Estimates: Finance and Public Administration Legislation Committee (Australian National Audit Office)

Senator RHIANNON: I would like to understand, firstly, how you went about your report—who you interviewed and how that was undertaken. Did you take in camera evidence?

Mr Morris : No.

Ms Horton : Not in camera evidence, no.

Senator RHIANNON: You have heard the chair's outline, which certainly summed up my feelings. I am still really trying to understand it, because the degree of dysfunction seems so extensive. So, I thought it would be useful to understand how you have gone about this. Who did you interview, considering there is such a range of viewpoints and you were trying to gain objective information?

Mr Morris : Mainly, we collected information from the systems—from DPS's systems. Certainly, within the department we talked to the management and the key contract managers and those with responsibilities for the areas that we were looking at. We also talked to some external stakeholders who had interest in the processes. We have a community consultation process on our website, where we make it known that we are undertaking the audit and we are seeking information, submissions and any commentary. That was available and we got some information through that. But, certainly, the gist of this one was to try to go through the records that DPS held, so that we could understand what their processes and practices really were.

Senator RHIANNON: So, are you saying that the bulk of what we read here is based on your analysis of the records, not on your interviews with senior staff?

Ms Cass : It is probably, I would say, a combination of both. I think in this instance, as you have already heard, we had great difficulty in getting documentation. So, particularly for this audit, we had extensive meetings and consulted very widely with DPS staff and their executive on many occasions. We highlighted the fact that we were having difficulty getting documentation, and we highlighted what we expected that we would be able to find and what we had not been able to find. These were quite critical findings, and it is our approach to discuss with the agencies involved so that there are no surprises, as we like to say.

So this was very much a combination of multiple interviews across all levels of the organisation. It involved looking at their systems, sampling their contracts and going to external stakeholders. We do this for all audits. Certainly for this audit, there was very much a constant process of trying to get the relevant information and documentation to support—one way or the other—what we were trying to find and to answer our audit objective.

Senator RHIANNON: Thank you for setting that out. Mr Morris, it did seem that your answer was different. You spoke about what I understood was senior management. Ms Cass gave great emphasis to the fact that there were extensive interviews across the staff; I am assuming, therefore, those involved all positions. Is that fair, Ms Cass?

Ms Cass : Yes.

Senator RHIANNON: That did seem at variance with what you said, Mr Morris?

Mr Morris : We certainly did both. Again, often what we do in an audit is go and talk to people to get an idea of the processes, the systems and their views. Then we want to test that more thoroughly—to the extent that we can—through the documented evidence. If we cannot get to the documented evidence, then we have to rely more on advice. In those instances, we have to identify it as being advice and not the analysis that we conducted ourselves.

Senator RHIANNON: Before I go on to a specific example, could you also set out the ongoing involvement of the ANAO with this? You have done the report, and you have made recommendations; do you have another stage?

Mr Morris : There are options. It is not clear, and we just tabled the report not very long ago. We may have some involvement. Typically, what we do is table the report, leave time for the agency to implement the recommendations and then perhaps come back with a follow-up audit or do a new audit in a few years time. With this agency, it is possible that we could run our eyes over the recommendations or the plan that they have to implement them. Again, it is too early to be able to say what we are going to do in this instance.

CHAIR: Mr Morris, this committee effectively did its own audit or inquiry into DPS in 2012 and nothing has really changed. It is like: do we have to do this every year until we can get away to actually happen? Is what you are proposing for ANAO to have a permanent detail to the DPS?

Ms Cass : To be fair—and I will be measured—I think that it is the case that this department has had multiple reviews done; each time they are waiting for these to be completed and then something else will come along, and they never really implement the recommendations. Now they have had some of these reviews come to fruition or they are expected to come to fruition in the next few months. That does give them a platform to start from. That does not change the fact that basic administrative practices should be in place, but it does give them a starting point that they may not necessarily have had before. But underpinning all of this will be record keeping, will be implementing our recommendations and your recommendations, and will be actually taking the time to do a stocktake of what their contracts are and look at their contract register. It is about taking that step-by-step approach not the scattergun approach of 'wherever of the next bushfire is, we will put that out first'. It is about actually taking a measured and structured approach to implement some of these changes, the recommendations that some of these reviews and the plans that they have had developed for them.

CHAIR: I agree with you. It is about accepting the recommendations and working through them in a methodical and diligent manner. It is the responsibility of management to ensure that these things take place. The difficulty I have is that the report was made in 2012 and, in my opening remarks to Mr McPhee, it just does not seem as if anything substantial—and I stand to be corrected, as there might be something—has changed. In fact, they may have got worse. Now, here we are in 2015. Last year, when we it was suggested we have this inquiry, we were told we were putting unfair pressure on DPS and we were told how terrible we were to interfere with their activities. We find that their activities are so devoid of integrity that it beggars belief. So we are going to come out with another report; we are going to have a bunch of recommendations. You have a bunch of recommendations. In three years, unless there is a change—and a serious change, because it is about management and not because of a lack of identification of the problems—I would not lay London to a brick but I would have a fairly healthy stack on it that we are going to have the same problem again. It comes back to management. It is not identification of issues. It is implementation of corrections and procedures and policies. Anyway, that is enough for me.

Senator RHIANNON: I think it follows on from the chair's comments on the enormity of what we have before us. I still feel the need to understand how you have assessed the information. Maybe we can use the issue of heritage, which obviously is one of great concern, because I have read the sections here. I was left with the impression from reading your report that you found that the project management with heritage is pretty irregular and loose. When I read here—and I am looking at page 22 onwards—about management arrangements in the department and then I read the summary of the entity response, it is starting to sound reasonable. You have just put 3½ pages in here of their response. I think that there does need to be commentary on that, because when we get to page 25 you are talking about customer request process. So we are now at the stage where they are talking about the strategic asset management plan and how they are going to support a revised system of asset management documentation—which, I have gathered from you, has been one of the obstacles that you have faced in actually accessing the documentation. And then they talk about customer request process; it is already in place and requires a two-stage business case. That is all just presented there. I am assuming somebody senior within DPS gave you that information. It seems as though you have uncritically reported on that. Could you take that as an example and explain how you have assessed that? And, if you have assessed it, could you explain what you have found? At the moment, it is presented to a reader that something is happening. But when you look at the bigger picture you cannot be confident that it is.

Mr Morris : Certainly, there is quite a lot of activity towards the end of our audit field work when we were writing up the audit report. And that is one example of that. I am not sure in which paragraph it is, but we do note in paragraph 3.24 that, I think, in October 2014, which was towards the end of our audit fieldwork from when we were writing the audit up, there was this new stakeholder consultation process. Certainly, Senator Rhiannon, you are aware that was DPS's response?

Senator RHIANNON: Yes, that is what I—

Mr Morris : So you are saying that we let it stand. One reason we did leave it stand was—and certainly for that one—that we were aware that that process was actually in place. We had noted that in 3.24. But it was too late in the audit fieldwork for us to examine it particularly. We know that it is around. But even with that one we did notice that they are trying to make it provide greater clarity for stakeholders to be able to liaise or communicate with the department. But, again, they did not have the actual criteria about what basis there would be for that consultation or communication and then what would be done with the communication. So it was just too early in the day for us to be able to really report on it, but we had identified that that process had just begun.

Senator RHIANNON: So it has been reported to you and there are some things that you have had to take on face value, and that is one of them?

Mr Morris : Yes, that is right.

Senator RHIANNON: Is that the same as the customer request inquiry? I have heard it referred to as that. I am assuming that is the same thing.

Mr Morris : That is the same thing.

Ms Horton : Yes, it is. DPS developed that process in particular right at the end of our fieldwork process as we started to write the report. So we were not able to test whether it had been implemented and how it was working. On pages 24 and 25 there is DPS's response to the final report. They gave it right at the end so we have not done any testing. We tabled it as they provided it to us.

Senator RHIANNON: So you have not done any testing. Were you able to assess if they took into account external views and the views of people that they are working with, or was it largely something that a few people in management did because they were under the pump because you had come up with a pretty serious report?

Ms Horton : It was varied. In that 'customer request incidents', for example, they had actually spent a bit of time consulting with their staff and going through a draft process to work out how the process would work in response to various concerns.

Senator RHIANNON: Did they tell you that they consulted with staff, or did you speak to the staff and they told you?

Ms Horton : We saw a combination of the draft procedures themselves as they were circulated through. They were going through the process while we were doing the audit. They had drafted procedures and they had circulated them across various areas of DPS. They had taken the comments back and then they had implemented it at the end.

Senator RHIANNON: It still sounds like you are just talking to senior management. That is what I am trying to really understand here.