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The Auditor-General responded on 14 November 2019 to correspondence from the Minister for Finance, Senator the Hon Mathias Cormann, regarding annual performance statements audits. The Minister requested that the Auditor-General conduct a program of pilot assurance audits of annual performance statements of Commonwealth entities subject to the PGPA Act, in consultation with the Joint Committee of Public Accounts and Audit (JCPAA). The Auditor-General has agreed to the request and proposes to conduct a pilot to audit the 2019–20 performance statements of three entities.

Auditor-General's response

14 November 2019

Senator the Hon. Mathias Cormann
Minister for Finance
Parliament House
Canberra ACT 2600

Dear Minister

Performance Statements Audit Pilot Program

Thank you for your letter dated 21 August 2019 requesting that I conduct a pilot program of audits of annual performance statements of Commonwealth entities subject to the Public Governance, Performance and Accountability Act 2013 (PGPA Act), in consultation with the Joint Committee of Public Accounts and Audit (JCPAA).

As your request is for a pilot audit of entity performance statements, I have treated this as a request under section 40 of the PGPA Act, as the mechanism by which these audits can be carried out under section 15 of the Auditor-General Act 1997.

I agree to your request to conduct a pilot program of audits of annual performance statements, to inform a decision on the subsequent implementation of mandatory annual performance statements audits over future years. I have decided that the pilot will consist of auditing three entities’ 2019–20 performance statements.

I am currently consulting with the JCPAA on Terms of Reference for the Performance Statement Audit Pilot Program. My office has also consulted with the Department of Finance.

I intend applying the performance statements auditing methodology developed and applied by my Office in performance audits over the past few years. As required by subsection 40(2) of the PGPA Act, I will provide you with a copy of the audit report on the selected entities’ compliance with the relevant provisions of the PGPA Act and the Public Governance, Performance and Accountability Rule 2014, prior to entities publishing their 2019–20 annual reports.

While the ANAO will meet the costs of conducting the pilot program in 2019–20, these costs will be met through a reduction in the number of performance audits undertaken. Transition to full implementation will require additional budget funding, the volume and timing of which will be informed by the pilot program. I have copied this letter to the Chair of the JCPAA, Ms Lucy Wicks MP.

Yours sincerely

Grant Hehir

Correspondence from Senator the Hon Mathias Cormann

Transcript of letter from Senator the Hon Mathias Cormann

Mr Grant Hehir
Auditor-General
Australian National Audit Office
GPO Box 707
CANBERRA ACT 2601

Dear Auditor-General

I am writing to you regarding the Independent Review into the operation of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and Rule (Review). The Government's in principle agreement to the recommendations of the Review falling within its executive responsibility was tabled in Parliament on 4 July 2019.

At this time, I would like to bring your attention to Recommendation 8 of the Review (Attachment A). I would like to request that you conduct a program of pilot assurance audits of annual performance statements of Commonwealth entities subject to the PGPA Act, in consultation with the Joint Committee of Public Accounts and Audit. This will allow you to further develop and refine an appropriate methodology, an area in which I understand substantial work has already been undertaken by your office, prior to the potential introduction of mandatory assurance audits of Commonwealth entities annual performance statements.

I have copied this letter to the Chair of the Joint Committee of Public Accounts and Audit, Mrs Lucy Wicks MP, to give effect to the requirement of Recommendation 8 of the Review, and to acknowledge the Committee's role in monitoring the implementation of the PGPA Act, and in relation to your office.

Kind regards

Mathias Cormann
Minister for Finance
21 August 2019