1. Executive summary

The Australian National Audit Office (ANAO) plays an important role in examining the expenditure of Australian Government entities and the administration of government-administered programs. The ANAO’s functions are critical to the work of the Joint Committee of Public Accounts and Audit (JCPAA, the Committee) and to the Parliament at large, by providing accountability and scrutiny over government spending, and ultimately improving public administration.
The role, functions and operations of the Auditor-General and the ANAO are established in the Auditor-General Act 1997 (the AG Act).
Over the last 25 years, the Committee has conducted an inquiry into the Auditor-General’s legislation approximately every decade, with inquiries conducted in 19961, 20012 and 20103. The 1996 inquiry resulted in the enactment of the AG Act, replacing the Audit Act 1901. The new legislation established the Auditor-General as an ‘independent officer of the Parliament’.4
There has not been a JCPAA inquiry into the AG Act since the introduction of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) or the Independent Review of the PGPA Act in September 20185. The PGPA Act established a new Commonwealth resource management framework to improve the quality of planning, performance information, risk management and reporting in the public sector, in order to enhance public accountability.
The Committee found that, for the most part, the AG Act is working well for its intended purpose. However, there are a number of areas to be considered for reform to keep the AG Act fit for purpose. This includes changes to the AG Act itself and to other legislation.
This report contains four chapters. After this introductory chapter, the remaining three focus on:
Ensuring the independence of the ANAO, including clarifying its remit and mandate;
The interaction of the AG Act with other relevant legislation; and
The relationship between the JCPAA and the ANAO.

Ensuring the independence of the ANAO

The JCPAA recognises the importance of the independence of the ANAO. As Australia’s Supreme Auditing Institution (SAI), the ANAO plays a crucial role in Australia’s democracy as an accountability mechanism.
The International Organization of Supreme Audit Institutions (INTOSAI) is an ‘umbrella organization for the external government audit community’.6 INTOSAI is a non-governmental organisation (NGO) with special consultative status with the Economic and Social Council of the United Nations. Australia is a full member of INTOSAI.
One of the focus areas of INTOSAI is improving the independence of SAIs around the world. This focus is described in the 2007 Mexico Declaration on SAI independence. The Mexico Declaration sets out eight core principles for members to work towards.
The eight independence principles of the Mexico Declaration are:
The existence of an appropriate and effective constitutional/statutory/legal framework and the de facto application provisions of this framework.
The independence of SAI heads and members of collegial institutions, including security of tenure and legal immunity in the normal discharge of their duties.
A sufficiently broad mandate and full discretion, in the discharge of SAI functions.
Unrestricted access to information.
The rights and obligation to report on their work.
The freedom to decide the content and timing of audit reports and to publish and disseminate them.
The existence of effective follow-up mechanisms on SAI recommendations.
Financial and managerial/administrative autonomy and the availability of appropriate human, material and monetary resources. 7
The Auditor-General explained that the Mexico Declaration is a principles-based system:
The framework is very much at a principle level. When these have been considered by the United Nations—and they've been endorsed as principles on a couple of occasions—they're put in place in the context of how they apply to the legal constitutional frameworks of the countries in which they exist. The principles are meant to be at a level where they could apply in every jurisdiction; however, if a particular one of the principles was at odds with the constitutional framework of a country then the framework acknowledges that it has to be built within that framework.8
The JCPAA recognises the Mexico Declaration as international best practice for SAIs, and encourages the ANAO to continue to align with this framework. Many of the findings and recommendations in this report are designed to clarify the independence of the Auditor-General and the ANAO, by outlining the Auditor-General’s functions, powers, rights, immunities and obligations.
The Auditor-General is established in the AG Act as an independent officer of the Parliament. The ANAO more broadly, however, sits within the Executive, as a portfolio agency of the Department of Prime Minister and Cabinet. The Committee believes that there could be greater clarity about what this designation means, as well as consideration of whether the ANAO should be reclassified as a parliamentary department; and also, an expanded role for the JCPAA in the appointment process of the Auditor-General.
The Committee also considers that guidelines to clarify the role of the Auditor-General and the ANAO be developed and published by the ANAO in consultation with the JCPAA and relevant entities, to make it clear to all observers that it is not the role of the ANAO to assess the relative merits of government policy.
The Auditor-General should be able to initiate audits of annual performance statements without requiring a request from the Finance Minister. This follows on from the recommendation in Report 469, and the successful completion of the 2020 Pilot Program.
The JCPAA repeats the recommendations from Report 419 calling for amendments to the Act so the Auditor-General has the authority to initiate performance audits of Government Business Enterprises (GBEs). Currently the Committee must make a request before the Auditor-General can conduct GBE audits. Removing the request requirement would increase the independence of the Auditor-General.
The Committee recommends that the ANAO notify the JCPAA when audit requests are received from Members and Senators, but outlines that the ANAO need not wait for feedback from the Committee before forming its own view on requests or actioning any audit.
The Committee further recommends that the Auditor-General Act 1997 be amended to clarify that working papers and draft reports prepared by the ANAO are protected by parliamentary privilege, and that documents held by the ANAO remain confidential unless they are tabled in the Parliament or released pursuant to other legislation.
The technical mandate issues that limit the Auditor-General’s ability to conduct audits of some federally funded bodies need resolution.

Section 37 concerns

Section 37 of the AG Act allows the Attorney-General to issue a certificate preventing the publication of some material in an ANAO report. The Committee recommends that clarifications be made to section 37 of the AG Act, including providing for a notification mechanism to ensure that both the Auditor-General and the Committee are informed of applications for section 37 certificates, that substantive reasons for the issuance of section 37 certificates are provided to both the Auditor-General and the JCPAA and that statutory time limits are applied to the Attorney-General’s decision-making process.

Interaction with other legislation

While the focus of this review was on the AG Act, the interaction between that Act and other legislation has caused inconsistencies or ambiguities. This report therefore notes where these exist and may need resolution.

Public Governance, Performance and Accountability Act 2013

Amending subsections 19(1) and (b) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) would clarify that requests made of the Auditor-General related to audits in progress be limited to information of an administrative nature only, like the provisions for courts and tribunals under section 19(2) of the PGPA Act.
Section 105D of the PGPA Act also needs review so that the JCPAA can ensure it maintains access to information it needs to perform its duties.

Freedom of Information Act 1982

The issue of whether ANAO documents held by audited entities are subject to FOI laws needs resolution. This could occur by redrafting section 36 of the AG Act to make section 38 of the Freedom of Information Act 1982 expressly apply.

Parliamentary Privileges Act 1987

The Committee recommends that the Privileges Committees of both the House of Representatives and the Senate consider clarifying the application of parliamentary privilege to the work of the ANAO.
The Committee also recommends that consideration is given to the development of a Memorandum of Understanding between the Australian National Audit Office and the Parliament that clarifies the application of parliamentary privilege to the Auditor-General’s work.

The relationship between the JCPAA and the ANAO

The Public Accounts and Audit Committee Act 1951 (PAAC Act) outlines that the JCPAA has an important role in relation to the ANAO. The Act requires the Committee to fulfill a number of functions including considering the operations of the Audit Office and reporting to both Houses of the Parliament on any matter relating to the Auditor-General's functions and powers.9
It is the Committee’s view that government should provide greater clarity on what role the JCPAA has in relation to the ANAO, including whether it is intended to provide oversight, accountability or simply facilitate the ANAO’s work.
The transition between independent auditors can be improved by encouraging better communication between incoming and outgoing appointments. There could also be better communication between the Independent Auditor and the JCPAA.
The AG Act and the PAAC Act could be amended in several key areas to strengthen this role, including the JCPAA’s ability to consider the operations of the ANAO, the JCPAA’s role in the ANAO’s budget process and the process of appointing a new Auditor-General, the role of the Independent Auditor and parliamentary input into the ANAO work program.

Scope and conduct of the inquiry

The Committee resolved on 2 September 2022 to undertake the inquiry into the review of the AG Act, as provided for under the PAAC Act.10 The terms of reference for the inquiry, which were informed by previous reviews into the AG Act and other inquiries on related topics, are contained at page x of this report.
The Committee announced the inquiry and called for submissions in a media release on 29 September 2020, in addition to inviting key stakeholders to submit. It received nine submissions and twelve supplementary submissions. A total of seven hearings were held, the majority of which were held remotely via videoconference or teleconference.
Further information about the scope and conduct of the inquiry can be found at the Committee’s website. The Committee thanks all witnesses and submitters who provided evidence over the course of the inquiry.

  • 1
    Joint Committee of Public Accounts (JCPAA), Report 346 Guarding the Independence of the Auditor-General, Parliament of Australia, 1996.
  • 2
    JCPAA, Report 386 Review of the Auditor-General Act 1997, Parliament of Australia, 2001.
  • 3
    JCPAA, Report 419 Inquiry into the Auditor-General Act 1997, Parliament of Australia, 2010.
  • 4
    Auditor-General Act 1997, s 8(1).
  • 5
    Elizabeth Alexander AM and David Thodey AO, Independent Review into the operation of the Public Governance, Performance and Accountability Act 2013 and Rule, 2018, available at: https://www.finance.gov.au/sites/default/files/2019-08/PGPA_Independent_Review_-_Final_Report.pdf (accessed 29 March 2021).
  • 6
    International Organization of Supreme Audit Institutions, INTOSAI.org, available at: https://intosai.org/ (accessed 19 July 2021).
  • 7
    International Organization of Supreme Audit Institutions, INTOSAI-P 10 - Mexico Declaration on SAI Independence, 2019, available at: https://www.issai.org/pronouncements/intosai-p-10-mexico-declaration-on-sai-independence/ (accessed 18 March 2020).
  • 8
    Mr Grant Hehir, Auditor-General, Australian National Audit Office, Committee Hansard, 3 September 2021, p. 1.
  • 9
    Public Accounts and Audit Committee Act 1951, ss 8(1)(g).
  • 10
    Public Accounts and Audit Committee Act 1951, ss 8(g) and 8(h).

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