I am pleased to present the Australian National Audit Office (ANAO) Annual Report 2023–24 to the Parliament. This reporting period has seen the ANAO continue to fulfil its mandate under the Auditor-General Act 1997 through the delivery of high-quality reporting.

The year in review

The ANAO is a professional organisation that is well regarded for its strong technical and specialist skills. Through our independent audit work, we provide assurance to the Parliament on the executive government’s use of resources. In 2023–24, the ANAO continued to deliver on its purpose through the efforts and commitment of our people.

Workplace capability

In August 2023, the ANAO received the results from our participation in the Australian Public Service (APS) Employee Census 2023. I was pleased to see the 89 per cent response rate to the survey, as this high response rate gives me assurance that the results are truly representative of how our staff feel about their work and workplace. The data collected through the census was positive, reflecting a workforce that strongly believes in the purpose and objectives of our organisation. Ninety-seven per cent of respondents agreed that they understand how their role contributes to achieving an outcome for the Australian public, and 94 per cent believe strongly in the purposes and objectives of the ANAO.

It was also pleasing to see that staff positively assessed the leadership by their Senior Executive Service (SES) manager and the ANAO’s approach to communication and change. The ANAO’s SES manager leadership index score was 10 points above the APS average and the communication and change index score was 6 points above the APS average. Through the census, we also identified two areas of focus and action — innovation and wellbeing. We released an action plan to address these focus areas in December 2023, and actions are well underway to implement the plan.

Parliamentary engagement

Over the reporting period, we actively engaged with the Parliament, primarily through the Joint Committee of Public Accounts and Audit (JCPAA). The work of the JCPAA and other parliamentary committees assists our reports to have an impact across the public sector — particularly as the Parliament continues to seek system-level transparency and assurance over the operation and effectiveness of public sector frameworks and the proper use of public resources to achieve intended results.

Through our submissions to the Parliament and our audit reports, we’ve contributed to the work of the JCPAA and the recommendations it has made on assurance of cybersecurity frameworks, and improvements to the Commonwealth Grants Rules and Guidelines and Commonwealth Procurement Rules. We’ve also observed progress of legislative changes arising from our work in telehealth and findings made in our financial statements audit work on the Commissioner of Taxation’s powers to manage debt.

Integrity and ethics

Building the integrity of the Australian public sector remains a key focus within the public service following the report of the Royal Commission into the Robodebt Scheme, and the ongoing suite of APS reforms aimed at addressing related issues within public administration. The ANAO has an important role to play as the public sector auditor in identifying opportunities to strengthen integrity across Commonwealth entities. Along with the Commonwealth Ombudsman, National Anti-Corruption Commissioner, Australian Federal Police Commissioner and APS Commissioner, the Auditor-General seeks to identify systemic integrity issues, based on our audit work, to contribute to improvements within the sector.

In June 2024, the JCPAA concluded its inquiry into probity and ethics in the Australian public sector, publishing Report 502: The never-ending quest for the golden thread, reviewing five performance audit reports. The report makes 11 recommendations, including recommending that the Public Governance, Performance and Accountability Act 2013 (PGPA Act) framework be amended to introduce a requirement for entities to develop, maintain and report on an overarching integrity framework.

As an integrity agency, the ANAO recognises that maintaining strong institutional integrity is critical to our operations. To support this posture, we established the ANAO Integrity Framework in June 2020. In December 2023, we published our framework — and, for the first time, a report against the framework — to provide increased transparency of the measures we undertake to maintain a high-integrity culture within the ANAO. I see this framework, and our public reporting against it, as an important mechanism in publicly demonstrating transparency and accountability of our own operations.

Public sector ethics, integrity and probity will remain a focus of our work. Performance audits continue to identify that, in routine areas of public administration (such as record keeping, governance, procurement, conflict of interest management and risk management), performance consistently falls short. In the last five years, the ANAO has made negative comments on record keeping in over 90 per cent of performance audit reports presented to the Parliament. Of particular concern is that all 45 performance audit reports tabled in 2023–24 made negative comments on record keeping. The ANAO has also identified deficiencies in enforcing the requirements and managing the risks associated with gifts, benefits and hospitality — another area of public service administration that has clear requirements across established legislation, including the Public Service Act 1999 and PGPA Act. These basic areas of administration matter, and getting them right can be an indicator of culture. They are areas covered by the law, policies and frameworks and therefore can indicate an entity’s attitude to other aspects of its responsibilities.

Report on performance

We report in detail on the ANAO’s performance during 2023–24 in Part 3 — ‘Report on performance’. During 2023–24, the ANAO issued reports on 245 mandated financial statements audits, conducted 10 performance statements audits, and presented 45 performance audit reports to the Parliament. Through this work, the Auditor-General provides independent assurance as to whether the executive is operating and accounting for its performance in accordance with the Parliament’s intent. The ANAO makes recommendations to audited entities through each of these audit products where we identify areas of control weakness, risk or noncompliance.

Financial statements audit services

In 2023–24, a total of 196 findings were reported to entities as a result of the 2022–23 financial statements audits (2021–22: 205). The findings included nine significant, 36 moderate, 137 minor and 14 legislative breaches. This compares with results from the previous year that included five significant, 35 moderate, 144 minor and 21 legislative findings. The highest number of significant and moderate findings for the 2022–23 audit cycle were in the categories of governance of legal and other matters impacting entity financial statements, IT governance (including security, change management and user access), and accounting and control of non-financial assets.

During the audits of 2022–23 financial statements, IT control environment findings continued as a theme, particularly in relation to IT security controls. This remains a key area of concern for the public sector in an environment of increasing cybersecurity risk. Four of the nine significant findings were in relation to weaknesses in the IT control environment, including weaknesses in change management, removal of user access, design and implementation of IT general controls, and IT governance. Entities should continue to improve their IT control environments, particularly as the sector considers the implementation of emerging technologies in their administration environments.

Four significant findings raised during the 2022–23 audit cycle related to weaknesses in entities’ consideration of legal matters when preparing their financial statements. The ANAO identified legal matters that entities had not previously communicated, nor had the entities considered the potential impact on their financial statements. In some cases, adjustments to balances and disclosures were required in the financial statements.

Of the legislative breaches, three were significant legislative breaches, one of which was identified during the 2022–23 audit cycle; the other two remain unresolved from prior years. There were 11 non-significant breaches relating to noncompliance with determinations made by the Remuneration Tribunal for remuneration of key management personnel (incorrect payments) and noncompliance with requirements of the Commonwealth Procurement Rules.

Performance audit services

The ANAO’s performance audit program continues to provide assurance to the Parliament and to promote accountability, transparency and improvement in public administration. In 2023–24, the ANAO presented 45 performance audit reports to the Parliament, which met the target for this measure outlined in the ANAO Corporate Plan 2023–24. In the delivery of these performance audits, we achieved the intended coverage outlined in the Annual Audit Work Program 2023–24.

The 45 performance audit reports presented to the Parliament in 2023–24 contained 255 recommendations. Entities agreed in full with 94.1 per cent of these recommendations. The degree to which accountable authorities agree with recommendations is an important indicator of their acknowledgement of areas of administration that need attention. Importantly, agreement to recommendations is reported to the Parliament to support accountability. The number of recommendations is an increase on the previous year (194 recommendations in 40 audit reports, with 91.2 per cent agreed in full), reflecting both the increase in audit reports presented, and also the nature of the reports themselves. Of the 45 performance audit reports tabled in 2023–24, 9 per cent of audits included a conclusion that was adverse, 40 per cent included a conclusion of ‘partly effective’, and 51 per cent included a conclusion of ‘largely effective’. No audit reports included a conclusion of ‘fully effective’.

Performance statements audit services

During 2023–24, the ANAO continued its rollout of the annual performance statements audit program. In February 2024, the ANAO published its findings from the 2022–23 performance statements audits of 10 entities.

The 2022–23 audit cycle indicated improvement in the quality of reporting from 2021–22. In particular, a reduced proportion of entities received a qualified conclusion in an auditor’s report, and the number of measures that were included in the basis for a qualified conclusion decreased. The audit program has demonstrated that mandatory annual performance statements audits encourage entities to invest in the ongoing capabilities needed to plan, monitor and report high-quality performance information. Following a request from the Minister for Finance on 18 July 2023, the ANAO commenced 14 performance statements audits in 2023–24.

The ANAO acknowledges the work of entities in improving performance reporting. Entities will need to make an ongoing effort to provide high-quality performance information to the Parliament that demonstrates their effective stewardship of public resources. Completeness of reports (that is, the inclusion of relevant key activities, performance measures and targets) and good-quality approaches to measuring and assessing performance and results remain areas for attention in the development of performance statements. The ANAO continues to improve its approach to performance statements auditing through the execution of its work, feedback from the sector and input from its expert advisory panel.

Supporting the Parliament

The ANAO continues to provide support to the work of the JCPAA in delivering its statutory role in the Parliament. During 2023–24, the JCPAA presented four reports to the Parliament following inquiries into Auditor-General audit reports. Two of these JCPAA reports followed inquiries into performance audit reports covering procurement, and probity and ethics; one report examines the ANAO’s performance statements work; and one report considers the 2021–22 Major Projects Report on Defence acquisitions. The ANAO provided eight private briefings to the JCPAA and attended 19 public hearings to support the committee’s inquiries. In addition to the support provided to the JCPAA, the ANAO supported the work of the Parliament more broadly by providing submissions, information, assistance and briefings to parliamentarians and other parliamentary committees. The ANAO also provided briefing material to each Senate estimates committee, on ANAO work in a committee’s portfolio of focus, before each round of estimates hearings.

International engagement

During 2023–24, the ANAO continued its support to capacity-building programs — funded through the Department of Foreign Affairs and Trade — in Indonesia and Papua New Guinea. The ANAO also continued to participate in the activities of the Pacific Association of Supreme Audit Institutions (PASAI). The ANAO engaged with the broader international and national auditing community on several activities aligned with the strategic objectives and key focus areas set out in the ANAO’s strategic planning framework. These engagements contribute strongly to the ANAO’s awareness, learning and sharing of international best practice in the public auditing profession.

The year ahead

The impactful delivery of the Auditor-General’s functions relies on independence, an appropriate legislative basis for the conduct of auditing work, funding to successfully deliver the audit program, and the availability of skilled and trained people to carry out our work agenda.

Legislative mandate

In March 2022, the JCPAA presented Report 491: Review of the Auditor-General Act 1997 to the Parliament. Among other things, the committee made recommendations on the Auditor-General’s independence and mandate. These recommendations included making annual performance statements audits a mandatory function of the ANAO (rather than at ministerial request), amending and clarifying the types of entities subject to audit by the Auditor-General, and amending the processes related to the issuing of certificates by the Attorney-General for the omission of sensitive information from public audit reports. The JCPAA also recommended a consideration of matters regarding modernising the information-gathering powers included in the Auditor-General Act 1997. The government is yet to respond to the committee’s recommendations.

The modernisation of legislation to support contemporary powers for the Auditor-General is increasingly necessary, in particular as they relate to information gathering. The Auditor-General Act 1997 came into effect when information gathering largely relied on paper-based files and documentation, and physical visits to entity premises. As the public sector continues to digitise and automate its functions and generate and hold more data, and considers the use of artificial intelligence in the delivery of services, the ANAO must be empowered to audit more effectively in the context of new technology.

Sustainable funding

Independence of public audit offices is a key part of the accountability framework. The International Organization of Supreme Audit Institutions (INTOSAI) sets out eight principles in its 2007 Mexico Declaration to guide the independence of audit institutions. Principle 8 refers to financial and managerial/administrative autonomy and the availability of appropriate human, material and monetary resources. To achieve the Parliament’s expectation of the presentation of 48 performance audit reports per year and deliver the functions mandated in the Auditor-General Act 1997, ongoing sustainability of funding for the ANAO remains an issue.

Appropriate funding of the ANAO has been a focus of the JCPAA in its role in making recommendations to the government on the ANAO’s budget. While the ANAO did not seek supplementation in the 2024–25 Budget, the JCPAA noted in its statement on the Budget estimates that ‘the Committee has been grappling with the unsustainability of ANAO’s long term financial position and the risk arising to its operational independence and ability to perform its vital statutory roles at an appropriate level of output’. The JCPAA also noted that ‘the ANAO will require additional funding in future years if it is to meet both its legislative requirements and other outputs under the present framework.’ The committee further noted the impact of the efficiency dividend on the ANAO’s budget.

Achieving sustainable funding will be a priority for the ANAO in 2024–25, in an environment of increasing costs of delivering high-quality audit products to the Parliament, the growth in the performance and performance statements audit programs, maintaining the security of sensitive information, and the prospect of new audit requirements (for example, for climate change disclosures by entities).

Audit work program

Over the coming year, the ANAO has several focus areas in its audit work program.

Changes in the technological landscape

The ANAO has been considering its approach to auditing the changing and advancing technological landscape of the public sector. Alongside increasing parliamentary interest, the report of the Royal Commission into the Robodebt Scheme highlighted the need for public sector entities to be able to provide assurance over the operation of automated decision-making. We have begun research activities into what audit methodology, audit tool changes and skills may be required to support audit work in this area. A performance audit into the Australian Taxation Office’s adoption of artificial intelligence is underway to both provide assurance to the Parliament and assist us in identifying further capability we may need to develop to undertake audits of emerging technologies into the future.

For the ANAO, like other audit offices, there is an opportunity to explore how automation can improve the audit process. While audit standards require human judgement, decision-making and scepticism, the ANAO has identified audit processes that can be automated. We have developed tools to achieve this, with oversight by our Quality Committee, to ensure adherence to the ANAO auditing standards and our audit methodology. Further, work is underway to govern the use of emerging technology within the ANAO’s business, recognising that information collected for audit purposes is the subject of strict confidentiality provisions in the Auditor-General Act 1997. We identified governance of the adoption of emerging technology as an issue across the sector through our auditing of 2022–23 financial statements, and we will continue to monitor this area as the government provides guidance to the sector.

Climate-related disclosures

Reporting of climate-related disclosures is an emerging area of audit focus. The first stage of sustainability reporting under the Net Zero in Government Operations Strategy is the introduction of mandatory climate-related disclosures in annual reports. The Treasury is leading the corporate climate-related financial disclosure policy rollout for companies reporting under the Corporations Act 2001. The reporting requirements will be set out in standards developed by the Australian Accounting Standards Board (AASB). Climate disclosures will be subject to similar assurance requirements to those currently in the Corporations Act for financial reports. Entities will also be required to obtain an assurance report from their financial auditors, with assistance from technical climate and sustainability experts where required. Assurance requirements will be set out in standards issued by the Auditing and Assurance Standards Board. Five Commonwealth companies will be impacted by the Corporations Act requirements, with proposed commencement for financial reporting years starting on or after 1 January 2025.

The Department of Finance is leading the Commonwealth climate disclosure policy rollout for Commonwealth entities and Commonwealth companies not captured by the thresholds set out in the proposed amendments to the Corporations Act. The department is developing a reporting framework based on the proposed AASB standards. The ANAO is working with the Department of Finance to develop an assurance and verification regime for climate disclosures. Readiness to audit climate disclosures will be a key focus for the ANAO in 2024–25. In preparing, we will consider the Auditor-General’s audit mandate, internal resourcing requirements, the training needed to support staff development, and access to specialist expertise to support the implementation of this activity. We will also consider the readiness of the sector for preparing these disclosures and how the audit process can be used to drive enhanced disclosure across Commonwealth entities.

Resourcing a growing audit program

The performance statements audit program will continue to grow. The Minister for Finance has requested that the ANAO audit the performance statements of 21 entities for 2024–25. Implementation of the audit program has already shown positive outcomes and the ANAO will continue to promote accountability of entities’ stewardship of public resources through high-quality performance reporting. It has been pleasing to observe both entities and parliamentarians engaging with performance statements findings, seeking to better understand what ‘good’ performance looks like in the context of public service delivery. The ANAO will continue to work with entities through the audit process to seek fair presentation of performance information which is meaningful to the users.

This coming year, the target for performance audit increases to 48, consistent with the Parliament’s expectations. As the number of performance audits completed each year grows, it will be a challenge to ensure that we remain suitably and skilfully resourced. In an employment market where attracting and retaining suitability qualified staff remains difficult, we will continue to assess the most appropriate resourcing approach to delivering our priorities across all audit disciplines.

Major projects report on Defence acquisitions

The 2022–23 Major Projects Report on Defence acquisitions was presented to the Parliament in February 2024. The Auditor-General’s independent assurance report on the 2022–23 Major Projects Report drew attention to the non-publication of information by Defence. Similar to the 2021–22 Major Projects Report, Defence had assessed that some of the details of project performance would or could be reasonably expected to cause damage to the security, defence or international relations of the Commonwealth without sanitisation of the data presented in the report. The major projects report provides a reduced level of transparency and therefore accountability to the Parliament and other stakeholders compared to reporting in 2020–21 and prior years. A continuation or expansion of this approach by the Department of Defence may reduce the value of the ANAO’s work on this important audit engagement and therefore its value to the Parliament — a matter that will continue to be discussed with the JCPAA in the year ahead.

Sharing audit insights

In 2024–25, we plan to more actively engage with the public sector to share the insights we gain from our audit work. We have observed an increasing demand from the public sector for products that translate our audit findings into helpful guidance that can be easily understood and implemented. Supporting the sector to understand who we are, what we do, and what we find through our work is important and recognised in our purpose. It is an area of both opportunity and risk — we need to remain mindful of our independence as the public sector auditor and not stray into the world of consulting. It is a fine line, and one we intend to tread carefully, recognising that we have insight to add to the public sector’s thinking. The ANAO is committed to building and enhancing our capability to convert technical audit findings into valuable resources for the public sector.

Grant Hehir’s contribution to auditing

Finally, I’d like to acknowledge the former Auditor-General for Australia, Mr Grant Hehir, who retired in mid-February 2024. Grant executed his functions and other duties with dignity, respect and independence. His commitment to transparency of public sector performance was a hallmark of his approach. I’m pleased that his vision for the auditing of non-financial performance information, contained in performance statements, has moved forward and the ANAO will continue to bring assurance of this important information to the Parliament into the future. This is the first new audit function for the ANAO since the 1980s when performance auditing was introduced.

Grant had an impact in supporting public auditors in the Pacific in his role as Chair of the Governing Board of PASAI; and through his strong relationships with the Auditor-General in Papua New Guinea and the Chair of the Audit Board of Indonesia, we shared and learned. Likewise, his leadership in the Australasian Council of Auditors-General was regarded as exemplary.

Importantly, Grant also ensured the ANAO never lost sight of its role in supporting the Parliament. This drove his commitment to quality in all that we do. His approach to appearing in the Parliament in a respectful and helpful way is a benchmark for all senior public officials. His leadership within the ANAO was highly regarded and has set a high standard for all of us for the future. The success of the ANAO’s performance for 2023–24 was largely due to his investment in our purpose and capability and sets us up well for the future. On behalf of the ANAO, we thank him for his service through his role as Auditor-General for Australia.

Dr Caralee McLiesh PSM has been appointed as the 16th Auditor-General for Australia. I am looking forward to working with her to continue the important work of the ANAO when her term commences on 4 November 2024.

Rona Mellor PSM
Acting Auditor-General

This part provides an overview of the ANAO’s purpose, role and values, our organisational structure, and our relationships with the Australian 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 entities within the Australian Government sector. It works to improve public sector performance and accountability through independent reporting on Australian Government administration to the Parliament, the executive government and the public.

The Auditor-General Act 1997 establishes the Auditor-General as an independent officer of the Parliament. While the ANAO resides within the Prime Minister and Cabinet portfolio, the normal relationship between ministers and their portfolio agency heads does not apply to the independent work of the Auditor-General and the ANAO.

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 (PGPA Act) 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 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, and any reports made by the committee under the Public Accounts and Audit Committee Act 1951.

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

• auditing the annual financial statements of Commonwealth entities, and Commonwealth companies and their subsidiaries (section 11 of the Act);
• auditing the annual consolidated financial statements in accordance with the PGPA Act (section 12 of the Act);
• auditing annual performance statements of Commonwealth entities in accordance with the PGPA Act (section 15 of the Act);
• conducting performance audits and assurance reviews of Commonwealth entities and Commonwealth companies and their subsidiaries (sections 17 and 18 of the Act);
• conducting a performance audit of a Commonwealth partner (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 its purpose, the ANAO is organised into six functional areas:

• Financial Statements Audit Services Group provides independent assurance on the financial statements and financial administration of all Australian Government entities. It also conducts assurance reviews.
• Performance Audit Services Group conducts performance audits and assurance reviews of Australian Government entities and their activities, and produces performance audit publications, including the annual major projects report on Defence equipment acquisitions, and information reports.
• Performance Statements Audit Services Group conducts audits of Australian Government entities’ annual performance statements and measures.
• Corporate Management Group leads corporate strategy, assurance and operations for the ANAO. It provides enabling services based on specialised knowledge in the areas of finance, human resources, information technology, governance, communications, parliamentary engagement, change management, legal support and the management of the ANAO’s external relations.
• Professional Services Group¹ provides technical accounting, audit advice and support to the Auditor-General; and establishes, manages and monitors the implementation of the quality management and integrity frameworks.
• Systems Assurance and Data Analytics Group provides IT and data analytics support to the ANAO’s full range of audit work.

The ANAO’s organisational structure at 30 June 2024 is shown in Figure 2.1.

Relationships

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

The ANAO’s engagement strategies detail our approach to key relationships with the Parliament, peers in the public sector auditing community, and the public sector.

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 Joint Committee of Public Accounts and Audit (JCPAA). The Auditor-General’s reports assist the Parliament to hold government entities to account 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. The ANAO’s assistance includes the provision of submissions and information, 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

Among its responsibilities, the JCPAA considers the operations and resources of the ANAO, including the ANAO draft budget estimates, about which it makes recommendations to both houses of parliament. The JCPAA is required to review all ANAO reports that are tabled in the Parliament and to report the results of its deliberations to both houses of parliament. The committee’s functions in relation to the ANAO are specified in the Public Accounts and Audit Committee Act 1951. The JCPAA of the 47th Parliament commenced on 26 July 2022.

The JCPAA commenced four inquiries reviewing Auditor-General reports throughout 2023–24 and tabled four reports adopted in 2022–23.² As at 30 June 2024, four inquiries remain in progress. An outline of inquiries and JCPAA reports is provided in Table 2.1.

On 2 September 2020, the JCPAA resolved to undertake a review of the Auditor-General Act 1997. The JCPAA tabled Report 491: Review of the Auditor-General Act 1997 on 31 March 2022. The report included 27 recommendations (six directed to the ANAO) on independence and interaction of the Auditor-General Act 1997 with other legislation. The ANAO provided an implementation update on recommendation no.26 on 4 October 2023. At 30 June 2024, the ANAO has one remaining recommendation to address out of the six recommendations directed to the ANAO.

In 2023–24, ANAO officers provided a total of eight private briefings and attended 19 public hearings to assist the committee in undertaking its functions.

Table 2.1: JCPAA inquiries and reports in 2023–24

National relationships

In addition to its relationship with the Parliament, the ANAO has important relationships 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

Accountable authorities of Australian Government entities have primary responsibility for and control over their entity’s operations. As such, the ANAO’s work focuses on the duties and responsibilities of accountable authorities (including the proper use and/or management of public resources) and the governance frameworks that accountable authorities put in place in their entities. 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’s ongoing relationships with chief financial officers (CFOs), officials responsible for preparing performance statements, and audit committees help the ANAO achieve its purpose to both support accountability and transparency in the Australian Government sector and improve public sector performance. As part of this work, the ANAO conducts forums for CFOs and officials responsible for preparing performance statements, and for audit committee chairs, to share insights on emerging and topical audit issues and requirements affecting Australian Government entities.

In 2023–24, the ANAO hosted the Financial and Performance Reporting Forum (formerly the CFO forum) on two occasions — in July 2023 and December 2023. The forums were attended by approximately 136 and 129 CFOs and entity representatives, respectively. The ANAO presented the forums as webinars, providing the opportunity to share information about issues arising in audits and key focus areas of the audit program, including IT general controls and cybersecurity, and developments in performance statements audits. The ANAO published recordings of the webinars on its website after each live delivery.

Audit committees are a requirement of the PGPA Act and play an important assurance role in entities’ governance frameworks. The ANAO presented forums for audit committee chairs in person and virtually in July 2023 and December 2023. The forums were attended by 57 and 63 audit committee chairs, respectively. The forums provided 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. The ANAO published a communiqué on its website after each forum.

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 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, contributing to submissions to standard-setting bodies, undertaking annual benchmarking and client surveys, and conducting peer reviews.

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 (CA ANZ). Ms Carla Jago, acting Deputy Auditor-General, is a member of CA ANZ’s ACT Regional Council as well as a member of the CA ANZ 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 provides input 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 engages with international auditing organisations and associations to maintain its capability in contemporary audit practices, and actively seeks opportunities to collaborate and share information with the international auditing community. The ANAO participates in peer-to-peer forums that facilitate international public auditing dialogue and align with the strategic objectives and key focus areas set out in the ANAO’s strategic planning framework. The ANAO has established bilateral capacity-building partnerships with Indonesia and Papua New Guinea under Australia’s international development program.

Engagement with international audit institutions

The supreme audit institution (SAI) is the highest public sector auditing function of the state or supranational organisation. Engagement with other SAIs allows the ANAO to participate in international dialogue on best-practice public administration and developments in public sector auditing. The ANAO responds to requests from SAIs directly, including by hosting and presenting to visiting delegations, providing information and participating in surveys. The ANAO’s international peer engagements also enable the ANAO’s commitment to being a learning organisation and provides the opportunity for the ANAO to learn about the work of other audit offices, discuss common challenges, and gain a deeper understanding of international best practice. International engagements are aligned with the ANAO’s strategic interests and developments in the Australian public sector, such as environmental auditing and IT and data practices.

In 2023–24, in-person engagements returned to pre-COVID-19 levels and many international events were delivered in a face-to-face format only. Virtual engagements also continued throughout the year.

The ANAO is a member of the International Organization of Supreme Audit Institutions (INTOSAI). INTOSAI’s mission is to support its members in contributing effectively to the accountability of the public sector, promoting public transparency and good governance, and fostering economical, effective and efficient government programs for the benefit of all.

The ANAO is a member of the three INTOSAI working groups and one subcommittee:

• the Working Group on IT Audit;
• the Working Group on Environmental Auditing;
• the Working Group on Impact of Science and Technology on Auditing; and
• the Performance Audit Subcommittee.

The ANAO has a representative member on the Forum for INTOSAI Professional Pronouncements (FIPP). The FIPP aims to support professional development by ensuring that INTOSAI provides a clear and consistent set of professional audit standards. The FIPP achieves this by reviewing and monitoring INTOSAI’s framework of professional pronouncements. In 2023–24, Ms Jane Meade, Group Executive Director, Professional Services Group, continued to be a member of the forum.

The ANAO participates in annual conferences and virtual meetings for each of these working groups and the Performance Audit Subcommittee.

The ANAO also routinely 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 2023–24, the Auditor-General and ANAO officials participated in several international engagements to discuss contemporary audit practices and specific areas of development in public sector audit, as listed below.

International Organization of Supreme Audit Institutions

• 32nd annual meeting of the Working Group on IT Audit in the United Arab Emirates in October 2023, attended by one ANAO official;
• Forum for INTOSAI Professional Pronouncements in Austria in November 2023, attended by one ANAO official, and virtual meetings attended by one ANAO official in September 2023, January 2024, March 2024, May 2024 and June 2024;
• International training on Sustainable Development Goals auditing with a focus on the energy transition as a part of the green economy, a collaborative initiative of the Audit Board of the Republic of Indonesia and INTOSAI’s Working Group on Environmental Auditing, in Indonesia in November–December 2023, attended by two ANAO officials;
• 22nd assembly of the Working Group on Environmental Auditing in Finland in January 2024, attended by one ANAO official;
• 15th annual meeting of the Performance Audit Subcommittee in Georgia in March 2024, attended by one ANAO official;
• Meeting to discuss the Working Group on Environmental Auditing’s ClimateScanner project, an initiative that aims to develop and disseminate a rapid review method and tool for assessing government action on climate change, in Fiji in June 2024, attended by one ANAO official; and
• Virtual participation by two ANAO officials in meetings of the Task Force on INTOSAI Auditor Professionalisation.

Pacific Association of Supreme Audit Institutions

• 14th Annual General Meeting (virtual) in September 2023, attended by the Deputy Auditor-General;
• Governance and Leadership Women Symposium in Samoa in February 2024, attended by one ANAO official;
• 25th Congress hosted by Cook Islands in May 2024, attended by the Acting Deputy Auditor-General and one other ANAO official; and
• IntoSAINT (INTOSAI Self-Assessment of Integrity) assessment of the Office of the Auditor-General of Fiji in June 2024, attended by one ANAO official.

Asian Organization of Supreme Audit Institutions

• International seminar on ‘How to meet the public expectation on supreme audit institutions’ in Indonesia in December 2023, attended by one ANAO official; and
• Participation in a meeting of the 13th ASOSAI research project on ‘Remote audit for supreme audit institutions: Future and challenges’, in collaboration with the Audit Board of the Republic of Indonesia as project leader, attended by one ANAO official.

Other forums

• 18th Joint Strike Fighter Supreme Audit Institution Conference in Denmark in October 2023, attended by one ANAO official; and
• Meeting of the MIKTA (Mexico, Indonesia, Republic of Korea, Türkiye and Australia) supreme audit institution group in Korea in May 2024, attended by one ANAO official.

Australia’s international development program

The ANAO, through a partnership agreement with the Department of Foreign Affairs and Trade, is participating in Australia’s international development 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 organisations. The partnership supports the Australian Government’s sectoral development initiative to build effective governance institutions and strengthen institutional relationships.

Australia–Indonesia Partnership for Economic Development (Prospera)

The ANAO’s activities under the Australia–Indonesia Partnership for Economic Development (Prospera) with the Audit Board of the Republic of Indonesia (Badan Pemeriksa Keuangan — BPK) continue to support BPK’s efforts to strengthen its audit functions. The program is aligned with the BPK’s strategic plan objectives of delivering beneficial and high-quality audits and has been pivotal in facilitating knowledge exchange between the ANAO and BPK. The key focus areas of the 2023–24 work program were on performance and financial audit management, quality assurance systems and processes, and strategic leadership and organisational development to support audit management and capability. Recognising the maturity of the partnership, in addition to supporting the development of audit and organisational capability, the ANAO engaged with BPK on topics of mutual interest and benefit to both offices. A new area of engagement in 2023–24 was on auditing performance information.

A mix of in-person and virtual delivery methods continued throughout 2023–24, to maintain broader outreach and engagement, supported by the deployed ANAO officer. The deployed officer, whose term was extended for a further 12 months to August 2025, continued to play a critical role in meeting program objectives.

The ANAO, in partnership with BPK, delivered 16 of the 17 planned activities for 2023–24. Following the resignation of Mr Grant Hehir as Auditor-General in February 2024, the planned senior management dialogue has been deferred until 2024–25. During the reporting period, the ANAO hosted nine secondees from BPK for various activities under the Prospera program, with a focus on technical knowledge transfer and training. These activities strengthened the relationship between the two organisations and deepened opportunities for two-way learning.

Papua New Guinea Institutional Partnerships Program

The Papua New Guinea (PNG) Institutional Partnerships Program supports the development of long-term institutional relationships between Australian and PNG government entities. The ANAO’s activities under the program support the efforts of the PNG Auditor-General’s Office (PNG AGO) to strengthen the management of its audit functions, in line with the objectives set out in the PNG AGO’s Strategic Plan 2022–2027. The focus areas of the 2023–24 work program were management of institutional linkages, quality assurance, performance audit, information technology audit support, governance frameworks, and organisational capacity development.

In 2022–23, the ANAO’s financial statements audit and compliance adviser to the PNG AGO completed their deployment and returned to Australia. A new adviser commenced in September 2023 to continue the support provided to the PNG AGO through this role. Both the senior adviser and financial and compliance audit adviser have continued to play a critical role in the delivery of program objectives.

The ANAO, in partnership with the PNG AGO, delivered 11 of the 12 planned activities for 2023–24 across three streams: supporting organisational development; supporting individual development and leadership capabilities; and technical audit support and training. A planned high-level visit to support the PNG AGO to host its first meeting of the Australasian Council of Auditors-General did not proceed as planned in May 2024 and was deferred to October 2024. The funds for this activity supported a visit of three senior ANAO officials to the PNG AGO to provide leadership on financial statements audit and corporate functions.

Annual performance statements

As the accountable authority of the Australian National Audit Office (ANAO), I present the 2023–24 annual performance statements as required under subsection 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.

Rona Mellor PSM
Acting Auditor-General
9 August 2024

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 (effectiveness/or 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. This work provides transparency and holds executive government to account by supporting the consideration and scrutiny by Parliament.

The ANAO performance framework also includes measures relating to quality and efficiency. The quality and efficiency measures are intended to demonstrate efficient use of taxpayer resources and a commitment to quality in our work.

The effectiveness and impact measures provide information on entities’ implementation of audit findings and recommendations, and the extent to which the Parliament’s engagement with our work leads to improvements in public sector administration.

Corporate plan and portfolio budget statements

The ANAO measures its performance against its purpose using a range of performance measures, which are outlined in the Portfolio Budget Statements 2023–24 and the ANAO’s Corporate Plan 2023–24.

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 2023–24, 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:

• Program 1.1: Financial Statements Audit Services;
• Program 1.2: Performance Audit Services;
• Program 1.3: Performance Statements Audit Services; and
• Shared performance criteria for Programs 1.1, 1.2 and 1.3.

The ANAO’s outcome and programs framework for 2023–24 is shown in Table 3.1.

Table 3.1: ANAO’s outcome and programs framework for 2023–24

Analysis of performance against our purpose

Overall, in 2023–24, the ANAO achieved 12 performance measures out of 17, an increase in the number of performance outcomes achieved in 2022–23:

• For Program 1.1: Financial Statements Audit Services, two out of five measures were met.
• For Program 1.2: Performance Audit Services, four out of four measures were met.
• For Program 1.3: Performance Statements Audit Services, four out of five measures were met.
• For relationships, corporate and professional services, two out of three measures were met.

The ANAO carried out its annual audit work program for 2023–24, having regard to the priorities and interests 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; followed up on past recommendations; identified trends for improvement or declines in performance across the public sector; and applied all of the Auditor-General’s mandate.

The ANAO Corporate Plan 2023–24 was updated on 26 March 2024 to reflect the following changes:

• organisational structure changes — changed ‘Professional Services and Relationships Group’ to ‘Professional Services Group’
• Measure 3 — change type from ‘Efficiency / Qualitative’ to ‘Efficiency / Quantitative’
• Measure 15, reporting mechanism 4 — replaced text to reflect updated JCPAA feedback process
• Measure 16, reporting mechanism 3 — replaced references to ‘insights’ with ‘lessons’

The following sections provide more detailed analysis of the ANAO’s performance results for Program 1.1: Financial Statements Audit Services, Program 1.2: Performance Audit Services, Program 1.3: Performance Statements Audit Services and ANAO-wide activities relating to relationships and corporate and professional services.

Performance results for Program 1.1: Financial Statements 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. The preparation of timely and accurate audited financial statements is 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 and present fairly the financial performance of the entity. 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 Report on Key Financial Controls of Major 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.

Performance measures

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

• number of mandated financial statements audit reports issued;
• percentage of mandated financial statements audit reports issued in time to meet entity annual reporting timeframes;
• average cost of a financial statements audit;
• percentage of moderate or significant findings from mandated financial statements audit reports agreed to by audited entities; and
• percentage of moderate or significant findings that are addressed by mandated audited entities within 24 months of reporting.

The number of financial statements auditor’s reports issued is a key measure of the ANAO’s core business in achieving its purpose. Under the Auditor-General Act 1997, the Auditor-General’s functions include the mandatory auditing of the annual financial statements of Commonwealth entities, Commonwealth companies and their subsidiaries, and the consolidated financial statements. This measure reports on the number of those reports issued.

During 2023–24, the ANAO completed all of the 245 mandated financial statements audits for the year ended 30 June 2024. This included the consolidated financial statements of the Australian Government. While all 245 mandated financial statements audits were completed, this measure shows as not met due to the original measure specifying a target of 247 mandated financial statements audits. This number was set prior to changes as a result of machinery of government changes and movements in the number of corporate entities. The ANAO plans to revise the measure in the 2024–25 corporate plan to reflect a percentage rather than a number to better represent the completion of mandated audits.

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 for the financial statements with 30 June year end, 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. The ANAO reported in the end of year report that 72 per cent of entities delivered financial statements in line with an agreed timetable.

Delivering cost-effective audits is one way the ANAO can demonstrate the efficient use of taxpayer resources in our work. This measure captures the average cost of delivering mandated financial statements audits and allows comparison over time.

Increases in cost are attributed to:

• increased fees charged by contracted firms for audit work;
• additional work as a result of the changes to ASA 315 Identifying and Assessing the Risks of Material Misstatement;
• additional work on entity audits where there are large numbers of findings; and
• machinery of government changes related to the creation of new entities.

These increases have been partially offset by reductions in audit fees on entities where efficiencies in the audit have been found.

Table 3.2: Cost of financial statements audit reports, 2020–21 to 2022–23

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

The ANAO provides 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.³ Lower risk issues are also reported individually to each entity, and in aggregate in the ANAO’s reports to the Parliament.

A total of 196 findings (prior year: 205) were reported to entities as open as a result of the 2022–23 financial statements audits at the time of the end of year report. There are currently 195 open findings that have been agreed to by entities. These comprised nine significant (prior year: 5), 36 moderate (prior year: 35), 137 minor (prior year: 144) and 14 legislative findings (prior year: 21). The highest number of findings are in the categories of governance of legal and other matters impacting entity financial statements; IT governance including security, change management and user access; and accounting for and management of non-financial assets.

One moderate finding was disagreed.

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 addressed by entities in order to measure the impact that the ANAO’s audit work has on public administration. This measure captures findings (moderate and significant) that are addressed by audited material entities within 24 months, resulting in improvements to the public sector control environment. ‘Addressed’ means that the entity has responded to and actioned the audit finding. The ANAO reviews all findings during the interim and/or final phases of the annual financial statements audit process. The ANAO reports on entities’ actions in response to findings in the Interim Report on Key Financial Controls of Major Entities and in an end-of-year report on the final results of the financial statements audits.

Audit findings are reported to entities at the conclusion of each year’s financial statements audit. To determine whether these findings have been addressed by entities within 24 months of reporting, a full 24-month period is required from the audit cycle when the findings were raised. The audit cycle generally runs from October to September. Therefore, this performance measure for 2023–24 considers whether the audit findings in the 2020–21 audit cycle had been addressed by mandated entities within 24 months of reporting, which was up to the conclusion of the 2022–23 audit cycle.

During the 2020–21 audit cycle there were two significant and 19 moderate findings raised, of these 18 (two significant and 16 moderate) had been addressed by the conclusion of the 2022–23 audit cycle.

Performance results for Program 1.2: Performance Audit Services

The Auditor-General’s functions or powers include conducting performance audits and assurance reviews (including the Defence Major Projects Report) of Commonwealth entities and Commonwealth companies and their subsidiaries. The ANAO’s performance audit reports are tabled in the Parliament of Australia to support accountability and transparency and thereby contribute to improved public sector performance. Performance audit reports provide independent reporting that supports the Parliament to scrutinise the operations of executive government and the proper use of resources as required under the Public Governance, Performance and Accountability Act 2013, the Public Service Act 1999 and any enabling legislation. The ANAO conducts performance audits in accordance with the ANAO Auditing Standards.

Performance measures

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

• number of performance audits presented to the Parliament;
• 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 2023–24, the Auditor-General tabled 45 performance audit reports in the Parliament (Table 3.3) against a target of 45 performance audit reports.

In addition to the 45 performance audits tabled in the Parliament, the ANAO tabled Auditor-General Report No. 14 2023–24 2022–23 Major Projects Report in February 2024. The Major Projects Report is an annual priority assurance review of the Department of Defence’s (Defence’s) major defence equipment acquisitions, undertaken under the Auditor-General Act 1997 at the request of the Parliament’s Joint Committee of Public Accounts and Audit (JCPAA). Its purpose is to provide information and assurance to the Parliament on the performance of selected acquisitions. The review includes information relating to the cost, schedule and progress towards delivery of required capability of individual projects as at 30 June each year.

Table 3.3: Number of performance audit reports, 2016–17 to 2023–24

The average cost of audits delivered in 2023–24 decreased compared to audits delivered in 2022–23 (Table 3.4). The decrease in the average cost was primarily due to the completion of multiple audits on some large topics instead of conducting one larger audit on the topic and conducting six audits in a series. Audits conducted in a series benefit from adopting standard methodologies and test programs, applied across a range of entities, resulting a lower average cost and shorter audit durations. Four audits examined compliance with corporate credit card requirements and two audits examined compliance with gifts, benefits and hospitality requirements. The average cost across these six audits was $315,541.

Table 3.4: Cost of performance audit reports, 2017–18 to 2023–24

Note: 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 the Parliament in its role in holding entities to account for their use of public money, and to seek to improve public administration. 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 3.5 provides a breakdown of audited entities’ responses to the ANAO’s recommendations against the total number of recommendations made. Only recommendations that were agreed without qualification are included as ‘agreed’ recommendations in the result for this measure, unless the qualification did not contradict the overall recommendation.

In 2023–24, 253 recommendations were counted as ‘agreed’ (this includes 13 recommendations that were agreed with qualification and assessed to be ‘agreed’), and two recommendations were not agreed.

Table 3.5: Agreement to recommendations in performance audit reports, 2017–18 to 2023–24

Note a: The percentages for 2021–22, 2018–19 do not total 100 per cent due to rounding.

The ANAO seeks advice annually from all relevant entities on progress in implementing audit recommendations over a two-year implementation period. The ANAO also 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 self-reported data for audit recommendations made in 2021–22 suggests that entities are implementing ANAO recommendations largely within 24 months of the recommendation being agreed (Table 3.6). For those recommendations that have not yet been implemented, the majority of entities have advised that work is underway.

This measure is based on entity self-reporting on implementation of recommendations. The ANAO has undertaken a series of performance audits on entities’ implementation of parliamentary and ANAO recommendations.⁴ These audits have shown that some entities have reported ANAO recommendations as being implemented when the evidence has shown that they have not actually been implemented. These performance audits of the implementation of recommendations do not cover all entities and the results may not be representative of the whole population. The audits undertaken to date in this series have identified that 18 per cent of recommendations that entities had reported as implemented were assessed by the ANAO as not implemented.

Table 3.6: Percentage of performance audit recommendations implemented within 24 months

Note a: The percentages for 2019–20 and 2021–22 do not total 100 per cent due to rounding.

Performance results for Program 1.3: Performance Statements Audit Services

Section 39 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) requires the accountable authority of a Commonwealth entity to prepare annual performance statements that provide information about the entity’s performance in achieving its purposes and include a copy of the statements in the entity’s annual report. Section 40 of the PGPA Act provides that the responsible Minister for a Commonwealth entity or the Finance Minister may request the Auditor-General to examine and report on the entity’s annual performance statements.

On 16 January 2023, the Finance Minister requested that the Auditor-General undertake assurance audits of 10 entities’ 2022–23 performance statements under section 40 of the PGPA Act. The Auditor-General conducted the ten audits under section 15 of the Auditor-General Act 1997.

Performance statements audit services contribute to the ANAO achieving its purpose. 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.

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

• number of performance statements audit reports issued;
• percentage of performance statements audit reports issued in time to meet entity annual reporting timeframes;
• average cost of a performance statements audit;
• percentage of moderate or significant findings, and recommendations, from performance statements audit reports agreed to by audited entities; and
• percentage of agreed moderate or significant findings that are addressed by audited entities within 24 months of reporting.

In 2023–24, the ANAO reports on audits of performance statements from the 2022–23 audit cycle, as audits began in the 2022–23 financial year.

In 2023–24 the ANAO completed ten audits of entity 2022–23 performance statements as part of the annual performance statements audit program. The ANAO audited the performance statements of the Attorney-General’s Department (AGD), the Department of Social Services (DSS), the Department of Veterans’ Affairs (DVA), the Department of Agriculture, Fisheries and Forestry (DAFF), the Department of Education, the Department of the Treasury (the Treasury), the Department of Industry, Science and Resources (DISR), the Department of Health and Aged Care (Health), Services Australia and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA).

The Minister for Finance tabled all ten audit reports in the Senate in November 2023 and January 2024. These are available at finance.gov.au/publications/reports.

Details of the learnings identified during the 2022–23 performance statements audit cycle are included in Auditor-General Report No. 16 2023–24 Audits of the Annual Performance Statements of Australian Government Entities — 2022–23. The report was tabled in Parliament on 12 February 2024.

The ANAO aims to issue performance statements audit reports within three months of the end of the financial year. The issue of timely audit reports supports entities to include audited annual performance statements in their annual reports to the Parliament.

Eight audit reports were issued within the three months of the end of the financial year, producing a result of 80.00 per cent. Reports for the remaining two entities (DSS and Health) were issued outside this timeframe.

Achievement of this measure relies on entities providing the ANAO with auditable and signed annual performance statements within the required timeframe. There were delays experienced by the ANAO in receiving auditable statements from Health and signed statements from DSS that contributed to the late issue of the audit reports for those two entities.

The average cost of performance statements audits for the 2022–23 audit cycle is calculated by comparing the average cost of the 2022–23 audits with the average cost of the 2021–22 audits.

The average cost of audits for the 2021–22 audit cycle was $656,649, for six audits. The average cost of audits for the 2022–23 audit cycle was $539,253, for ten audits, representing a 17.87 per cent decrease from the previous audit cycle (Table 3.7).

Factors that contributed to the reduction in the average cost of an audit in the 2022–23 audit cycle included:

• Six of the ten audits were repeat audits, with two of them having been conducted for the fourth time in 2022–23. Audit teams are more familiar with the already audited entities and their corporate plans and measures. This results in less time required to understand the entity and plan the audit where there are not material changes to the corporate plan from the prior year, improving efficiency and resulting in less hours spent on the audit.
• More established methodology — while the performance statements audit program is in its infancy and the methodology is still being refined, it is more established than in previous years, allowing staff to implement it more efficiently.
• More experienced staff — the ANAO has been working on a Learning and Development program to upskill staff in performance statements auditing, resulting in a better understanding of the audit process. In addition, many staff had already completed a full audit cycle prior to the 2022–23 audit cycle, resulting in more experience across the audit teams and familiarisation with the process.

Table 3.7: Average cost of performance statements audits — 2020–21 to 2022-23

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

2023–24 is the second year the ANAO implemented this performance measure. As such, targets and results for years prior to 2021–22 are not included.

The ANAO provides entities with audit findings and recommendations based on observations during the conduct of performance statements audits. These findings and recommendations are aimed at assisting entities to improve their performance reporting, internal controls, and business processes. Entities are more likely to fully address findings and implement recommendations that are agreed to without qualification. Significant or moderate findings are Category A or B findings.⁵

Audit findings and recommendations are reported to the accountable authority and copied to the chair of the audit committee 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.

In the 2022–23 performance statements audit cycle, 29 moderate or significant findings were reported across the ten audits. Of the findings, 28 were agreed to (without qualification) by entities and one was not agreed, resulting in 96.55 per cent of findings agreed to.

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

To measure the impact that the ANAO’s audit work has on public administration, the ANAO measures the percentage of agreed moderate or significant findings that are addressed by audited entities. This measure captures findings (moderate or significant) that are addressed by audited entities within 24 months, resulting in improvements to the public sector control environment. ‘Addressed’ means that the entity has responded to and actioned the audit finding. The ANAO reviews all findings during the interim and/or final phases of the annual performance statements audit process.

Audit findings are reported to entities at the conclusion of each year’s performance statements audit. In order to determine whether these findings have been addressed by entities within 24 months of reporting, a full 24-month period is required from the audit cycle when the findings were raised. The audit cycle generally runs from October to September. Therefore, this performance measure for 2023–24 considers whether the audit findings from the 2020–21 audit cycle had been addressed by entities within 24 months of reporting which was up to the conclusion of the 2022–23 audit cycle.

For 2023–24, only AGD, DSS and DVA were included in the result of this measure, as they are the only entities that had undergone an audit in 2020–21.

Nine moderate or significant findings were agreed to by entities at the conclusion of the 2020–21 audit cycle with seven of those findings addressed in the 24-month period across the three audits.

Shared performance criteria for Programs 1.1, 1.2 and 1.3: The ANAO supports the Australian Government sector to improve public sector performance

A number of performance measures are shared across the ANAO. 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 our support of the Australian Government to improve public sector performance.

The ANAO also evaluates whether the independent quality assurance program indicates that audit conclusions are appropriately supported by evidence.

The ANAO has identified four reporting mechanisms (with defined targets) to assess the level of support provided to the Parliament. The ANAO considers that the mechanisms identified are a reasonably complete and appropriate set of mechanisms to assess the overall measure.

For 2023–24, four of the four reporting mechanisms for Measure 15 have been met. Therefore, Measure 15 has been met overall.

Reporting mechanism 1 — Appearances for private briefings and public hearings undertaken at the request of parliamentary committees

In 2023–24, the ANAO attended nine private briefings, 24 public hearings and one classified hearing. All appearances followed requests from parliamentary committees. The total number of appearances remains consistent with prior reporting cycles with the total of 34 appearances in 2023–24 being equal the total appearances in 2022–23.

The ANAO’s key stakeholder is the JCPAA. The JCPAA commenced four inquiries into ANAO reports in 2023–24 and the ANAO attended 19 public hearings and eight private briefings with the JCPAA.

All private briefings provided by the ANAO to parliamentary committees are published on the ANAO website as they occur. Annexure A outlines all public hearings and private briefings requested by parliamentary committees attended by the ANAO.

Reporting mechanism 2 — Private briefings undertaken at the request of parliamentarians

In 2023–24, the ANAO provided 27 of 27 private briefings requested by parliamentarians. The total number of briefings provided in 2023–24 is lower than the 43 briefings provided in 2022–23. The highest number of briefings in 2022-23 is attributed to the commencement of the 47th Parliament on 26 July 2022.

Of the 27 briefings, 23 were in relation to specific audit reports, one was in relation to departmental portfolio matters, one was in relation to the general function of the ANAO, and two were in relation to the ANAO’s support of the JCPAA.

Summary level information of private briefings provided by the ANAO to parliamentarians and parliamentary committees are published on the ANAO website as they occur. Annexure A outlines all private briefings requested by parliamentarians attended by the ANAO.

Reporting mechanism 3 — Response to audit request from parliamentarians

In determining the ANAO’s audit work program, the Auditor-General must have regard to the audit priorities of the Parliament, as determined by the JCPAA. Formal consultation with the JCPAA about the audit priorities of the Parliament occurs between February and May each year to inform the development of the ANAO’s annual audit work program. The ANAO provided the draft work program for 2024–25 to the JCPAA in February 2024. The final work program was published on 8 July 2024.

Throughout the year, the Auditor-General also receives direct requests from members of parliament for audits of particular areas of public administration. 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, and through correspondence or inclusion in future work programs.

In 2023–24, the Auditor-General received eight requests for audit⁶ from members of parliament. A response to 100 per cent of requests was provided within 28 days. This is equal to the total number of requests for audit received in 2022–23.

Annexure A outlines the ANAO’s responses to these requests.

Reporting mechanism 4 — Feedback from the Joint Committee of Public Accounts and Audit

The process for gathering feedback from the JCPAA has changed for 2023–24. This follows a decision to discontinue the previously used survey method due to low participation rates.

The new process involves a letter from the Auditor-General to the JCPAA outlining the services provided by ANAO to the JCPAA and the Parliament in the financial year. The letter requests the JCPAA provide feedback on a several statements about the ANAO’s performance.

For 2023–24, the JCPAA agreed with all statements presented, stating: ‘The Committee agrees that all of the requirements indicated by these statements have been met and thanks the ANAO for its excellent performance once again in 2023–24’.

The ANAO supports the work of the Australian Government by producing reports and products that provide insight into public sector performance (based on the findings within our audit programs) and understand areas for improvement in performance.

For 2023–24, four of the five reporting mechanisms for measure 16 have been met and one reporting mechanism has not been met. Therefore, measure 16 has not been met.

Reporting mechanism 1 — ANAO financial and performance statements audit work presented to the Parliament

In 2023–24, the ANAO tabled three reports in the Parliament on its financial and performance statements audit work. In relation to its financial statements audit work, the Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2023 was tabled on 14 December 2023 and the Interim Report on Key Financial Controls of Major Entities was tabled on 20 June 2024. In relation to its performance statements audit work, the Audits of the Annual Performance Statements of Australian Government Entities – 2022–23 was tabled on 12 February 2024.

All reports presented to the Parliament are published on the ANAO website.

Reporting mechanism 2 — Assurance audits by arrangement

In 2023–24, the ANAO agreed to undertake 51 audits or reviews conducted under section 20 of the Auditor-General Act 1997 and completed 50 of those audits or reviews. They include financial statements audits and audits or reviews of compliance with legislative requirements. The ANAO did not complete the audit of Norfolk Island Health and Residential Aged Care Services.⁷

Reporting mechanism 3 — Audit Insights

The ANAO’s Insights (formerly Audit Insights) products include Audit Lessons, Audit Practice and Audit Opinion. Audit lessons provide information on shared learnings for all Commonwealth entities as identified through financial statements audits, performance audits and performance statements audits. All ANAO performance audit reports contain key messages for all Australian Government entities. In 2023–24, the ANAO met its target of publishing four Audit Lessons, publishing the following reports in the period:

• Probity Management: Lessons from Audits of Financial Regulators;
• Risk Management;
• Management of ICT System Access: Separating Personnel; and
• Grants Administration

Reporting mechanism 4 — Observed improvements in entities processes during an audit

Improvements in administrative and management practices usually occur in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

Of the 45 performance audit reports tabled in 2023–24, 40 (89 per cent) included observed improvements made by entities during the audit process. This is 19 per cent above the target measure of 70 per cent and is slightly above the 2022–23 result of 87.5 per cent.

Improvements occurred in the key areas of governance, risk management, administrative processes, and performance reporting and monitoring. Improvements observed by the ANAO are outlined in appendix 2 of ANAO’s performance audit reports.

Reporting mechanism 5 — Entity feedback on the impact of audits

In 2023–24, the ANAO engaged a research firm, ORIMA Research, to conduct two independent surveys on the ANAO’s financial statements audits (FS audits) and performance audits to obtain audit entity feedback on the impact of audits. The surveys rate entity perceptions of audit value on selected questions relating to the value of ANAO services on improving entity performance and provide a score in index points.

The FS audits survey covered the 2022–23 financial year reporting and audit cycle and results were based on the percentage of respondents agreeing or strongly agreeing to the following three statements:

• We value the assurance we obtain from the audit of statutory financial statements.
• The policy and technical advice provided by the ANAO is valued by our organisation.
• We value the ANAO’s recommendations to improve the financial management and internal controls of our organisation.

Overall, the FS audits survey had a response rate of 65 per cent which is consistent with the response rate of 65 per cent in 2022. The FS audits survey achieved a result of 93 per cent agreeing they value the work of the ANAO. This represented a decrease from 94 per cent from the prior year.

The performance audits survey covered performance audits tabled in Q4 2022–23 and Q1–Q3 2023–24 and results were based on the percentage of respondents agreeing or strongly agreeing to the following four statements:

• The audit made a valuable contribution by providing our organisation with a sense of assurance regarding the administration of the audited activity.
• The audit will help us improve the performance of the audited activity.
• The entity benefits from good practice lessons, and related issues, raised in other ANAO performance audit reports.
• I value the independent opinion expressed by the ANAO.

Overall, the performance audits survey had a response rate of 59 per cent which is 9 per cent lower than the response rate from the prior year. The performance audits survey achieved a result of 89 per cent, representing an increase from 81 per cent in the prior year.⁸

The performance audits survey also asked entities to rate the overall value of ANAO’s performance audit services. Overall, 82 per cent of survey respondents agreed that they value performance audit services, compared to 75 per cent in the prior year.

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 Measure 17.

A key element of the ANAO’s quality management framework is monitoring of compliance with the policies and procedures that comprise the system of quality management. This aims to provide the Auditor-General with reasonable 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. The ANAO’s independent Quality Assurance Program 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 Group, which reports to the Executive Board of Management.

In 2023–24 the annual quality assurance program included:

• annual quality assurance reviews of completed audits covering all of the ANAO’s functions (nine financial statements audits, four performance audits and one performance statements audit).
• real-time quality reviews of three in-progress financial statements audits and one performance statements audit;
• biennial external peer reviews performed by the New Zealand Office of the Auditor-General of two performance audits completed by the ANAO;
• external review conducted by the Australian Securities and Investments Commission (ASIC) of two financial statement audits completed by the ANAO; and
• an annual internal audit of compliance with selected requirements of the ANAO Audit Manual.

In 2023–24, a significant finding was identified in the one of the completed financial statements audit files reviewed. The audit file did not contain sufficient appropriate audit evidence to support the conclusion issued. The significant finding related to the sufficiency of audit work performed over the annual and long service provisions and the cash flow statement. In the ASIC review of one completed financial statement audit a ‘negative finding – risk of material misstatement’ was identified. The negative finding related to the extent of audit work performed over intangible assets under construction. The ANAO assessed this finding to be significant as the audit file did not contain sufficient appropriate audit evident to support the conclusion issued.

Remediation procedures were completed in the two financial statements audits to determine that the audit conclusions were appropriate despite the significant findings identified. The remediation procedures included reperforming audit testing over expanded samples. Following review of the remediated audit procedures and the results of the work performed, the ANAO is satisfied that all audit conclusions subject to monitoring were appropriate in the circumstances.

Identified deficiencies and good practice recommendations identified in all internal and external reviews are addressed by ANAO follow-up actions. The ANAO Quality Committee is responsible for monitoring the ANAO’s progress in addressing the findings and recommendations arising from the monitoring programs. Reports on quality risks resulting from the quality assurance reviews are provided to the ANAO’s Audit Committee for consideration of proposed mitigations and actions.

Further results on the ANAO’s quality assurance program and monitoring activities are reported in the ANAO Quality Report 2023–24, including the results of root cause analysis and the identified areas for improvement.

Annexure A

Table 3A.1: ANAO appearances for private briefings and public hearings at the request of parliamentary committees in 2023–24 (Measure 15 – Mechanism 1)

Table 3A.2: Number of private briefings undertaken at the request of parliamentarians in 2023–24 (Measure 15 – Mechanism 2)

Table 3A.3: Parliamentary requests for audit, 2023–24 (Measure 15 – Mechanism 3)

Note a: The audit into 2022–23 Aids to Navigation Maintenance Procurement was tabled 3 June 2024.

Note b: The audit into the Administration of the Future Fit Program commenced June 2024 and is due to table February 2025.

Note: Parliamentarians are advised on the outcome of the request when the annual audit work program is released.

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 loss of $6.039 million ($4.533 million after changes in asset revaluation reserve) in 2023–24. Excluding the impact of depreciation and adjusting for leasing arrangements, the ANAO’s result for the 2023–24 financial year was an operating deficit of $4.283 million (Figure 3.1).

As part of the Federal Budget 2023–24, additional funding of $14.4 million over four years was provided to the ANAO to support its delivery of the audit program, compliance with updated auditing standards, and to ensure that the ANAO can safeguard data.

The ANAO sought approval from the Minister for Finance for an operating loss for the 2023–24 financial year to meet employee and supplier pressures. Prior-year appropriation reserves were used to fund the approved operating loss. Employee benefit overspends were due to an increase in the average staffing level (ASL) in the second half of the year to ensure the audit work program was delivered. Supplier overspends were related to staff related expenses and IT expenses, including recruitment, internet and data and software licenses in line with the with ANAO’s increase in ASL. The ANAO also used specialised audit contractors to supplement audit teams. In 2023–24, the ANAO continued to utilise prior-year appropriations to fund strategic projects to build IT and people capabilities. Increasing the ANAO’s in-house skills and capability remains a priority.

Figure 3.1: Operating result, excluding depreciation and amortisation, 2017−18 to 2023−24

Expense impacts

In 2023–24, the ANAO spent 60 per cent of its budget on employee-related expenses and 22 per cent on contractors and consultants. The ANAO uses private sector firms, under the supervision of senior staff at the ANAO, to undertake audits of entities within and outside of Canberra. 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 2023–24, contractors and consultants for non-audit services were also engaged to provide the ANAO with the right technical expertise to deliver its IT and human resource projects. The ANAO also outsources information technology to a managed service provider. Total IT costs, including the managed service provider contract, made up 8 per cent of the ANAO’s expenses in 2023–24.

The ANAO’s total expenses for 2023–24 were $104.074 million, compared to $95.031 million in 2022–23, an increase of $9.043 million (Figure 3.2).

Figure 3.2 Total expenses by category, 2023–24

Financial position

The ANAO’s overall financial position continued to remain sound in 2023–24 (Table 3.8):

• total assets reduced as at 30 June 2024 to $64.557 million; and
• total liabilities reduced to $53.691 million.

The majority of the ANAO’s assets are financial assets, with the largest balance being appropriation receivable ($23.911 million). The ANAO’s appropriation receivable has decreased by $4.779 million from 2022–23, reflecting the operating loss and expenditure on strategic projects.

The majority of the ANAO’s liabilities are comprised of leases ($31.949 million) and employee provisions ($16.184 million).

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

Table 3.8: Summary of financial performance, 2022−23 and 2023−24

Note: The ANAO’s operating result was a deficit of $4.283 million in 2023–24, excluding depreciation and amortisation and adjustments for leases.

Revenue impacts

Government revenue from departmental and special appropriations was $92.224 million in 2023–24, an increase of $8.043 million from 2022–23.

Own-source revenue in 2023–24 was $5.811 million, a decrease of $0.738 million compared to 2022–23. The decrease was in rendering of other services and international development funding.

Entity resource statement

The entity resource statement provides additional information about the various funding sources that the ANAO may draw on during the year. Appendix B details the resources available to the ANAO during 2023–24 and sets out the ANAO’s summary of total expenses for Outcome 1.

Financial statements

• Independent Auditor’s Report
• Statement by the Auditor-General (Acting) and the Chief Finance Officer
• Statement of Comprehensive Income
• Statement of Financial Position
• Statement of Changes in Equity
• Cash Flow Statement
• Administered Schedule of Comprehensive Income
• Administered Schedule of Assets and Liabilities
• Administered Reconciliation Schedule
• Administered Cash Flow Statement
• Overview
• Note 1: People and Relationship
  
  • Note 1.1: Employee Benefits and Provisions
  • Note 1.2: Key Management Personnel
  • Note 1.3: Remuneration Paid to Senior Executives
  • Note 1.4: Remuneration Paid to Highly Paid Staff
  • Note 1.5: Related Party Disclosures
• Note 2: Funding
  
  • Note 2.1: Appropriations
  • Note 2.2: Net Cash Appropriation Arrangements
• Note 3: Financial Performance
  
  • Note 3.1: Expenses
  • Note 3.2: Own-source Income
  • Note 3.3: Revenue from Government
• Note 4: Financial Position
  
  • Note 4.1: Financial Assets
  • Note 4.2: Non-Financial Assets
  • Note 4.3: Liabilities
  • Note 4.4: Interest Bearing Liabilities
• Note 5: Other Information
  • Note 5.1: Current/Non-Current Distinction for Assets and Liabilities
  • Note 5.2: Remuneration of Auditors

As part of its strategic planning framework, the ANAO regularly reviews and updates its governance arrangements, undertakes mature risk management and adopts an integrated approach to organisational capability. The ANAO’s governance framework includes several committees with clear responsibilities and terms of reference, and procedures for clear lines of accountability.

The ANAO’s commitment to strategic planning and ongoing capability development ensures that we can continue to achieve our purpose. Our 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, strategic planning, capability investment and risk management.

Accountable authority

The Auditor-General is responsible for both delivering the functions set out in the Auditor-General Act 1997 (the Act) and managing the ANAO within the arrangements of the broader Australian Public Service (APS). Part 6 of the Act establishes the ANAO under the Public Service Act 1999 and requires the organisation 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 effective corporate governance. The ANAO’s approach to delivering quality outcomes and sound decision-making is underpinned by good governance.

During 2023–24, Mr Grant Hehir was the accountable authority of the ANAO from 1 July 2023 to 15 February 2024, when he held the position of Auditor-General, and Ms Rona Mellor PSM, Acting Auditor-General, was the accountable authority of the ANAO from 16 February to 30 June 2024.

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. This supports effective management of the organisation to achieve its purpose and meet public and community expectations of probity, accountability and transparency.

Governance structure

The Executive Board of Management is the ANAO’s leading committee. At 30 June 2024, it was supported by six subcommittees and three operational committees. It also benefits from reports to the Auditor-General from 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 their statutory responsibilities as the ANAO’s accountable authority under the PGPA Act. The board membership consists of the lead executive of all ANAO groups and the Chief Finance Officer. Table 4.1 shows the members of the Executive Board of Management at 30 June 2024. The board allows members to raise and resolve issues of significance for the agency and delivers collective leadership, enabling the ANAO to pursue and deliver strategic goals, commitments and initiatives outlined in the corporate plan.

Board responsibilities include approving and reviewing progress on the ANAO’s direction and commitments across key organisational responsibilities — for example, reviewing progress against the corporate plan, approving the annual budget and key business initiatives such as the methodology and quantum of charge-out rates, and identifying and monitoring strategic risks and opportunities. The board meets monthly, and terms of reference are reviewed annually.

Table 4.1: Membership of the Executive Board of Management, at 30 June 2024

The board’s key decisions are communicated to staff via an all-staff email containing a link to the Auditor-General’s monthly message on the ANAO intranet.

Information on the remuneration of key management personnel is available at Note 1.2 of the 2023–24 financial statements.

Subcommittees

The ANAO has established subcommittees to support the Executive Board of Management. The subcommittees ensure organisational accountability and transparency, providing oversight and risk management in specific areas of operations. Subcommittees report to the executive board through summary reports and meeting minutes. The terms of reference for each committee are reviewed annually.

At 30 June 2024, the ANAO had six subcommittees:

• 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 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 ANAO’s work health and safety (WHS) policies and practices, and advises the Executive Board of Management on WHS matters; and
• Information Technology Strategic Committee — provides advice to the Executive Board of Management on information technology and business system strategic directions and investments.

Operational committees

At 30 June 2024, the ANAO had three operational committees:

• Remuneration Committee — advises the Auditor-General on remuneration;
• 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; and
• 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 matters of strategic importance to the ANAO.

Figure 4.1: ANAO governance structure and strategic planning framework, at 30 June 2024

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.

The Audit Committee’s 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).

The Audit Committee met four times during 2023–24. Details of the Audit Committee’s membership in 2023–24, including remuneration for the period, meeting attendance, and experience and qualifications of members, are provided in Table 4.2.

Table 4.2: Membership of the ANAO Audit Committee for 2023–24

Strategic planning framework

Strategic planning drives the ANAO’s activities, enabling us to adjust our performance and resourcing to align with emerging priorities and risks, and supports us in achieving our purpose. The ANAO identifies its organisational priorities and performance measures in its corporate plan, and reports on its performance in the annual performance statements within the annual report.

The Executive Board of Management tracks all organisational priorities, risks, performance measures and strategic projects, including milestones and dependencies. The board ensures the effective operation of the organisation through the ANAO’s governance subcommittees. The subcommittees regularly monitor progress on how the ANAO delivers its three key audit programs: financial statements audit, performance statements audit and performance audit.

Each year, the ANAO undertakes strategic planning exercises, examining corporate and audit priorities. These exercises inform our corporate plan, forward audit work program and group business plans. We balance the priorities of delivering high-quality and trusted mandatory audits of financial statements, audits of performance statements as requested by the Minister for Finance, and performance audits that examine key issues for government and offer assurance to the Parliament.

In July each year, the Auditor-General publishes an annual audit work program, which is developed after consideration of audit findings and portfolio risks, and extensive consultation with key stakeholders. We design the program to respond to current and emerging risks and challenges impacting public administration. The work program complements the corporate plan. It reflects the organisation’s audit strategy and informs 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 2023–24 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 strategic planning document and sets out how we will achieve our purpose over a four-year period. It articulates the purpose and operating environment for the ANAO, and how we identify and manage risk in that environment. The plan details the intended activities and performance of the ANAO, including performance measures, capability investments and strategies to help deliver our purpose.

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 statements audits, performance audits, performance statements 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 2024–25 program, the ANAO considered prior-year audit and other review findings to inform portfolio risks and areas for improvement, as well as emerging risks from new investments, reforms or changes in the operating environment.

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. The JCPAA identified 25 audit priority topics during consultation for the Annual Audit Work Program 2024–25. Of these 25 audit priorities, 23 were included in the final program.⁹ The remaining two priorities will be brought back for consideration as part of the 2025–26 program. We also sought feedback from accountable authorities of Australian Government entities affected by the proposed audit coverage, members of the public, the Commonwealth Ombudsman, the Inspector-General of Taxation, the Inspector-General of Intelligence and Security, the Inspector-General of Aged Care, the Australian Information Commissioner, and the Commissioner and Chief Executive Officer of the National Anti-Corruption Commission.

As part of the performance audit program, the ANAO undertakes a series of audits on the implementation of agreed parliamentary committee and Auditor-General recommendations, to provide assurance to the Parliament that actions to improve public administration are implemented as intended and agreed, and within reasonable timeframes. At 30 June 2024, the ANAO has tabled six audits in this series, with another cross-entity audit included in the 2024–25 work program.

Key focus areas of the Annual Audit Work Program 2024–25 include:

• key accountabilities as outlined in the Public Governance, Performance and Accountability Act 2013, including proper use of public resources — efficient, effective, economical and ethical;
• significant government procurement activities and grants program administration;
• entity implementation of agreed recommendations made by parliamentary committees and the Auditor-General;
• compliance with government legislation and policy frameworks;
• effective delivery of services to the Australian public;
• cybersecurity and IT systems controls; and
• an ongoing series of audits of major areas of public investment, such as in the Department of Defence, the National Disability Insurance Scheme, programs targeting Aboriginal and Torres Strait Islander peoples, and programs focused on climate change, energy and the environment.

Organisational capability

The ongoing development of the ANAO’s capability ensures that we can continue to achieve 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 2023–24 outlined capability investments we would make to ensure that we continue to deliver on our purpose. The areas of investment were:

• workforce;
• productivity and technology; and
• quality.

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

Workforce

The ANAO is a professional organisation of curious and critical thinkers who have strong analytical capabilities and act with the highest integrity. We are committed to investing in our people and supporting their development as leading audit and public service professionals.

To support current and future audit work, the ANAO continues to identify strategic opportunities to explore new ways of working, develop existing areas of capability, and embed efficiencies in our organisational design and processes.

At 30 June 2024, the ANAO had a headcount of 429 ongoing staff. Details of the ANAO workforce, including workforce composition, coverage of employment instruments, diversity statistics and salary information, can be found at Appendix C. The ANAO’s staff engagement and performance strategies are outlined in Appendix D.

Workforce plan

In 2023–24, the ANAO continued implementation of the ANAO Workforce Plan 2022–2025, enhancing critical technical and leadership skills and knowledge, and strengthening our workforce engagement and retention practices and processes.

Several workforce plan initiatives were progressed during 2023–24, including reviewing and improving our employee onboarding processes, developing a new graduate marketing campaign, and implementing a 360-degree feedback and leadership coaching program for our executive-level cohort. Preparations for a new workforce plan in the coming year are also underway.

Attract

During 2023–24, the ANAO commenced development of an employee value proposition. The purpose of the value proposition is to highlight the unique benefits and opportunities the ANAO has to offer current and potential employees. We aim to leverage the employee value proposition to attract the highly skilled and professional workforce we need to deliver on our purpose and audit outcomes.

Our commitment to inclusive attraction and recruitment practices was sustained throughout 2023–24. Provisions such as RecruitAbility supported our recruitment of a more diverse workforce. Individual flexibility agreements enabled greater flexibility for staff in the workplace, with the aim of improving job satisfaction and productivity, and attracting and retaining a diverse workforce of skilled and valuable staff.

We continued to invest in our entry-level talent pipeline through our graduate and intern programs. In 2023–24, 40 graduates commenced with the ANAO across two intakes — in October 2023 and February 2024. We attracted a graduate cohort with a broad spectrum of backgrounds, abilities and professional qualifications to enrich our workforce. In addition to the graduate development program, we continued our paid intern program to identify and foster suitably qualified talent to contribute to our work and provide interns with the opportunity to gain valuable workplace experience.

During the year, we delivered an enhanced onboarding experience, ensuring our new talent is well prepared, engaged and productive from the outset. Our onboarding activities comprise pre-onboarding communication, early connections with colleagues, a buddy program and a tailored induction learning pathway, including engagement with our senior leaders to learn about the ANAO culture and purpose.

Develop

The ANAO core capability framework supports our strategic approach to growing our own talent through ongoing professional development. The framework defines the knowledge, skills and behaviours expected of our workforce, encompassing three curriculum areas:

• essentials — foundational and public sector capabilities for all roles;
• technical — job family-specific and professional capabilities; and
• leadership — management and leadership capabilities for current and future leaders.

Building on the establishment of the ANAO Academy in 2022, our efforts in 2023–24 focused on supporting staff to attain professional qualifications, and prioritising critical capability development in fields such as such as data analytics, performance management, communication and leadership.

During 2023–24, experienced ANAO audit practitioners led the development of technical audit capability. In November 2023, we delivered our annual festival of learning, LearnFest, with the theme, ‘Leading with integrity — driving improvements in public sector performance’.

Throughout the year, we strengthened capability governance in the ANAO through the ANAO Academy to achieve a more coordinated approach to staff and professional development. We progressed a number of workforce plan initiatives, such as:

• delivering a refreshed talent management program to two cohorts of high-performing and high-potential future and emerging leaders;
• expanding the graduate development program, including participation in the APS-wide graduate event series, to provide our graduates with the opportunity to build essential public sector capabilities and develop their APS network;
• developing and piloting a learning evaluation framework and tools to monitor the effectiveness of ANAO learning initiatives for continuous improvement; and
• optimising our learning management system and other digital learning resources to improve capability development access and user experience.

Retain

The ANAO recognises that auditing is a challenging profession and we actively seek to retain our high-performing workforce by empowering our people through flexible policies — ensuring they can achieve their best while maintaining a healthy work-life balance.

The new ANAO Enterprise Agreement 2024–2027 introduced progressive measures aimed at fostering flexible ways of working to enhance employee satisfaction and productivity. The agreement underscores the ANAO’s dedication to contemporary workplace practices, offering employees enhanced flexibility to achieve a balance between professional obligations and personal needs.

The agreement includes updated remuneration structures ensuring competitive pay for our employees. It allows flexibility in certain employment conditions, such as regular salary reviews and adjustments, and individual flexibility agreements to meet the genuine needs of the employee and the ANAO.

At the ANAO, we recognise the health, safety and wellbeing of our employees is the highest priority. In 2023–24, we strengthened our efforts to support employee wellbeing and inclusiveness by:

• embedding our human resource business partnering model to deliver early intervention strategies and data-driven decision-making through regular engagement with business lines;
• increasing support for managers and individuals on the performance management process, including the provision of communications, resources and training;
• continuing the delivery of wellness initiatives such as Employee Assistance Program onsite appointments, an annual health check program, flu vaccinations, workstation assessments, and subsidised eyesight testing and spectacles;
• implementing a calendar of tailored wellbeing events, resources and programs to promote employee wellness as part of the ANAO Census Action Plan 2023;
• supporting our staff-led networks and initiatives such as the Diversity Contact Officer Network, the Reconciliation Action Plan Working Group, and the Workplace Consultative Forum; and
• adopting the APS continuous learning model to enable our staff to access a broad range of inclusive learning experiences and resources suited to their individual preferences and needs.

APS Employee Census results and ANAO Census Action Plan 2023

The Australian Public Service (APS) Employee Census is an annual survey administered by the Australian Public Service Commission. The survey collects confidential information from APS employees on their attitudes and opinions on issues in the workplace.

The ANAO recognises that the survey provides an opportunity for employees to share their experience of working within our organisation and the public service — and for the ANAO to respond to this feedback.

In 2023, the APS Employee Census was conducted from 8 May to 9 June. The ANAO received the census results in August 2023. The ANAO had a response rate of 89 per cent, with 329 of 371 employees responding to the survey. ANAO staff participation in the survey compared favourably with the APS more generally, which reported a response rate of 80 per cent. A high response rate gives the ANAO assurance that the results are representative of how staff feel about their work and the workplace.

Overall, the ANAO results were positive, reflecting a workforce that strongly believes in the purpose and objectives of the organisation. The ANAO scored strongly against the indices of employee engagement, communication and change, leadership — SES manager, and leadership — immediate supervisor, receiving an index score of 75 or above in each area. The results show that not only have we improved or maintained our results in these areas compared with the APS Employee Census 2022, but the ANAO also sits above the overall APS scores for all four indices. In previous years, our Senior Executive Service (SES) and other leaders have focused on improving communication and engagement. These continue to be areas of strength and will remain a focus in the way we work.

In December 2023, we published the Census Action Plan 2023–24 in response to the results from the APS Employee Census. The ANAO identified two key focus areas for improvement: wellbeing and innovation. The ANAO received an index score of 69 for ‘wellbeing policies and support’ and 64 for ‘enabling innovation’ — scores that are lower than the ANAO’s results for other key areas, albeit comparable to the overall APS.

During 2023–24, we implemented several activities and initiatives to support and improve employee experience in these areas. Results against the plan will be included in the next census action plan.

ANAO Enterprise Agreement 2024–2027

In March 2024, the Fair Work Commission approved the ANAO Enterprise Agreement 2024–2027. This approval was granted following a dedicated bargaining and consultation process. The agreement reflects the ANAO’s commitment to fostering a supportive and professional workplace, with a focus on fairness, inclusivity and productivity.

Productivity and technology

The ANAO maintains an ongoing focus on building productivity as a key capability. We recognise that improved productivity is critical to demonstrating the efficient use of taxpayer funds in the delivery of our work to the Parliament and the public.

In 2023–24, we achieved productivity improvements through a focus on using resources strategically, streamlining our business practices and modernising our ways of working. Productivity improvements are designed to become part of our business-as-usual processes, enabling continued improvement and enhanced capability.

We have achieved productivity improvements through our increased use of data analytics, new audit solutions and systems involving automation of procedures, the modernisation of back-end infrastructure and the redevelopment of our information technology strategy.

Data analytics

The ANAO continues to invest in capabilities to further realise the benefits of data analytics for audits. A specialist data analytics team within the ANAO works with audit teams to use data to produce more efficient and effective audit work while maintaining quality. The data analytics team also supports corporate functions such as data-driven decision-making and streamlining the analysis of internal performance reporting. The team’s audit analytics section focuses on designing bespoke solutions for individual audit needs, and a data engineering and automation section designs and implements standardised data analytics solutions.

Standardised data analytics solutions provide a standard, consistent and data-driven approach to some of the common areas of audit testing. These solutions continue to be the default approach for audit teams, unless the circumstances of an audit require a different approach. The ANAO continues to develop new standardised solutions to support audit requirements and identify opportunities for further development.

Responding to emerging technology issues

The ANAO continues to develop its capability to provide assurance to the Parliament on new issues and risks arising from the adoption of new technologies within government.

In 2023–24, the ANAO commenced its first audit examining the implementation of artificial intelligence, in the Australian Taxation Office. We will use this audit to develop an approach for similar audits, in line with increased adoption of artificial intelligence, and automated decision-making, by government entities. The ANAO continues to monitor entity adoption of new technology, and other learnings from peer institutions within Australia and overseas, to inform our future audit work.

The ANAO has also developed an audit strategy as part of its response to changes in the cybersecurity environment. This strategy aims to:

• streamline the analysis of cyber threat and risk information to support the ANAO’s audit activities and products;
• establish and enhance key strategic relationships with agencies responsible for cybersecurity across the Australian Government; and
• undertake industry engagement and continuous monitoring of changes in the cyber threat landscape to improve awareness of the latest cybersecurity trends, issues, risks and opportunities.

New audit tools and systems

The ANAO’s Corporate Management Group 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 change management in business and technology to enable improved delivery of audit services.

In 2023–24, the ANAO migrated from a centralised data centre to a distributed cloud-based infrastructure. This creates an environment where we have on-demand capacity and scalability as well as increased security controls over the network.

Information technology strategy

In 2023–24, the ANAO continued to invest in new technology, to keep pace with relevant changes in the technological landscape and ensure audit teams have the tools they need to work efficiently and effectively. We are developing a Digital Strategy 2024–2028 that will drive our future technology delivery. We expect that the strategy will be approved in 2024–25.

The ANAO has progressed the delivery of its future-state architecture, which has brought new capabilities to support more efficient data analysis. We have also progressed plans to provide a streamlined mechanism for audited entities to send audit data, which will realise efficiencies. In 2023–24, the future-state program delivered foundational capabilities to enable further transformation, by reviewing data governance and cloud management practices. We also migrated remaining applications into the ANAO’s Azure environment to realise efficiencies.

Quality

The quality of ANAO audit work is reliant on the strength of its independence and quality framework. The ANAO’s quality framework and plan articulate the system of quality management that the ANAO has established to support the delivery of high-quality audit work, and enables the Auditor-General to have confidence in the opinions and conclusions in the reports prepared for the Parliament.

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) and 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 quality management standards issued by the Auditing and Assurance Standards Board, including ASQM 1 – Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements.

The ANAO published its Quality Management Framework and Plan 2023–24 in July 2023. In December 2023, the ANAO published its Audit Quality Report 2022–23, which sets out the Auditor-General’s evaluation on the implementation and operating effectiveness of the quality management framework for 2022–23. The report provides transparency around the processes, policies and procedures that support each element of the quality management framework and the ANAO’s performance results against audit quality indicators and associated benchmarks. The audit quality report also assesses the ANAO’s achievement of the quality assurance strategy and deliverables, as set out in the Quality Assurance Framework and Plan 2022–23.

In 2023–24, the ANAO’s internal auditor conducted a review of the ANAO’s implementation of ASQM 1, including its evaluation on the implementation and operating effectiveness of the quality management framework. The internal audit found that the ANAO had undertaken appropriate actions to implement the revised quality management standard. The appropriateness of these actions was demonstrated through the ANAO’s interpretation of the standard’s requirements, staff awareness of changes and what they mean, as well as alignment of the ANAO Audit Manual, the Quality Management Framework and Plan 2023–24, and other internal documents with the standard.

In 2023–24, the ANAO continued to expand its root cause analysis program as part of the enhanced system of quality management. In previous years, the ANAO conducted formal root cause analysis on the findings identified in financial statements audit quality assurance reviews. In August 2023, the ANAO completed a root cause analysis on the findings identified in performance audit quality assurance reviews for the first time. In April 2024, the ANAO completed a root cause analysis on the findings identified in performance statements audit quality assurance reviews for the first time, and also conducted root cause analyses on the findings identified in financial statements and performance audit quality assurance reviews. Each root cause analysis was undertaken in parallel with the finalisation of the quality assurance reviews, and follow-up actions were developed to address the underlying drivers of the deficiencies identified.

In addition, the ANAO identified opportunities to continuously enhance and improve its quality framework through the Australian Securities and Investments Commission’s annual review of selected financial statements audits, the peer review of performance audits conducted by the New Zealand Office of the Auditor-General, and internal audits of compliance with ANAO Audit Manual policies.

Methodology

The ANAO Auditing Standards are supported by a methodology that is applicable to performance audit, financial statements audit and performance statements audit work, and that is incorporated into the ANAO Audit Manual. The ANAO regularly reviews and updates this methodology to reflect 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 2023–24, the ANAO finalised its review and update of the performance audit methodology for audits of efficiency. The ANAO also continued to refine its methodology for performance statements audits based on its growing experience in this area.

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 2022–2024 is based on adherence to the Commonwealth Risk Management Policy, which adopts definitions outlined in ISO 31000:2018 Risk Management — Guidelines. The framework includes the ANAO enterprise risk register.

The ISO 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 continuously reviews the organisation’s enterprise risk register, which captures strategic and operational risks and their related controls. The Executive Board of Management ensures organisational accountability and transparency of risk through the oversight of its subcommittees.

Risks are 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 have a clear view of the mitigating controls and their effectiveness at controlling risks. 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.

The ANAO’s management of risk is embedded into all business-as-usual practices, using consistent language, approaches and documentation. The adoption of risk analysis tools is applicable to the ANAO’s operations across all groups. This approach ensures all ANAO staff have a general responsibility to practise active risk management. Risks associated with audit products are identified and managed within the delivery of the products and within the quality framework for audits. Audit policies, procedural guidance and progress reviews take risk into consideration.

The Auditor-General takes advice from the Executive Board of Management and the Audit Committee into account when approving the risk management framework and enterprise risk register, and when determining the ANAO’s appetite and tolerance for risk. The Executive Board of Management reviews enterprise risks at each board meeting, considering any serious risk incidents for the month, and any residual risk assessed as ‘high’ or above, as outlined in the ANAO risk management policy.

All subcommittees provide oversight of specific areas of strategic operations and are responsible for identifying and managing relevant corporate risks on an ongoing basis. The subcommittees report to the Executive Board of Management on operational and enterprise risks relevant to their responsibilities. The Weekly Operational Committee meetings may also discuss a range of operational and strategic risks.

The ANAO conducts periodic reviews of its internal controls and compliance framework. These reviews consider factors such as the size of the ANAO and its functions, the risk profile of the organisation, resource management arrangements and compliance history. The committees, as well as internal audit and the ANAO’s external auditor, contribute to these reviews.

The Professional Services Group and the three 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.

The risk management framework is linked and aligned with the ANAO Fraud and Corruption Strategy 2024–2026.

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 2023–24, the ANAO’s internal auditor, Sententia, completed the following internal audit reports:

• Travel and Expense Management (June 2024); and
• ANAO Quality Assurance Program — ASQM 1 Implementation (February 2024).

The two completed internal audits made eight recommendations in total. Following the Audit Committee meeting in July 2024, there were seven agreed recommendations not yet fully implemented.

Control environment

The ANAO has a robust control environment in place to ensure compliance with the requirements of the Commonwealth’s resource management framework, and in particular the Public Governance, Performance and Accountability Act 2013.

The current control framework includes the following policies and procedures, which document key business procedures and 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 manual.

Regular reviews of controls are undertaken by management and internal audit. Reviews of our control environment include consideration of our approach to:

• probity and independence;
• fraud and corruption control and prevention;
• disclosure of the Auditor-General’s expenses;
• gifts and benefits;
• outside employment; and
• the results of our compliance survey.

Probity and independence

The ANAO’s commitment to high ethical and professional standards underpins the quality of our 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 ANAO independence policies 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. All 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. Probity and conflict of interest requirements are applied with appropriate and proportionate measures informed by sound risk management principles. Probity is applied to each individual procurement based on value, the level of complexity, and risk. 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 Integrity Framework 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 integrity framework, the ANAO maintains an enduring focus on promoting integrity as an organisational value that is embedded in our work and culture.

Fraud and corruption control and prevention

The ANAO continues to maintain appropriate fraud and corruption prevention, detection, investigation, reporting and data collection procedures in accordance with the Public Governance, Performance and Accountability Rule 2014.

The ANAO reviewed and updated the organisation’s Fraud and Corruption Framework in June 2024. The updates reflect the changes to the Commonwealth Fraud Rule and Fraud Policy, which are in effect from 1 July 2024.

The Chief Operating Officer, Corporate Management Group, is responsible for managing the ANAO Fraud and Corruption Strategy 2024–2026, including fraud and corruption detection, prevention and response. The strategy fulfils requirements outlined in the Commonwealth Fraud and Corruption Control Framework and is linked to the ANAO Risk Management Framework 2022–2024.

There were no incidents of fraud or corruption in 2023–24.

The ANAO periodically reviews its fraud and corruption control plan, considering changes in the operating environment. Through the appropriate governance frameworks, the Executive Board of Management and various ANAO subcommittees monitor the organisation’s fraud and corruption risks and controls, and action is taken as required.

The ANAO enhances fraud and corruption awareness among staff through various mechanisms, including a mandatory fraud and corruption e-learning module. This training is required to be completed by new staff to the ANAO, and completed annually, as a refresher, for all staff.

In 2023–24, fraud and corruption awareness was emphasised in several information sessions and internal communication strategies. It was also highlighted through our Integrity Awareness Week activities, which included presentations by ANAO staff.

Auditor-General’s disclosure of expenses

To ensure transparency, the Auditor-General makes voluntarily public disclosures of any expenses incurred. The Auditor-General’s expenses are disclosed every six months. Expenses for the 2023 calendar year and for January to June 2024 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 declined) through an internal gifts and benefits register within 10 business days of the offer being made. The data collected through the register is reported to the Executive Board of Management, and a subset of the data is reported publicly.

Outside employment

In 2023–24, the ANAO continued its focus on supporting the ANAO workforce to work in a range of flexible ways, including participating in outside employment. ANAO employees may engage in outside employment activities if they are considered to serve the public interest and provide professional benefits for both the individual and the ANAO. Outside employment includes activities such as additional paid or unpaid employment, or volunteer activities pursued by an employee alongside their official APS responsibilities, or during periods of paid or unpaid leave from the ANAO.

Employees must obtain prior approval for all outside activities and employment, unless specifically excluded from the policy. If an employee began outside employment before joining the ANAO, upon commencement they must seek approval to continue. Approval is not required for personal activities, voluntary community work, or passive investments such as rental properties and share trading, provided they are conducted in the employee’s personal time, without using ANAO resources, and do not conflict with official duties.

At 30 June 2024, the ANAO had 16 approvals recorded for staff undertaking outside employment.

Compliance survey

ANAO employees who exercise delegated powers and responsibilities assert their compliance with the financial framework, including compliance with the PGPA Act, by completing a compliance survey. Twenty-one instances of non-compliance were reported for the 2023–24 financial year, all of which were deemed to be non-significant breaches of the finance law and associated legislation, and the ANAO delegations.

There were nine instances where procurements made by the ANAO were registered on AusTender after 42 days and four instances of breaches of section 23 of the PGPA Act, where delegate approval was not obtained prior to varying a contract. The ANAO has internal controls to mitigate the likelihood of procurements not being reported on AusTender within the mandated timeframe and strengthened its processes to ensure appropriate delegation is obtained before entering into a contract variation.

There were eight instances of misuse of the ANAO’s corporate credit card in 2023–24. This represents less than 0.1 per cent of total credit card transactions. Although the proportion of misuse is small, each instance is investigated, with all incidents found to be inadvertent. All instances of credit card misuse were reported to the Executive Board of Management. The Chief Finance Officer contacted those staff who misused their credit card, 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 account.

The biannual compliance survey administered in January 2024 and July 2024, identified that some staff members at the ANAO need further education on the ANAO’s governance frameworks and policy documents to increase their confidence. The ANAO is taking steps to further educate employees to ensure there is a strong understanding of their obligations regarding compliance.

External scrutiny

The ANAO’s operations, processes and reports are periodically subject 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 Joint Committee of Public Accounts and Audit. The Independent Auditor position is a part-time statutory appointment for a period of at least three years and not more than five years. Ms Eileen Hoggett’s five-year term (2019–2024) as ANAO’s Independent Auditor ceased on 1 March 2024. The Governor-General appointed Mr Shane Bellchambers as the ANAO’s Independent Auditor, commencing 1 April 2024 for a period of four years.

The Independent Auditor conducts an audit of the ANAO’s performance statements at the request of the Auditor-General to provide independent assurance to the Parliament. The ANAO received unmodified auditor reports on its financial statements and performance statements for the year ended 30 June 2024.

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 2023–24. The ANAO was not the subject of any agency capability reviews or reports by the Commonwealth Ombudsman in 2023–24.

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 E:

• compliance with the finance law;
• asset management;
• purchasing and procurement;
• consultancy and non-consultancy contracts;
• procurement initiatives to support small business;
• advertising and market research;
• grant programs;
• environmental performance;
• disability reporting;
• work health and safety;
• freedom of information;
• audit fee methodology; and
• service charter.

Appendix A — Transparency reporting

The Corporations Act 2001 includes requirements for annual 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 A.1 summarises the requirements that are relevant to the ANAO and shows where the required information is presented in this annual report.

Table A.1: Transparency reporting

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

Appendix B — Entity resource statement and expense by outcome

Entity resource statement

Table B.1: Entity resource statement 2023–24

Note a: Appropriation Act (No. 1) 2023–2024, Supply Act (No. 1) 2022–2023 and Supply Act (No. 3) 2022–2023 prior-year departmental appropriation, and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Note b: Special appropriation remaining balance is returned to the Consolidated Revenue Fund at the end of each year.

Expenses by outcome

Table B.2: Summary of total expenses for Outcome 1, 2023−24

Note a: Full-year budget, including any subsequent adjustment made to the Budget 2023–24.

Note b: Departmental appropriation combines ‘Ordinary annual services (Supply Bill (No. 1) and Appropriation Act (No. 1)’ and ‘Revenue from independent sources (section 74 of the PGPA Act)’.

Note c: Expenses not requiring appropriation in the budget year are made up of deprecation expenses, amortisation expenses, and principal payments on lease liabilities.

Appendix C — Workforce information

Table C.1: Employee coverage under employment instruments in 2023–24

Note: The numbers of employees shown in this table are headcounts. The section 24 determination figure is at 28 March 2024. The ANAO Enterprise Agreement and common law contract figures are at 30 June 2024. This table includes ongoing, non-ongoing and casual employees.

Table C.10: APS employees, by full-time and part-time status, at 30 June 2024

Note: Includes all operative and inoperative employees. Inoperative employees are defined as employees who are absent from work for more than 13 weeks. Information in this table covers the headcount based on substantive classification of staff and does not include acting arrangements.

Table C.11: APS employees, by full-time and part-time status, at 30 June 2023

Note: Includes all operative and inoperative employees. Inoperative employees are defined as employees who are absent from work for more than 13 weeks. Information in this table covers the headcount based on substantive classification of staff and does not include acting arrangements.

Table C.12: APS employment type, by location, at 30 June 2024

Note: All ANAO positions are Canberra-based.

Table C.13: APS employment type, by location, at 30 June 2023

Note: All ANAO positions are Canberra-based.

Table C.14: Indigenous APS employees, by employment status, at 30 June 2024

Table C.15: Indigenous APS employees, by employment status, at 30 June 2023

Remuneration

The ANAO’s employment framework enables our ongoing investment in workforce capability and remuneration. The ANAO’s Enterprise Agreement 2024–2027 came into effect on 29 March 2024 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 salary ranges for Senior Executive Service (SES) staff are determined by the ANAO’s SES Remuneration, Performance and Development Policy. SES remuneration payments are set out under Note 2.3 of the financial statements at Part 3 of this report. Table C.8 shows the salary ranges for the ANAO’s SES and non-SES employees at 30 June 2024.

Table C.16: APS employee salary ranges, by classification level, at 30 June 2024

Notes: SES stands for Senior Executive Service; EL stands for Executive Level; APS stands for Australian Public Service.
Graduates are captured in the ‘Other’ category.

The ANAO’s employment arrangements for SES and non-SES employees do not provide for performance pay. Under the ANAO’s Enterprise Agreement 2024–2027, incremental salary advancements within non-SES classification levels are linked to performance ratings. Table C.17 contains a summary of ratings for the performance cycle ending 31 October 2023.

Table C.17: Summary of performance ratings for the period ending 31 October 2023

Note: EL stands for Executive Level; APS stands for Australian Public Service.

Non-salary benefits

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

• individual development including coaching, tertiary qualifications and training;
• professional development delivered by the ANAO Academy;
• study assistance;
• flexible working arrangements;
• contributions to relevant professional memberships;
• annual influenza immunisation;
• spectacles reimbursement; and
• a free, confidential employee assistance program for employees and their immediate families.

The ANAO provides SES staff and — where there is a business need — some non-SES staff with a tablet computer and/or airline lounge membership. All ANAO staff have laptops and mobile phones, predominantly to provide multifactor authentication for access to ANAO systems. Employees can also make use of a range of salary sacrifice benefits, including additional superannuation and leased motor vehicles.

Appendix D — Staff engagement and performance strategies

This appendix outlines the ANAO’s strategic approaches to attracting, developing and retaining staff, as well as creating a productive and supportive workplace that fosters employee engagement and motivation.

The ANAO Workforce Plan 2022–2025, comprising 33 initiatives, outlines strategies to foster a high-performing workforce through focused efforts on attraction, development and retention. As at 30 June 2024, we have delivered 17 of the initiatives, with all initiatives on track for implementation before the end of 2025.

Attraction

In 2023–24, the ANAO continued its efforts to attract highly skilled and qualified individuals to our workforce through the development of a new employee value proposition. Attraction strategies linked to our Workforce Plan 2022–2025 also included sustained efforts in graduate recruitment, with the number of commencing graduates increasing to 40 in 2024.

Graduate program

The ANAO’s graduate program is open to Australian citizens who have completed any undergraduate degree within the past seven years. During the 12-month program, graduates undertake a targeted development program, consisting of a broad range of learning opportunities to build the technical professional and foundational public sector capabilities needed to commence their ANAO career. Development includes on-the-job training, learning from and working with experienced practitioners, and participation in various formal training workshops and events.

A total of 40 graduates commenced in the ANAO’s 2024 graduate program, an increase from 27 in the previous year (Table D.1). We attracted graduates with a broad range of undergraduate degrees, including accountancy, data science, mathematics, IT and computer science, and social science.

Table D.1: Number of recruits in 2023 and 2024 graduate programs, by ANAO group

Note a: Professional Services and Relationships Group was renamed ‘Professional Services Group’ from 2 January 2024.

Affirmative measures

During 2023–24, we continued our commitment to a diverse workforce. Our key focus was on strengthening affirmative measures in recruitment, particularly at the graduate level, and through provisions such as RecruitAbility, an APS scheme that aims to attract and develop applicants with disability. We are also focused on building the capabilities of our managers to support and lead a diverse workforce.

Recruitment

To ensure the ANAO possesses a suitably skilled workforce to deliver our audit and assurance program in a tight labour market, we increased our recruitment in 2023–24. Subsequently, the ANAO conducted recruitment processes for digital, data, finance, human resources, legal and accounting professionals. We enhanced our recruitment and onboarding processes to improve the candidate and new employee experience.

We provided internal mobility opportunities, which are advertised on the ANAO intranet, to allow our staff to develop their capability through temporary and ongoing vacancies within the workplace.

Secondments and temporary transfers from other APS agencies allowed the ANAO to fill roles within the organisation. We also supported our staff to achieve their development and career goals through temporary assignments to other APS agencies and international jurisdictions.

Development

During 2023–24, we made advances in nurturing talent, fostering a culture of continuous learning, and embracing diversity and inclusion. Through strategic investment in professional development and qualifications, talent and leadership development, and innovative human resource initiatives, we strengthened our capabilities while also enhancing employee engagement and productivity.

ANAO Academy

The ANAO Academy enables the ANAO workforce to develop the professional skills and knowledge needed to deliver on our purpose and audit outcomes. The academy develops and maintains learning and development strategies, and provides a range of learning and development experiences to build technical and non-technical capability in the ANAO.

The ANAO Academy is a shared responsibility model, with the ANAO Academy Faculty at the centre. Comprising representatives from all ANAO business lines, the ANAO Academy Faculty has improved coordination of learning and development across the ANAO.

In 2023–24, ANAO Academy achievements included:

• more than 160 learning activities made available to ANAO staff, including new online learning modules, and face-to-face training workshops and presentations;
• monthly ANAO induction workshops;
• a 12-month graduate development program, including the two-week graduate orientation;
• the annual week-long learning festival, LearnFest, with 2,751 registrations for 32 events;
• an ANAO talent development program for high-performing, high-potential future and emerging leaders;
• a 360-degree feedback and leadership coaching program for our executive-level cohort; and
• an enhanced learning management system for improved access and user experience.

Talent retention

The ANAO is committed to retaining a highly engaged workforce, supporting the health and wellbeing of our staff, and recognising the contributions of individuals and teams in the achievement of our corporate objectives.

Staff engagement

Our workforce continues to be committed to the goals, purpose and objectives of the ANAO. In the 2023 APS Employee Census, the ANAO achieved an 89 per cent response rate, nine percentage points higher than the APS average. The ANAO recorded positive census results for communication and leadership of SES managers and immediate supervisors.

In response to staff feedback, the ANAO implemented a Census Action Plan 2023–24, focusing on improving employee wellbeing policies and support. Actions included the introduction of the ‘wellbeing calendar’ focusing on a different wellbeing theme each month, and the provision of in-house workshops — delivered by our employee assistance provider — on priority areas such as reducing burnout, managing stress and building resilience. The Census Action Plan also addressed innovation through the development and implementation of a strategy to identify and enhance opportunities for improving our processes.

In November 2023, we held our annual week-long learning festival, LearnFest, which focused on staff engagement, culture and capability building. LearnFest featured a keynote opening address by the President of the Senate, Senator the Honourable Sue Lines. Other notable speakers included Dr Alex Antic, an expert in strategic data science and artificial intelligence from the Australian National University; Dr Ben Gauntlett, Deputy Commissioner, National Anti-Corruption Commission; and Professor Anne Twomey from the University of Sydney Law School, who presented on constitutional law and ethical considerations for auditors. In total, 32 presentations were delivered on various topics, including integrity, wellbeing, leadership, and data analytics.

Reward and recognition

The ANAO reward program recognises the contributions of individuals and teams through the annual Australia Day and Auditor-General’s awards. The awards acknowledge those whose behaviours and contributions align with the ANAO values of integrity, excellence and respect, and assist the ANAO to achieve our objectives.

The Auditor-General’s awards, presented in July 2023, recognised 10 individuals and three teams. In January 2024, six individuals and one team received Australia Day awards. Award recipients during the year were recognised for a range of achievements, including outstanding examples of trusted expertise, commitment to assisting staff and colleagues, and innovation.

Health and wellbeing

Throughout the year, we strengthened our efforts to protect and enhance staff wellbeing by providing onsite appointments through our Employee Assistance Program, conducting annual health checks, administering flu vaccinations, undertaking workstation assessments, and offering subsidised eyesight testing and spectacles.

Flexible work

The ANAO supports our people to work in flexible ways, enabling staff to work safely and effectively in the office, from home and in APS entities with the support of contemporary equipment, technology, platforms, capability development, and workspaces.

Human resources business partnering model

In 2023–24, we embedded our human resources business partnering model by implementing monthly and quarterly workforce meetings with business lines to identify critical resources that are unique to the ANAO or difficult to replace. We also commenced work to establish succession plans. This model utilises critical workforce data to support decision-making and early intervention strategies.

Appendix E — Other management issues

Compliance with finance law

In 2023–24, the ANAO had no significant issues under paragraph 19(1)(e) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) relating to noncompliance with the finance law.

Asset management

The ANAO’s asset 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 is consistent with, and reflects the principles of, the Commonwealth Procurement Rules — in particular, the core rule of competition contributing to demonstrating value for money. 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 2023–24 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.

Reportable consultancy contracts

During 2023–24, six new reportable consultancy contracts were entered into, involving total actual expenditure of $0.225 million. In addition, 16 ongoing reportable consultancy contracts were active during the period, involving total actual expenditure of $1.084 million (Table E.1).

Table E.1: Reportable consultancy contracts, 2023–24

Table E.2 shows the organisations that received the five largest shares of the ANAO’s total expenditure of $1.309 million on reportable consultancy contracts during 2023–24.

Table E.2: Organisations receiving largest shares of reportable consultancy contract expenditure, 2023–24

Annual reports contain information about actual expenditure on reportable consultancy contracts. Information on the value of reportable consultancy contracts is available on the AusTender website.

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 2023–24 were to obtain professional skills to assist with certain financial statements audits and performance audits.

The decision to engage a consultant is made in accordance with the PGPA Act and related rules, including the Commonwealth Procurement Rules, and relevant internal policies.

Reportable non-consultancy contracts

During 2023–24, 76 new reportable non-consultancy contracts were entered into, involving total actual expenditure of $8.256 million. In addition, 189 ongoing reportable non-consultancy contracts were active during the period, involving total actual expenditure of $29.531 million (Table E.3).

Table E.3: Reportable non-consultancy contracts, 2023–24

Table E.4 shows the organisations that received the five largest shares of the ANAO’s total expenditure of $37.787 million on reportable non-consultancy contracts during 2023–24.

Table E.4: Organisations receiving largest shares of reportable non-consultancy contract expenditure, 2023–24

Annual reports contain information about actual expenditure on reportable non-consultancy contracts. Information on the value of reportable non-consultancy contracts is available on the AusTender website.

The major competitive non-consultancy tendering and contracting activities in 2023–24 were to contract out a number of financial statements audits and performance audits, as well as to contract in staff to assist the ANAO in delivering financial statements audits and performance audits. The ANAO’s IT services are managed by a third-party provider.

The decision to engage a supplier to assist the ANAO in the delivery of its mandate is made in accordance with the PGPA Act and related rules, including the Commonwealth Procurement Rules, and relevant internal policies.

Procurement initiatives to support small business

The ANAO supports small business participation in the Commonwealth Government procurement market. Small and medium-sized enterprise (SME) and small enterprise participation statistics are available on the Department of Finance’s website, finance.gov.au.

The ANAO’s procurement practices support SMEs through 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

Under section 311A of the Commonwealth Electoral Act 1918, we are required to disclose payments of $16,300 or more (inclusive of GST) to advertising agencies, market research organisations, polling organisations, media advertising organisations and direct mail organisations.

During 2023–24, the ANAO conducted non-campaign advertising for graduate recruitment amounting to $90,577 (inclusive of GST). The ANAO did not make any payments to direct mail organisations or polling organisations and did not make any payments of $16,300 or more (inclusive of GST) to media advertising organisations.

During 2023–24 the ANAO did not conduct any advertising campaigns.

Payments over $16,300 (including GST) to market research organisations, incurred in the course of client surveys on performance, are set out in Table E.5.

Table E.5: Payments made to market research organisations, 2023–24

Grant programs

The ANAO does not administer any grant programs.

Audit fee methodology

For some financial statements audits, Commonwealth bodies are liable to pay fees. Subsection 14(1) of the Auditor-General Act 1997 provides for the Auditor-General to determine a scale of audit fees. The fees paid by Commonwealth corporate entities and companies for financial statements audits are returned to the Official Public Account and are not available to the ANAO unless they relate to additional services.

Paragraph 8(1)(k) of the Public Accounts and Audit Committee Act 1951 requires the Joint Committee of Public Accounts and Audit to consider the level of fees determined by the Auditor-General under subsection 14(1) of the Auditor-General Act 1997. Information relating to the methodology utilised to determine the ANAO’s level of fees is outlined below.

Charge-out rates are used to determine the notional or actual audit fee in respect of financial statements audits and to report the cost of performance audits and performance statements audits. The audit fees for financial statements audits of non-corporate Commonwealth entities are notionally calculated for information purposes and inclusion in the notes of the entities’ financial statements. Other entities — mainly Commonwealth statutory authorities and companies — are required to pay audit fees.

Consistent with government policy, the ANAO aims to establish charge-out rates at a level sufficient to recover the costs of its activities over time. An hourly charge-out rate is determined for each staff classification. The establishment of charge-out rates is guided by a costing model that considers all relevant costs, including the attribution of overhead costs, and is designed to achieve full notional cost recovery of the ANAO operating budget. When determining the basis for allocating overhead costs, the ANAO takes into account the nature of the expenditure and calculates the charge-out rate using an accrual-based costing model.

Using the methodology outlined, the average hourly charge-out rate for the ANAO in 2023–24 was $240.62, ranging from $154.26 per hour for a junior auditor through to $476.47 for a senior executive.

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

In 2023–24, the ANAO continued to improve its environmental performance and mitigate the effects of our impact on the environment through:

• the introduction of organic waste bins;
• procuring energy-efficient equipment and lighting solutions;
• using recycled copy paper;
• energy-efficient power management settings on office equipment, including motion sensor lighting;
• videoconferencing to reduce the need for local, interstate and international travel;
• 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 waste management as core indicators of the effect of its activities on the environment. We will continue to improve our collection and monitoring of data on energy use, water consumption and waste management in our office building.

APS Net Zero Emissions by 2030

The Australian Public Service (APS) Net Zero Emissions by 2030 target is a government initiative to reduce APS greenhouse gas emissions to net zero by the year 2030, as part of the Net Zero in Government Operations Strategy. The ANAO has demonstrated a firm commitment to achieving this target within the stipulated timeline. To instil accountability and foster transparency, Australian Government entities are required to report on their emissions in their annual reports. Entities included their inaugural reports in their 2022–23 annual reports.

The initial baseline reporting in 2022–23 primarily concentrated on:

• emissions from entities’ facilities and vehicles, including natural gas and other energy such as diesel fuel (Scope 1);
• emissions from purchased electricity (Scope 2); and
• emissions associated with domestic air travel and the extraction, production, transportation and distribution losses of fuels and electricity (Scope 3).

For 2023–24, reporting has expanded to include refrigerants (Scope 1), waste disposal and treatment (Scope 2), and employee domestic business travel (non-air) and accommodation (Scope 3).

Table E.6 details the ANAO’s recorded greenhouse gas emissions for 2023–24 using the location-based method. This method takes into account the intensity of emissions from electricity generation in the state or territory where an entity operates. Table E.7 provides further information on electricity greenhouse gas emissions for 2023–24.

Table E.6: Greenhouse gas emissions inventory (location-based method), 2023–24

Note a: Emission sources were collected for the first time in 2023–24. The quality of data is expected to improve over time as emissions reporting matures.

Note b: Optional emission source for 2023–24 emissions reporting.

Note: The table above presents emissions related to electricity usage using the location-based accounting method. CO2-e = Carbon Dioxide Equivalent.

Table E.7: Electricity greenhouse gas emissions, 2023–24

Note a: Mandatory renewables are the portion of electricity consumed from the grid that is generated by renewable sources. This includes the renewable power percentage.

Note b: Voluntary renewables reflect the eligible carbon credit units surrendered by the entity. This may include purchased large-scale generation certificates, power purchasing agreements, GreenPower and the jurisdictional renewable power percentage (ACT only).

Note: The table above presents emissions related to electricity usage using both the location-based and the market-based accounting methods. CO2-e = Carbon Dioxide Equivalent.

During 2023–24, the ANAO was responsible for recorded carbon emissions amounting to 364,653 kilograms of CO2 equivalent using the location-based method. Scope 2 emissions represented approximately 35 per cent of recorded emissions across our operations. Scope 3 emissions made a comparatively smaller contribution, representing 65 per cent of the total emissions.

Emissions from hire cars for 2023–24 have been sourced from a third party and may be incomplete due to a lack of robust data. The quality of data is expected to improve over time as emissions reporting matures as we are only including data from Hertz Rent-A-Car in 2023–24.

To address the Scope 2 emissions, strategic purchasing from renewable energy sources or the acquisition of certified GreenPower offer viable solutions to lower the overall carbon footprint of the ANAO’s operations. These eco-friendly alternatives present a sustainable pathway to reduce our carbon emissions originating from electricity consumption.

Adopting alternative modes of travel or leveraging technology for virtual meetings could significantly curb the ANAO’s Scope 3 emissions associated with air travel. Further, with offset purchasing now available as an option when booking flights, this approach could serve as an effective strategy to offset any residual emissions related to air travel.

With these combined strategies, the ANAO has the potential to significantly decrease its environmental impact and steer towards a more sustainable and greener business model.

Sustainability of the ANAO’s tenancy building

The ANAO has a Green Lease Schedule, which includes the obligation to undertake an annual tenancy rating under the National Australian Built Environment Rating System (NABERS). In July 2024, the ANAO’s tenancy at 38 Sydney Avenue in Canberra was rated against the NABERS indicators and achieved a 6-star rating, which demonstrates excellent performance against NABERS benchmarks and exceeds policy requirements. The tenancy is currently undergoing a renewal of the NABERS rating and is expected to achieve a similar energy efficiency performance.

Waste

The ANAO segregates waste to ensure suitable items are recycled and to minimise landfill. Organic waste bins were introduced in February 2022. From 1 July 2022, the ANAO has received monthly reporting from waste vendors to support better understanding of consumption, identify areas for improvement, and support reduction of the total amount of waste sent to landfill. In FY 2023–24, ANAO generated 6.53 tonnes of general waste, marking a 19% increase compared to the previous financial year. Of this, nearly two tonnes were recycled, excluding office paper, which was 100% recycled. Combined, the recycling of waste and office paper accounted for approximately 35% of the total tenancy waste being diverted from landfill. Additionally, the tenancy contributed 0.2 tonnes of organic waste, which was biologically treated to prevent it from ending up in landfill. Approximately 73 per cent of total waste generated by the ANAO in 2023–24 was sent to landfill, and 27 per cent was recycled.

Disability reporting

Australia’s Disability Strategy 2021–2031 is the overarching framework for inclusive policies, programs and infrastructure. Its goal is to support people with disability to take part in all aspects of Australian life. The strategy outlines practical changes that will be made to improve the lives of people with disability in Australia. It ensures that Australia’s policies and programs affecting people with disability, their families and carers align with the principles of the UN Convention on the Rights of Persons with Disabilities. All levels of government have committed to deliver more comprehensive and transparent reporting under the strategy. Progress reports on the strategy’s action plans and outcomes are available at disabilitygateway.gov.au/ads.

In December 2020, the Australian Government released the Australian Public Service Disability Employment Strategy 2020–2025, with the goal of increasing the employment of people with disability across the Australian Public Service to 7 per cent by 2025. 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 38 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. One incident was reported in 2023–24.

Freedom of information

The Freedom of Information Act 1982 (FOI Act) 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. As a result, the ANAO is exempt from the requirement in Part II of FOI Act to publish an Information Publication Scheme plan on its website.

Performance audit reports, financial statements audit reports and audit opinions are tabled in the Parliament and/or published on the ANAO’s website. Requests for audit from members of parliament are published on the ANAO’s website.

Other corporate information is also published on the ANAO’s website, including:

• the Auditor-General’s expenses in the form of official credit card transactions;
• details of parliamentary briefings provided on request to parliamentarians and parliamentary committees;
• the ANAO Audit Manual;
• external audits and reviews;
• the Australian Securities and Investments Commission’s audit inspection reports on the ANAO;
• the SES Remuneration, Performance and Development Policy;
• gifts and benefits offered (whether accepted or declined);
• guidance on procurement complaints;
• the ANAO Workforce Plan 2022–2025;
• the Quality Management Framework and Plan 2024–25;
• the ANAO Integrity Framework and Report 2022–23;
• the ANAO Risk Management Framework; and
• the ANAO Fraud and Corruption Strategy 2024–26.

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 phoning (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.