As acting Auditor-General, I am responsible for the evaluation of the Australian National Audit Office (ANAO) Quality Management Framework.

My evaluation is based on the matters outlined in the accompanying ANAO Audit Quality Report 2023–24. The ANAO has undertaken remediation procedures where the ANAO quality assurance review program identified a significant finding that was deemed to be a departure from the ANAO Auditing Standards (see paragraph 3.96). Through the completion of remediation procedures and enhanced documentation that met the ANAO Auditing Standards, I am satisfied that the deficiencies have been appropriately remediated at the time of this evaluation. The ANAO has also designed and implemented remedial actions that strengthen the quality management framework in response to opportunities for improvement identified in our quality assurance review program, including root cause analysis.

Based on my evaluation, I have concluded that the ANAO Quality Management Framework was operating effectively for the year ended 30 June 2024, and provides reasonable assurance that:

• The ANAO and its personnel fulfill their responsibilities in accordance with AUASB standards and applicable legal and regulatory requirements, including the Auditor-General Act 1997 and the Australian National Audit Office Auditing Standards 2024, and conduct engagements in accordance with such standards and requirements; and
• Engagement reports issued by the ANAO are appropriate in the circumstances.

Rona Mellor PSM
Acting Auditor-General
31 October 2024

Audit quality reporting

1.1 The purpose of the Australian National Audit Office (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.

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

Framework for quality

1.3 The ANAO is established under the Auditor-General Act 1997 (the Act). Section 24 of the Act requires the Auditor-General to set auditing standards that are to be complied with by persons performing functions under the Act. The ANAO Auditing Standards set under this provision incorporate standards issued by the Auditing and Assurance Standards Board (AUASB) and relevant auditing and assurance standards issued by standard-setting bodies other than the AUASB as appropriate. Specific to quality management, this includes 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 1).

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

Purpose of the audit quality report

1.5 In accordance with ASQM 1 the ANAO has established and maintains a system of quality management. The system of quality management is set out in the Quality Management Framework and Plan 2023–24 and is designed to provide the ANAO with reasonable assurance that:

• the ANAO and its staff fulfill their responsibilities in accordance with the ANAO Auditing Standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and
• reports issued by the ANAO are appropriate in the circumstances.

1.6 This Quality Report provides transparency in respect of the processes, policies, and procedures that support each element of audit quality as described in the ANAO Quality Management Framework, and reports on the 2023–24 audit quality indicators. These indicators assess ANAO performance against benchmarks for the year ended 30 June 2024.

Audit quality indicators

1.7 Audit quality indicators (AQIs) are reliable quantitative measures regarding the audit process. AQIs are considered alongside relevant qualitative information to identify insights into factors that may influence audit quality. Measuring AQIs can strengthen audit quality through assisting in understanding the root causes of quality inspection findings and informing discussions about auditing processes and appropriate benchmarks. This in turn leads to improved audit planning, execution, and communication and, where root causes are identified, improved remediation procedures that address the drivers of quality deficiencies.

1.8 The ANAO measures 10 AQIs and has identified benchmarks for each of these AQIs against which performance is considered. The identified benchmarks are not targets, but provide context for consideration of the results of the AQIs along with qualitative information and prior year results. Four AQIs are measures from the Australasian Council of Auditors-General (ACAG) annual macro benchmarking survey in which most Australian audit offices¹, including the ANAO, participate. The purpose of the survey is to provide comparable information and benchmarks to audit offices across Australasia. ANAO benchmarks for the AQIs derived from the ACAG macro benchmarking are developed using past results of comparable audit offices² taken from this survey and adjusted to calculate a three-year rolling average. This may cause variation in the benchmarks from year to year. The remaining six AQIs and related benchmarks are derived from ANAO Audit Manual policy requirements, the ANAO Workforce Plan and leadership expectations regarding independence and audit quality. The Quality Management Framework and Plan 2023–24 outlines the source of each of the benchmarks.

2.1 The ANAO employed 429 ongoing staff as at 30 June 2024. ANAO staff come from a range of disciplines including commerce, accounting, finance, economics, public policy, law, science, social sciences, and information technology.

2.2 The ANAO tabled 49 reports in Parliament in 2023–24. These reports included 45 performance audits, two reports on the financial statements of Australian Government entities, the Major Projects Review, and a report on the audits of performance statements for the reporting period 2022–23. In 2023–24 the ANAO issued 245 opinions on mandated financial statements audits, completed a further 50 audits by arrangement and issued 10 performance statements audit opinions. In 2023–24 the ANAO also published five Insights products, which included four Audit Lessons publications to communicate lessons from ANAO audit work to make it easier for people working within the Australian public sector to apply those lessons, and one Insights: Audit Opinion publication to provide the Auditor-General’s views on key issues facing the Australian public sector.

2023–24 Audit quality indicator results

2.3 The ANAO measures and reports against 10 AQIs.³ Table 2.1 summarises the 2023–24 ANAO results against each AQI.

Table 2.1: Summary of 2023–24 ANAO results against each Audit quality indicator

2.4 The ANAO’s 2023–24 results against benchmarks indicate that there are opportunities to improve the implementation of the quality management framework. The ANAO has assessed each of the areas where the results were not consistent with the benchmark to understand the drivers for the results and develop action items to strengthen the framework. The assessment and actions are summarised below:

• The analysis of material restatements resulting from a prior period error. The cause of material restatements is assessed by the ANAO to determine whether they are errors that should have been identified in the previous year’s audit. This can also indicate whether there are risks to audit quality that need to be addressed. Where prior period errors have been identified, this will form part of the risk assessment process in selecting audit files for the 2024–25 quality assurance review program.
• Turnover of audit personnel remains not consistent with the benchmark for financial statements and performance audit staff. Additionally, ANAO total staff numbers have increased from 409 at 30 June 2023 to 429 as at 30 June 2024 (4.6% increase). These factors increase the risk to audit quality in the area of staff capability. The mitigation to this risk is increasing staff training.
• Training hours per audit professional has increased for performance audit and is not consistent with the benchmark. The increase is due to an increase in the amount of internal technical training completed by performance audit staff. The amount of training hours performed by financial statements auditors and performance statements auditors also remains not consistent with the benchmark, but has decreased compared to prior year.
• Staff audit workload for performance audit remains not consistent with the benchmark due to the increase in number of new starters and consequently the impact on hours charged to audits which include additional supervision.
• Technical accounting and auditing resources remain not consistent with the benchmark. The ANAO has additional technical resources in comparison to other audit offices as it has a greater range of products, including the Major Projects Report, performance statements audit and standardised data analytics solutions which require methodology and quality assurance.
• Quality assurance review coverage is not consistent with the benchmark however the ANAO is comfortable with the coverage of Engagement Executives for in-house and contract-out audits being in line with or exceeding the policy requirements.
• To address the significant finding identified in the ANAO’s internal quality review program, the ANAO conducted a root cause analysis and designed targeted action items to address the drivers of the findings. Implementation of the action items is monitored by the Quality Committee.

2.5 Chapter 3 outlines the results of the 2023–24 audit quality indicators under each element of the ANAO Quality Management Framework with further explanations of the results and the impacts on audit quality.

2.6 The ANAO will continue its focus on the implementation of quality management activities and make further enhancements to the quality framework in 2024–25 as set out in the ANAO Corporate Plan, with particular emphasis on:

• refining our processes for the evaluation of the Quality Management Framework, including implementing lessons learnt from our inaugural evaluation;
• strengthening our root cause analysis program by identifying the key quality risks arising from thematic quality deficiencies to ensure remediation activities effectively address those risks;
• developing an ANAO sustainability assurance methodology for audits of Commonwealth entity climate disclosures; and
• expanding the conduct of internal special monitoring programs, including inspections of specific aspects of auditing across multiple audits to assess compliance with auditing standards and methodology.

Quality Management Plan and deliverables for 2023–24

2.7 The Quality Management Framework and Plan 2023–24 set out 29 key deliverables. Progress against these deliverables as at 30 June 2024 was:

• 20 deliverables completed;
• eight deliverables in progress; and
• one deliverable did not proceed.

2.8 The status of deliverables as at 30 June 2024 is discussed further in Chapter 4.

3.1 This chapter outlines the activities conducted by the ANAO in 2023–24 under each element of the ANAO Quality Management Framework. It also includes the results of the 2023–24 audit quality indicators against benchmarks.

Responsibilities for the system of quality management

3.2 The Auditor-General is ultimately responsible and accountable for the system of quality management in place for all assurance and related activities undertaken by the ANAO.

3.3 The Deputy Auditor-General is operationally responsible for ensuring that the system of quality management satisfies the requirements of the ANAO Auditing Standards. In 2023–24 the Deputy Auditor-General was assisted with this role by the Group Executive Directors (GEDs) of each of the ANAO’s six business groups:

• Financial Statements Audit Services Group (FSASG);
• Performance Audit Services Group (PASG);
• Performance Statements Audit Services Group (PSASG);
• Systems Assurance and Data Analytics Group (SADA);
• Professional Services Group (PSG); and
• Corporate Management Group (CMG).

3.4 The Auditor-General is supported and advised by the Executive Board of Management (EBOM) in achieving the ANAO’s purpose. The Deputy Auditor-General, the GEDs of the six business groups and the Chief Financial Officer (CFO) are members of EBOM.

The Quality Committee

3.5 Governance for audit quality is provided through the Quality Committee (a sub-committee of EBOM). The role of the Quality Committee includes monitoring the implementation of the ANAO Quality Management Framework and Plan. The Quality Committee is comprised of representatives from all ANAO business groups and is chaired by the PSG GED.

3.6 The Quality Committee met five times during 2023–24, including a special meeting for the evaluation of the System of Quality Management (SOQM) for the 2022–23 year, and reported on its activities to EBOM. In 2023–24 the Quality Committee, in accordance with its terms of reference:

• reviewed the findings of external and internal reviews in relation to quality;
• monitored the ANAO’s progress in addressing the findings and recommendations made in external and internal reviews;
• monitored and reported to EBOM on the implementation, operating effectiveness and efficiency of the Quality Management Framework, having regard to the findings of external and internal reviews and the audit quality indicators;
• advised the Auditor-General on whether the operation of the Quality Management Framework provides reasonable assurance that the ANAO’s quality objectives are being achieved;
• monitored the strategic and operational risks associated with quality; and
• considered and endorsed proposed amendments to the ANAO Audit Manual that substantially impact the conduct of an audit prior to the Auditor-General’s approval.

3.7 A summary of the Quality Committee membership and meetings attended in 2023–24 is provided in Table 3.1.

Table 3.1: Quality Committee membership and meetings attended 2023–24

Note a: S = a Special Quality Committee meeting was held to discuss evaluation of ANAO Quality Management Framework.

Note b: P = Proxy, the Quality Committee member was unable to attend the Committee meeting; a nominated proxy attended on their behalf.

The ANAO’s risk assessment process

3.8 The ANAO has designed and implemented a risk management framework which shapes our strategic direction, contributes to evidence-based decision-making and is embedded into business-as-usual practices. Risk management is integrated into our governance structure and is supported by the Enterprise Risk Register, which sets out the ANAO’s strategic and operational risks.

3.9 The ANAO has established the quality objectives required by ASQM 1 and one additional ANAO-specific quality objective.⁴ The ANAO Quality Risk Assessment identifies and assesses risks that may affect the achievement of those quality objectives and supports the design and implementation of responses to address those risks. The Quality Risk Assessment is informed by the ANAO Enterprise Risk Register.

3.10 The process of risk assessment is iterative. The ANAO’s quality objectives and quality risks are reviewed on an annual basis to support the annual review of the Quality Management Framework. The annual review considers the Auditor-General’s evaluation of whether the Quality Management Framework provides reasonable assurance that the ANAO’s quality objectives are being achieved.

3.11 In 2023–24, the Quality Committee reviewed and considered the quality objectives and quality risks. Following the number of unsatisfactory quality assurance review results identified during 2022–23 and reported in the Audit Quality Report 2022–23, EBOM increased the strategic risk relating to audit quality from moderate to high. The response to the elevated risk was monthly reporting to EBOM of progress against the action plan put in place to address the recommendations arising from the quality assurance reviews.

Governance and leadership

Commitment to quality through culture, actions and behaviours

3.12 The Auditor-General sets the tone at the top and demonstrates a leadership commitment to audit quality and culture by articulating the importance of quality in ANAO Executive discussions, monthly EBOM meetings, and all staff communications including town hall meetings and the Auditor-General’s monthly messages to staff. Through this communication, the Auditor-General promulgates the expectation that all ANAO staff take a shared responsibility for quality and view the monitoring activities as an opportunity to continuously improve.

3.13 GEDs reinforce the Auditor-General’s expectations and focus on audit quality through group staff meetings, cohort forums and communications. Engagement Executives support quality in their portfolio of audits by providing direction to audit teams, by reviewing audit work, and through increased involvement in critical areas of judgement, significant risk and difficult or contentious matters.

3.14 The ANAO Corporate Plan 2023–24 includes quality as one of the four key capability areas that the ANAO invests in to support the ANAO in achieving its purpose. Audit quality is a shared responsibility for all staff and each business group plan includes the ‘quality’ capability and outlines the activities, and measures of success, that each group is responsible for leading or supporting.

Leadership responsibility, and roles and responsibilities

3.15 The ANAO Audit Manual assigns specific responsibilities for quality to senior leaders.

• The PSG GED is responsible for the ANAO audit methodology, which supports compliance with the ANAO Auditing Standards.
• The FSASG, PASG, PSASG and SADA GEDs are responsible for the delivery of quality audit services within their respective business units.
• The FSASG, PASG, PSASG and SADA Engagement Executives are responsible for quality within their portfolio of audits and supporting the GEDs in the delivery and management of quality audit services.
• The CMG COO is responsible for the design, execution and maintenance of policies supporting the Quality Management Framework in respect of human resources, IT security and support, external communications, legal advice, learning and development and the design and implementation of the ANAO Academy.

3.16 The ANAO organisational structure is consistent with the assignment of roles and responsibilities for quality set out above and in the ANAO Audit Manual and Quality Management Framework.

3.17 The fulfilment of leadership responsibilities is assessed in quality assurance (QA) reviews through review of Engagement Executive involvement in an audit. Any issues in leadership responsibilities are highlighted in the reports to EBOM as part of the results of the QA review program. The results of QA reviews conducted in 2023–24 are set out below from paragraph 3.92 onwards.

Resource needs consistent with commitment to quality

3.18 The ANAO takes a strategic approach to resourcing and workforce management to position and strengthen its workforce to achieve its purpose, which includes achieving audit quality. Investment is made in people through recruitment; learning and development; and managing, leading and supporting employees. The ANAO’s policies on human resources are further discussed below from paragraph 3.45 onwards.

Relevant ethical requirements

3.19 ANAO staff act in accordance with the Australian Public Service (APS) values and the Code of Conduct set out in the Public Service Act 1999. The ANAO core values are 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 values promote audit quality by encouraging staff to perform their duties objectively, impartially and in the best interests of the Parliament. The ANAO holds itself to high standards to ensure independence and accountability across all levels of the organisation.

Independence

3.20 In audit engagements, it is in the public interest and required by the ANAO Auditing Standards that auditors are independent of the entity subject to audit. Independence comprises both independence of mind and independence in appearance and is fundamental to the ANAO’s ability to act with integrity, to be objective and to maintain an attitude of professional scepticism. The Auditor-General emphasises the importance of maintaining the independence and integrity of the ANAO in staff communications, including town hall meetings and the Auditor-General’s monthly messages to staff.

3.21 Under the ANAO independence policies, suspected or actual contraventions of the independence requirements of legislation, APES 110 Code of Ethics for Professional Accountants (including Independence Standards) or ANAO policy requirements must be reported immediately to the responsible GED.

Table 3.2: Audit Quality Indicator – Compliance with independence requirements

3.22 No independence breaches were reported during 2023–24.

3.23 Independence breaches captured in this Audit Quality Indicator represent instances where APES 110 requirements and ANAO independence policies, excluding documentation deficiencies, have not been met.

3.24 As part of our quality assurance program, the ANAO monitors compliance with independence policies, including documentation requirements. Compliance with independence documentation requirements is also monitored annually by ANAO Internal Audit. Table 3.3 provides the results from the monitoring of compliance with the ANAO independence documentation requirements. Documentation deficiencies include instances where the audit file does not demonstrate that there are no threats to independence or if there are threats identified how they have been mitigated. When detected these instances are considered and assessed to ensure that the documentation deficiencies do not constitute actual breaches of independence.

Table 3.3: Compliance with ANAO independence documentation requirements

3.25 The monitoring of independence requirements identified instances where required individual audit team member declarations had not been completed. The number of instances of non-compliance with independence documentation requirements has decreased from the prior year for all service groups. The internal auditor’s review of compliance with ANAO independence documentation requirements did not identify any instances of non-compliance with the requirements which is a positive outcome, however it did observe a number of instances where independence declarations were completed after commencing audit work. Timing of completion of independence declarations was not considered or assessed by internal audit in previous years. The ANAO will further investigate the observations raised by internal audit. The ANAO has a strong focus on independence and ensuring that the audit file contains a complete record of auditor independence and will continue to strive for full compliance with completion of independence declarations. The results of the quality assurance program are reported to the responsible Engagement Executive, the Quality Committee and EBOM.

Rotation of key audit personnel

3.26 The ANAO independence policies set key audit personnel rotation requirements for financial statements audits to safeguard against the threat to independence that may arise from a long association with an auditee. While the rotation requirements are specific to financial statements audits, all ANAO staff participating in audits must comply with independence requirements in respect of long association with the auditee.

3.27 Key audit personnel rotation was undertaken in 2023–24 in accordance with the ANAO’s independence policies. All Engagement Executives and Engagement Quality Reviewers qualifying for rotation were either rotated or an extension was approved by the FSASG GED in line with the ANAO independence policies. In the 2023–24 financial statements audit cycle, the Engagement Executive on one audit was rotated in line with key audit personnel rotation requirements and approvals for extensions were obtained for two audits. The ANAO’s rotation requirements are more demanding than the requirements of APES 110, and all extensions for Engagement Executives were compliant with APES 110.

Other services

3.28 Where the ANAO resources the performance of an audit, or part of an audit, through contracting a private sector firm, that firm is required by ANAO policy to request approval from the ANAO to provide other services to auditees.

3.29 In 2023–24 the ANAO approved 14 requests from private sector firms to provide other services to ANAO auditees. Two requests to provide other services were not approved as the proposed services were not consistent with ANAO Audit Manual policies and the requirements of APES 110. The proposed services included providing assistance with applying climate related disclosures which created a self-review threat, and grant application compilation services which created a self-interest / advocacy threat.

Gifts and benefits monitoring

3.30 ANAO employees must report any offered gift or benefit (whether accepted or refused) in the gifts and benefits register.

3.31 The data collected through the internal gifts and benefits register is reported to EBOM, and deidentified information is reported publicly on the ANAO website to promote transparency.

Audit mandate and selection

3.32 The Auditor-General publishes an Annual Audit Work Program (AAWP) in July each year which outlines the proposed audit activities to be undertaken in the financial year. From the 95 potential topics included in the 2023–24 AAWP, 45 audits were commenced, of which 20 audits have been tabled⁵ and 25 remain underway as at 30 June 2024.

3.33 The ANAO provided a draft of the 2024–25 AAWP to the Parliament for consultation through the JCPAA, consistent with the Auditor-General’s requirement in the Auditor-General Act 1997 to have regard to the audit priorities of the Parliament. The JCPAA identified 25 audit priority topics and did not identify new topics for the program. Of these 25 topics:

• 21 were included, in whole or in part, in the 2024–25 AAWP;
• two were topics that had already commenced and were therefore not included in the final program; and
• two topics will be reconsidered as part of the 2025–26 AAWP development.

3.34 The ANAO tabled 49 reports in Parliament in 2023–24. These reports included 45 performance audits, two reports on the financial statements of Australian Government entities, the Major Projects Review, and a report on the audits of performance statements for the reporting period 2022–23. In 2023–24 the ANAO issued 245 opinions on mandated financial statements audits and completed a further 50 audits by arrangement. The ANAO also issued audit opinions on the performance statements of 10 Commonwealth entities in accordance with a request from the Finance Minister, and commenced the audits of 14 entities’ 2023–24 performance statements, an increase of four entities from the 2022–23 performance statements audit program.

Engagement performance

Consultation

3.35 The ANAO Audit Manual includes policies requiring consultation on difficult or contentious matters.

3.36 The ANAO has a Qualifications and Technical Advisory Committee (QTAC), which provides a forum for Engagement Executives to consult on difficult or contentious matters and, where necessary, resolve differences of opinion on audit related matters.

3.37 In 2023–24 QTAC was consulted on 26 matters (27 matters in 2022–23). The number of matters consulted on in 2023–24 remains consistent with the prior year.

3.38 There was previously a requirement in the ANAO Audit Manual to consult with the FSASG GED when material errors or misstatements are detected that relate to prior year financial statements on which the ANAO has issued an unqualified auditor’s report. The ANAO Audit Manual was updated during 2023–24 to also require consultation with PSG when material prior period errors or misstatements are detected. This change was made in response to the increase in number of material errors or misstatements identified during 2023–24.

3.39 The number and impact of restatements for errors are generally considered a signal of possible areas of concern in the audit process. This indicator places restatements in context by focusing on their magnitude and overall impact on the financial statements. The restatements are assessed for materiality at the individual engagement level. The measure includes all financial statements audits, including non-mandated audits. Restatements that were below materiality or related to reclassifications or disclosures with no net impact on the financial result or position have not been included in the totals.

Table 3.4: Audit Quality Indicator – Material restatements resulting from a prior period error

Note a: The financial statements audit cycle for 30 June year end reports is 1 October to 30 September. Therefore the 2023–24 results in the table above record the number of restatements identified in 2022–23 financial statements audits which are finalised within the 2023–24 reporting period.

3.40 The number of restatements of financial statements resulting from prior period errors was not consistent with the benchmark. The largest restatement related to incorrect capitalisation of software as a service, which was identified by the auditee following an internal review of end-to-end processes for accounting and management of software assets. The internal review identified early stage software-as-a-service project costs that did not meet the asset recognition criteria under AASB 138 Intangible Assets and were incorrectly recognised as non-financial assets instead of being recorded in operating expenses. This was not identified by the audit during the relevant reporting period.

3.41 The cause of material restatements is assessed by the ANAO to determine whether they are errors that should have been identified in the previous year audit and if so, whether there are risks to audit quality that need to be addressed. Where prior period errors have been identified, this will form part of the risk assessment process in selecting audit files for the 2024–25 quality assurance review program.

Engagement quality review policies and monitoring of compliance

3.42 An Engagement Quality Reviewer (EQR) is required under ANAO Audit Manual policy to be appointed to certain audits, including high risk audits and audits of entities determined to be public interest entities (PIEs)⁶. The EQR provides an objective evaluation of the significant judgements made by the audit team and conclusions reached in formulating the audit report.

3.43 Reviews conducted as part of the ANAO Quality Assurance Program consider compliance with the EQR policy including assessments of whether an EQR was required to be appointed, if an appointed EQR met the eligibility criteria and if the documentation of that involvement throughout the audit was in accordance with the ANAO Audit Manual requirements.

3.44 In 2023–24, 11 financial statements engagements were rated as high risk and an EQR was appointed. In 2023–24, 10 financial statements audits were assessed as PIEs, and three of these audits were assessed as high-risk engagements. EQRs were appointed to all PIE audits, with the exception of one audit where approval was obtained by the Auditor-General to appoint a second reviewer rather than an EQR. This exception was made as the Auditor-General was the signing officer. Seven performance statements audits were rated as high-risk audits and an EQR was appointed. One performance audit tabled in 2023–24 was rated as a high-risk audit and an EQR was appointed.

Resources

Human resources

Qualified personnel

3.45 The ANAO’s human resources policies and procedures support the selection of employees who have the necessary integrity, capability and competence to perform the work required.

3.46 The degree and nature of the changes in an audit team from year to year are an input in determining the readiness and ability of the team to perform a quality audit. Some level of attrition is expected but a comparatively high rate of turnover or frequent auditor transfers within the office may adversely affect audit quality. The benefit of retaining an audit team’s experience with a particular auditee needs to be carefully balanced with the benefit of adding new auditors who may provide a fresh look at audit issues.

Table 3.5: Audit Quality Indicator – Turnovera of audit personnel

Note a: Movement between business areas within the ANAO are not counted as turnover in this table; only departures from the ANAO are reported.

3.47 In 2023–24, the turnover rate for FSASG, PSASG, and PASG decreased from prior year and turnover for SADA increased. All results remain not consistent with the benchmark.

3.48 Attrition in the profession, whether in public or private sector auditing, is typically high. As set out in the ANAO Corporate Plan 2024–25, the ANAO will focus on identifying opportunities and mechanisms to support retention across the ANAO. In 2024–25, the ANAO will continue to implement the initiatives set out in the ANAO Workforce Plan 2022–25, which outlines how we will attract, develop and retain a highly capable workforce to ensure we remain suitably skilled to deliver on our purpose to the Parliament.

Performance and career development

3.49 The ANAO recognises that its reputation relies on high performing individuals. It is important that staff are trusted for their expertise, are effective at engaging others, and contribute to maintaining a supportive and productive workplace. The ANAO’s Performance and Career Development Policy and Procedures have been designed to facilitate high performance across the ANAO, which in turn supports the ANAO to achieve its business and quality objectives and support high audit quality.

3.50 The ANAO performance assessment cycle is from 1 November to 31 October. The results for the performance cycle ending 31 October 2023 are reported in the ANAO Annual Report in Appendix C and 99 per cent of our staff were rated as meeting expectations or higher (31 October 2022: 99 per cent).

Learning and development

3.51 As a learning organisation with a focus on audit quality, the ANAO supports staff with continuous learning and development.

3.52 Regular technical update training sessions are provided to audit staff. Technical updates cover new auditing and accounting standard requirements, financial reporting framework developments, and changes in audit policy and methodology. In 2023–24, nine technical update sessions were held for FSASG staff, five were held for PASG staff, eight for PSASG staff and 11 for SADA staff.

3.53 In 2023–24, the ANAO made available a webinar recording to contractor firms that conduct financial statements audits on behalf of the ANAO to communicate public sector specific audit considerations and lessons learnt from quality assurance reviews.

Table 3.6: Audit Quality Indicator – Training hours per audit professional

Note a: Note a: The 2022-23 plan benchmark was 20 hours. The ANAO has changed the source of the benchmark from the minimum training hours requirement set in ANAO audit manual policy to a benchmark set from the results of comparable ACAG audit offices. A rounded average of financial, performance statements and performance auditor training hours has been used to determine one ANAO-wide benchmark for training hours per audit professional.

3.54 The training hours per audit professional for all audit groups is not consistent with the benchmark for 2023–24.

3.55 All ANAO staff, including non-audit professionals, must complete a minimum of 20 training hours annually, as required under ANAO Audit Manual policy. The benchmark for professional development for 2023–24 of 80 hours is derived from the average training hours of comparable ACAG audit offices. The benchmark will further increase to 90 hours of professional development per audit professional as outlined within the Quality Management Framework and Plan 2024–25 to align with recent ACAG audit office training hour results.

3.56 The training hours captured in this AQI include all forms of learning and development including internal and external training, the graduate development program and ANAO Talent Management Program, except on-the-job coaching and mentoring hours. From 2023–24, the ACAG Macro benchmarking survey amended the definition of training hours to incorporate on-the-job coaching and mentoring hours. The benchmark for 2023–24 does not incorporate the additional hours, thus the result for 2023–24 excludes on-the-job training hours. If on-the-job training hours were to be included in this result, FSASG and PSASG staff training hours would be 103 hours, and PASG staff training hours would be 143 hours for 2023–24. The ANAO has focused on implementing mentoring and coaching for lateral hires, particularly at the audit manager level.

3.57 The total training hours reported for financial statements and performance statements staff has decreased compared to the prior year. The total training hours reported for performance audit staff has increased relative to prior year. This increase is primarily due to an increase in the number of internal technical training hours as a result of the increase in staff in PASG during the year to increase the number of performance audits conducted. Specific training is required for new performance auditors given the absence of formal qualifications in the auditing profession for this type of auditing.

3.58 The ANAO continues to have a strong focus on learning and development and, as set out in the ANAO Corporate Plan 2024–25, has been increasing its focus on internal training through a refreshed, integrated learning program – the ANAO Academy. The ANAO Academy is designed to uplift and refine both the technical and non-technical skills required of our people. The Academy encompasses a complete learning and development curriculum tailored to our unique role within the Australian Government sector, the specialist capability required to deliver our audit work, and the leadership potential we will need for the future.

3.59 ANAO staff are also required to complete mandatory e-learning courses.⁷ A summary of the completion of mandatory e-learning courses as at 30 June 2024 is provided in Table 3.7.

Table 3.7: Staff completion of mandatory e-learning courses

3.60 A completion rate of 100% is not expected due to varying due dates for each staff member. CMG is investigating whether a universal due date for e-learn courses can be implemented in the future. Information on the completion of mandatory e-learning courses is regularly reported to the EBOM and GEDs.

3.61 In addition to completion of mandatory e-learning courses, new starters at the ANAO are required to complete mandatory induction training. In 2023–24, 93 per cent of new starters completed mandatory new starter induction training within one month of commencing. Five per cent attended outside of one month, one per cent departed the ANAO prior to attending and one per cent were exempt from attending.

Staff workloads

3.62 ANAO polices for the allocation of Engagement Executives and staff to audits ensure that engagement teams have the appropriate level of expertise and time to perform their role. Under these policies the workload and availability of Engagement Executives is monitored to ensure they have sufficient time to adequately discharge their responsibilities. The following audit quality indicator provides information about the time FSASG and PSASG Engagement Executives spend on in-house audits.

Table 3.8: Audit Quality Indicator – Staffing leverage

Note a: The 2022–23 plan benchmark was 0.08.

3.63 The engagement leader is the Engagement Executive who has direct responsibility for the conduct of an audit and who is either the signing officer or who makes recommendations to the signing officer in respect of the audit opinion. Engagement leaders are responsible for oversight of the audit and the audit team, which will include less experienced staff. Sufficient time to oversee the work of the audit staff is critical to quality.

3.64 In 2023–24, the total ratio of engagement leader hours is consistent with the benchmark set by the ANAO. Engagement leader hours in PSASG decreased from the prior year due to a decrease in complexity of issues arising in audits and maturity of audit approach and methodology.

3.65 Table 3.9 sets out the percentage of time spent by the senior members of the audit team including Engagement Executives, Audit Managers and Engagement Quality Reviewers.

Table 3.9: Audit Quality Indicator – Engagement Executive and manager audit workload

Note a: The 2022–23 plan benchmark was 38%

3.66 Excessive workloads could prevent Engagement Executives and audit managers from giving adequate and focused attention to an audit engagement. This measure can provide perspective on the involvement of senior personnel in audits. The lower the amount of senior time, the greater the risk that senior staff will have insufficient time to supervise and review staff work and evaluate audit judgements. Inadequate levels of supervision raise the risk of less effective audit procedures and a reduction in audit quality.

3.67 The Engagement Executive and manager workload for financial statements and performance statements audit staff has decreased and is consistent with the benchmark. The performance audit Engagement Executive and manager workload increased from prior year and is consistent with the benchmark. In 2023–24, the ANAO methodology for capturing Engagement Executive and audit manager workload was amended to incorporate performance audit EL1 level staff who are responsible for performing the roles and responsibilities of an audit manager. In 2023–24 there were 21 EL1 audit managers in performance audit who are captured in this result, resulting in the increase in result compared to 2022–23. The 2022–23 result for PASG does not capture the EL1 audit manager time for 16 EL1 staff members who were responsible for performing the roles and responsibilities of an audit manager.

Table 3.10: Audit Quality Indicator – Staff audit workload

Note a: Chargeable hours refers to the number of hours charged to audits.

3.68 An excessive workload increases the risk that staff may have insufficient time to appropriately perform the necessary audit procedures and steps that deliver a quality audit. Staff may become less effective when working long hours. The requirement that audit team members have sufficient time to perform a quality audit is set out in the Australian Quality Management Standards, including ASQM 1.

3.69 In 2023–24, staff audit workload for financial statements and performance statements audit staff decreased from prior year and remains consistent with the benchmark. Staff audit workload for performance audit staff decreased from prior year and remains not consistent with the benchmark. The increased numbers of new starters due to expansion in performance audit has resulted in a higher level of training performed by the new starters, and consequently impacted the hours charged to audit. The focus on coaching and mentoring from experienced staff also impacted on the staff audit workload as the time spent coaching and mentoring new starters is not captured in the audit time.

3.70 The objective of the ANAO resourcing model and policies is to ensure that staff have sufficient capacity to undertake a quality audit, and Engagement Executives and audit managers have sufficient time to not only undertake appropriate review and supervision, but also to coach and mentor staff to improve staff capability and development.

Internal and external specialists and technical resources

3.71 PSG provides internal professional services such as technical accounting and audit support and quality assurance services. Access to technical accounting and auditing resources enables audit teams to consult on complex matters identified during an audit. As set out in paragraphs 3.35 and 3.36, QTAC also provides a forum for consultation on complex matters; PSG acts as secretariat to QTAC.

3.72 Table 3.11 shows the ANAO expenditure on technical accounting and auditing resources, including PSG accounting and audit technical, methodology support and training expenditure.

Table 3.11: Audit Quality Indicator – Technical accounting and auditing resources

3.73 The expenditure on technical resources in 2023–24 has decreased from prior year and remains not consistent with the benchmark. The ANAO has additional technical resources in comparison to other audit offices as it has a greater range of products, including the Major Projects Report, performance statements audit and standardised data analytics solutions which require methodology and quality assurance.

3.74 In addition to the resources captured in the AQI above, to further support the delivery of quality audits, the ANAO also uses external subject matter and technical experts where a specific need has been identified, including:

• the engagement of audit firms to conduct financial statements audits when specialist industry knowledge is not readily available in-house; and
• the engagement of auditor experts in both financial statements and performance audits as required.

Technological resources

3.75 The ANAO SADA group supports audit evidence-gathering and analysis through providing Information Technology (IT) and data specialists with audit capability for analysing the IT environment, IT general and application controls, system-generated reports, and data. SADA is responsible for the development of standardised data analytics solutions to provide a standard, data-driven approach to some of the common areas of financial statements audit testing to improve the efficiency of audit procedures, while enhancing audit quality. In 2023–24, SADA:

• continued the implementation of three existing standardised solutions for employee expenses, general ledger journals, appropriations;
• piloted a new non-financial assets testing solution;
• piloted a new data analytics solution for centralisation of transactional data for use across the audit with built in completeness checking; and
• piloted new solutions for data-driven IT general controls testing for SAP.

3.76 The standardised data analytics solutions have been designed to support teams in executing the procedures by providing standardised data requests and templates and identifying exceptions and risk areas for further investigation. This allows teams to spend more time focusing on judgements and conclusions rather than developing their own processes. The ANAO Quality Committee approves the development of standardised solutions. PSG approves that the standardised solutions align with the ANAO’s audit methodology.

Intellectual resources

3.77 ANAO auditors apply a robust methodology which includes the ANAO Audit Manual and standardised tools and templates to assist in the consistent application and documentation of audit procedures. Application of this methodology ensures compliance with the ANAO Auditing Standards and provides for consistent quality across audits.

3.78 The ANAO Audit Manual, methodology and supporting tools and templates are reviewed on an annual basis. The review process incorporates any improvements or amendments arising from changes in the ANAO auditing standards, responses to findings from quality monitoring processes and audit staff consultation. In 2023–24, key updates to the methodology included finalising 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.

Information and communication

Information systems

3.79 The ANAO uses a number of information systems which supports its system of quality management and the performance of engagements, including:

• TeamMate – the ANAO’s project management software, which is used to retain an electronic version of the audit file;
• E-Hive – the ANAO’s enterprise document management system;
• Saviom – the ANAO’s enterprise resource management and workforce planning system;
• Aurion Timekeeper – the ANAO’s time recording system;
• Learning Management System;
• SharePoint – the ANAO intranet;
• ANAO website;
• data analytics tools and e-discovery tools; and
• Microsoft applications such as Excel and Teams.

3.80 CMG is the systems owner of the information systems used to support the ANAO’s system of quality management. CMG is responsible for resolving issues affecting systems.

3.81 Change across the ANAO is supported by a structured approach to strategic planning, governance, risk management and change management. Changes implemented in 2023–24 included:

• Migration of most applications from ANAO Infrastructure to the ANAO Azure Environment;
• Cyber Security initiatives including the implementation of increased controls, the ANAO’s security position and cyber resilience; and
• The adoption of a digital strategy for the next five years to plan for changes in the future.

Communication within the ANAO

3.82 The ANAO encourages collaboration and information-sharing between staff in accordance with the Auditor-General Act and the Protective Security Policy Framework. ANAO audit manual policies and processes support collaboration between audit service groups.

3.83 New starter and induction training programs are designed to provide new starters with all necessary information relevant to their duties. For ANAO staff more generally, regular technical updates inform staff about any changes to aspects of the system of quality management, including changes to Audit Manual policies, methodology and templates (see paragraph 3.52).

Communication with external parties

3.84 The ANAO communicates with external parties including auditees, service providers, Parliament, the Australasian Council of Auditors General⁸ and the International Organisation of Supreme Audit Institutions.⁹

3.85 The ANAO communicates with Financial Statements and Performance Statements preparers and Audit Committee Chairs by holding two forums for each of these groups annually.

3.86 ANAO representatives attend, as observers, audit committee meetings of Commonwealth entities and Commonwealth companies. Engagement Executives are also responsible for communicating with the accountable authority of an entity.

3.87 The ANAO provides all relevant ANAO policies and templates to private sector firms that are contracted to resource the performance of audits, or parts of audits, via the GovTeams community page. Additionally, annual webinars communicate changes to policies, templates and requirements (see paragraph 3.53) and regular notifications communicate the release of new information. For individual contract staff, onboarding processes include mandatory online modules specifically designed to set out expectations for contractors. Additionally, the ANAO Audit Manual makes clear that the requirements which apply to individual contractors are consistent with those which apply to ANAO staff.

Monitoring and remediation process

Internal and external quality assurance reviews

3.88 A key element of the ANAO Quality Management Framework is the monitoring of compliance with policies and procedures through internal and external QA reviews of the ANAO’s audits and other assurance engagements. The monitoring program is designed to provide the Auditor-General with assurance that engagements comply with the ANAO Auditing Standards, relevant regulatory and legal requirements, and ANAO policies; and that reports issued are appropriate in the circumstances. PSG is responsible for delivering the monitoring program, including the coordination of external reviews. PSG reports to EBOM, the Quality Committee and the ANAO Audit Committee on the results of each quality assurance review and other monitoring activities.

3.89 Monitoring activities conducted in 2023–24 were:

• annual quality assurance reviews of completed audits (nine financial statements audits, four performance audits and one performance statements audit reviewed);
• real-time quality reviews of four in-progress financial statements audits and three in--progress performance statements audits;
• external review of two completed financial statement audits conducted by the Australian Securities and Investments Commission (ASIC); and
• biennial external peer review of two completed performance audits performed by the Office of the Auditor General New Zealand (OAG NZ).

Internal quality assurance reviews

3.90 The ANAO selects audits and other engagements for QA review in accordance with the requirements of the ANAO Audit Manual to provide coverage of all responsible Engagement Executives at least once every three years. The 2023–24 results in relation to quality assurance review coverage are provided in Table 3.12. The results reflect internal quality assurance reviews, including complete real-time reviews, and external reviews conducted by ASIC and OAG NZ but does not include focused real-time reviews and internal audit compliance reviews.

Table 3.12: Audit Quality Indicator – Quality assurance review coverage

3.91 In 2023–24 the coverage of Engagement Executives for in-house financial statements audits, performance audits and performance statements audits were in line with or exceeded the policy requirements which form the basis of the AQI benchmark. The coverage for contracted firms for financial statements audits was also in line with the benchmark.

3.92 Table 3.13 provides the number of audit files reviewed in the ANAO quality review program that were rated as unsatisfactory.

Table 3.13: Audit Quality Indicator – Internal quality review results

3.93 In 2023–24, the ANAO ceased rating files based on individual findings in quality assurance reviews. The basis for this change is to ensure that the focus for audit teams and EBOM is on the risks to quality indicated by findings from the reviews. This is better achieved by focusing on the significance of the individual findings. To reflect the change in focus, in future years this AQI will be changed to the ‘number of significant findings identified in the ANAO Annual Inspection Program’. Table 3.14 sets out these results.

Table 3.14: Audit Quality Indicator – Internal quality review results

3.94 One significant finding was identified in a financial statements audit related to the audit work completed by a contracted firm over the annual leave and long service leave provision balances and the cash flow statement.

3.95 The number of significant findings identified in the ANAO Annual Inspection Program has decreased significantly from 2022–23. Following the high number of significant findings that were identified in 2022–23, a number of action items were implemented to address the causes of the deficiencies. This included raising the enterprise risk rating level from moderate to high and subsequent monthly reporting to EBOM on progress against each action item.

3.96 Remediation procedures were completed to address the significant finding and to determine that the audit conclusion was appropriate despite the procedural deficiencies identified. The remediation procedures included reperforming audit testing over expanded samples to confirm that there was sufficient and appropriate audit evidence to support the auditor’s report, and there were no material misstatements in the impacted areas. Following review of the remediated audit documentation, the ANAO is satisfied that all financial statements audit, performance audit and performance statements audit conclusions subject to monitoring were appropriate. As a result, in 2023–24 the ANAO met the target for performance measure 17 reported in the ANAO Annual Report (‘The ANAO independent quality assurance program indicates that audit conclusions are appropriate’).

Table 3.15: Summary of quality assurance review findings in the annual inspection program

Note a: Of the four real time reviews, three were complete reviews and one was a focused review. A complete review assesses the audit file as a whole, whereas a focused review is targeted at a particular type of procedure.

Note b: Of the four real time reviews, two were complete reviews and two were focused reviews.

Note c: In the finalisation of the real-time review report, it was agreed that findings ratings would no longer be assigned to findings identified in a real-time review.

3.97 A high number of findings from quality reviews, particularly when these are repetitive, indicates issues with audit quality. Timely identification and appropriate remediation of issues is necessary to facilitate improvements in audit quality.

3.98 Financial statements audit inspection results saw a decrease in both the number of significant and moderate findings raised. The identified areas for improvement in financial statements audits related extent of audit procedures over material by nature balances (Key Management Personnel remuneration and appropriations), auditing accounting estimates and risk identification and response. A root cause analysis was undertaken to address these areas of improvement, in which further actions were identified.

3.99 Inspection results for performance audits increased slightly however the number of audit files selected for review also increased. The identified areas for improvement in performance audits related to audit evidence, independence, protective security, record-keeping, risk and materiality and supervision direction and review. A root cause analysis was undertaken to address these areas of improvement, in which further actions were identified.

3.100 The number of moderate findings identified in performance statements audit inspection results remained the same and a small increase in the number of minor findings was noted. The identified areas for improvement in performance statements audits related to engagement between the PSASG and FSASG audit teams. Other findings and observations of interest were also raised in relation to review of other information. A root cause analysis was undertaken to address these areas of improvement, in which further actions were identified.

External and internal audits and external quality assurance and peer reviews

3.101 The Act establishes the position of the Independent Auditor, who may conduct a performance audit of the ANAO at any time. The most recent Independent Auditor report, Performance Audit of Attraction, Development and Retention of Capability, was tabled in Parliament on 15 August 2022. The Independent Auditor found that the ANAO had effective strategies, plans and processes in place to identify, quantify, attract, develop and retain the necessary capability required, and that there were appropriate governance arrangements in place. The Independent Auditor also made four recommendations to the ANAO. The ANAO publishes the status of recommendations made in Independent Auditor reports on the ANAO website.

3.102 In 2023–24, the ANAO continued the arrangement, initiated in 2017–18, with ASIC to conduct an annual external independent review of the ANAO’s financial statements audit files. This is similar to the review work conducted by ASIC on external auditors in the private sector. The reviews are valued by the ANAO as they provide external scrutiny and the ANAO recognises the important role that openness to evaluation plays in building a culture focused on quality, learning and continuous improvement. This year, two audits of financial statements for the year ended 30 June 2023 were reviewed. These reviews were conducted using ASIC’s methodology for reviewing private sector audits. In respect of the file reviews, ASIC made a finding that a sufficient sample size for testing was not selected, therefore insufficient evidence was obtained over additions to intangible assets under construction. Other findings related to the clarity of documentation in the audit team’s impairment assessment, documentation of the evaluation of factors in employees benefits provisions and assessment of the work performed by another audit team. The ANAO performed remediation procedures over the finding raised in relation to insufficient evidence obtained over additions to intangible assets under construction and concluded that the report issued is appropriate in the circumstance. The reports from the ASIC annual review are published on the ANAO website.

3.103 In 2023–24, the Office of the Auditor-General New Zealand (OAG NZ) conducted a peer review over two performance audits. The ANAO and the OAG NZ have a longstanding arrangement to conduct reciprocal performance audit peer reviews annually on a rotating basis. The OAG NZ’s peer review of the ANAO’s work identified opportunities for improvement regarding documenting audit procedures, demonstrating how materiality has been addressed, and the readability of published reports. The report on the results of the peer review is published on the alongside the previous NZ OAG peer review reports. ANAO website alongside the previous NZ OAG peer review reports.

3.104 In 2023–24, the ANAO’s internal auditor conducted a review on compliance with selected ANAO Audit Manual policies, including completion of independence declarations, agreement of scope of work with the other ANAO audit teams, sign-off of planning documentation prior to interim work, use of risk assessment and test program templates, sign-off of planning meeting minutes and discussion of fraud risks.

3.105 In 2023–24, the ANAO’s internal auditor also conducted a review of the ANAO’s implementation of ASQM 1. The internal audit found that the ANAO had undertaken appropriate action to implement the Standard which was demonstrated through the alignment of the ANAO Audit Manual policy updates, the Quality Management Framework and Plan 2023–24 as well as the awareness of staff on the changes implemented. Three low risk recommendations were made regarding minor wording updates to the ANAO Audit Manual, the implementation of an attestation letter to be provided by contracted audit service providers and conducting a lessons learnt activity on the annual evaluation required under ASQM 1 to inform the objectives and conduct of future evaluations. The recommendation to update wording in the ANAO Audit Manuals has been completed, with the revised wording approved by the Acting Auditor-General in July 2024.

Root cause analysis

3.106 The conduct of root cause analysis on deficiencies to determine their nature, severity and effect on the system of quality management is a requirement of ASQM 1.¹⁰ The ANAO has been undertaking root cause analysis of deficiencies identified in in-house financial statements audit files for several years prior to the entry into force of ASQM 1. The ANAO expanded the root cause analysis program in 2023–24 to include undertaking a root cause analysis of deficiencies identified in performance audit files and performance statements audit files in accordance with the requirements of ASQM 1.

3.107 In 2023–24, the ANAO continued to use root cause analysis of significant findings and thematic findings from the inspections of 2022–23 financial statements audit files to identify the root cause of findings and determine the most appropriate remedial actions. Follow-up actions arising from the analysis included development of additional resources and support activities to assist audit teams when designing the planned audit approach, developing and delivering training on risk identification and response and identifying opportunities to improve existing templates.

3.108 Root cause analysis over the thematic findings identified in the performance audit quality assurance review was conducted in 2023–24 to understand the underlying drivers of identified deficiencies and develop targeted follow-up actions. Follow-up actions arising from the analysis include considering timeliness and effectiveness of new starter induction training, communication on the importance of mandatory audit procedures, and consideration of audit tabling dates to ensure there is sufficient time to provide adequate supervision, direction and review.

3.109 Findings arising from the quality assurance review of 2022–23 performance statements audits were also subject to root cause analysis. Follow-up actions arising from the analysis included amending key aspects of the performance statements audit methodology to incorporate additional guidance, considering feasibility of trialling approach with more active involvement of PSASG auditors in FSASG planning and development learning and development materials for key aspects of financial statement audit methodology that performance statements auditors should be familiar with.

Remediation

3.110 The results of internal and external quality assurance reviews, root cause analysis, external and peer reviews, and relevant internal and external audits are reported to EBOM. The reports include the recommended follow-up actions to address any identified findings, recommendations or observations. The follow-up actions are assigned to responsible officers with timeframes for completion.

3.111 The ANAO Quality Committee is responsible for monitoring the ANAO’s progress in addressing the findings and recommendations arising from external or internal quality assurance reviews, including assessing the prioritisation of active follow-up actions, and reports on this to EBOM. Table 3.16 details the status of findings arising from internal and external reviews.

Table 3.16: Summary of quality assurance review findings in the annual inspection program

3.112 The ANAO Audit Committee reviews the outcomes of internal and external quality assurance reviews. The Audit Committee also monitors the progress of ANAO action items to address recommendations from external reviews and internal audits. In 2023–24, the Audit Committee reviewed three internal quality assurance review reports, one root cause analysis report, the external ASIC quality assurance review report, and internal audit reports.

3.113 Findings from monitoring processes are communicated to ANAO audit staff and contract firms, through technical updates (see paragraph 3.52) and the annual contractor webinar (see paragraphs 3.53 and 3.87), to allow all staff to implement lessons learnt and to foster continuous improvement.

Complaints and allegations

3.114 The ANAO Audit Manual sets policies and processes for the formal management of any complaints or allegations that the work performed by the ANAO does not comply with applicable standards, requirements, systems of quality management or independence policies.

3.115 During 2023–24 the ANAO received no complaints or allegations.

4.1 The key deliverables for 2023–24 were set out in the Quality Management Framework and Plan 2023–24. The achievement of the strategy and deliverables are set out below in Table 4.1.