Auditor-General’s foreword

The Australian National Audit Office (ANAO) Corporate Plan 2022–23 updates the previous corporate plan and outlines how we intend to deliver against our purpose over the next four years (2022–23 to 2025–26).

The corporate plan is the ANAO’s primary planning document – it outlines our purpose; the dynamic environment in which we operate; our commitment to building capability; and the priorities, activities and performance measures by which we will be held to account. The plan highlights our desire to engage positively and transparently in delivering audit and support services to the Parliament. In addition, the plan details our approach to risk management, which is critical to successfully meeting our responsibilities in providing professional and independent audits to the Parliament.

The corporate plan is part of our strategic planning process. This process allows us to continually improve organisational practices and capability, and demonstrate value in delivering our services to the Parliament. The corporate plan is complemented by the annual audit work program, which reflects the ANAO’s audit strategy for the coming year.

Statement of preparation

As the accountable authority of the Australian National Audit Office under the Auditor-General Act 1997, I am pleased to present the ANAO Corporate Plan 2022–23, which covers the period 2022–23 to 2025–26, as required under paragraph 35(1)(b) of the Public Governance, Performance and Accountability Act 2013.

Grant Hehir
Auditor-General
6 July 2022

A summary of the ANAO’s purpose, outcome, programs and shared activity is shown in Figure 1.

Figure 1: ANAO’s purpose, outcome, programs and shared activity

Note: The ANAO’s three programs and shared activity are outlined in the Portfolio Budget Statements 2022–23. Performance measure numbers refer to numbers used in this corporate plan.

Our purpose

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

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

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

Figure 2: How the ANAO delivers its purpose

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

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

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

The Auditor-General’s functions are a key component of the accountability and integrity framework, and form part of the core business of Australian public sector entities. The Act sets out the requirements for entities to engage with the Auditor-General in the carrying out of Auditor-General functions.

The ANAO supports the Auditor-General in this role.

ANAO values

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

Corporate structure

The ANAO is organised into six functional areas:

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

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

Key relationships

The ANAO’s primary relationship is with the Australian Parliament and the ANAO’s key interaction with the Parliament is through the JCPAA. Among its responsibilities, the JCPAA considers the operations and resources of the ANAO, including the ANAO draft budget estimates, about which it makes recommendations to both houses of parliament. The JCPAA is 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 Auditor-General, supported by the ANAO, assists the work of the Parliament by providing independent reporting, assurance and opinions. The ANAO further supports the Parliament by providing submissions, briefings and other information to parliamentarians and parliamentary committees, and appearing before committees. The Parliament and its committees also scrutinise the work and administration of the ANAO.

The ANAO’s relationships with the accountable authorities of Australian Government entities are important, as the accountable authorities have primary responsibility for, and control over, the proper (i.e., efficient, effective, economical, and ethical) use of resources of their entities. The ANAO supports these relationships by regularly engaging with officials of audited entities and by attending audit committee meetings of Australian Government entities.

The ANAO invests in its external relationships to support learning through the two-way exchange and sharing of information and practices, and to support other nations through peer-to-peer institutional capacity development. The ANAO contributes to the Australasian auditing community as a member of the Australasian Council of Auditors-General. The ANAO also has close links with the international and regional auditing community through the International Organization of Supreme Audit Institutions and its related regional working groups, particularly the Pacific Association of Supreme Audit Institutions and the Asian Organisation of Supreme Audit Institutions. The ANAO’s regional engagement contributes to the delivery of the Australian Government’s aid program in the Indo-Pacific region.

The ANAO values its relationships with the Australian Accounting Standards Board and the Auditing and Assurance Standards Board in their roles of setting and maintaining professional and ethical standards for the accounting and auditing professions, which underpin the delivery of quality audit services.

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

Strategic planning framework

The ANAO’s governance and strategic direction are underpinned by a strategic planning framework (Figure 3). The corporate plan is the ANAO’s primary planning document and covers the next four-year period, 2022–23 to 2025–26. From this plan, the ANAO’s annual priorities flow into the annual audit work program, business plans, and then to individual performance agreements. The ANAO reports on its activities through its annual report.

Figure 3: ANAO’s strategic planning framework

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

Supporting the Australian Parliament

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

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

In supporting the Parliament, the ANAO recognises the complexities of auditing in a contestable environment – specifically with the shift towards government and service provider information being held not only as commercial-in-confidence, but at increasingly higher levels of security classification. Access to information is critical to the audit process, providing the foundation for substantive, accurate, evidence-based conclusions. The role of the auditor will always be focused on driving transparency and providing the information necessary to assist the Parliament in holding executive government to account. The ANAO will continue to manage the complexities that such a shift creates in the conduct of our audit work and, as necessary, bring them to the Parliament’s attention.

Further, in an environment where accountable authorities are charged with delivering the government’s agenda, the ANAO identifies delivery risks against the frameworks established by the Parliament, government and by accountable authorities themselves. This can create tension when the principles and risk management approaches of recent reforms and regulatory frameworks do not deliver the level of compliance with mandatory requirements that the Parliament expects. Some evidence indicates that the Parliament is signalling a desire for more system-level assurance and transparency of the operation of public sector frameworks, such as the:

• performance reporting, corporate planning and risk management rules under the Public Governance, Performance and Accountability Act 2013;
• Protective Security Policy Framework, including cybersecurity rules;
• Commonwealth Procurement Rules; and
• Commonwealth Grant Rules and Guidelines.

Increasingly, the Parliament is also seeking insight from the ANAO on the relationship between compliance and organisational culture. The ANAO will continue to focus on providing transparency and accountability on regulatory frameworks through our audit work.

47th Parliament of Australia

As our primary relationship is with the Parliament, the ANAO will continue to look for opportunities to maintain effective and active engagement with parliamentarians and committees. In December, following the Federal Budget, the ANAO will review the AAWP to ensure our audit strategy remains appropriate to the policy and risk environment. We expect that the policy agenda of the government will bring challenges for advice and implementation within the APS.

The ANAO is also cognisant of the government’s intention to establish a national integrity commission. The ANAO is an integrity institution, with integrity positioned as one of our core values. We will continue to observe the development of this policy agenda and its potential impact on the operations and independence of the ANAO.

New audit products and standards

Performance statements audit

To support the Parliament, and contribute to further maturity in the Australian Government sector’s performance reporting, the ANAO’s Portfolio Budget Statements 2022–23 has introduced a new program for the staged implementation of performance statements audits. The purpose of the program, and its related audits, is to drive improvement in the quality of entities’ performance reporting to the Parliament and the public, against the requirements of the Commonwealth reporting framework.

During the ANAO’s annual performance statements audit pilot program (2020–21), there was improvement in the standard of performance statements preparation and reporting for each of the audited entities. These improvements demonstrate that mandated audits of performance statements can drive more transparent and meaningful performance reporting to the Parliament. While entities have demonstrated their willingness to improve the quality of the annual performance statements they present to the Parliament, our observation of the sector is that performance reporting capability and supporting evidence systems require further maturity and improvement. This is important if performance information is to contribute to entity strategic planning and provide an evidence base for entities to justify new policy proposals, and evaluate existing policy and program settings.

The ANAO recognises that we will need to increase awareness within the sector of our methodology for conducting performance statements audits. Further, we will continue to refine the methodology for performance statements auditing to enable the Auditor-General to provide the auditee with clear, concise and timely findings.

Ethics and audit

The Public Governance, Performance and Accountability Act 2013 (PGPA Act) requires accountable authorities of Commonwealth entities to govern their entities in a way that promotes the proper use and management of public resources. The PGPA Act defines proper use as ‘efficient, effective, economical and ethical’. The ANAO assesses all aspects of the proper use of resources, with effectiveness being the most common of these objectives examined. In recent years, the ANAO has expanded its efforts towards conducting performance audits of efficiency.

The importance of ethics in government programs has been highlighted in several audits, particularly in procurement and grants administration. A theme that we have identified across a number of audits is a lack of adequate documentation and records to support the rationale for decisions made and actions undertaken. Where entities are technically compliant with the rules and policy framework, this behaviour sometimes falls short of meeting the intent behind such frameworks. Lack of proper documentation of decision-making processes makes it difficult for entities to be assured that the activity was undertaken with integrity and without improper influence or consideration of inappropriate factors.

Greater scrutiny in this area will help ensure that the public sector is looking beyond technical compliance and operating in line with the intent of established rules and frameworks, alongside community expectations of integrity. A culture of integrity in an organisation flows from the standards set by its leaders.

The ANAO is finalising the design of an appropriate audit framework against which to test ethics. Over the next four years, the ANAO will increase its focus on the ethical aspect of proper use and management of public resources. This will include audits of entity governance and ethical frameworks and the consideration of ethical requirements in audits of procurement and grants administration.

Evolving challenges in service delivery

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

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

Changes to public sector service delivery are intended to deliver government services more effectively and efficiently. The ways in which government seeks to deliver cost-effective services continue to evolve. This includes direct service delivery by government, joined-up service delivery within the sector and with private sector providers, contracted providers, and equity investment, grants and loans. New approaches and innovations in service delivery models and working arrangements create opportunities for the public sector to improve services in the longer term, but also create risks. Specifically, the increased agility and pace of change in service delivery presents risks to meeting the requirements set out within the Public Governance, Performance and Accountability Act 2013 and the responsibility of entities to adhere to both the directions and intent of the Act. In this environment, the ANAO must remain cognisant of new approaches and their associated risks in order to provide high-quality, insightful audits to the Parliament.

Changes to public service delivery are also heavily influenced by the ever-changing nature of technology. Technology advances have resulted in significant changes and challenges to not only public administration, but also our role as the auditor of government administration. While enabling improvements in service delivery, advances in technology also create an environmental pressure for the sector to work faster and more effectively, while remaining agile.

For example, over the last decade technology has enabled the collection and analysis of large datasets to reveal trends, patterns and associations, and change the interface between citizens, businesses and government. In pursuing advances in technology and data analysis, government continues to improve how it delivers services online. At the same time, the ongoing shift to digital services brings additional risks to stability and security of systems, management of data privacy and integrity, and business continuity. This is particularly evident in the shift towards using smartphone and web-based applications to support the delivery of government services. As such, technology and data analysis play an important role in the ANAO’s work.

In addition, the increased adoption of technology and digital data-based approaches has seen the heightened importance of robust cybersecurity. In both financial and performance auditing, the ANAO has consistently identified findings in entities’ information technology control and security environments. Appropriate cybersecurity, driven by auditing against the mandatory Australian Government frameworks, will remain a focus of our audit work.

Adequate security and privacy measures are critical in managing the proliferation of data capture and storage. At a global level, data breaches are illustrating the importance of maintaining personal privacy when managing large datasets. With growing cybersecurity threats, organisations need to understand their information and data risks and protect their critical information assets – including private, sensitive and security-classified data – from malicious actors. Appropriate security can only be maintained through a considered approach to cyber resilience, supported by effective cyber controls. For the ANAO, appropriate security remains a priority for entity data collected and stored throughout the audit process.

Impact of new legislation

The ANAO must stay cognisant of changes to existing laws and to legislation, especially developments that may impact, or may be perceived to impact, the independence of the Auditor-General.

In September 2020, the Joint Committee of Public Accounts and Audit (JCPAA) resolved to undertake a review of the Auditor-General Act 1997 (the Act). The ANAO’s submission to the review was based on strengthening the independence of the Auditor-General and the ANAO – including the creation of the ANAO as a parliamentary department.

In March 2022, the JCPAA concluded the 2020 review of the Act and presented Report 491: Review of the Auditor-General Act 1997. In the report, the JCPAA noted that it is vital that the Act remains fit for purpose – specifically that the Act must continue to ensure the Auditor-General’s independence and remit, establish clear processes, and interact consistently with other legislation. The report made 27 recommendations, including amendments to the Act and other related legislation. The ANAO considers that the report by the JCPAA provides a strong foundation to strengthen the independence of the Auditor-General and, as a result, the position of the ANAO within the public sector.

Further, throughout the inquiry, the JCPAA showed an interest in the collection of evidence in the ANAO’s work with the emergence of new technology. In February 2022, the ANAO provided an additional submission to the JCPAA outlining the complexities related to the Auditor-General’s information-gathering powers (sections 32 and 33 of the Act), and the potential for legislative amendments to modernise and clarify how information is collected under those powers.

The efficient collection of sufficient and appropriate information, to form the evidence base to support audit opinions and conclusions, is a key issue in the ANAO’s role in supporting the Parliament through independent reporting. With the emergence and adoption of new technology across government, there has been a significant shift away from paper-based evidence to more digitalised formats. This shift has raised questions about the operations of sections 32 and 33 of the Act, specifically the Auditor-General’s ability to:

• require remote access to entity ICT systems for evidence-gathering purposes; and
• to specify the form in which requested information is provided by entities.

Amendments to the legislation could provide greater clarity for future ANAO information gathering to allow more clearly for remote access, and to enable the Auditor-General to specify the form of requested information. The ANAO will continue to support the JCPAA to understand these complexities within our environment, the powers of the Auditor-General under the Act and possible impacts on the conduct of our work.

Beyond considering the recommendations related to the Act, the ANAO continues to remain abreast of changes to policy and legislation within the public sector, including whole-of-government measures. While whole-of-government measures can create operational efficiencies within the public service, requirements for the ANAO to participate in such measures can reduce our ability to provide independent reporting on the accountability and transparency of such arrangements. The ANAO will continue to monitor emerging whole-of-government measures and possible impacts on the ANAO, specifically where they present conflicts for our independence and ability to deliver on our purpose.

Audit profession

Auditing is an important profession. The demand for skilled auditors is high globally, as public and private sectors respond to increasing community expectations of transparency and assurance in their activities. The importance of high-quality audit work has meant significant growth and demand for auditing skills across both sectors – and as such, we remain alert to changes in the audit profession and their impact on the ANAO workforce.

The ANAO is a professional organisation with strong technical and specialist skills. It is through our high-quality, high-performing people that the ANAO produces quality audits and delivers on its purpose to the Parliament. We must continue to invest in our people to support audit now and into the future.

Continuous improvement of staff skills will be a key requirement over the next four years, through the office’s ability to attract, retain and develop quality people. Auditors will always need deep knowledge and experience in traditional areas such as auditing standards, financial accounting and reporting, internal controls, IT, managerial accounting, and taxation. ANAO auditors also need to have:

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

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

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

Maintaining resourcing requirements is a critical area of focus for the ANAO in building our workforce capability. Attrition in the profession, whether in public or private sector auditing, is typically high. We further recognise that the COVID-19 pandemic has posed significant challenges to the university sector, including current and prospective students. These factors, coupled with the increasing demand for audit-related expertise, has resulted in a competitive recruitment environment and tight labour market. The ANAO will continue to monitor the trends emerging across the sector – specifically those that may have long-term impacts on the supply of appropriate candidates who are essential to our audit disciplines.

The ANAO will continue to look for opportunities to build our workforce capability, while maintaining a culture of professionalism and quality and retaining a strong cohort of leaders who can effectively respond to current and emerging challenges.

Technology and data

In delivering our work to the Parliament, it is critical that the ANAO remains responsive to technology and data changes, specifically in analysing how government is using technological advances to support program implementation, service delivery and manage risk. The ANAO recognises that entities are continuously seeking opportunities to implement automated and standardised approaches to find efficiencies, manage risk and support sound decision-making.

Over the last several years, the ANAO has invested in building data analytics capability within our audit work. Data analytics can inform evidence-based policy, drive risk-based compliance and regulatory activities, and enable performance monitoring and measurement. Data analytics has enabled the ANAO to better identify financial reporting, fraud and operational business risks, and tailor our approaches to deliver more targeted risk-based audits. Our continued investment in data analytics, coupled with a digitally confident workforce, will enable the ANAO to better use data to strengthen audit outcomes and present data in a more accessible way to the Parliament.

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

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

The ANAO has developed a strategic organisational plan, Towards 2025. The plan captures key investments we intend to make in our organisational capability to continue to effectively deliver quality audit services to the Parliament. Uplifting our enabling functions will be a critical focus of the plan, to ensure we maintain sufficient operational capability to build, grow and support our organisation.

Workforce

The ANAO is a professional organisation of people with strong specialist and technical skills. We are committed to investing in our people and supporting their development as leading audit and public service professionals.

To support our workforce requirements, we have recently developed a new ANAO workforce plan. The plan outlines how we will attract, develop and retain the capability of our workforce, to ensure we remain suitably skilled to deliver on our purpose to the Parliament – now and into the future.

While competition within the recruitment environment requires us to cast our net wider for talent, our attention has turned further towards our capacity to ‘grow our own’ and support the professional development of our people. While auditing will always require deep knowledge across a range of disciplines, the plan considers the fundamental skills we require in our people and the opportunities that exist to develop the potential of talented individuals to deliver our work. As such, the ANAO will increase our focus on internal training through a refreshed, integrated learning program – the ANAO Academy.

The ANAO Academy has been designed to uplift and refine both the technical and non-technical skills required of our people. The program will deliver a complete learning and development curriculum – tailored to our unique role within the Australian Government sector, the specialist capability required to deliver our audit disciplines, and the leadership potential we will need for the future.

Over the next four years, to support the capability of our workforce and people, the ANAO will:

• source excellent candidates with broad skills and teach them how to become great auditors, strong leaders and exemplary public servants;
• continue to support our people to operate effectively and flexibly within our Canberra, activity-based, work environment;
• improve reporting processes to accurately monitor and evaluate the position of our workforce;
• develop and implement an integrated, comprehensive curriculum approach to learning and development;
• uplift our organisational training capability by investing in internal training and trainers, and adopting a ‘one ANAO’ approach to knowledge sharing;
• grow the organisation’s capacity to deliver effective change management and support our people through change; and
• continue to uphold an organisational culture that is driven by our values – integrity, respect and excellence – and focused on providing a positive working experience for our people.

Productivity

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

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

In particular, the ANAO recognises that we are able to improve audit outcomes by using a data-enabled approach that automates procedures and analysis of relationships between variables. The ANAO is focused on improving automated processes, through data analytics and in-house technology, to strengthen our audit methodologies and outcomes.

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

• continue to embed ways of working that support mobility, collaboration and information sharing across the organisation;
• continue investments in our data capability and use of technology, including:
  • making effective and systematic use of audit analytic solutions to drive audit efficiency; and
  • refining our approach to cybersecurity and cyber resilience audits to respond to emerging risks and parliamentary requests;
• grow our capacity through the use of fit-for-purpose technology and platforms, enabling our people to have the right tools to deliver quality outcomes; and
• continue to support an organisational culture that embraces innovative solutions and encourages digital proficiency.

Technology

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

The ANAO is committed to implementing the technology required to support strategic improvements across the organisation. Our recent investments have empowered our workforce to work securely and remotely – anywhere, anytime. By using contemporary technology, the ANAO will continue to build efficiencies in the work we do and how we deliver it.

Over the next four years, we will make technology investments that:

• continue to enhance the ANAO’s security environment, with a focus on maintaining strong organisational cyber resilience and streamlining secure data governance, collection and classification methods;
• improve our connective technology to support increasingly flexible working patterns, stronger collaboration between staff, enhanced engagement with entities, and integration across systems and tools;
• develop modern, consumption-based cloud computing to enable a robust, flexible and cost-effective technology environment that can readily scale to support peak work patterns;
• build high-capacity data storage and computer platforms to support enhanced data analytics, modelling and automation;
• identify discovery tools to use on unstructured data;
• increase the technical confidence of our people through learning and development; and
• retain the skills capability required to effectively maintain and support our IT infrastructure.

Quality

The quality of ANAO audit work is reliant on the strength of its independence and quality control framework. A sound quality framework supports high-quality audit work and enables the Auditor-General to have confidence in the opinions and conclusions in the reports prepared for the Parliament. This facilitates the Parliament’s confidence that the ANAO operates with independence, and that the audit approach meets the auditing standards set by the Auditor-General.

The ANAO quality framework meets the requirements of Auditing Standard ASQC 1 – Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements. The framework encompasses key elements such as learning and development, delegations, methodology development and review, escalation of accounting policy and qualifications risk, supervisory and arm’s-length internal review, and external review. The ANAO is subject to external review, through peer review arrangements with international colleagues, a voluntary arrangement with the Australian Securities and Investments Commission, and external audits by the Independent Auditor, appointed under section 41 of the Auditor-General Act 1997.

The ANAO publishes its quality assurance framework and plan annually. This document outlines the current quality framework and key activities that we will undertake over the next 12 months. A report against this plan is published annually in August.

Over the next four years, the ANAO will continue its focus on implementing the quality assurance plan and further enhancing the quality framework, with particular emphasis on:

• implementing the revised Australian Quality Management Standards 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; ASQM 2 – Engagement Quality Reviews; and ASA 220 – Quality Management for an Audit of a Financial Report and Other Historical Financial Information by December 2022;
• refining the performance statements audit methodology and continuing to pilot various approaches to completing the performance statements audits;
• finalising the design of an appropriate audit framework against which to test ethics;
• revisiting the methodology associated with auditing ‘efficiency’;
• implementing the revised Auditing Standard ASA 315 – Identifying and Assessing the Risks of Material Misstatement; and
• continuing to expand our root cause analysis program.

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

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

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

The performance measurement framework is based on measuring:

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

Taken together, the performance measures tell a story of how well the ANAO is achieving its purpose. Where the ANAO operates in a contestable environment, we are committed to demonstrating transparency in our operations.

The output measures relay progress in the delivery of the ANAO’s audit work. This audit work generates findings and recommendations for improvement that are directed at entities and tabled in the Parliament. The efficiency measures are intended to demonstrate efficient use of taxpayer resources and a commitment to quality in our work. We use information from public audit offices in other jurisdictions to benchmark much of our performance. The effectiveness and impact measures provide information on entities’ responses to audit findings and implementation of recommendations, and the extent to which the Parliament’s engagement with our work leads to improvements in public sector administration.

The ANAO’s annual report contains our annual performance statements, which assess our performance against the performance measures and provide narrative and analysis.

The three programs and one shared activity that contribute to achieving our purpose are:

• financial statements audit services; 
• performance audit services; 
• performance statements audit services;  and
• shared relationships, corporate and professional services. 

Measuring impact

The ANAO recognises that good performance information should provide insight into not only what we do, and the efficiency and quality of our work, but also its impact. We measure impact through a number of key measures.

For example, the ANAO provides entities with audit findings and recommendations based on observations during the conduct of audits. These findings and recommendations are aimed at assisting entities to improve their performance reporting, internal controls, and business processes. The ANAO measures the percentage of findings and recommendations to which entities agree without qualification, as entities are more likely to fully address findings and implement recommendations that are agreed without qualification.

To measure the impact that the ANAO’s audit work has on public administration, the ANAO also measures the percentage of moderate or significant findings that are addressed by entities. By capturing the findings that are addressed by audited entities, we are able to understand the improvements that are being made within the public sector control environment as a result of our work.

The ANAO’s annual performance statements will also include a narrative on the impact of our audits on public administration by:

• including analysis of key improvements made by entities during an ANAO audit process, based on information included in tabled audit reports;
• reporting on the results of surveys of audited entities; and
• reporting on the JCPAA’s level of satisfaction that the ANAO is providing support to the committee through briefings, submissions, appearances and other mechanisms as requested.

The ANAO’s annual performance statements are audited by an independent auditor, at the request of the Auditor-General.

Financial statements audit services

Financial statements audit services contribute to the ANAO achieving its purpose through:

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

The ANAO audits the annual financial statements of all Australian Government entities and the consolidated financial statements of the Australian Government. The consolidated financial statements present the consolidated whole-of-government financial result inclusive of all Australian Government–controlled entities, including entities outside the general government sector. These audits are designed to give assurance to the Parliament that each entity’s and the whole-of-government financial statements fairly represent their financial operations and positions at year end. Insights and findings from the Financial Statements Audit Services program are tabled in the Parliament twice a year, generally in May and December.

The ANAO also undertakes a range of assurance reviews by arrangement with entities, and in accordance with section 20 of the Auditor-General Act 1997.

The performance measures and targets for financial statements audit services from 2022–23 to 2025–26 are shown below.

Performance audit services

Performance audit services contribute to the ANAO achieving its purpose through:

• audits of the performance of Australian Government programs and entities, including identifying opportunities for improvements and lessons for the sector.

The ANAO’s performance audit activities involve the audit of all or part of an entity’s operations to assess its economy, efficiency, effectiveness, ethics, and legislative and policy compliance. The ANAO identifies areas for improvement in aspects of public administration, and makes specific recommendations to assist public sector entities to improve their program management. Entities indicate their agreement to implement ANAO recommendations in the audit report, which is tabled in the Parliament. In this way, entities inform the Parliament of improvements they intend to make as a result of ANAO audits.

Performance audits are the major factor driving the number of ANAO briefings and submissions to, and appearances before, parliamentary committees. We publish insights from performance audit activities four times a year (Audit Insights), addressing key themes identified through our audit work.

The performance measures and targets for performance audit services from 2022–23 to 2025–26 are shown below.

Performance statements audit services

Performance statements audit services contribute to the ANAO achieving its purpose through:

• audits of the performance statements of selected Australian Government entities.

Performance statements audits are designed to give assurance to the Parliament that an entity’s performance statements have been prepared, in all material respects, in accordance with the requirements of Division 3 of Part 2-3 of the Public Governance, Performance and Accountability Act 2013.

While the ANAO continues to roll out the staged implementation of performance statements audits across the public sector, the Commonwealth Performance Framework does not currently require audited entities to include the performance statements audit conclusion in its annual report (as is the case for financial statements audit opinions). The ANAO continues to provide the Auditor-General’s independent assurance reports on entities’ annual performance statements to the Minster for Finance for tabling in the Parliament.

The performance measures and targets for performance statements audit services from 2022–23 to 2025–26 are shown below.

Relationships, corporate and professional services

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

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

The performance measures and targets for relationships, corporate and professional services from 2022–23 to 2025–26 are shown below.

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

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

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

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

The Executive Board of Management continually monitors the environment in which the ANAO operates, adjusting the ANAO’s risk profile as necessary. The ANAO’s ongoing approach to monitoring risk enables the board to implement mitigation plans and introduce additional controls to bring enterprise risks rated above our tolerance levels back to an acceptable level.

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

The ANAO defines strategic risks as those that can arise due to factors outside the ANAO’s control. We have identified three strategic risks, which are managed in line with the risk management framework. The strategic risks are:

• the ANAO’s capacity for independent reporting is reduced;
• Parliament questioning the ANAO’s ability to execute its mandate; and
• the ANAO is unable to deliver expected targets (in accordance with Parliament’s expectation and established performance measures).

The ANAO further recognises that the risk environment for Commonwealth entities is dynamic. As a result, the ANAO must continuously monitor the risk to entities’ ability to provide accurate evidence for audits. Where appropriate, the ANAO may adjust audit plans to ensure that quality is retained and auditing standards are not compromised. The ANAO maintains ongoing contact with contracted audit service providers to ensure consistent application of the auditing standards and the ANAO’s audit manual.