2.1
In 2020-21, the Joint Committee of Public Accounts and Audit tabled five reports, held 28 meetings (including nine public hearings) and undertook a variety of non-inquiry responsibilities including determining the Audit Priorities of the Parliament and reporting to the Parliament on two Budgets. The JCPAA also commenced a further five inquiries, for completion in 2021-22.
2.2
This chapter outlines the JCPAA’s work in 2020-21, including:
Audit Priorities of the Parliament; and
Approval of the appointment of a Parliamentary Budget Officer.
Committee inquiries 2020-21
2.3
As noted above, the JCPAA tabled five reports and commenced five other inquiries during 2020-21, with seven of those based on Auditor-General reports and three based on other duties of the JCPAA. Details of the JCPAA’s inquiries for 2020-21 are included in Table 2.1 below.
Table 2.1: JCPAA inquiries 2020-21
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Annual Report 2019-20
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Tabled 19 October 2020
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Public Accounts and Audit Committee Act 1951
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Review of the Operations of the Parliamentary Budget Office 2019-20
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Tabled 19 October 2020
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Parliamentary Service Act 1999
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Inquiry into the 2018-19 Defence Major Projects Report and the Future Submarine Project – Transition to Design
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Tabled 7 December 2020
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Two Auditor-General reports:
Defence Major Projects Report 2018-19 (Report 19 of 2019-20)
Future Submarine Project – Transition to Design (Report 22 of 2019-20)
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The Administration of Government Grants
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Tabled 7 December 2020
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Three Auditor-General reports:
Australian Research Council’s Administration of the National Competitive Grants Program (Report 5 of 2019-20)
Award of Funding Under the Regional Jobs and Investment Packages (Report 12 of 2019-20)
Award of Funding under the Community Sport Infrastructure Program (Report 23 of 2019-20)
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Cyber Resilience
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Tabled 9 December 2020
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Two Auditor-General reports:
Cyber Resilience of Government Business Enterprises and Corporate Commonwealth Entities (Report 1 of 2019-20)
Implementation of the My Health Record System (Report 13 of 2019-20)
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Review of the Auditor-General Act 1997
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Ongoing
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Self-referred under Public Accounts and Audit Committee Act 1951
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Regulatory Activities
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Ongoing
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Five Auditor-General reports:
Tertiary Education Quality Standards Agency’s Regulation of Higher Education (Report 33 of 2019-20)
Referrals, Assessments and Approvals of Controlled Actions under the Environment Protection and Biodiversity Conservation Act 1999 (Report 47 of 2019-20)
Management of the Australian Government’s Lobbying Code of Conduct – Follow-up Audit (Report 48 of 2019-20)
Regulation of the National Energy Market (Report 5 of 2020-21)
Administration of Financial Disclosure Requirements under the Commonwealth Electoral Act (Report 8 of 2020-21)
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Governance in the Stewardship of Public Resources
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Ongoing
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Five Auditor-General reports:
Implementation of the Digital Continuity 2020 Policy (Report 11 of 2019-20)
Management of Defence Housing Australia (Report 31 of 2019-20)
Implementation of the Commonwealth Scientific and Industrial Research Organisation (CSIRO) Property Investment Strategy (Report 39 of 2019-20)
Procurement of Strategic Water Entitlements (Report 2 of 2020-21)
Purchase of the ‘Leppington Triangle’ Land for Future Development of Western Sydney Airport (Report 9 of 2020-21)
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Inquiry into the Defence Major Projects Report 2019-20
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Ongoing
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One Auditor-General report:
2019-20 Major Projects Report (Report 19 of 2020-21)
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Inquiry into Commonwealth Financial Statements 2019-20
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Ongoing
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Two Auditor-General reports:
Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2020 (Report 25 of 2020-21)
Interim Report on Key Financial Controls of Major Entities (Report 40 of 2020-21)
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Committee review of Auditor-General reports
2.4
In 2020-21, the Auditor-General tabled 42 performance audits in the Parliament. The JCPAA considered all of those, and commenced inquiries into five, plus the Commonwealth Financial Statements (based on two audits). The Committee’s inquiries also considered 13 audit reports tabled in 2019-20.
Other committee inquiries
2.5
Aside from the seven inquiries based on Auditor-General reports, the JCPAA in 2020-21 either commenced or completed three inquiries on the basis of the Committee’s legislative responsibilities. These were the JCPAA’s Annual Report 2019-20, the Review into the Operations of the Parliamentary Budget Office 2019-20 and the Review of the Auditor-General Act 1997.
2.6
The JCPAA Annual Report 2019-20, the predecessor of this report, is a requirement of the Public Accounts and Audit Act 1951.
2.7
Section 64S of the Parliamentary Service Act 1999 gives the JCPAA the duty to consider ‘the operations of the Parliamentary Budget Office’ and ‘the resources of the Parliamentary Budget Office, including funding, staff and information technology’, and to ‘report to both Houses of Parliament on any matter arising’ out of the Committee’s consideration of those. Accordingly, the JCPAA in December 2019 commenced an inquiry into the operations of the PBO.
2.8
In September 2020, the JCPAA launched a review of the Auditor-General Act 1997. The JCPAA last considered the Auditor-General’s establishing legislation in a review tabled as report 419, tabled in December 2010. As at 30 June 2021, this review was ongoing.
Inquiry findings and themes
2.9
As noted, the JCPAA tabled five reports in 2020-21. Full findings and recommendations of each can be found in the reports themselves, available on the JCPAA’s website. This section briefly outlines key themes as identified by the JCPAA Chair, Ms Lucy Wicks MP, in tabling those reports.
Report 480.1 Annual Report 2019-20
2.10
In tabling the previous Annual Report on 19 October 2020, the Chair noted the challenges of the 2019-20 period through the COVID-19 pandemic, but also highlighted the JCPAA’s role as host of the 15th biennial Australasian Council of Public Accounts Committees conference in November 2019:
Like all committees, the work of the JCPAA was challenged by the circumstances of COVID-19. Despite this, the committee presented two reports in the parliament, containing 12 recommendations, and held six public hearings using a combination of methods—face to face, videoconference and teleconference. Four further inquiries were also underway as at 30 June.
A highlight of the committee's activities during 2019-20 was hosting the 15th biennial Australasian Council of Public Accounts Committees conference, with the theme 'Changes and challenges over the last 30 years'. The conference presented an opportunity to strengthen existing intraparliamentary dialogue and discuss the workings of the Joint Committee of Public Accounts and Audit and its counterpart committees in each state and territory. International delegates from South Africa, Fiji and New Zealand also attended the conference.
Report 482 Review of the Operations of the Parliamentary Budget Office 2019-20
2.11
Tabled on 19 October 2020, the JCPAA review of the operations of the PBO focused on areas of reform based on previous reviews, and recommended that a formal review of the PBO automatically take place after each general election:
The purpose of the committee's inquiry was to report on possible areas of reform to support the effective operations of the PBO, the PBO's implementation of recommendations of past reviews and stakeholder relationships and engagement. The committee concluded that the PBO is fulfilling its legislative mandate and is held in high regard by stakeholders.
To support the continuing effective operation of the PBO, the committee has recommended that the Parliamentary Service Act 1999 be amended to provide for an automatic referral process for independent review of the PBO after a general election. This significant reform will enable the committee to monitor PBO implementation of review recommendations over the life of the parliament and to serve to further reinforce the independence of the PBO.
Report 483 Inquiry into the Defence Major Projects Report and the Future Submarine Project – Transition to Design
2.12
The JCPAA review of the Defence Major Projects Report (MPR), tabled on 7 December 2020, was coupled with an inquiry based on a separate ANAO audit into the Future Submarine Project – Transition to Design. The JCPAA’s focus in its inquiry was on the MPR’s function as a key reporting tool into Defence’s expenditure for the JCPAA, the Parliament and the wider community:
Reviewing the MPR each year has been a longstanding practice of the Joint Committee of Public Accounts and Audit and goes to the core of its oversight role of public governance, performance and accountability. In this report, the committee has made six recommendations. In the interests of time, I'll broadly outline some of the key themes. The first includes recommendations directed to improve the clarity, readability and accessibility of the MPR. This is to enable greater understanding by the parliament and the public. This theme is continued in recommendation 3, which outlines that the ANAO, in conjunction with the Department of Defence, should consider ways to make the report more understandable to those who may not have technical knowledge of Defence terminology. The recommendation suggests that changes be made to the definitions section in the MPR, with descriptions of terms such as 'constant costs', 'out-turned costs' and 'risks' and suggests that a description of 'total schedule slippage' be provided, to provide clarity as to the concurrent nature of Defence acquisition and the meaning of this term. Further, recommendation 6 suggests that Defence and the ANAO use clear and accessible language in future Major projects reports when reporting on and describing cost, scope and capability variations.
The second broad area addressed in the recommendations goes to issues identified in relation to key projects examined in the MPR, including the MRH-90 helicopters project. The committee recommends that Defence commission a performance review or independent external audit of the entire helicopter acquisition program in advance of upcoming helicopter acquisitions by Navy and Army. Chapter 3 of the committee's report examines Defence's administration of the Future Submarine program, a significant Defence acquisition program. Noting that the Future Submarine project will be included in subsequent MPRs, the committee has recommended that Defence clarify the required thresholds that categorise Defence major projects listed as projects of concern.
Report 484 The Administration of Government Grants
2.13
Tabling the report on 7 December 2020, the Chair emphasised that, across a range of grants programs, some recurring themes emerged and the JCPAA’s recommendations to address those:
The purpose of this inquiry was to examine the administration of government grants covering a range of program areas, including academic grants, regional and rural infrastructure projects and community sports. The committee's report focused on aspects of grants administration such as corporate governance, program delivery and adherence to Commonwealth rules and guidelines. In examining these matters, the committee made six recommendations that largely address broad themes and issues identified across the Regional Jobs and Investment Packages, the Australian Research Council's administration of the National Competitive Grants Program and the Community Sport Infrastructure Grant Program.
In recommendation No. 1 the committee notes the recent regulatory changes to require all grant programs run by corporate and non-corporate Commonwealth entities be administered in accordance with the Commonwealth Grants Rules and Guidelines 2017. The committee recommends that the Department of Finance review the operation of the guidelines and associated regulations two years after the tabling of this report to ensure they remain efficient and effective.
In recommendation No. 2 the committee suggests that the Department of Finance, in consultation with the ANAO, revise its resource management guides to provide a single authoritative guide to grants administration, provide detailed information regarding legislative requirements of administrative officials and provide clear guidance where advice is either mandatory or optional in administering grants programs.
Recommendation No. 3 outlines that the Department of Finance should review the established reporting and compliance system and approach to ensure that Commonwealth grant program guidelines are adhered to at all points of grant administration for applicable entities and decision-makers.
The importance of record keeping was another key issue raised throughout the inquiry. As such, in recommendation No. 4 the committee outlined that the Department of Finance should review the official recordkeeping requirements of the Commonwealth Grants Rules and Guidelines 2017. This includes a focus on ensuring all parties involved in grant administration disclose and record any conflicts of interest. Further, recommendation No. 4 suggests changes be made to ensure records are kept of the reasoning of decisions of a relevant minister or ministers to approval or reject grant applications and recommendations, including ministerial panels. This is particularly important where a minister approves a grant that a relevant official or entity has recommended be rejected or assessed as ineligible.
Recommendation No. 5 addresses a number of potential improvements to the Commonwealth Grants Rules and Guidelines 2017. This includes recommending amendments to emphasise the importance of ensuring that all relevant entities involved in grants administration receive and complete sufficient training, with documented processes to ensure the ongoing quality assurance of assessments. Further, these amendments aim to ensure timely and consistent announcement and communication to stakeholders of grant opportunities and outcomes of grant programs and adherence to published guidelines.
Finally, recommendation No. 6 addresses the key issue of decision-making and recommends that Sport Australia review its guidelines in relation to all current and future grant programs to clarify the authorities and duties of the minister for sport and the Australian Sports Commission board and report back to the committee in six months.
Report 485 Cyber Resilience
2.14
Tabled on 9 December, this report emphasised key themes on what has been one of the JCPAA’s main areas of interest in the 46th Parliament: cyber resilience within Commonwealth entities, and the culture that supports it. The report made both high-level and individual agency-specific recommendations:
The purpose of the committee's inquiry was to consider the effectiveness of the management of cyber-risks and the implementation of cybersecurity measures in various agencies. It also examined the Auditor-General's findings on the extent to which Commonwealth entities had embedded a cyber-resilience culture.
The report contains six recommendations targeting a number of core areas. […] The first of those concerns the importance of the development of a cyber resilience culture within entities. The committee noted that the ANAO has developed a detailed framework of 13 behaviours and practices that could assist in the implementation and improvement of culture. […] The committee outlines in recommendation 3 that these practices and behaviours should play a greater role in the implementation and improvement of a cyber-resilience culture within Commonwealth entities.
Further, the committee noted that the Protective Security Policy Framework, commonly known as the PSPF, addresses the development of a positive security culture. However, specific references to the 13 behaviours and practices under the title outlined by the Auditor-General within the PSPF could not be found. Recommendation 3 seeks to help to address this by outlining that the PSPF should be amended to reflect or incorporate, where needed, the ANAO's framework. It also recommends that a dedicated section be created within the annual PSPF self-assessment questionnaire addressing these 13 criteria.
Further, in recommendation 4, the committee outlines that the Australian National Audit Office should consider conducting an annual limited assurance review into the cyber-resilience of Commonwealth entities and that this could include examining the extent to which entities have embedded a cyber-resilience culture and compliance with the essential eight mitigation strategies in the Information Security Manual. To enable time for implementation, the committee recommends that this review commence from June 2022 and be conducted yearly for five years.
2.15
The report also included two specific recommendations to individual agencies.
Non-inquiry activities
2.16
In line with the JCPAA’s duties under the Public Accounts and Audit Committee Act 1951, the Committee undertook a range of non-inquiry activities in 2020-21. As noted above, the COVID-19 pandemic-related postponement of the 2020 Budget from May to October 2020 meant that in the 2020-21 year the JCPAA reviewed Budget Estimates for the Australian National Audit Office and the Parliamentary Budget Office on two occasions. The JCPAA also determined the Audit Priorities of the Parliament for 2021-22 and approved the appointment of a Parliamentary Budget Officer. This section details the work of the Committee in relation to these duties.
Budget estimates 2020-21
2.17
For the 2020-21 Budget, delivered by the Treasurer on 6 October 2020, the JCPAA made qualified recommendations of support for supplementation for both the PBO and ANAO:
The Committee understands that, since the COVID-19 pandemic, the PBO has focused its research on publications relevant to the current fiscal situation, reflecting a heightened level of interest in publications that inform the Parliament and the public about fiscal matters. Accordingly, the PBO has sought temporary supplementation of $3.1 million over four years, from the 2020-21 Budget, to maintain and expand its research publication program in light of COVID-19.
[…]
The Committee acknowledges the benefit to the Parliament and public discourse of the PBO’s research program. The Committee notes that the COVID-19 pandemic has had an impact on many departments and agencies across government, as well as the broader budgetary position, and therefore provides a qualified recommendation in support of the PBO’s request for temporary supplementation.
2.18
The ANAO also sought additional funding in the 2020-21 Budget, which the JCPAA supported with a qualified recommendation given the fiscal situation during the COVID-19 pandemic:
The ANAO states that to restore its ability to deliver an appropriate number of performance audits, conduct mandatory financial statement audits, and meet increased costs associated with changes in work patterns due to COVID-19, supplementary budget funding of $6.3 million in 2020-21 is needed. The ANAO has proposed that this would rise over the forward estimates to $9.1 million by 2023-24.
[…]
The ANAO has advised the Committee that performance audits in 2020-21 are projected to fall to 42, with further reductions over the forward estimates if supplementary funding is not provided. With the proposed supplementary funding, the ANAO advised the Committee it would return to meeting its annual target of 48 audits per annum by 2023-24.
The Committee recognises that the ANAO has had a target of achieving 48 performance audits for several years and requires adequate funding to meet this objective. Members are also cognisant of the current difficult budgetary environment and the unprecedented impact of the Coronavirus on departments and entities that the ANAO audits, as well as the broader budgetary position.
Acknowledging the difficult fiscal situation, the Committee provides a qualified recommendation in support of the Auditor-General’s request for supplementation. The Committee recognises that the Government will determine its view on the Auditor-General’s resourcing via the Budget and recommends that sufficient funding be provided to enable the ANAO to meet its KPIs over the forward estimates.
Budget estimates 2021-22
2.19
On 11 May 2021, the JCPAA reported to the Parliament its consideration of the PBO and ANAO Budget Estimates, and supported the PBO’s request for supplementary funding to enable the PBO to continue producing material that contributes to Parliament’s, and the public’s understanding of budgetary issues:
With regard to the Parliamentary Budget Office, the Committee has been informed that the PBO has sought additional funding of $3.6 million over four years in the 2021-22 Budget to allow it to maintain and expand its publicly available research.
The PBO states that additional funding over the 2021-22 to 2024-25 period would allow the continued production and publication of new material during the peak period of the six-nine months around an election. It would also assist in improving the useability and accessibility of the PBO’s website, assist in the hiring of a team of five staff to expand the PBO’s work and allow the PBO to maintain its special appropriation. This is substantially similar to the PBO’s $3.1 million request last year, which the Government did not fund in the previous Budget.
The JCPAA recognises the important role that the PBO can play in shaping Parliament’s, and the public’s, understanding of our economic and fiscal environment. The Committee notes that the agency received $5.3 million in the 2019-20 Budget to uplift its funding base, to meet demand and modelling costs. The JCPAA supports the Parliamentary Budget Officer’s request for additional funding over the forward estimates, acknowledging the continued difficult budgetary conditions arising from the COVID-19 pandemic.
2.20
Similarly, the JCPAA endorsed the ANAO’s request for supplementation in the 2021-22 Budget, including to fund a rollout of performance statement auditing:
With regard to the ANAO’s 2021-22 budget estimates, the Auditor-General is seeking supplementation of $8.8 million in 2021–22, rising to $11.6 million by 2024–25 ($41.4 million over four years) to address existing cost pressures and restore, by 2024-25, the ANAO’s capacity to meet its longstanding target of delivering 48 performance audits annually.
The committee is advised that this will also assist in ensuring quality and auditing standards in financial statement auditing are met and maintained. The ANAO states that supplementation is required to deliver an appropriate number of performance audits, conduct mandatory financial statement audits, and meet quality standards and IT and data storage security requirements.
The Committee notes that in recent years, the ANAO has delivered a reduced number of audits. In 2019-20, the ANAO delivered 42 audits, and in 2021-22 the Auditor-General forecasts delivering 40 audits, falling to 36 by 2024–25. In the ANAO’s 2019-20 Annual Report, the Auditor-General has outlined that this is due to several factors. These include insufficient resourcing, higher than average audit costs resulting from cost pressures including the need to train new staff due to high turnover, more complex audit issues, challenges from entity record keeping systems, and increased contract out costs for financial statements audit.
The JCPAA further notes that the ANAO has reported an operating deficit in recent years including a total operating deficit of $3.117 million for the 2019–20 financial year, and a $4.778 million operating deficit in 2018–19. It notes that this is inclusive of one-off costs for property.
The ANAO is also seeking funding of $3.1 million in 2021–22 rising to $8.9 million by 2025–26 ($30.7 million over five years) to implement mandated performance statement audits following a recent pilot program. As part of the pilot, audits were completed on two entities: the Attorney General’s Department and the Department of Veterans’ Affairs. These audits aim to drive improvements in the transparency and quality of entities’ performance reporting and increase entities’ accountability to the Parliament and public.
The ANAO submits that this pilot demonstrated benefits in improving the reliability, relevance and completeness of performance statements of the entities involved. The committee notes that developing a methodology and capability for performance statement audits has been a long running project over many Parliaments and supports the intent of such audits.
The Committee endorses the Auditor-General’s request for supplementation to build the capability of the ANAO to return to a capacity to deliver 48 performance audits annually, by the end of the forward estimates. The committee considers that increased funding consistent with a return towards the historic target is important in the near-term, to commence that trajectory.
Further, the Committee considers that there are opportunities to provide for a more sustainable ongoing funding model to avoid regular returns to the Government and is examining this issue in its 10-year review of the Auditor General Act 1997. Finalisation of this report need not preclude a funding commitment in this Budget.
Members of the JCPAA acknowledge the difficult budgetary conditions due to COVID-19 in which this request is made, while understanding the importance and value of a robust audit function in achieving value for money for taxpayers and greater efficiency and effectiveness of government expenditure. The Committee also endorses the Auditor-General’s proposal to implement mandated performance statement audits in a staged approach and recommends that ongoing funding be provided to the ANAO to undertake this work.
Audit Priorities of the Parliament 2021-22
2.21
On 17 March 2021, the Auditor-General wrote to the JCPAA, seeking comments on the ANAO’s Draft Annual Audit Work Program 2021-22. The JCPAA, as is its usual practice, sought feedback from all other parliamentary committees and incorporated responses received, along with the JCPAA’s own feedback, into the Audit Priorities of the Parliament.
2.22
The Audit Priorities of the Parliament 2021-22 were sent to the Auditor-General on 7 May 2021. From the Draft Annual Audit Work Program 2021-22, the JCPAA identified the following proposed audits as Audit Priorities of the Parliament:
Cross-entity
Cyber security strategies of commercial entities supporting government
COVID-19: Australian Government Crisis Management Framework
COVID-19: Support to the Aviation Sector
Agriculture, Water and the Environment
Commonwealth development of the National Waste Policy Action Plan
Post-bushfire wildlife and habitat recovery
Attorney-General’s
Comcare’s Administration of its Workers’ Compensation Scheme
Defence
Defence’s management of the Integrated Investment Program
Defence’s management of the recruitment of contractors
Major Projects Report 2021-22
Foreign Affairs and Trade
Overseas crisis management and response
Health
COVID-19: Vaccine and Treatment Strategy
Department of Health’s performance management of Primary Health Networks
Industry, Science, Energy and Resources
Design and Delivery of the Building Better Regions Fund
2.23
The JCPAA proposed a further three audit topics for the Auditor-General’s consideration:
Cross entity
Management and Measurement of a Cyber Resilience Culture across Government Entities – culture has been identified in previous audits as a key determinant of cyber resilience. An audit could focus examination on this aspect of resilience.
Governance arrangements for Government Business Enterprise (GBE) executive pay and bonuses – media reports regarding bonuses in certain GBEs have raised community concerns about the governance of bonuses. An audit could examine the basis on which performance targets are set and measured and provide assurance they are set at reasonable levels.
Education, Skills and Employment
Employment services caseload management - The proportion of long-term unemployed people has grown significantly in recent years, particularly in older age cohorts. This audit would look at the performance of government labour market programs in addressing employment outcomes for this cohort.
2.24
Other parliamentary committees also identified potential audit themes:
Parliamentary Joint Committee on Intelligence and Security
Major capability procurement by agencies in the National Intelligence Community, including shared capability procurement across the sector (Home Affairs portfolio)
House of Representatives Standing Committee on Tax and Revenue
Efficiency and effectiveness of the ATO’s interaction with service providers and tax agents
Approval of the appointment of a new Parliamentary Budget Officer
2.25
On 4 September 2020, the Presiding Officers advised the JCPAA of the outcome of the selection process for a new Parliamentary Budget Officer. The JCPAA met with the proposed candidate, Dr Stein Hegleby, and subsequently conveyed its approval to the Presiding Officers.
Lucy Wicks MP
Chair
24 November 2021