of the Parliament and public sector entities. This is reflected in the target set in the performance indicator for Criterion 15.

The ANAO’s quality assurance framework is a system of quality control designed to provide assurance that audits performed by the ANAO comply with applicable professional standards and relevant regulatory and legal requirements, and that the reports issued are appropriate in the circumstances.

A key element of the quality assurance framework is monitoring of compliance with policies and procedures that comprise the system of quality control. The monitoring system comprises internal and external quality assurance reviews of the ANAO’s audit and other assurance engagements. Monitoring activities are the responsibility of the Professional Services and Relationships Group reporting to the Executive Board of Management and the ANAO Audit Committee. The ANAO Quality Committee is responsible for monitoring the ANAO’s progress in addressing the findings and recommendations arising from the monitoring programs.

Monitoring processes include:

• annual quality assurance reviews of completed audits covering all of the functions of the ANAO;
• real-time quality reviews of in-progress financial statements audits;
• progress reviews at specified points by the audit executive and Auditor-General for in-progress performance audits;
• biennial external peer reviews of completed performance audits performed by the New Zealand Office of the Auditor-General;
• external reviews of the quality framework and completed financial statement audits conducted by the Australian Securities and Investments Commission; and
• internal audits of compliance with selected requirements of the ANAO audit manual.

In 2019–20, the annual quality assurance program of completed audits reviewed nine financial statements audits and four performance audits. In addition, four real-time quality reviews of in-progress financial statements audits were conducted. One real-time review was a focused review on the IT audit work conducted as part of the financial statement audit. The focused review is not included in the above performance measure.

One financial statements audit file reviewed was determined to be unsatisfactory as a material misstatement was not detected in the audit meaning the conclusion was inappropriate in the circumstances. The identified quality issues are being considered in the context of the 2019–20 audit. Additional work is underway with the auditee to ensure appropriate remediation of the findings and presentation in the 2019–20 year financial statements. All remaining financial statement audit conclusions and all performance engagement assurance conclusions were appropriate in the circumstances. The three satisfactory reviews conducted by the Australian Security Investment Commission and discussed further below are also included in the performance measure.

Based on the results reported to the Executive Board of Management and the completed internal and external reviews, the Auditor-General is satisfied that the system of quality control functioned effectively in 2019–20. Identified deficiencies and good practice recommendations identified in all internal and external reviews are addressed by ANAO follow-up actions. Progress and completion of follow-up actions is monitored by the Quality Committee.

As in previous years, the mix of financial statements audits selected for review comprised audits conducted utilising in-house resources and those undertaken by contracted firms. Identified areas for improvement in financial statements audits included the design and execution of substantive analytical procedures and the documentation related to engagement team planning meetings, independence declarations and subsequent events. The identified areas for improvement in performance audits relate to records of internal meetings and the closure of the audit file.

In 2019–20, the ANAO conducted a root cause analysis of selected findings and observations from the 2017-18 financial statements audit file inspections to identify the root cause of findings and determine the most appropriate remedial actions. Follow up actions arising from this analysis included updates to methodology and guidance and training for engagement team planning discussions and responses to fraud risk, and the audit approach over risks associated with auditees’ use of cloud services and other emerging technologies.

The ANAO Qualifications and Technical Advisory Committee provides a forum for engagement executives to consult on difficult or contentious matters and, where necessary, resolve differences of opinion on audit-related matters. ANAO policy identifies the matters that must be referred to the committee and the committee meets as required to provide advice to the Auditor-General. Under ANAO audit policy, the Auditor-General can refer matters arising in performance audits to the committee for advice. The committee was consulted on 14 matters in 2019–20.

In 2019–20, the ANAO continued the arrangement with the Australian Securities and Investments Commission (ASIC) to conduct an external independent review of the ANAO’s quality assurance framework initiated in 2017–18. This year, three audits of financial statements for the year ended 30 June 2019 were reviewed. These reviews were conducted using ASIC’s methodology for reviewing private sector audits. In respect of the file reviews, ASIC made findings on the sufficiency and adequacy of audit documentation, including considerations related to retaining or updating historical accounting positions and the details of supporting evidence reviewed. Other findings included design of audit procedures over journal entries and capitalisation costs.

In respect of the quality framework, ASIC reviewed the ANAO’s responses to recommendations made in the prior-year review, and also reviewed in detail the ANAO’s root cause analysis conducted in 2019–20. ASIC concluded that the initial pilot was effectively scoped to cover internal monitoring findings from QA reviews conducted on in-house ANAO financial statements audits. ASIC provided the ANAO with a number of good practice considerations to further enhance and expand on the initial root cause analysis program. The ANAO will integrate these considerations made by ASIC in the expansion of the root causes analysis program and methodology. Within the scope of its review, ASIC identified no areas where the design of the framework did not satisfy the requirements of Auditing Standard ASQC 1⁵.

In 2019–20, the ANAO’s internal auditor conducted a review on compliance with selected ANAO Audit Manual policies, including completion of independence declarations; process for agreement of work with Systems Assurance and Data Analytics (SADA); signoff of planning documentation prior to interim work; signing officer responsibilities on contract out audits; approval of changes to audit scope and documentation of entry and exit meetings. Two medium-risk recommendations were made regarding training and communication of the importance of completing independence declarations and ensuring timely review and sign off of the planned audit approach prior to audit work commencing. One low risk recommendation was made regarding entry and exit meetings.

Note: An ANAO response to an audit request or inquiry is finalised when it has been prepared and sent to a parliamentarian. In cases where an audit or limited assurance review is commenced, the notification by letter that the ANAO has taken this step will be sufficient to consider the request ‘finalised’. Equally, where a response is provided that the topic will be considered in the development of the next annual audit work program, this will be considered a ‘finalised’ response. Follow-ups to the initial audit request would not be counted as an additional inquiry. This measure does not refer to a holding letter that is sent to parliamentarians to indicate that we have received the request.

In determining the ANAO’s audit work program, the Auditor-General must consider the priorities of the Parliament, as determined by the JCPAA. Formal consultation with the JCPAA about the audit priorities of the Parliament occurs in approximately April to May each year to inform the development of the ANAO’s annual audit work program. The ANAO provided the draft work program for 2020–21 to the JCPAA in April 2020. A revised draft work program was provided to the Committee in May 2020 that included a focus on the impacts of the COVID-19 pandemic on public sector administration. Throughout the year, the Auditor-General also receives direct requests from members of parliament and senators for audits of particular areas of public administration as new issues emerge. Where the Auditor-General determines that further examination is warranted as a result of an audit request, a response can be provided through a range of mechanisms, including by initiating a performance audit, assurance review or information report, or through correspondence.

In 2019–20, the Auditor-General received 17 requests for audit from members and senators of the Parliament of Australia. A response to 100 per cent of requests was provided in 28 days. Table 3.8 outlines the ANAO’s responses to these requests.

Note: The result reported is based on the result achieved from those members who responded to the survey.

The ANAO engaged a research firm, ORIMA Research Pty Ltd, to conduct a survey of JCPAA members in 2020. The result of 100 per cent against a target of 90 per cent was based on the percentage of JCPAA members who responded to the survey that agreed or strongly agreed to the following statements:

• The ANAO’s reports and services have contributed to improved public sector accountability and transparency; and
• The ANAO’s reports and services help improve public sector administration.

The response rate of JCPAA members to the 2020 survey (50 per cent), representing eight of the 16 members surveyed, remained consistent with the participation rate of 53% (8 of 15 members surveyed) in 2019. Comparative analysis of the 2019 and 2020 survey in respect to the satisfaction ratings that the ANAO improved public sector performance and supported accountability and transparency, indicate that the results were similar in terms of the level of agreement. In addition, JCPAA members were positive in their ratings in relation to the ANAO’s role and function, particularly with regard to perceptions of the ANAO’s integrity as an organisation; the ANAO’s audit priorities; representation by the ANAO at public hearings; and the overall value of information it provides on public sector performance. Ratings for the ANAO’s audits of financial statements were very positive, showing improvements for the majority of aspects compared to 2019. Performance audit reports, the Defence Major Projects Report and other assurance review reports were rated consistently high, with some opportunity for improvement in relation to reports being easy to understand noted.

The ANAO supports accountability and transparency in the Australian Government sector through independent reporting to the Parliament. To provide some insights into the Parliament’s utilisation of ANAO reports, analysis of mentions of ANAO reports by parliamentarians or parliamentary committees was conducted for internal reporting purposes. The results of the analysis reveal that, in 2019–20, there were in excess of over 250 individual mentions of ANAO reports, significantly more than the 180 mentions reported in 2018–19. Over fifty of the mentions related to Auditor-General Report No.23 Award of Funding under the Community Sports Infrastructure Program reflecting the significant parliamentary interest in the audit in the period February to March 2020.

The ANAO’s Audit Insights products provide information on shared learnings for all Commonwealth entities as identified through financial statements audits and performance audits. In 2019–20, the ANAO published four reports in its Audit Insights series:

• Management of conflicts of interest in procurement activity and grants programs
• Fraud control arrangements
• Rapid implementation of Australian government initiatives
• Implementations of recommendations

The ANAO has continued to revise and improve the development of Audit Insights since the first edition was released in 2017. Key changes have been to focus on a strategic thematic topic as a method to identify the narrative and tell the story, identifying the audience and focusing on targeted and customised distribution methods for each edition.

Transparency reporting

The Corporations Act 2001 includes requirements for annual transparency reporting by auditors. Although the ANAO is not subject to the transparency reporting requirements for private sector audits that are specified in the Corporations Act, the ANAO has embraced the principles of transparency reporting. Appendix B summarises the requirements that are relevant to the ANAO and shows where the required information is presented in this annual report.

Report on financial performance

The work of the ANAO is mainly funded by government appropriation, with a small amount of revenue generated from audit fees paid by clients for audits by arrangement under section 20 of the Auditor-General Act 1997. Audit fees are set to recover the expenses incurred as part of paid audits.

Overview of financial performance and future financial viability

The ANAO reported a total comprehensive income loss of $5.548 million in 2019–20. Excluding the impact of depreciation, the ANAO’s result for the 2019–20 financial year was an operating deficit of $3.117 million (Figure 3.1).

The ANAO’s revised budget submission to the JCPAA for the 2019–20 financial year reflected that any further savings measures applied to the ANAO that reduced the funding base would impact on our ability to deliver the planned audit program. This required the ANAO to seek approval from the Minister for Finance for an operating loss for 2019–20 by virtue of accessing the prior-year unspent appropriations to meet resourcing pressures, which was approved by the minister on 8 May 2020.

The ANAO had built up its reserves by conservative budget management, including by limiting expenditure on investments. Use of reserves has been focussed on investment in activities to improve future business delivery. Options for efficiency and productivity have been explored and implemented or are in the process of being implemented; however, they are not keeping pace with reductions to appropriation while the costs of delivering quality audit products continue to increase. The ANAO is now in a position where, in order to deliver the mandated financial statement audit functions, we need to reduce the number of discretionary performance audits provided to the Parliament.

The 2019–20 operating result was impacted by two factors – ongoing cost increases relating to increased complexity of auditing, and the ANAO’s accommodation and IT projects. These expenses were in line with management expectations and the budgeted operating deficit of $3.400 million, excluding depreciation approved by the Minister for Finance. Given the volume of Commonwealth information collected by the ANAO, it is imperative that our IT systems are maintained at a level capable of searching, analysing and storing this information, and applying appropriate security controls. This, along with increasing complexity of government entity transactions and activities, increasing numbers of Commonwealth corporate entities, and higher market costs for audit services and qualified resources, have been key cost drivers for the ANAO. It is also imperative that the quality of our audit work is maintained over time, particularly in an environment where extracting evidence is becoming more complex and dependent on use of technology-based tools, where and scrutiny of audit findings is increasing. The ANAO’s accommodation project was completed during 2019–20, with the ANAO moving into its new premises in December 2019.

The impact of the COVID-19 pandemic on the ANAO’s budget position saw a reduction in travel and training expenses in the final quarter of 2019–20, in line with government travel restrictions and social distancing requirements. The reduction was partially offset by increases in IT costs to enable ANAO staff to work remotely. These reduced travel and training expenses have resulted in a small reduction to the approved budgeted operating deficit of $3.400 million.

The operating deficit of $3.117 million was also impacted by the bond rate movement and adjustments to the ANAO’s employee benefits provisions.

Figure 3.1: Operating result, excluding depreciation and amortisation, 2015–16 to 2019–20

The ANAO manages its finances and resources to remain financially sustainable into the forward estimates, and continues to implement operational efficiencies.

Expense impacts

The ANAO consistently spends most of its budget on employee related expenses, contractors and consultants. All positions are Canberra based, predominantly undertaking audits on key portfolio and material agencies. The ANAO also engages contractors, under the supervision of senior staff at the ANAO, within and at locations outside of Canberra to undertake audits of entities. ANAO staff travel to interstate locations to maintain appropriate oversight and quality assurance processes over these audits, including attendance at entity audit committees.

Where required, the ANAO also engages contractors and consultants such as valuers and actuaries to provide expertise required to complete the audit program. In 2019–20 contractors and consultants for non-audit services were engaged to fill key resourcing gaps and provide the ANAO with the right technical expertise to deliver its Accommodation and IT projects.

The ANAO’s total expenses for 2019–20 were $77.155 million excluding depreciation.

Figure 3.2: Expenses by type, 2019–20

Financial position

The ANAO’s overall financial position continued to remain sound in 2019–20.

• Total assets increased as at 30 June to $73.221 million; and
• Total liabilities increased to $50.942 million.

The substantial increase in the ANAO’s assets and liabilities during 2019–20 was primarily driven by the adoption and implementation of the new accounting standard AASB 16 – Leases, which recognises leases as a right-of-use asset, with a corresponding interest bearing liability.

Excluding the impact of AASB 16 – Leases, the majority of the ANAO’s assets and liabilities are financial assets, with the largest balance being appropriation receivable ($23.771 million). The ANAO’s appropriation receivable has reduced by $12.411 million since 2018–19, reflecting the use of the accumulated reserves to fund the Accommodation and IT Transformation Projects and the ANAO’s operating loss.

Excluding the impact of AASB 16 – Leases, the majority of the ANAO’s liabilities are comprised of employee provisions ($12.696 million) and payables ($3.606 million). The ANAO’s employee provisions have increased by $0.931 million in 2019–20, due to a change in probability factors and discount rates based on a report provided by the Australian Government Actuary, and the impact of the bond rate adjustment.

The ANAO continues to operate with sufficient cash reserves to fund its liabilities and commitments as and when they fall due.

Table 3.9: Summary of financial performance, 2019–20 and 2018–19

Note (a): The ANAO’s operating result was a deficit of $3.117 million in 2019–20, excluding depreciation and amortisation.

Revenue impacts

Government revenue from departmental and special appropriations decreased between 2018–19 and 2019–20 by $0.781 million to $69.236 million.

Own-source revenue in 2019–20 was $4.879 million, $0.894 million more than the own-source revenue earned in 2018–19. The increase in own-source revenue was primarily due to an increase in audits by arrangement under section 20 of the Auditor-General Act 1997 ($0.851 million).

Entity resource statement

The entity resource statement provides additional information about the various funding sources that the ANAO may draw upon during the year. Appendix C details the resources available to the ANAO during 2019–20 and sets out the ANAO’s summary of total expenses for Outcome 1.

Financial statements

• Independent Auditor’s Report
• Statement by the Auditor-General and the Chief Finance Officer
• Statement of Comprehensive Income
• Statement of Financial Position
• Statement of Changes to Equity
• Cash Flow Statement
• Administered Schedule of Comprehensive Income
• Administered Reconciliation Schedule
• Overview
• Note 1: Budget Variances
• Note 2: People and Relationships
  • Note 2.1: Employee Benefits and Provisions
  • Note 2.2: Key Management Personnel
  • Note 2.3: Remuneration Paid to Senior Executives
  • Note 2.4: Remuneration Paid to Highly Paid Staff
  • Note 2.5: Related Party Disclosures
• Note 3: Funding
  • Note 3.1: Appropriations
  • Note 3.2: Special Accounts
  • Note 3.3: Net Cash Appropriation Arrangements
• Note 4: Financial Performance
  • Note 4.1: Expenses
  • Note 4.2: Own-source Income
  • Note 4.3: Revenue from Government
• Note 5: Financial Position
  • Note 5.1: Financial Assets
  • Note 5.2: Non-Financial Assets
  • Note 5.3: Liabilities
  • Note 5.4: Interest Bearing Liabilities
• Note 6: Other Information
  • Note 6.1: Aggregate Assets and Liabilities
  • Note 6.2: Remuneration of Auditors

Download the audited financial statements at Related documents on this page.

The Auditor-General is responsible for both administering the Auditor-General Act 1997 (the Act) and managing the ANAO within the arrangements of the broader Australian Public Service. Part 6 of the Act establishes the ANAO under the Public Service Act 1999 and requires it to operate as an entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

In line with the requirements and expectations of the PGPA Act, the Auditor-General manages the ANAO in achieving its purpose through the application of good corporate governance. Good governance underpins the ANAO’s approach to delivering quality outcomes and effective decision-making.

Good governance at the ANAO is achieved through a robust governance framework, directed by a clear governance structure, managed through strong governance practices, and delivered as part of the strategic planning framework. Strategic planning outcomes are realised through a mature approach to risk management and strengthened through an integrated approach to organisational capability. The ANAO’s strong commitment to strategic planning and the ongoing development of capability ensures that we are able to continue to achieve and deliver our purpose. Investments in capability support the ANAO to uphold public sector principles and values, while building sufficient flexibility and expertise to meet future needs.

Part 4 outlines the ANAO’s approach and continued commitment to corporate governance, capability investment and risk management.

Governance

The ANAO’s governance framework supports the organisation to uphold public sector principles and values, including legislative requirements for accountability, leadership, transparency, integrity, efficiency and risk management. The framework ensures that our operations remain compliant with relevant laws, standards and directions.

The ANAO’s clearly defined governance structure and practices support the Auditor-General in the effective oversight of the organisation, management of its resources and the delivery of quality audit products. The ANAO’s corporate governance framework, processes and related organisational capability enable us to achieve our purpose, and meet public and community expectations of probity, accountability and transparency.

Governance structure

The ANAO’s main governance bodies, as at 30 June 2020, are the Executive Board of Management, six standing committees, three operational committees, and the independent Audit Committee.

The ANAO’s governance structure and strategic planning framework are outlined in Figure 4.1.

Executive Board of Management

The Executive Board of Management assists the Auditor-General to meet his statutory responsibilities, and provides leadership to the ANAO in pursuing its strategic direction and delivering against the commitments and initiatives outlined in the corporate plan.

The Executive Board of Management is responsible for supporting the ANAO’s strategic direction; overseeing business; identifying strategic and operational risks; managing the ANAO’s budget and workforce; and delivering against the commitments and initiatives outlined in annual business plans. The executive board meets monthly and terms of reference are reviewed annually. The standing membership is:

• Auditor-General (Chair);
• Deputy Auditor-General;
• Group Executive Directors of the Assurance Audit Services Group, Performance Audit Services Group, and Professional Services and Relationships Group;
• Senior Executive Director, Corporate Management Group;
• Senior Executive Director, Systems Assurance and Data Analytics Group; and
• Chief Finance Officer.

The members of the Executive Board of Management as at 30 June 2020 are shown in Table 4.1.

Table 4.1: Membership of the Executive Board of Management, at 30 June 2020

Staff are informed about key decisions of the Executive Board of Management through communications from the Auditor-General, which are published on the ANAO intranet after each meeting. Information on the remuneration of key management personnel is available at Note 2.2 of the 2019–20 financial statements.

Standing committees

To support the Executive Board of Management and ensure organisational accountability and transparency, the ANAO has established a number of standing committees. These committees provide oversight to specific areas of strategic operations and are responsible for identifying and managing risk on an ongoing basis. Standing committees report to the executive board through summary reports and meeting minutes, with their terms of reference reviewed annually.

The business of the ANAO is governed through the following standing committees:

• People and Change Committee — provides strategic advice to the Executive Board of Management on people and capability development and on managing change in the ANAO.
• Quality Committee — provides assurance and assistance to the Executive Board of Management on the ANAO’s quality framework and the strategic and operational risks associated with quality.
• Finance Committee — advises the Executive Board of Management on financial matters, and monitors the strategic and operational risks associated with resources.
• Security Committee — provides assurance and assistance to the Executive Board of Management on the ANAO’s security framework and monitors associated strategic and operational risks.
• Work Health and Safety Committee — monitors and reviews the work health and safety (WHS) policies and practices and advises the Executive Board of Management on WHS matters.
• Ways of Working Steering Committee — supports the implementation of the ANAO’s accommodation and IT transformation projects and provides advice to the Executive Board of Management.

Operational committees

There are three ANAO operational committees:

• Remuneration Committee — advises the Auditor-General on processes to support changes in remuneration and performance payments.
• Qualifications and Technical Advisory Committee — provides a forum for audit engagement executives to consult on difficult or contentious matters and, where necessary, resolve differences of opinion on audit-related matters. ANAO policy identifies the matters that must be referred to the committee, and the committee meets as required to provide advice to the Auditor-General.
• Weekly Operational Committee — oversees the operational activities of the ANAO, with a particular emphasis on staffing, performance and external relations. The committee also considers the status of the audit program in service group reporting and any other matter of strategic importance to the ANAO.

Figure 4.1: ANAO governance structure and strategic planning framework at 30 June 2020

Audit Committee

The Audit Committee provides independent assurance and advice to the Auditor-General, including reviewing the appropriateness of the ANAO’s financial and performance reporting, systems of risk oversight and management, and systems of internal control. Section 45 of the Public Governance, Performance and Accountability Act 2013 and section 17 of the Public Governance, Performance and Accountability Rule 2014 set out the role of the audit committee for Commonwealth entities.

The ANAO’s Audit Committee charter sets out the committee’s role, authority, membership and functions, and its procedural, reporting and administrative arrangements. The charter is available on the Governance page on the ANAO website (anao.gov.au/about/governance).

In order to maximise the independence of the assurance and advice provided by the Audit Committee, the Auditor-General appoints only external independent members. The Audit Committee met five times during 2019–20.

Details of the Audit Committee’s membership in 2019-20, including remuneration for the period and Audit Committee meeting attendance, and experience of members, is provided in Table 4.2.

Table 4.2: Membership of the ANAO Audit Committee for 2019-20

(a) The Chair’s contract was renewed on 11 December 2019 and annual remuneration was reviewed and increased by 2 per cent.

Strategic planning framework

Strategic planning drives the ANAO’s activities and enables the ANAO to adjust its activities and resourcing to align with emerging priorities and support achievement of its purpose. The ANAO identifies its organisational priorities and performance measures in its corporate plan, and reports on its performance in the annual performance statements of the annual report. The Executive Board of Management tracks all strategic projects, including milestones and dependencies, and ensures that the business of the ANAO’s governance committees is aligned with the ANAO’s strategic priorities.

In addition, the Auditor-General publishes an annual audit work program. The work program forms part of the strategic planning framework, designed to reflect the organisation’s audit strategy and inform the Parliament, government entities and the public of the planned audit coverage for the Australian Government sector.

Key elements of the ANAO’s strategic planning framework for 2019–20 are presented in Figure 4.1. Further details on the ANAO corporate plan and annual audit work program are provided below.

Corporate plan

The corporate plan is the ANAO’s primary planning document and sets out how we will achieve our purpose over a four-year period. The corporate plan is complemented by the annual audit work program, which reflects the ANAO’s audit strategy and deliverables for the coming financial year.

The corporate plan articulates the purpose of the ANAO and the environment within which the ANAO expects to operate. It details the planned performance framework, including the methodology, data and information to be used to measure and assess performance. The corporate plan outlines our intended capability investments, including the plans and strategies we will implement to achieve our purpose. It also includes an overview of the ANAO’s risk oversight and management systems.

Annual audit work program

The annual audit work program sets out the ANAO’s audit strategy and deliverables for the coming financial year. It informs the Parliament, the public and government sector entities of the planned coverage of the Australian Government sector. The program presents information on the financial statement audits, performance audits and other assurance engagements for each portfolio. It also includes information on audits in progress and audits recently tabled.

A whole-of-organisation planning process brings together the knowledge and insights gained across all ANAO audit activity to identify priority areas of audit coverage. In determining the 2020–21 program, the ANAO considered prior-year audit and other review findings and what these indicate about the portfolio risks and areas for improvement, as well as emerging risks from new investments, reforms or operating environment changes.

The ANAO provided a draft of the annual audit work program to the Parliament for consultation through the Joint Committee of Public Accounts and Audit (JCPAA), consistent with the Auditor-General’s requirement to have regard to the audit priorities of the Parliament. We also invited feedback from accountable authorities of Australian Government entities, members of the public, the Australasian Council of Auditors-General, the Commonwealth Ombudsman, the Inspector-General of Taxation and the Inspector-General of Intelligence and Security.

Organisational capability

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

The ANAO’s Corporate Plan 2019–20 outlined capability investments that we would make to ensure that we continue to deliver on our purpose. The areas of investment were:

• integrity;
• productivity;
• workforce capability;
• quality; and
• engagement.

The ANAO is committed to building capability that is forward focused, supporting the work of our auditors and corporate services professionals now and into the future. The information below reports on the implementation and progress of all five of these capability investments.

Integrity

Maintaining credibility and independence is essential in exercising the Auditor-General’s powers and delivering against the mandate of the Auditor-General Act 1997. In order to demonstrate these qualities, the ANAO regards integrity as a core value of the organisation — critical in sustaining the confidence of the Parliament, strengthening public trust in government and delivering quality audit products.

In March 2019, the ANAO participated in ‘IntoSAINT’ — a self-assessment tool for audit institutions and other public sector organisations — to identify and evaluate the ANAO’s institutional vulnerability and the resilience of its integrity control system. Findings from this self-assessment indicated that the ANAO builds and maintains integrity through a mature control system. As part of the ANAO’s Corporate Plan 2019–20, we committed to investing in integrity as a key organisational capability. To support this capability, we developed an integrity framework — a key recommendation from the IntoSAINT self-assessment.

The integrity framework provides an overarching structure to the existing ANAO integrity control system. The framework serves to assist staff in ethical decision-making and risk, fraud and misconduct management. It consolidates the existing integrity control system — including legislation, policies, procedures and guidelines — outlining the expected behaviours of staff as representatives of the ANAO.

The framework highlights integrity as one of our core values. It outlines the expectation that our people will demonstrate integrity in their behaviours — as auditors, public servants, officials and professionals. It details the ANAO Integrity Statement, which encompasses the five key principles of independence, honesty, openness, accountability and courage. The framework emphasises that integrity at the ANAO means more than simply complying with requirements — rather, we expect our people to live this value through their actions.

Productivity

The ANAO maintains an ongoing focus on building productivity as a key capability investment. Improved productivity is critical to demonstrating the efficient use of taxpayer funds in the delivery of our work to the Parliament and the public. The ANAO has made investments in our ways of working to ensure the organisation remains efficient and effective, increasing productivity and enhancing performance.

As outlined in the ANAO Corporate Plan 2019–20, to support improvements in productivity, the ANAO invested in:

• providing an activity-based working environment;
• implementing an updated IT strategy;
• implementing a data analytics strategy;
• developing a new resourcing model for assurance audits;
• implementing new audit tools (TeamMate+); and
• introducing more productivity technology to support efficiency (new time recording and scheduling).

Activity-based working environment

In December 2019, the ANAO relocated to new premises at 38 Sydney Avenue, Forrest. Fit-out works were undertaken prior to the relocation to develop an activity-based working environment. The new fit-out provides staff with a wider range of workspaces, supports more flexible ways of working, and has increased communication and collaboration across service groups. Fit-out works were delivered under budget, and the ANAO’s new 15-year lease also provides savings to the Commonwealth compared to its previous lease.⁶

Prior to the ANAO’s relocation to the new building, we provided a number of staff engagement activities to support the transition to an activity-based working environment. Leading and Growing Flexible Teams workshops were held in October 2019 for Senior Executive Service and executive-level staff, followed by Working in Flexible Teams workshops in November 2019 for staff at all levels of the organisation. The workshops were attended by 284 people, and provided an in-depth overview of the different work zones available at the new building. The workshops also informed the development of a series of workplace principles that outlined how the new, more flexible workspaces would be used and how staff would work effectively together.

We provided onsite assistance to staff on their first day of work in the new building, including ergonomists who conducted roaming workstation assessments, IT support, removalists to assist with unpacking, and tours of the building and the different work zones. The majority of staff feedback indicated that the relocation process, and subsequent induction to the new premises, was smooth, and that the more flexible working environment has increased collaboration and provided staff with a wider variety of work spaces to better match the different tasks they perform.

On 23 March 2020 all staff were requested to work from home in response to the COVID-19 pandemic. A transition plan has been developed to support the gradual and safe transition of staff back to the office in line with the easing of COVID-19 restrictions.

Information technology strategy

The ANAO uses outsourced services to deliver a flexible and responsive IT environment and secure gateway services up to the ‘protected’ classification level. Over the past two years, the ANAO has recognised that cloud computing technology is a key enabler for the organisation. Transitioning workloads to cloud services has provided the ANAO with high levels of system availability and reliability, along with flexibility and improved performance. During the COVID-19 pandemic, the ANAO has continued to benefit from its cloud adoption strategy, secure gateway services and flexible laptop equipment, which supported a transition of the full workforce to remote working in response to the pandemic.

Improving the ANAO’s cyber resilience remains a key focus in the face of constant changes to the threat landscape. In February 2020, the ANAO commenced a two-year security improvement project to build increased security responsiveness. The first phase to 30 June 2020 delivered an uplift in the ANAO’s cyber resilience maturity level, as measured against the Australian Cyber Security Centre’s Essential Eight mitigation strategies, including more responsive patching, improved threat monitoring and detection capabilities, and increased security controls to further mitigate cybersecurity incidents.

The ANAO developed a 2019–2021 data governance framework, which outlines the key principles and mechanisms used to support the governance of data within the organisation. The framework has a strong focus on data security and managing data as an asset. It is designed to ensure the efficient management of data and promote the value of data assets, including their analysis and the exchange of data insights. We are implementing the data governance framework through a data action plan, which includes a program of comprehensive data asset discovery, tracking and management, as well as improving data collection technological capability. We expect that the data governance framework will deliver a number of organisational benefits, including enhanced risk management of data, storage cost reductions and further productivity efficiencies, as well as increased data loss prevention and cybersecurity.

Data analytics strategy

The ANAO is in the third year of its Data Analytics Strategy 2018–2020. The strategy focuses on developing innovative and effective use of data, technology, tools and resources to build capability, generate new audit products, enhance quality and increase efficiency. Under the strategy, the capability developed over the last two years has enabled the ANAO to take a new approach to the use of data analytics to provide assurance for audits, including:

• embedding the consideration of data analytics in the planning and scoping phase of all performance audits;
• developing standardised, or bespoke, data analytics solutions for financial statement audits; and
• developing efficient work processes and automating manual data processes where possible.

During 2019–20, the ANAO has achieved the following in applying data analytics to provide more efficient and effective audit assurance:

• Data analytics is now used by 80 per cent of the largest financial statement audits undertaken in-house (those reported in the ANAO’s interim reports on key financial controls of major entities).
• Data analytics was used to provide new insights into the management of staff leave across multiple entities, the results of which were tabled in Auditor-General Report No. 38 of 2019–20: Interim Report on Key Financial Controls of Major Entities.
• New data analytics solutions have been developed across a number of areas, including a new dashboard-based tool for analysing payroll-related expenditure on financial statement audits, which is in use by multiple teams.
• The ANAO also produced Auditor-General Report No. 27 of 2019–20: Australian Government Procurement Contract Reporting Update, which used data analytics to provide insights into procurement activity across the public service.

The specialist data analytics team also provides support to corporate functions, including data-driven decision-making and improving the way data is collected and reported.

In an environment of ever-increasing challenges, the ANAO will continue to build organisational capability in data analytics, and leverage technologies and information resources to increase quality and productivity in our audit work.

New audit tools and systems

The ANAO’s new Business Applications team started work in November 2019. This team works with the ANAO’s business groups to provide strategic guidance and project management expertise for the selection, delivery and modernisation of business applications in the ANAO. This capability promotes continuous improvement through business and technology change to enable improved delivery of audit services.

The ANAO uses Saviom, an enterprise resource management tool, to allocate and monitor resources for audits. In 2019, the software underwent a minor update, while licencing was expanded to audit managers and senior managers, increasing visibility over resource allocation.

Nuix is used by performance audit teams as a software platform for indexing, searching, analysing and extracting knowledge from unstructured data. A portion of Nuix users were transitioned from desktop computers to a Nuix virtual solution to adjust to the changed work environment at the ANAO’s new accommodation.

TeamMate is one of the key audit management tools used by the ANAO. After exploring the TeamMate+ cloud solution in 2019, the ANAO ultimately decided to stay on the current on-premises platform and upgrade to TeamMate version 12.4. This decision was based on the most appropriate functionality to meet business needs, while still addressing application support requirements.

As part of the broader IT strategy to better realise the benefits of existing applications and consolidate overlapping functions, the ANAO ended its longstanding relationship with the time and project recording system Changepoint. The ANAO is deploying Aurion Timekeeper as a replacement tool, which is expected to lead to ongoing efficiency gains.

The ANAO also completed negotiations to transition the TechnologyOne financial application to a cloud platform in early 2020–21. This will shift the application from an on-premises to a ‘software as a service’ arrangement, in line with the ANAO’s IT strategy. The transition to a cloud platform is expected to reduce application management overheads and reduce risks associated with maintenance, while also allowing rapid deployment of updates.

Workforce capability

At 30 June 2020, the ANAO employed 336 staff, including 27 senior executives (based on a headcount). The ANAO staffing profile, details of coverage of employment instruments, diversity statistics and salary information can be found at Appendix D. The ANAO’s staff engagement and performance strategies are outlined in Appendix E.

The ANAO recognises that workforce capability is integral to the delivery of quality audits, other reports and support functions. In 2018, the ANAO delivered its workforce plan to address current organisational challenges and future capability needs.

Pandemic response

Following the activation of the ANAO’s Business Continuity Management Plan, on 23 March 2020 all staff were requested to work from home in response to the COVID-19 pandemic. We undertook a review to identify critical business functions and roles, and developed strategies to maintain these in the case of disruption due to illness. Equipment such as monitors and task chairs were offered to all staff for use at home during the pandemic response to maintain a safe and ergonomic working environment.

We implemented building management measures such as removing furniture throughout the building to comply with physical distancing requirements, providing additional cleaning and hygiene supplies, installing hygiene signage, and implementing sign-in procedures for potential contact tracing purposes. In line with the easing of COVID-19 restrictions by the ACT and federal governments, we have developed a transition plan to support a graduated return of staff to the building. As at 30 June 2020, a limited number of staff are permitted to work at the ANAO’s premises each day, prioritised by operational and wellbeing requirements, and in adherence with physical distancing and hygiene measures.

Employment arrangements

The ANAO Enterprise Agreement 2016–2019 nominally expired on 21 April 2019. In April 2019, the ANAO implemented a section 24(1) determination under the Public Service Act 1999 after a lengthy consultation process. The determination holds in place conditions of the ANAO Enterprise Agreement 2016–2019 while enabling an annual 2 per cent pay increase commencing 22 April 2019.

In response to the COVID-19 pandemic and a request made by the Australian Public Service Commissioner on 26 March 2020, the Auditor-General made a section 24(1) determination pausing annual pay increases for all Senior Executive officers.

On 9 April 2020, the Australian Government made a section 24(3) determination pausing all Australian Public Service (APS) pay increases for a period of six months. The determination came into effect on 14 April 2020 and will defer ANAO staff pay increases until 22 October 2020.

Workforce plan

The workforce plan is focused on building a workforce that is forward-looking, risk focused, technologically adept, change-orientated and highly adaptive. By sustaining a culture of high performance and professionalism, the ANAO will be able to support increased workforce engagement to deliver organisational outcomes.

The workforce plan was designed to be implemented over four years through the development of two enabling frameworks and three strategies:

• a human resource metrics framework;
• a core capability framework;
• a recruitment strategy;
• an onboarding and separation strategy; and
• a development and high performance strategy.

During 2019–20, the ANAO continued to progress the key elements of the workforce plan.

We implemented a fresh approach to the graduate recruitment process, with a revised advertising campaign and updated assessment methodology. In 2019, the ANAO piloted a video interview process with great success, which set the framework for rolling out the entire assessment process to an online model in 2020.

We also refreshed and updated the 2020 graduate induction process, and piloted a revised approach to agency-wide induction and onboarding throughout 2019–20. We will incorporate staff feedback into a new strategy for 2020–21, with a view to being able to induct and onboard new staff in a remote working environment during the COVID-19 pandemic.

With the majority of staff working from home through the COVID-19 pandemic, we developed a pastoral care process to support staff and new graduates, supported by a new flexible work policy and mental health strategy. A buddy system has also been put in place for staff to reach out for additional support during the current uncertainty.

The ANAO talent management program was relaunched after a pilot program in 2018–19. Participants commenced the program with a 360-degree review — where feedback is gathered from multiple sources — and will participate in sessions with the talent sponsor, the Deputy Auditor-General and outsourced training providers over a 12-month period.

The Australasian Council of Auditors-General (ACAG) identified a need to establish a mentoring program to support employees in the audit offices of smaller countries that are members of either ACAG or the Pacific Association of Supreme Audit Institutions (PASAI). In conjunction with ACAG, the ANAO is conducting a group mentoring program to assist audit practitioners from the Tonga Office of the Auditor General to develop audit, corporate and leadership knowledge and skills. Mentoring sessions commenced in June 2020 and will continue through July and August 2020, covering financial audit, performance audit, corporate governance and leadership.

We implemented new recruitment processes for candidates seeking to move to the ANAO laterally, and we are currently automating aspects of our eRecruit system to improve the candidate experience and streamline internal processes.

The ANAO has transitioned to Aurion for payroll services, and we have configured the system to ensure ease of reporting and accuracy of human resources data. This work will enable us to build on current reporting capability and provide accurate forecasting and trend information.

The ANAO worked closely with providers to move to a virtual training model. Non-technical training has focused on people management (coaching and developing others), managing mental health, personal productivity, and skills to help staff transition to remote working. We also engaged guest speakers to discuss the importance of integrity and data capability. Technical training has included internal experts facilitating training on the ANAO’s quality framework, risk management and the ANAO Audit Manual.

The Learning and Development team has been engaging with the Systems Assurance and Data Analytics Group to develop a training package around the different tiers of data capability by APS level. The package will include a self-assessment and e-learning, sharing best practice, accessing Australian Public Service Commission foundational courses, and internal rotations to the Data Analytics team where appropriate.

We will continue to refine and implement the workforce plan over the next year.

Quality

The ANAO maintains a strong focus on its quality assurance framework as a core business investment. A sound quality framework supports delivery of high-quality audit work and enables the Auditor-General to have confidence in the opinions and conclusions in reports prepared for the Parliament. The ANAO published its first Quality Assurance Framework and Plan at the beginning of 2019–20. During 2019–20, we prepared the Quality Assurance Framework and Plan 2020–21, which complements the ANAO Corporate Plan 2020–21, and outlines the quality assurance strategy and key activities planned for the year ahead.

The ANAO defines audit quality as the provision of timely, accurate and relevant audits, performed independently in accordance with the Auditor-General Act 1997 (the Act), the ANAO Auditing Standards, and methodologies that are valued by the Parliament. Delivering quality audits results in improved public sector performance through accountability and transparency.

The ANAO’s work is governed by the ANAO Auditing Standards established by the Auditor-General, in accordance with section 24 of the Act. The ANAO Auditing Standards incorporate Auditing Standard ASQC 1 – Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements. ASQC 1 requires the ANAO to establish and maintain a system of quality control to provide it with reasonable assurance that the organisation complies with the ANAO Auditing Standards and other applicable requirements, and that reports issued by the Auditor-General are appropriate in the circumstances.

The ANAO Quality Assurance Framework and Plan encompasses policies and procedures that address leadership responsibilities for quality, relevant ethical requirements, audit mandate and selection, human resources, audit performance and monitoring.

As outlined in the 2019–20 Corporate Plan, the ANAO has published its first Audit Quality Report. This report assesses the implementation and operating effectiveness of the elements of the ANAO Quality Assurance Framework outlined above. The report provides transparency in respect of the processes, policies and procedures that the ANAO has implemented to address or support each element, including reporting on Audit Quality Indicators (AQIs) and measuring ANAO performance against target benchmarks. AQIs are measures in respect of individual audits, and the ANAO more broadly, that provide insights about key matters that may contribute to the quality of an audit. Measuring AQIs informs and enhances reporting about audit quality and assists in understanding the root causes of quality inspection findings. The achievement of the quality assurance strategy and deliverables, as set out in the Quality Assurance Framework and Plan 2019–20, is also included in the audit quality report to enhance accountability.

Figure 4.2: ANAO quality framework

Methodology

The ANAO Auditing Standards are supported by a methodology incorporating audit manuals applicable to performance audit and assurance audit work. This methodology is regularly reviewed and updated as required for changes in the ANAO Auditing Standards, industry better practice, and new and emerging products, and to address findings from the ANAO’s quality assurance program. In 2019–20, key updates to the methodology included:

• implementation of a new template and technical guidance to respond to the impact of the COVID-19 pandemic on financial statement audits;
• revision to the financial and performance audit policy related to quality monitoring, to incorporate emerging quality assurance reviews, such as reviews by the Australian Securities and Investments Commission and real-time reviews, and amend the selection basis for quality reviews of audits contracted out to audit firms;
• development and implementation of a new audit file structure for performance audits to support the consistent documentation of the conduct, supervision and review of performance audits, and the development of a new performance engagement risk assessment template;
• upgrade of the audit software the ANAO utilises to support ANAO audit methodologies; and
• development of a new performance statements auditing volume of the ANAO Audit Manual being trialled in the performance statements auditing pilot.

Engagement

The ANAO considers engagement as a core capability for delivering on our purpose. Consistent with the outcomes of the strategic communication review undertaken in 2018–19, the ANAO sought to identify specific audiences and develop strategies and tactics to meet their communication needs. As a result, in October 2019, we launched a new section of the ANAO website featuring information designed to support the information needs of Senate estimates committees. This section of the website displays summaries of all audits tabled since the previous estimates hearings, relevant to each committee’s allocated portfolios. This provides committee members and secretariat staff with direct and real-time access to audit report summary information, and allows for printing and PDF-optimised information exports to support committee business requirements.

A new Audit Insights strategy was implemented in November 2019. The new strategy enables the ANAO to plan and develop a contemporary product designed to share good practice approaches to public administration across the Australian Government sector. A key component of the strategy is to more closely align the development of an insights product to audit planning and selection processes. This approach will provide a series of tabled audit reports to draw from, to create thematic insight products promoting good public administration principles.

Effective internal communication and staff engagement were important in keeping staff informed and engaged during the accommodation move in December 2019. Methods of communication included a regular all-staff email newsletter dedicated to accommodation news and information, as well as the use of existing channels such as the intranet and TV displays. Early feedback from staff during the COVID-19 pandemic reinforced the importance of effective internal communication, resulting in the deployment of regular executive messaging through email, a new fortnightly all-staff email newsletter, and text messages to staff at the end of each work day.

Since November 2019, all tabled performance audit reports have included a single-page feature called an ‘audit snapshot’. This new feature is intended to provide readers with a concise summary of the report, to help the reader make a decision about whether the report is of interest to them. It includes information about why the audit was conducted, what the audit found, what was recommended to the audited entity, and some key facts about the subject of the audit.

Risk management

The effective management of risk is integral to achieving our objectives and supporting our purpose. Risk management is a critical component of the ANAO’s approach to good governance, and is integrated into our oversight structures, strategic planning framework and values-driven, high-performance culture.

Risk management framework

The ANAO’s risk management framework is based on adherence to the Commonwealth Risk Management Policy, which adopts definitions outlined in ISO 31000:2018 Risk management — Guidelines. The standard defines risk as ‘the effect of uncertainty on objectives’, and risk management as the ‘coordinated activities to direct and control an organisation with regard to risk’. The Commonwealth’s policy has nine elements and the ANAO has established risk oversight and management systems to address each of those elements.

The ANAO’s management of risk is embedded into all business-as-usual practices, using consistent language, approaches and documentation, with the adoption of both qualitative and quantitative risk analysis tools applicable across all operations and groups. Risks associated with audit products are identified and managed within the delivery of the products and within the quality framework through policies, procedural guidance and review points.

Risks need to be managed in the context of achieving organisational goals and objectives. While all staff contribute to the way risks are managed, senior staff in key positions are expected to have a clear view of the mitigating controls and their effectiveness at controlling risks.

The Auditor-General takes advice from the Executive Board of Management into account when approving the risk management framework and enterprise risk register and determining the ANAO’s appetite and tolerance for risk. The risk management framework identifies specific responsibilities for key personnel across the ANAO and the enterprise risk register assigns owners for each enterprise-level risk. In addition, all ANAO staff have a general responsibility to practise active risk management. The Executive Board of Management reviews any serious risk incidents each month, and any residual risk assessed as ‘high’ or above is monitored monthly. Business risks are reviewed at least annually.

The ANAO proactively managed a number of serious risk incidents in 2019–20 in response to a changing risk environment. These included environmental hazards restricting use of the ANAO’s office facilities and the COVID-19 pandemic. The required mitigations that the ANAO put in place in response to these risk events will continue to benefit the ANAO’s operations in the post-pandemic environment.

The Professional Services and Relationships Group and the two audit services groups have primary responsibility for managing audit risk. Each individual audit work plan assesses operational risks and mitigation strategies, and risk is assessed at all audit review points. Responsibility for managing operational audit risk is assigned to responsible senior executives and audit managers.

Internal audit

Internal audit provides an objective audit service that is designed to add value and improve the ANAO’s operations. A systematic and disciplined approach is taken to evaluate and improve the effectiveness of risk management, control and governance processes.

In 2019–20, the ANAO’s internal auditor, BellchambersBarrett, completed the following reviews:

• TeamMate rollout — pre-implementation review
• TeamMate rollout — implementation review
• JCPAA and other parliamentary committee audit recommendations
• Contract management — contract-out audits
• Payroll and payment data integrity
• Management of outsourced information and communications technology services
• ANAO Audit Manual compliance.

The seven completed internal audits made 10 recommendations in total all agreed to by the ANAO. Following the June 2020 Audit Committee meeting, work was in progress to address the five outstanding internal audit recommendations.

Control environment

The ANAO has a robust control environment in place. The current control framework includes the following policies and procedures, which document key business procedures and incorporate details of key internal controls:

• Auditor-General instructions — these apply key principles and requirements of the Commonwealth’s resource management framework to the operations of the ANAO;
• financial management procedures (to support the Auditor-General instructions);
• delegations and authorisations; and
• an employee handbook.

Regular reviews of controls are undertaken by management and through the use of internal audit.

Probity and independence

The ANAO’s commitment to high ethical and professional standards underpins the quality of its work. For audit professionals, independence is an element central to the quality of each audit. It requires all members of the audit team to avoid circumstances that could compromise their ability to act with integrity and exercise objectivity and professional scepticism. The ANAO Auditing Standards and the ANAO Independence Policy require staff and contractors engaged in audits to comply with the relevant provisions of the Accounting Professional and Ethical Standards Board’s APES 110 – Code of Ethics for Professional Accountants (including Independence Standards). Any threat to independence must be evaluated and safeguards applied to reduce the threat to an acceptable level. Situations where a threat cannot be reduced to an acceptable level are not entered into or not allowed to continue.

When conducting procurements, the ANAO adheres to the Department of Finance’s Ethics and Probity in Procurement principles. Staff involved in assessing procurements are required to receive a probity briefing from the procurement team. Any open tender procurements require the completion of probity and conflict of interest declarations from staff involved in evaluating the responses before they are given access to the responses. Complex procurements have nominated probity advisers included in the evaluation team — either internal ANAO staff or specialised external probity advisers.

In order to maintain credibility and demonstrate independence, the ANAO regards integrity as a core value of the organisation — critical in sustaining the confidence of the Parliament, strengthening public trust in government and delivering quality audit products.

The ANAO’s integrity control system and processes include good governance practices, publishing of gifts and benefits, and an ongoing focus on independence in the delivery of our work. Beyond its control system, the ANAO maintains an enduring focus on promoting integrity as an organisational value that is embedded in our work and culture.

Fraud control and prevention

The Senior Executive Director CMG is responsible for managing the ANAO’s fraud control framework, including fraud detection, prevention and response. This framework is linked to the ANAO’s risk management framework and consolidates all fraud prevention and detection activities in one document. Having particular regard to risk against the ANAO’s reputation should fraudulent activity occur, the ANAO periodically reviews its fraud control framework to take into account changes in its operating environment. There were no incidents of fraud in 2019–20. We conducted a fraud risk assessment and concluded that all identified fraud risks were accurately assessed and appropriate controls were in place.

The ANAO continues to maintain appropriate fraud prevention, detection, investigation, reporting and data collection procedures in accordance with the Public Governance, Performance and Accountability Rule 2014. The ANAO enhances fraud awareness among staff through various mechanisms, including a mandatory fraud e-learning module.

Auditor-General’s disclosure of expenses

The Auditor-General voluntarily discloses publicly any expenses incurred to ensure transparency. The Auditor-General’s expenses are disclosed every six months. His expenses for the 2019 calendar year and for January to June 2020 are available on the ANAO website.

Gifts and benefits

The ANAO gifts and benefits policy recommends that ANAO employees do not accept any gifts or benefits in their role as an employee of the ANAO. Employees are required to report any offered gift or benefit (whether accepted or refused) within 10 business days of the offer being made, through an internal gifts and benefits register. The data collected through the register is reported to the ANAO’s Executive Board of Management, and a subset of the data is reported publicly. In response to new guidance released by the Australian Public Service Commissioner on the 18^th October 2019, the ANAO moved from quarterly to monthly public reporting of gifts and benefits through its website in January 2020.

Outside employment

The ANAO provides its employees with flexibility to participate in activities outside the Australian Public Service if the activities do not conflict or adversely affect the performance of their official duties. A range of activities may be deemed to be in the public interest and of professional benefit to the individual and to the ANAO. Outside work is other employment (paid or unpaid) or volunteer activities undertaken by an employee in addition to their official duties or while on paid or unpaid leave from the ANAO.

Prior approval is required for all outside activities and employment, unless specifically excluded from the policy. If an employee commenced outside employment before joining the ANAO, the employee must obtain approval to continue the employment immediately upon commencement. In all other cases, employees must obtain approval before commencing outside employment.

Approval is not required where activities are solely of a personal nature — that is, when employees perform work or undertake activities for voluntary community organisations or sporting bodies. Passive investment activities, such as rental properties, share trading and so on, are also excluded from approval requirements. However, all exclusions from approval are on the basis that activities are undertaken in the employee’s own time, no ANAO resources are used, and that there is no conflict of interest or adverse effect on their official duties.

At 30 June 2020, the ANAO approved 63 staff undertaking outside employment activities.

Compliance survey

The ANAO’s delegates assert compliance with the financial framework, including compliance with the PGPA Act, by completing a Compliance Survey. The response rate to the survey in 2019–20 was 90%. Not all identified staff provided a response due to their absence when the survey was being undertaken.

In 2019–20 the survey identified no significant breaches of the ANAO delegations, financial management rules and associated legislation. A number of non-significant breaches relating to procurement were identified in relation to reporting procurements via Austender within the mandated timeframe of 42 days. Non-significant instances of the misuse of the ANAO’s official credit cards were also identified.

There were 45 instances where procurements made by the ANAO were registered on Austender after 42 days. The ANAO has implemented additional internal controls to mitigate the likelihood of procurements not being reported on Austender within the mandated timeframe.

There were 16 instances of misuse or fraud related transactions of the ANAO’s corporate credit card in 2019–20. This represents 0.2% of total credit card transactions. Although the proportion of misuse is small, each instance is investigated, with all these incidents found to be inadvertent. All instances of credit card misuse were reported to the Executive Board of Management. The CFO contacted those staff that misused their credit card and reminded them of their obligations when using the card and ensured that the amounts associated with the misuse of the credit cards were repaid into the ANAO’s bank.

External scrutiny

The ANAO’s operations, processes and reports are periodically subjected to independent external review.

Part 7 of the Auditor-General Act 1997 provides for the appointment of an Independent Auditor, who undertakes the audit of the ANAO’s financial statements and carries out selected performance audits, having regard to the audit priorities of the Parliament as determined by the JCPAA. The Independent Auditor position is a part-time statutory appointment for a period of at least three years and not more than five years. On 21 February 2019, the Governor-General appointed Ms Eileen Hoggett as the ANAO’s Independent Auditor from 1 March 2019 for a period of five years.

In 2019–20, the Independent Auditor commenced a performance audit to assess the effectiveness of the ANAO’s internal budgeting and forecasting processes and practices, in supporting the 2019–20 and 2020–21 financial years. The report is due to be finalised by the end of August 2020.

The ANAO received unmodified auditor reports on its financial statements and performance statements for the year ended 30 June 2020.

No decisions made by a court or administrative tribunal or by the Australian Information Commissioner had a significant effect on the ANAO’s operations in 2019–20. The ANAO was not the subject of any agency capability reviews or reports by the Commonwealth Ombudsman in 2019–20.

Other management issues

The management activities and services that support the ANAO’s audit functions are undertaken in line with government policies and better practice. Reporting against the following issues is provided in Appendix F:

• compliance with financial law;
• asset management;
• purchasing and procurement;
• consultants;
• procurement activities to support small business;
• advertising and market research;
• grant programs;
• environmental performance;
• disability;
• work health and safety;
• freedom of information; and
• service charter.

Appendix A — ANAO appearances before, and submissions to, parliamentary committees

Table A.1 provides details on the ANAO's appearances before, and submissions to, parliamentary committees during 2019–20.

Table A.1: ANAO appearances before, and submissions to, parliamentary committees in 2019–20

Appendix B — Transparency reporting

The Corporations Act 2001 includes requirements for annual transparency reporting by auditors. Although the ANAO is not subject to the transparency reporting requirements for private sector audits that are specified in the Corporations Act, the ANAO has embraced the principles of transparency reporting. Table B.1 summarises the requirements that are relevant to the ANAO and shows where the required information is presented in this annual report.

Table B.1: Transparency reporting

(a) Based on the items set out in Schedule 7A of the Corporations Regulations 2001.

Appendix C — Entity resource statement and expenses by outcome

Entity resource statement

Table C.1: Entity resource statement 2019–20

(a) Appropriation Act (No. 1) 2019–2020, prior-year departmental appropriation, and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013.

Expenses by outcome

Table C.2: ANAO's summary of total expenses for Outcome 1, 2019–20

(a): Full year budget, including any subsequent adjustment made to 2019–20 Budget.

(b): Departmental appropriation combines 'Ordinary annual services (Supply Bill (No. 1) and Appropriation Act (No. 1))' and 'Revenue from independent sources (s74 of the PGPA Act)'.

Appendix D — Workforce information

Table D.1: Staff coverage under employment instruments, at 30 June 2020

Note: Includes ongoing, non-ongoing and casual staff. All employees are covered by either the ANAO Enterprise Agreement 2016–2019 or a common law employment contract. Employees covered by the enterprise agreement may also have an individual flexibility arrangement in place. Information in this table covers substantive classification of staff and does not include acting arrangements.

Table D.3: Ongoing, non-ongoing and casual staff, by attendance type, at 30 June 2020 and 30 June 2019

Note: Includes all operative and seven paid inoperative staff, and excludes three inoperative staff who were on leave without pay. Inoperative staff are defined as staff who are absent from work for more than 13 weeks. Four full-time ongoing staff identify as indigenous. All ANAO staff are Canberra based.

Remuneration

The ANAO's employment framework supports strategies in developing and building capability, investing in its staff, flexible working arrangements and appropriate remuneration. The ANAO's Enterprise Agreement 2016–2019 came into effect on 21 April 2016 and covers the terms and conditions of employment at the ANAO, other than terms and conditions applying under a relevant Commonwealth law or implied at common law. The agreement provides for a 2 per cent annual pay increase, which is funded from within existing and known future agency budget and revenue streams.

In April 2019, the ANAO implemented a section 24(1) determination under the Public Service Act 1999 after a lengthy consultation process. The determination holds in place conditions of the ANAO Enterprise Agreement 2016–2019 while enabling an annual 2 per cent pay increase commencing 22 April 2019. This agreement was put on hold when the Australian Government issued a section 24(3) determination, effective 14 April 2020, pausing all APS staff pay increases for a period of six months.

The salary ranges for Senior Executive Service (SES) staff are determined by the ANAO's SES Remuneration Policy and have regard to public sector benchmarks, such as the annual APS remuneration survey. The nature of the work, specific skills and individual contributions to business outcomes are key factors in setting individual SES salaries. SES remuneration payments are set out under Note 2.3 of the financial statements at Part 3 of this this report.

Table D.4: Salary ranges for APS employees, by classification, at 30 June 2020

APS = Australian Public Service; EL = Executive Level.

Table A.9: Table D.5: Performance payments in 2019–20

APS = Australian Public Service; EL = Executive Level; SES = Senior Executive Service.

Table A.10: Table D.6: Summary of performance ratings for the period ending 31 October 2019

APS = Australian Public Service; EL = Executive Level.

Non-salary benefits

The ANAO offers staff a number of non-salary benefits, which include:

• annual influenza immunisation;
• spectacle reimbursement;
• mentoring and coaching programs;
• in-house capability development programs;
• a free, confidential employee assistance program for employees and their immediate families;
• study assistance to eligible employees;
• access to flexible working arrangements; and
• contributions to relevant professional memberships.

The ANAO provides SES staff and — where there is a business need — some non-SES staff with a mobile phone, tablet, laptop and/or airline lounge membership. Employees can also make use of a range of salary sacrifice benefits, including additional superannuation and leased motor vehicles.

Workplace consultative forum

The Workplace Consultative Forum is an important part of the ANAO's ongoing commitment to employee engagement. The forum has 17 members who include staff, union and management representatives. In 2019–20, the forum met on six occasions to consider a range of employment-related issues, including the response to COVID-19, accommodation and information technology upgrades.

Workforce diversity

The ANAO aims to create an organisation that encourages and welcomes diversity. This includes diversity of backgrounds, views, thoughts and approaches. The ANAO's objective is to attract a range of people across varying professions and backgrounds, especially within the executive-level roles, to build a successful and sustainable organisation with a culture that enriches its work and impact. Diversity fosters an environment of mutual learning, respect, and openness to and appreciation of differences and other perspectives. Such a positive culture creates opportunities for a variety of different voices to be encouraged and heard.

The ANAO has diversity contact officers who champion diversity across the ANAO, with a focus on building a positive workplace culture. The diversity contact officer cohort provides informal and confidential support to staff who are seeking assistance and guidance on workplace issues, such as harassment and bullying.

The diversity contact officers host events and support recognised days to educate and raise awareness among our staff. During 2019–20, sponsored events included:

• R U OK? Day;
• Wear it Purple Day; and
• Mental Health Awareness Month.

The ANAO Diversity and Inclusion Strategy 2018–2020 was developed in consultation with staff and Diversity Council Australia. The strategy was approved by the executive and released in February 2018. It provides the ANAO with guidance on ways to successfully embrace diversity by creating an environment that values and uses the contributions of people with different backgrounds, experiences and perspectives. The strategy aims to create a supportive, flexible and engaging workplace in which our employees' differences are respected and viewed as an organisational asset.

At 30 June 2020, the ANAO had three employees who self-identified as Aboriginal and/or Torres Strait Islander. The ANAO collaborates with other Australian Government agencies so that it can better meet the employment needs of Aboriginal and Torres Strait Islander people.

Implementation of the ANAO's first Reconciliation Action Plan — at the 'reflect' stage — formally concluded in July 2019. A report on the key achievements under this plan can be found on the ANAO website. The ANAO has commenced planning for the development of its next Reconciliation Action Plan at the 'innovate' stage.

During 2019–20, the ANAO continued to demonstrate commitment to the goals of its first Reconciliation Action Plan, including by hosting events for National Reconciliation Week, recognising NAIDOC Week, and exploring opportunities within the organisation to strengthen cultural intelligence.

Appendix E — Staff engagement and performance strategies

This appendix sets out the ANAO's strategies for recruiting and retaining staff, and building a productive and supportive workplace that encourages and engages its employees.

Recruitment and retention

The ANAO has a number of programs and strategies to ensure that we recruit and retain high-performing staff.

Graduate program

The ANAO's graduate program is open to university students who are completing their final year of study or have completed a degree within the past seven years. During the 12-month program, graduates undertake a robust development program, consisting of technical and professional training.

In 2019, the ANAO's graduate program included 18 graduates: 10 in the Assurance Audit Services Group, six in the Performance Audit Services Group, one in the Systems Assurance and Data Analytics Group, and one in the Corporate Management Group.

Intern program

The ANAO's intern program provides paid casual work experience for Canberra university students who are currently completing an undergraduate degree in a relevant field of study. During 2019–20, seven students participated in the ANAO intern program. The ANAO continued to foster productive relationships with the Australian National University, the University of Canberra, Chartered Accountants Australia and New Zealand and CPA Australia to recruit students for the program.

Supporting high performance

During 2019–20, the ANAO supported 149 staff members to undertake qualifications and tertiary education, including programs offered by Chartered Accountants Australia and New Zealand, CPA Australia and ISACA (the professional association for IT audit specialists). The ANAO also invested in a diverse range of programs to build capabilities, including coaching, technical workshops, wellbeing and communication skills. The year saw a stronger focus on increasing soft skills throughout the ANAO.

The ANAO's learning and development program supports staff to meet continuous professional development requirements relating to their membership of professional accounting associations. This includes:

• support to complete 120 hours of continuous professional development over a three-year period, with a minimum of 20 hours to be completed each financial year. This includes 10 hours of formal technical training in relevant areas such as financial statements auditing, accounting or legal frameworks;
• a written declaration that relevant staff have complied with the continuous professional development requirements for each financial year; and
• evaluation of training undertaken by staff against the learning and development curriculum.

The ANAO recognises and rewards individual staff and teams who make a significant contribution to achieving its business objectives in areas such as client service, people management, business management, audit management and innovation. The recognition and awards system comprises formal ANAO awards (Auditor-General's Australia Day Awards, outstanding achievement awards, professional development awards, and certificates of appreciation) and formal external awards (the Public Service Medal, Institute of Public Administration Australia awards, and Chartered Accountants Australia and New Zealand – Leadership in Government Awards).

In 2019–20, the ANAO's studies assistance program was reviewed and streamlined.

Talent management program

A renewed approach to talent management is in the process of implementation following the success of pilot programs in 2017 and 2018.

The 2020–21 talent management program will offer the following opportunities to participants:

• keynote speakers;
• leadership development opportunities;
• group coaching sessions;
• strategic projects;
• mentoring junior staff members; and
• shadow boards.

An evaluation of the program will occur in early 2021 with a view to renewing the ANAO's approach to talent management.

Staff engagement

The ANAO is committed to building a productive and supportive workplace that encourages and engages its employees. Each year, the ANAO participates in the Australian Public Service employee census. The 2019 census achieved an ANAO staff response rate of 76 per cent. Unfortunately, due to COVID-19, the 2020 census has been delayed and we are unable to report on response rates.

The ANAO organises regular internal events that aim to foster a culture of engagement and information sharing for all staff. Events raise awareness of ANAO priorities and contribute to the professional and personal development of staff. 'Town hall' events inform staff of current organisational priorities, future directions and relevant developments. The purpose is to create a sense of cohesion across the organisation and to recognise staff contributions and achievements. Three 'town hall' events were held in 2019–20.

The ANAO's Leaders Speaking program is a key professional and development opportunity that provides ANAO staff with exposure to a variety of professionals from industries and sectors outside of auditing. Topics and areas of focus are broadly based on leadership, management, innovation, change, performance and professional development. The program is well attended and contributes to culture building. It equips staff with insights and learnings that complement their technical training and development. Two Leaders Speaking events were held in 2019–20 and featured Mr Noel Pearson and Dr Simon Longstaff.

Health and wellbeing initiatives

The ANAO is committed to promoting the health and wellbeing of its staff. The ANAO recognises that work-based health and wellbeing programs positively contribute to morale, resilience and productivity by reducing workforce absence, illness and workplace injury. The ANAO participates in the Australian Public Service Commission's benchmarking on unscheduled absences across the Australian Public Service (APS), which can provide information on staff wellbeing. The most recent report received, covering the period 1 July 2019 to 31 March 2020 shows the ANAO's unscheduled absence rate at 6.2 days compared to the APS average of 6.8 days.

By informing, enabling and supporting staff to make healthy choices, the ANAO is contributing to the overall health and wellbeing of its social community. During 2019–20, programs that were promoted include:

• diversity contact officers;
• the Reasonable Adjustment Passport for employees with an illness, injury or disability;
• the Employee Assistance Program;
• the Mental Health Guru online employee induction program;
• an online mental health toolkit;
• COVID-19 pastoral care check-ins;
• flu vaccinations;
• annual health checks; and
• mental health first aid officers.

Appendix F — Other management issues

Compliance with finance law

In 2019–20, the ANAO had no significant issues under paragraph 19(1)(e) of the Public Governance, Performance and Accountability Act 2013 relating to noncompliance with the finance law.

Asset management

The ANAO's assets management policy is set out in the Auditor-General Instructions and supporting financial management procedures. High-value assets are subject to whole-of-life management, including formal tendering for acquisition, scheduled maintenance, and detailed accounting of disposal or return at the end of the useful life of the asset. The ANAO's asset management practices are designed to protect the interests of the Australian Government.

Purchasing and procurement

The ANAO's approach to procuring goods and services, including consultancies, is consistent with, and reflects the principles of, the Commonwealth Procurement Rules. These rules are applied to activities through the Auditor-General Instructions and supporting financial management procedures and guidelines.

The ANAO's procurement plan is published annually and is available on the AusTender website, tenders.gov.au. The plan is updated when circumstances change.

The ANAO's tender evaluation processes are designed to be fair and equitable and to enable potential suppliers to compete for ANAO business. Before proceeding to a substantive evaluation, the ANAO undertakes a check against all mandatory requirements that are listed in the tender documentation.

All tenders and contractual arrangements undertaken in 2019–20 were carried out in accordance with the Commonwealth Procurement Rules.

No contracts in excess of $10,000 (including GST) or standing offers were exempted by the Auditor-General from being published on AusTender on the basis that they would disclose exempt matters under the Freedom of Information Act 1982.

Consultants

The ANAO engages consultants as required to undertake a variety of tasks. The most common uses of contracted consultants include the application of expert professional skills to:

• investigate or diagnose a defined issue or problem;
• provide independent advice, information or creative solutions; and
• provide specialised services, including assistance with actuarial calculations, probity services and legal advice.

The major competitive tendering and contracting activities in 2019–20 were to obtain professional skills to assist with certain financial statements audits and performance audits, and the ANAO accommodation project.

During 2019–20, three new consultancy contracts were entered into involving total actual expenditure of $0.190 million. In addition, 11 ongoing consultancy contracts were active during the period, involving total actual expenditure of $0.427 million.

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of the ANAO's contracts and consultancies is available on the AusTender website, tenders.gov.au.

Procurement initiatives to support small business

The ANAO supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance's website: Statistics on Australian Government Procurement Contracts. In addition, the ANAO updated its payment terms on 14 April 2020 to 7 days to support suppliers' cash flow during the COVID-19 pandemic.

Procurement practices support SMEs by the use of the Commonwealth Contracting Suite for low-risk procurements valued under $200,000. Practices also support the use of electronic systems or other processes to facilitate on-time payment, including the use of payment cards.

The ANAO recognises the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury's website: treasury.gov.au.

Advertising and market research

The ANAO did not undertake media advertising campaigns and therefore did not make any payments to advertising agencies in 2019–20. The ANAO did not make any payments to direct mail organisations or polling organisations.

Payments over $13,000 (including GST) to market research organisations and media advertising organisations, incurred in the course of HR, audit and assurance reviews, are set out in Table F.2.

Table F.1: Payments made to market research organisations, 2019–20

Grant programs

The ANAO does not administer any grant programs.

Environmental performance

Section 516A of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) requires that Australian Government entities include a section detailing their environmental performance and contribution to ecologically sustainable development in their annual report.

The EPBC Act requires Commonwealth agencies to report against two core criteria:

• how the agency accords with and contributes to the principles of ecologically sustainable development; and
• the environmental performance of the agency, including the impact of its activities on the natural environment, how these are mitigated and how they will be further mitigated.

Contribution to ecologically sustainable development

The ANAO accords with and contributes to environmentally sustainable development by actively taking steps to reduce our environmental impact and adopting environmentally friendly options where practical.

In 2019–20, the ANAO continued to improve its environmental performance and mitigate the effects of our impact on the environment through:

• relocating to smaller premises, reducing the footprint of the agency;
• relocating to premises with a higher NABERS (National Australian Built Environment Rating System) rating;
• procuring energy-efficient equipment and lighting solutions, including sensor-controlled lighting;
• energy-efficient power management settings on office equipment;
• updated videoconferencing facilities to reduce the need for local, interstate and international travel;
• ensuring that new leases entered into comply with the Australian Government's energy policy;
• recycling of paper, cardboard, office furniture, batteries and printer cartridges; and
• fostering employee awareness of environmental issues, including reconsidering the need to print documents in line with 'paper-lite' principles.

The integration of energy-efficiency practices into our organisation and planning processes allows us to reduce our energy costs and decrease the consumption of resources.

Effect of activities on the environment

The ANAO monitors its energy and water usage and waste management as core indicators of the effect of its activities on the environment.

In December 2019, the ANAO relocated to new premises following fit-out and base building construction works. During the construction phase, the building contractor was legally responsible for the removal and disposal of debris generated by the works, with a particular focus on recycling as much waste as possible and reducing landfill. Further, the building contractor was legally obligated to take all precautions necessary to prevent the discharge of mud, dust, water, fumes, smoke, rubbish, and other pollutants from the work site to any adjacent areas.

We will continue to improve our collection and monitoring of data on energy use, water consumption and waste management in our office building.

Disability reporting

The National Disability Strategy 2010–2020 is Australia's overarching framework for disability reform. It acts to ensure the principles underpinning the United Nations Convention on the Rights of Persons with Disabilities are incorporated into Australia's policies and programs that affect people with disability, their families and carers.

All levels of government will continue to be held accountable for the implementation of the strategy through biennial progress reporting to the Council of Australian Governments. Progress reports can be found at dss.gov.au.

Disability reporting is included in the Australian Public Service Commission's State of the Service reports and the APS Statistical Bulletin. These reports are available at apsc.gov.au.

Work health and safety

Under section 35 of the Work Health and Safety Act 2011, the ANAO is required to notify Comcare of any incidents arising out of the conduct of the ANAO's operations that result in death, serious injury or serious illness of a person, or involve a dangerous incident. No incidents were reported in 2019–20.

Freedom of information

The Freedom of Information Act 1982 provides the Auditor-General with an exemption from the provisions of the Act, and in 2015 the Australian Information Commissioner determined that the Auditor-General's exemption extends to the ANAO.

Performance audits, assurance reviews and audit opinions are tabled in the Parliament and/or published on the ANAO's website. Correspondence with members of parliament and senators is published on the ANAO's website. Other corporate information is also published on the ANAO's website, including:

• the Auditor-General's credit card transactions;
• meetings held with members of parliament and senators;
• Senior Executive Service remuneration policy and details;
• gifts and benefits received and declined; and
• the ANAO's risk management framework.

Service charter

As the ANAO does not provide services directly to members of the public, it does not have a service charter. However, the ANAO recognises that it provides a service to the community through the delivery of a range of audit services, and welcomes feedback. Comments and suggestions can be made via the ANAO website, anao.gov.au, or by phone on (02) 6203 7300. Members of the public are also invited to make contributions to specific audits, with each audit having a facility for contributions to be received while the audit is in progress.

The list of annual report requirements in the table below is prepared in accordance with paragraph 17AJ(d) of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). Page references for the ANAO’s compliance with these requirements are provided in the right-hand column of the table.

List of requirements