Chapter 3Annual reports of agencies
3.1Annual reports for the 2023-24 financial year (the reporting period) from agencies within the Attorney-General’s and Home Affairs portfolios were referred to the committee for examination and report between 1 May 2024 and 31 October 2024. These annual reports are set out in paragraph 1.12.
3.2On this occasion, the committee has examined in more detail the reports of the National Anti-Corruption Commission (NACC) and the Australian Financial Security Authority (AFSA).
National Anti-Corruption Commission
Tabling of the report
3.3The National Anti-Corruption Commission Annual Report 2023-24 was presented out of session to the Senate on 14 November 2024 and tabled in the House of Representatives on 20 November 2024. The annual report was presented to the Attorney-General on 25 October 2024, meeting the requirements under section 46 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
Review by the Commissioner
3.4The NACC’s review of the reporting period has been provided as a foreword by the commissioner, the Hon Paul Brereton AM RFD SC. Although the commissioner is not the accountable authority of the NACC, the commissioner’s foreword will be used to outline its key activities.
3.5The key activities of the NACC in the reporting period were outlined as follows:
establishment on 1 July 2023 following enactment of the Anti-Corruption Commission Act 2022 (the Anti-Corruption Act) in December 2022;
3190 referrals of suspected corrupt conduct, with roughly 90 per cent being dismissed due to being unrelated to a Commonwealth public official or outside the scope of the Anti-Corruption Act;
36 preliminary investigations opened, with 12 completed during the reporting period and one of these 12 resulting in an investigation;
one investigation leading to a person of interest being charged;
three convictions from the 15 investigations which were commenced by the former Australian Commission for Law Enforcement Integrity;
decision to not investigate referrals by the Royal Commission into the Robodebt Scheme; and
growth of workforce from 154 members to 220 over the reporting period.
Performance reporting
3.6The NACC’s reporting framework is set out in the Attorney-General’s Department Portfolio Budget Statements 2023-24 (AGD PBS) and the National Anti-Corruption Commission Corporate Plan 2023-24 (NACC Corporate Plan). The AGD PBS outlines the NACC’s one outcome as well as several performance measures.
3.7The one outcome is:
Independent assurance to the Australian community that corrupt conduct involving Commonwealth public officials is prevented, detected, investigated and responded to appropriately.
3.8The NACC aims to achieve its purpose through the delivery of five key activities:
providing corruption prevention education and information to enhance the effectiveness and maturity of approaches to corruption prevention;
detecting corruption and enhancing the Commonwealth public sector’s capabilities to detect corruption;
receiving and assessing referrals of alleged corrupt conduct;
conducting NACC investigations into corruption issues that could involve serious or systemic corrupt conduct; and
referring allegations of corrupt conduct back to Commonwealth agencies for investigation.
3.9In the NACC annual report, performance has been assessed against two performance indicators which correspond to two of the key activities outlined in the NACC Corporate Plan. These measures relate to the third and fourth activities in the list above and are as follows:
Key activity 3 – Average time for assessment of referrals; and
Key activity 4 – Average duration of finalised investigations.
3.10The NACC reported the average time for assessment of referrals as 89 days. The NACC explained that this average was impacted by the implementation, from 22 November 2023, of an altered approach to recording the closure of referrals. This meant that referral assessments were reclassified in the case management system which resulted in cases being recorded as having remained open until the date of reclassification.
3.11The NACC reported that the average duration of finalised investigations could not be reported as only one investigation was finalised in the reporting period. The NACC explained that completion times were prolonged due to factors such as warrant approval times and the subsequent large volumes of information obtained.
3.12For 2023-24, the NACC chose not to specify targets for its performance indicators to allow for the establishment of a baseline for reporting in the next period.
Financial performance
3.13The NACC reported a surplus of $500 000 for the 2023-24 financial year, including depreciation and amortisation. The NACC also reported $44.4 million worth of financial assets which exceeded its liabilities of $28.9 million.
3.14The total operation expenditure of the NACC was $57.4 million, below its budget of $60 million. The NACC attributed the surplus to lower expenditure on employee benefits and supplier costs.
Other matters
3.15In the annual report’s list of requirements, PGPA Rule 17AD(a), ‘a review by the accountable authority of the entity’, has been referenced to page 12 of the report. However, the CEO’s review is brief and does not review the activities of the NACC over the reporting period. The information required of the accountable authority’s review has instead been included in the commissioner’s foreword. In future reports, it would be beneficial for the accountable authority’s review to be written with similar detail to that presented as the commissioner’s foreword in the current report.
3.16For PGPA Rule 17AF(2), the NACC has included a page number reference in its list of requirements, however, the referenced page does not include information related to the rule. It is, therefore, unclear whether the NACC was required to report on this requirement and if so, where the relevant information is presented.
3.17Under 17AD(d) of the PGPA Rules agency annual reports are required to provide certifications by their accountable authorities on compliance with section 10 of the PGPA Rule, which relates to fraud prevention. In NACC’s certification by the accountable authority, several key phrases are omitted, such as ‘detecting incidents’, ‘investigating’ and ‘reporting and recording’, which are set out by the PGPA Rule. Omission of key phrases such as these is counterproductive to the purpose of providing a certification, which is to hold entities accountable for fraud.
Conclusion
3.18Noting the observations in the preceding paragraphs, on balance the committee considers the annual report to be ‘apparently satisfactory’.
Australian Financial Security Authority
3.19The Australian Financial Security Authority Annual Report 2023-24 was presented out of session to the Senate on 28 October 2024 and tabled in the House of Representatives on 4 November 2024. The annual report was presented to the Attorney-General on 8 October 2024, meeting the requirements under section 46 of the PGPA Act.
Review by the accountable authority
3.20The Chief Executive of the AFSA, Mr Tim Beresford, noted the following initiatives in his review of the reporting period:
shifting of AFSA’s ‘regulatory posture’ to address the increase in Australian households and businesses experiencing financial vulnerability which has resulted in a 17 per cent rise in personal insolvencies;
maintaining focus on balancing fair results for those experiencing financial hardship and firm enaction of ‘compliance and enforcement outcomes’ in response to system misuse;
convening of the AFSA summit which hosted over 100 stakeholders from the ‘Australian credit ecosystem’; and
the rise of criminal assets under management by AFSA by 33 per cent to $586 million, with the proceeds being used for community benefit.
Performance reporting
3.21AFSA’s reporting framework is set out in the AGD PBS and the Australian Financial Security Authority Corporate Plan 2023-24 (AFSA Corporate Plan). The AGD PBS outlines AFSA’s one outcome and two related programs, as well as several performance measures.
3.22AFSA’s outcome is to:
Maintain confidence in Australia’s personal insolvency and personal property securities systems by delivering fair, efficient and effective regulatory, trustee, registry and information services.
3.23In support of this outcome, the AFSA Corporate Plan outlines the agency’s role, which is to ensure the personal insolvency system operates in a way that:
provides a fair and orderly process for sorting out the financial affairs of people that are unable to pay their debts;
allows clients to receive timely referrals, trustworthy advice and help that is tailored to their individual circumstances; and
maximises returns to creditors; and quickly deals with those who seek to avoid their obligations and duties to others.
3.24AFSA’s performance is measured against eight performance measures all of which were ‘substantially achieved’ or ‘achieved’ during the reporting period. These eight measures are broken down into 24 sub-measures, of which 13 were ‘achieved’, nine were ‘partially achieved’ and two were ‘not achieved’.
3.25Both sub-measures which were not achieved were part of the performance measure of ‘improved user satisfaction and reduced effort’ and are outlined below.
3.26Practitioner surveillance: the development of three digital solutions to improve the experience of practitioners and make compliance easier. This sub-measure was not achieved as zero digital solutions were implemented. AFSA explained that this was due to its focus on allocating resources toward conducting physical inspections of its regulated entities.
3.27Compliance and registry: decisions of Official Receiver (OR) notice applications to be made within 90 days of receiving the application for 80 per cent of the applications. This sub-measure was not achieved as only 68.4 per cent of applications had decisions made within 90 days. AFSA attributed the failure to meet this sub-measure to the ‘complexity and quality of applications, and [lack of] availability of specialist staff’, explaining that the OR division, established in 2023-24, is anticipated to support its capacity to achieve this sub-measure.
Financial performance
3.28AFSA reported an operating deficit of $13.014 million for the 2023-24 financial year. AFSA further reported total equity of $102.733 million.
3.29AFSA reported $50.084 million in ‘own-source revenue’, $49.421 million of which was from contracts with customers. AFSA also reported $117.441 million in expenses which was an increase from $96.948 million in the previous reporting period. AFSA also noted a $13.676 million variance between the total expenses in its annual report and the AGD PBS, which was attributed to unplanned expenditure relating to the Bankruptcy Taskforce, subsidy payments to the Official Trustee and an increase in legal matters and consequent expenses throughout the reporting period.
Other matters
3.30Under the PGPA Rule 17AH(1)(a)(ii), entities must include a prescribed statement disclosing advertising campaigns which also includes a reference to reports available on the Department of Finance’s website. This statement and reference have not been included by AFSA, however, information regarding advertising has still been provided.
3.31Under the PGPA Rule 17AG(7)(b, entities must include a prescribed statement disclosing reportable consultancy contract details. Although AFSA has provided information on contract details, the wording differs from the prescribed statement.
3.32To benefit the ease of access to information, the report could have provided a financial overview.
Conclusion
3.33Noting the observations in the preceding paragraphs, on balance the committee considers the annual report to be ‘apparently satisfactory’.
General comments on other annual reports
Compliance indexes
3.34Compliance indexes are a useful tool in aiding the accessibility of annual reports and determining whether they comply with the PGPA Rule requirements.
3.35Several annual reports of agencies did not include page number references to each requirement or gave incorrect page numbers.
3.36Further to this, several entities included page number references in their compliance indexes for requirements categorised as ‘if applicable, mandatory’, when the requirement was not applicable to the entity. This may cause confusion as to whether an entity must report on the requirement and therefore, a specification of ‘not applicable’, instead of a page number reference, would be beneficial.
Provision of information requiring analysis or assessment
3.37Several of the PGPA Rules require entities to provide either ‘analysis’ or ‘assessment’. Many reports could have provided more thorough analysis or assessment which explicitly articulates how the entity’s procedures or results contribute to its performance for the relevant requirements.
Alignment with phrasing provided by PGPA Rule
3.38Several of the PGPA Rules provide specified wording to be included in annual reports. Several annual reports deviated from the wording provided.
Senator Nita Green
Chair