Only one per cent of performance measures across $858 billion of Commonwealth spending are genuine efficiency measures.
That’s the stark finding from the latest Australian National Audit Office (ANAO) report, Performance Statements of Major Australian Government Entities: Outcomes from the 2024–25 Audit Program, which reviewed performance reporting across 21 major entities covering more than 85 per cent of Commonwealth expenditure.
The ANAO’s warning is clear: while the complexity facing Australian Government entities will only intensify, the way performance is measured and audited is not keeping pace.
For senior public servants, this is more than a reporting issue. The ANAO is clearly articulating how value for money, impact and accountability will be judged in the years ahead.
The problem? Not data, but what we measure
Most public sector entities are not short on data or metrics. In fact, many are overwhelmed by them.
The issue, as the ANAO has repeatedly observed, is the type of measures being used. Most performance plans and statements still focus on what was done, rather than what difference those activities made, or whether they were delivered efficiently.
As the report highlights, “Ensuring that entities align their performance with long term outcomes that matter most to the community and decisionmakers is crucial. Performance statements that provide meaningful information can promote accountability, transparency, and genuine improvements in entity performance and public service delivery.”
Timeliness is a common example. Faster response times may look positive on paper, but tell only part of the story. A quicker turnaround is far less meaningful if it comes at the expense of accuracy, quality or customer satisfaction.
Efficiency may be harder to measure than speed or volume but that does not make it optional.
Why this matters now: performance audits are sharpening
Performance audits are designed to assess:
- effectiveness
- efficiency
- governance and compliance.
In practice, the ANAO is increasingly testing whether entities can explain and evidence how public money is converted into outcomes, and whether it is done efficiently, transparently and reliably.
“A performance audit is essentially a health check on how well a department turns money into results… and whether it does so efficiently, transparently and in a way that stands up to scrutiny,’ says OCM Canberra Audit partner, Susanne Kennedy.
This matters because the operating environment is becoming tougher, with the report noting. “The coming years will continue to be challenging for the public sector as it continues to be asked to do more, with less, for more people, in an increasingly complex and risky environment.”
In that environment, entities will increasingly be assessed both on what they spend, and on the difference they make.
The emerging risk for decision makers
For senior executives and audit committees, the risk is no longer limited to technical non compliance.
The bigger risk is being unable to clearly demonstrate:
- How efficiency is being measured and improved
- How tradeoffs between speed, quality and cost are managed
- How performance information is actually used in decision making
- How leaders know that systems and controls are working as intended
These are exactly the questions performance audits are seeking answers to. And if performance frameworks are built primarily for reporting, rather than for managing the business, those questions are difficult to answer and even harder to evidence.
Where better preparation makes a difference
This is where forward looking internal audit and advisory work can materially change outcomes.
Rather than focusing solely on whether policies exist, Kennedy says good performance auditors work with public sector leaders to examine how performance, efficiency and governance operate in practice and whether they can be clearly evidenced.
That includes:
- Stress testing performance measures to see whether they genuinely demonstrate efficiency and impact
- Tracing decisions from funding through to outcomes
- Identifying where activity measures mask efficiency or quality issues
- Helping executives and audit committees articulate how they know performance is improving.
Importantly, this work is not about “audit proofing” documents. It is about improving how organisations understand and manage performance, so that audit readiness becomes a byproduct of good governance, not a lastminute scramble.
A narrow window to act
The ANAO’s findings paint a clear picture as to where its efforts are focused and the expectations it has, offering leaders a blueprint for the future.
Performance audits are becoming more sophisticated. Expectations around efficiency and impact are rising. And the gap between what entities report and what they can evidence is increasingly visible.
OCM Assurance leader, Judy Malpas, notes the ANAO is making it clear that simply being active isn’t sufficient anymore.
‘Departments must demonstrate how public funds are used effectively to create outcomes, which calls for new types of discussions, improved measurement, and stronger evidence… much of which many organisations still need to develop.’
Top tips to be match-fit for your performance audit
Kennedy and Malpas both say their experience is that the best preparation for a performance audit comes down to ensuring you are measuring the right things; and that your team understand the importance of these.
“What I have seen, time and time again, is that the organisations that perform most strongly in performance audits have thought clearly about what they need to measure, how they will measure it and how they will demonstrate that,’ says Kennedy. ‘They don’t wait for the missive that they are being audited to arrive, they proactively plan for it, seek advice, train their people and invest in the right systems.’
Their top tips for what leaders can do, today, to strengthen their approach:
- Capability-building in evidence handling, help teams understand what “audit safe” evidence looks like and how to maintain it.
- Training operational teams on record-keeping expectations, decision rights, controls, and documentation standards.
- Establishing clear data ownership, roles and routines so internal capability grows where it’s needed most.
- Shadowing and mentoring arrangements, where appropriate, have staff work alongside the performance audit team, building confidence and skills and helping them identify what good looks like.
