21 June 2024

Senator the Hon Katy Gallagher
Minister for Finance
Parliament House
CANBERRA ACT 2600

Dear Minister

Annual Performance Statements Audit Program 2024–25

I am writing to advise of my proposal to expand the Australian National Audit Office’s (ANAO) program of audits of annual performance statements to include 21 Commonwealth entities in 2024–25, as set out in the audit program presented in the ANAO’s 2024-25 Portfolio Budget Statements. I am seeking your request in writing to proceed with the proposed audits as required under subsection 40(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Consistent with the approach taken for the 2023–24 audit cycle, I propose to continue the program of work in 2024–25 with the 14 entities that are subject to audit in the current cycle, as outlined in your letter of 18 July 2023 (Ref: MC23-001985). This continuity helps entities to mature their performance reporting frameworks and to build capability to ensure the reporting of high-quality performance information that improves transparency and accountability of entity performance to the Parliament. This matter was reflected in Auditor-General Report No. 16 2023–24 Audits of the Annual Performance Statements of Australian Government Entities — 2022–23 tabled in the Parliament on 12 February 2024. Continuing to work with existing audited entities also helps the ANAO to continue to evolve the audit methodology and improve the efficiency of the audit process.

In addition to the current 14 entities (see Attachment A), I am seeking your approval for performance statements audits to be conducted on seven new Commonwealth entities, being:

• Department of Climate Change, Energy, the Environment and Water (DCCEEW);
• Department of Defence;
• Department of Employment and Workplace Relations (DEWR);
• Department of Finance;
• Department of Parliamentary Services;
• Department of the Prime Minister and Cabinet; and
• National Indigenous Australians Agency.

The selection of the above proposed new entities for the 2024–25 audit program will ensure that the annual performance statements of the 16 departments of State and the Department of Parliamentary Services, Services Australia, National Disability Insurance Agency, Australian Taxation Office and the National Indigenous Australians Agency will have an auditor’s report issued in 2025–26. These entities contribute significantly to the income, expenses, assets and liabilities of the Commonwealth Financial Statements.

The 21 entities that are proposed for the 2024–25 audit program include DEWR and DCCEEW. The Auditor- General had proposed the inclusion of these two newly created entities for the 2022–23 audit program. You may recall that following the 1 July 2022 Machinery of Government (MoG) changes, those departments were replaced in the program with the Department of Industry, Science and Resources and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. The rationale was to provide time for DEWR and DCCEEW to effectively implement the MoG changes before performance statements auditing was undertaken. The proposed issuing of auditor’s reports for DEWR and DCCEEW in 2025–26 is in line with government’s previous decision that these entities be included in the performance statements program from that year.

Through audit work, the ANAO has observed progress in both departments in establishing appropriate governance frameworks. Auditor-General Report No. 30 2023–24, Corporate Planning in the Department of Climate Change, Energy, the Environment and Water presented to Parliament on 28 May 2024 demonstrates DCCEEW’s readiness for inclusion in the performance statements audit program. The report concluded that DCCEEW has developed its corporate plan in line with the Commonwealth Performance Framework and has a largely effective assurance framework to support performance reporting against the corporate plan outcomes. Similarly, information presented by DEWR to its Audit and Risk Committee indicates that the department has put in place processes and controls for monitoring and reporting performance designed to meet its responsibilities under the PGPA Act.

You will note I am seeking your request earlier than for the 2023–24 audit cycle. This is in response to entity feedback for early engagement with the ANAO to enable entities to appropriately plan and prepare for a performance statements audit. Following your request, we will engage with all entities subject to audit in the 2024–25 audit cycle, with a particular focus on supporting the newly selected entities to prepare for the audit. I would like to be in a position to commence such engagement early in the 2024–25 financial year.

As required by subsection 40(2) of the PGPA Act, I will provide you with a copy of the audit reports on the selected entities’ compliance with the relevant provisions of the PGPA Act and the Public Governance, Performance and Accountability Rule 2014. I anticipate this will occur prior to the tabling of entities’ annual reports.

The ANAO will continue to liaise with your department and the Joint Committee of Public Accounts and Audit (JCPAA) on this program of work, including to review audit methods and outcomes each year, and will actively work with the sector to ensure ongoing improvements in the audit program, the quality of performance information reported by entities and entity capability and preparation practices.

Yours sincerely

Rona Mellor PSM

Acting Auditor-General

Attachment A – List of the 21 proposed entities for the 2024–25 audit cycle