Services Australia needs to improve risk management when handling its bilateral agreements with other federal government entities, according to the Australian National Audit Office.
In his latest performance audit report, auditor-general Grant Hehir looked at the bilateral agreements between Services Australia and three government organisations — the Department of Veterans’ Affairs, the Department of Agriculture, Water and the Environment, and the National Disability Insurance Agency.
He found the agreement arrangements to be “largely effective”, but identified a few issues. While arrangements to support the delivery of payments and services were partly effective, some agreements didn’t include appropriate risk statements or review points, Hehir concluded.
“In managing agreements, some improvements are required in risk management, specifying roles and responsibilities, and issues escalation and resolution,” he reported.
“There was limited effectiveness in performance monitoring and reporting arrangements between Services Australia and the three entities, with missing service levels, inconsistent reporting and a lack of analysis of performance reports by the three entities receiving services.”
The bilateral agreements contained most of the expected elements, but 30% of agreements were missing a statement on how the parties would manage risk, and 13% of agreements did not contain a review clause.
Most of the agreements contained appropriate performance measures or service levels, the audit noted.
“The service levels were largely specific, affordable, relevant and time-based, however there is an opportunity for the entities to ensure service levels are measurable by including targets against all service levels,” it said.
“In addition, eight of 26 sets of measures reviewed were not complete as they did not cover issues such as accuracy or integrity, or cover all services delivered.”
The ANAO also identified issues with performance monitoring and reporting arrangements.
“Agriculture and Services Australia have set performance measures in place but Services Australia does not consistently report on these measures and Agriculture does not undertake any analysis of the reporting,” it stated.
“Not all services delivered by Services Australia for DVA and the NDIA have performance measures in place, and not all of those measures in place are reported on by Services Australia. DVA and the NDIA do not undertake any analysis of that reporting.”
The audit recommended Services Australia work with entities to ensure bilateral agreements include statements committing to “cooperatively communicating and managing risks” related to the delivery of the program or service, as well as agreement review clauses with clear timeframes, and effective performance measures and reporting mechanisms.
Each entity should also develop “more robust approaches to risk planning and management within the bilateral agreement arrangements”, including implementing risk management plans, regularly discussing and reporting on risk at governance forums, and developing strategies to identify and manage shared risks.
The entities should also ensure appropriate performance measures are incorporated into services schedules where needed, and are accurately reported against, discussed at governance forums, analysed, and verified — all on a regular basis.
In response to the audit, Services Australia said it would continue to transform its service delivery model, which would “have the potential to impact how it engages with partner entities”.
“This will include reviewing its approach to governance arrangements and agreements with partner entities,” it said.
The NDIA noted it was committed to improving services delivered to participants, while also being cost effective.
“To that end, the NDIA will work with Services Australia to implement Whole of Government transformation initiatives, such as the Shared Services Program, for the benefit of participants,” it wrote.
“In addition, the NDIA is currently reviewing its Memorandum of Understanding and Services Schedules with Services Australia. The renegotiation of these documents provides the opportunity for an increased focus on risk management, improved service delivery and greater cost transparency.”
Agriculture said it would work with Services Australia to effectively manage the delivery of the Farm Household Allowance program.
“The report places appropriate importance on the need for timely and robust data and for strengthening risk management processes for the Farm Household Allowance program. The department considers the recommendations will foster improvements in these areas,” it said.