The ongoing development of the ANAO's capability ensures that we are able to continue to achieve and deliver our purpose. Investments in capability support the ANAO to uphold public sector principles and values, while building sufficient flexibility and expertise to meet future needs.

The ANAO’s Corporate Plan 2019–20 outlined capability investments that we would make to ensure that we continue to deliver on our purpose. The areas of investment were:

• integrity;
• productivity;
• workforce capability;
• quality; and
• engagement.

The ANAO is committed to building capability that is forward focused, supporting the work of our auditors and corporate services professionals now and into the future. The information below reports on the implementation and progress of all five of these capability investments.

Integrity

Maintaining credibility and independence is essential in exercising the Auditor-General's powers and delivering against the mandate of the Auditor-General Act 1997. In order to demonstrate these qualities, the ANAO regards integrity as a core value of the organisation — critical in sustaining the confidence of the Parliament, strengthening public trust in government and delivering quality audit products.

In March 2019, the ANAO participated in ‘IntoSAINT’ — a self-assessment tool for audit institutions and other public sector organisations — to identify and evaluate the ANAO’s institutional vulnerability and the resilience of its integrity control system. Findings from this self-assessment indicated that the ANAO builds and maintains integrity through a mature control system. As part of the ANAO’s Corporate Plan 2019–20, we committed to investing in integrity as a key organisational capability. To support this capability, we developed an integrity framework — a key recommendation from the IntoSAINT self-assessment.

The integrity framework provides an overarching structure to the existing ANAO integrity control system. The framework serves to assist staff in ethical decision-making and risk, fraud and misconduct management. It consolidates the existing integrity control system — including legislation, policies, procedures and guidelines — outlining the expected behaviours of staff as representatives of the ANAO.

The framework highlights integrity as one of our core values. It outlines the expectation that our people will demonstrate integrity in their behaviours — as auditors, public servants, officials and professionals. It details the ANAO Integrity Statement, which encompasses the five key principles of independence, honesty, openness, accountability and courage. The framework emphasises that integrity at the ANAO means more than simply complying with requirements — rather, we expect our people to live this value through their actions.

Productivity

The ANAO maintains an ongoing focus on building productivity as a key capability investment. Improved productivity is critical to demonstrating the efficient use of taxpayer funds in the delivery of our work to the Parliament and the public. The ANAO has made investments in our ways of working to ensure the organisation remains efficient and effective, increasing productivity and enhancing performance.

As outlined in the ANAO Corporate Plan 2019–20, to support improvements in productivity, the ANAO invested in:

• providing an activity-based working environment;
• implementing an updated IT strategy;
• implementing a data analytics strategy;
• developing a new resourcing model for assurance audits;
• implementing new audit tools (TeamMate+); and
• introducing more productivity technology to support efficiency (new time recording and scheduling).

Activity-based working environment

In December 2019, the ANAO relocated to new premises at 38 Sydney Avenue, Forrest. Fit-out works were undertaken prior to the relocation to develop an activity-based working environment. The new fit-out provides staff with a wider range of workspaces, supports more flexible ways of working, and has increased communication and collaboration across service groups. Fit-out works were delivered under budget, and the ANAO’s new 15-year lease also provides savings to the Commonwealth compared to its previous lease.¹

Prior to the ANAO’s relocation to the new building, we provided a number of staff engagement activities to support the transition to an activity-based working environment. Leading and Growing Flexible Teams workshops were held in October 2019 for Senior Executive Service and executive-level staff, followed by Working in Flexible Teams workshops in November 2019 for staff at all levels of the organisation. The workshops were attended by 284 people, and provided an in-depth overview of the different work zones available at the new building. The workshops also informed the development of a series of workplace principles that outlined how the new, more flexible workspaces would be used and how staff would work effectively together.

We provided onsite assistance to staff on their first day of work in the new building, including ergonomists who conducted roaming workstation assessments, IT support, removalists to assist with unpacking, and tours of the building and the different work zones. The majority of staff feedback indicated that the relocation process, and subsequent induction to the new premises, was smooth, and that the more flexible working environment has increased collaboration and provided staff with a wider variety of work spaces to better match the different tasks they perform.

On 23 March 2020 all staff were requested to work from home in response to the COVID-19 pandemic. A transition plan has been developed to support the gradual and safe transition of staff back to the office in line with the easing of COVID-19 restrictions.

Information technology strategy

The ANAO uses outsourced services to deliver a flexible and responsive IT environment and secure gateway services up to the ‘protected’ classification level. Over the past two years, the ANAO has recognised that cloud computing technology is a key enabler for the organisation. Transitioning workloads to cloud services has provided the ANAO with high levels of system availability and reliability, along with flexibility and improved performance. During the COVID-19 pandemic, the ANAO has continued to benefit from its cloud adoption strategy, secure gateway services and flexible laptop equipment, which supported a transition of the full workforce to remote working in response to the pandemic.

Improving the ANAO’s cyber resilience remains a key focus in the face of constant changes to the threat landscape. In February 2020, the ANAO commenced a two-year security improvement project to build increased security responsiveness. The first phase to 30 June 2020 delivered an uplift in the ANAO’s cyber resilience maturity level, as measured against the Australian Cyber Security Centre’s Essential Eight mitigation strategies, including more responsive patching, improved threat monitoring and detection capabilities, and increased security controls to further mitigate cybersecurity incidents.

The ANAO developed a 2019–2021 data governance framework, which outlines the key principles and mechanisms used to support the governance of data within the organisation. The framework has a strong focus on data security and managing data as an asset. It is designed to ensure the efficient management of data and promote the value of data assets, including their analysis and the exchange of data insights. We are implementing the data governance framework through a data action plan, which includes a program of comprehensive data asset discovery, tracking and management, as well as improving data collection technological capability. We expect that the data governance framework will deliver a number of organisational benefits, including enhanced risk management of data, storage cost reductions and further productivity efficiencies, as well as increased data loss prevention and cybersecurity.

Data analytics strategy

The ANAO is in the third year of its Data Analytics Strategy 2018–2020. The strategy focuses on developing innovative and effective use of data, technology, tools and resources to build capability, generate new audit products, enhance quality and increase efficiency. Under the strategy, the capability developed over the last two years has enabled the ANAO to take a new approach to the use of data analytics to provide assurance for audits, including:

• embedding the consideration of data analytics in the planning and scoping phase of all performance audits;
• developing standardised, or bespoke, data analytics solutions for financial statement audits; and
• developing efficient work processes and automating manual data processes where possible.

During 2019–20, the ANAO has achieved the following in applying data analytics to provide more efficient and effective audit assurance:

• Data analytics is now used by 80 per cent of the largest financial statement audits undertaken in-house (those reported in the ANAO’s interim reports on key financial controls of major entities).
• Data analytics was used to provide new insights into the management of staff leave across multiple entities, the results of which were tabled in Auditor-General Report No. 38 of 2019–20: Interim Report on Key Financial Controls of Major Entities.
• New data analytics solutions have been developed across a number of areas, including a new dashboard-based tool for analysing payroll-related expenditure on financial statement audits, which is in use by multiple teams.
• The ANAO also produced Auditor-General Report No. 27 of 2019–20: Australian Government Procurement Contract Reporting Update, which used data analytics to provide insights into procurement activity across the public service.

The specialist data analytics team also provides support to corporate functions, including data-driven decision-making and improving the way data is collected and reported.

In an environment of ever-increasing challenges, the ANAO will continue to build organisational capability in data analytics, and leverage technologies and information resources to increase quality and productivity in our audit work.

New audit tools and systems

The ANAO’s new Business Applications team started work in November 2019. This team works with the ANAO’s business groups to provide strategic guidance and project management expertise for the selection, delivery and modernisation of business applications in the ANAO. This capability promotes continuous improvement through business and technology change to enable improved delivery of audit services.

The ANAO uses Saviom, an enterprise resource management tool, to allocate and monitor resources for audits. In 2019, the software underwent a minor update, while licencing was expanded to audit managers and senior managers, increasing visibility over resource allocation.

Nuix is used by performance audit teams as a software platform for indexing, searching, analysing and extracting knowledge from unstructured data. A portion of Nuix users were transitioned from desktop computers to a Nuix virtual solution to adjust to the changed work environment at the ANAO’s new accommodation.

TeamMate is one of the key audit management tools used by the ANAO. After exploring the TeamMate+ cloud solution in 2019, the ANAO ultimately decided to stay on the current on-premises platform and upgrade to TeamMate version 12.4. This decision was based on the most appropriate functionality to meet business needs, while still addressing application support requirements.

As part of the broader IT strategy to better realise the benefits of existing applications and consolidate overlapping functions, the ANAO ended its longstanding relationship with the time and project recording system Changepoint. The ANAO is deploying Aurion Timekeeper as a replacement tool, which is expected to lead to ongoing efficiency gains.

The ANAO also completed negotiations to transition the TechnologyOne financial application to a cloud platform in early 2020–21. This will shift the application from an on-premises to a ‘software as a service’ arrangement, in line with the ANAO’s IT strategy. The transition to a cloud platform is expected to reduce application management overheads and reduce risks associated with maintenance, while also allowing rapid deployment of updates.

Workforce capability

At 30 June 2020, the ANAO employed 336 staff, including 27 senior executives (based on a headcount). The ANAO staffing profile, details of coverage of employment instruments, diversity statistics and salary information can be found at Appendix D. The ANAO’s staff engagement and performance strategies are outlined in Appendix E.

The ANAO recognises that workforce capability is integral to the delivery of quality audits, other reports and support functions. In 2018, the ANAO delivered its workforce plan to address current organisational challenges and future capability needs.

Pandemic response

Following the activation of the ANAO’s Business Continuity Management Plan, on 23 March 2020 all staff were requested to work from home in response to the COVID-19 pandemic. We undertook a review to identify critical business functions and roles, and developed strategies to maintain these in the case of disruption due to illness. Equipment such as monitors and task chairs were offered to all staff for use at home during the pandemic response to maintain a safe and ergonomic working environment.

We implemented building management measures such as removing furniture throughout the building to comply with physical distancing requirements, providing additional cleaning and hygiene supplies, installing hygiene signage, and implementing sign-in procedures for potential contact tracing purposes. In line with the easing of COVID-19 restrictions by the ACT and federal governments, we have developed a transition plan to support a graduated return of staff to the building. As at 30 June 2020, a limited number of staff are permitted to work at the ANAO’s premises each day, prioritised by operational and wellbeing requirements, and in adherence with physical distancing and hygiene measures.

Employment arrangements

The ANAO Enterprise Agreement 2016–2019 nominally expired on 21 April 2019. In April 2019, the ANAO implemented a section 24(1) determination under the Public Service Act 1999 after a lengthy consultation process. The determination holds in place conditions of the ANAO Enterprise Agreement 2016–2019 while enabling an annual 2 per cent pay increase commencing 22 April 2019.

In response to the COVID-19 pandemic and a request made by the Australian Public Service Commissioner on 26 March 2020, the Auditor-General made a section 24(1) determination pausing annual pay increases for all Senior Executive officers.

On 9 April 2020, the Australian Government made a section 24(3) determination pausing all Australian Public Service (APS) pay increases for a period of six months. The determination came into effect on 14 April 2020 and will defer ANAO staff pay increases until 22 October 2020.

Workforce plan

The workforce plan is focused on building a workforce that is forward-looking, risk focused, technologically adept, change-orientated and highly adaptive. By sustaining a culture of high performance and professionalism, the ANAO will be able to support increased workforce engagement to deliver organisational outcomes.

The workforce plan was designed to be implemented over four years through the development of two enabling frameworks and three strategies:

• a human resource metrics framework;
• a core capability framework;
• a recruitment strategy;
• an onboarding and separation strategy; and
• a development and high performance strategy.

During 2019–20, the ANAO continued to progress the key elements of the workforce plan.

We implemented a fresh approach to the graduate recruitment process, with a revised advertising campaign and updated assessment methodology. In 2019, the ANAO piloted a video interview process with great success, which set the framework for rolling out the entire assessment process to an online model in 2020.

We also refreshed and updated the 2020 graduate induction process, and piloted a revised approach to agency-wide induction and onboarding throughout 2019–20. We will incorporate staff feedback into a new strategy for 2020–21, with a view to being able to induct and onboard new staff in a remote working environment during the COVID-19 pandemic.

With the majority of staff working from home through the COVID-19 pandemic, we developed a pastoral care process to support staff and new graduates, supported by a new flexible work policy and mental health strategy. A buddy system has also been put in place for staff to reach out for additional support during the current uncertainty.

The ANAO talent management program was relaunched after a pilot program in 2018–19. Participants commenced the program with a 360-degree review — where feedback is gathered from multiple sources — and will participate in sessions with the talent sponsor, the Deputy Auditor-General and outsourced training providers over a 12-month period.

The Australasian Council of Auditors-General (ACAG) identified a need to establish a mentoring program to support employees in the audit offices of smaller countries that are members of either ACAG or the Pacific Association of Supreme Audit Institutions (PASAI). In conjunction with ACAG, the ANAO is conducting a group mentoring program to assist audit practitioners from the Tonga Office of the Auditor General to develop audit, corporate and leadership knowledge and skills. Mentoring sessions commenced in June 2020 and will continue through July and August 2020, covering financial audit, performance audit, corporate governance and leadership.

We implemented new recruitment processes for candidates seeking to move to the ANAO laterally, and we are currently automating aspects of our eRecruit system to improve the candidate experience and streamline internal processes.

The ANAO has transitioned to Aurion for payroll services, and we have configured the system to ensure ease of reporting and accuracy of human resources data. This work will enable us to build on current reporting capability and provide accurate forecasting and trend information.

The ANAO worked closely with providers to move to a virtual training model. Non-technical training has focused on people management (coaching and developing others), managing mental health, personal productivity, and skills to help staff transition to remote working. We also engaged guest speakers to discuss the importance of integrity and data capability. Technical training has included internal experts facilitating training on the ANAO’s quality framework, risk management and the ANAO Audit Manual.

The Learning and Development team has been engaging with the Systems Assurance and Data Analytics Group to develop a training package around the different tiers of data capability by APS level. The package will include a self-assessment and e-learning, sharing best practice, accessing Australian Public Service Commission foundational courses, and internal rotations to the Data Analytics team where appropriate.

We will continue to refine and implement the workforce plan over the next year.

Quality

The ANAO maintains a strong focus on its quality assurance framework as a core business investment. A sound quality framework supports delivery of high-quality audit work and enables the Auditor-General to have confidence in the opinions and conclusions in reports prepared for the Parliament. The ANAO published its first Quality Assurance Framework and Plan at the beginning of 2019–20. During 2019–20, we prepared the Quality Assurance Framework and Plan 2020–21, which complements the ANAO Corporate Plan 2020–21, and outlines the quality assurance strategy and key activities planned for the year ahead.

The ANAO defines audit quality as the provision of timely, accurate and relevant audits, performed independently in accordance with the Auditor-General Act 1997 (the Act), the ANAO Auditing Standards, and methodologies that are valued by the Parliament. Delivering quality audits results in improved public sector performance through accountability and transparency.

The ANAO’s work is governed by the ANAO Auditing Standards established by the Auditor-General, in accordance with section 24 of the Act. The ANAO Auditing Standards incorporate Auditing Standard ASQC 1 – Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements. ASQC 1 requires the ANAO to establish and maintain a system of quality control to provide it with reasonable assurance that the organisation complies with the ANAO Auditing Standards and other applicable requirements, and that reports issued by the Auditor-General are appropriate in the circumstances.

The ANAO Quality Assurance Framework and Plan encompasses policies and procedures that address leadership responsibilities for quality, relevant ethical requirements, audit mandate and selection, human resources, audit performance and monitoring.

As outlined in the 2019–20 Corporate Plan, the ANAO has published its first Audit Quality Report. This report assesses the implementation and operating effectiveness of the elements of the ANAO Quality Assurance Framework outlined above. The report provides transparency in respect of the processes, policies and procedures that the ANAO has implemented to address or support each element, including reporting on Audit Quality Indicators (AQIs) and measuring ANAO performance against target benchmarks. AQIs are measures in respect of individual audits, and the ANAO more broadly, that provide insights about key matters that may contribute to the quality of an audit. Measuring AQIs informs and enhances reporting about audit quality and assists in understanding the root causes of quality inspection findings. The achievement of the quality assurance strategy and deliverables, as set out in the Quality Assurance Framework and Plan 2019–20, is also included in the audit quality report to enhance accountability.

Figure 4.2: ANAO quality framework

Methodology

The ANAO Auditing Standards are supported by a methodology incorporating audit manuals applicable to performance audit and assurance audit work. This methodology is regularly reviewed and updated as required for changes in the ANAO Auditing Standards, industry better practice, and new and emerging products, and to address findings from the ANAO’s quality assurance program. In 2019–20, key updates to the methodology included:

• implementation of a new template and technical guidance to respond to the impact of the COVID-19 pandemic on financial statement audits;
• revision to the financial and performance audit policy related to quality monitoring, to incorporate emerging quality assurance reviews, such as reviews by the Australian Securities and Investments Commission and real-time reviews, and amend the selection basis for quality reviews of audits contracted out to audit firms;
• development and implementation of a new audit file structure for performance audits to support the consistent documentation of the conduct, supervision and review of performance audits, and the development of a new performance engagement risk assessment template;
• upgrade of the audit software the ANAO utilises to support ANAO audit methodologies; and
• development of a new performance statements auditing volume of the ANAO Audit Manual being trialled in the performance statements auditing pilot.

Engagement

The ANAO considers engagement as a core capability for delivering on our purpose. Consistent with the outcomes of the strategic communication review undertaken in 2018–19, the ANAO sought to identify specific audiences and develop strategies and tactics to meet their communication needs. As a result, in October 2019, we launched a new section of the ANAO website featuring information designed to support the information needs of Senate estimates committees. This section of the website displays summaries of all audits tabled since the previous estimates hearings, relevant to each committee’s allocated portfolios. This provides committee members and secretariat staff with direct and real-time access to audit report summary information, and allows for printing and PDF-optimised information exports to support committee business requirements.

A new Audit Insights strategy was implemented in November 2019. The new strategy enables the ANAO to plan and develop a contemporary product designed to share good practice approaches to public administration across the Australian Government sector. A key component of the strategy is to more closely align the development of an insights product to audit planning and selection processes. This approach will provide a series of tabled audit reports to draw from, to create thematic insight products promoting good public administration principles.

Effective internal communication and staff engagement were important in keeping staff informed and engaged during the accommodation move in December 2019. Methods of communication included a regular all-staff email newsletter dedicated to accommodation news and information, as well as the use of existing channels such as the intranet and TV displays. Early feedback from staff during the COVID-19 pandemic reinforced the importance of effective internal communication, resulting in the deployment of regular executive messaging through email, a new fortnightly all-staff email newsletter, and text messages to staff at the end of each work day.

Since November 2019, all tabled performance audit reports have included a single-page feature called an ‘audit snapshot’. This new feature is intended to provide readers with a concise summary of the report, to help the reader make a decision about whether the report is of interest to them. It includes information about why the audit was conducted, what the audit found, what was recommended to the audited entity, and some key facts about the subject of the audit.