1 10 th ASOSAI Research Project Australian National Audit Office (ANAO) November 2013 Dr Thomas Clarke Executive Director Performance Audit Services Group Australian National Audit Office

2 ANAO role in anti-corruption and anti-money laundering: summary assessment  ANAO mandate and role falls within the Westiminster/Parliamentary model of SAI –Reports are public, recommendations are advisory –No mandate to conduct criminal investigations or impose penalties etc  ANAO does not seek to directly detect corruption or money laundering via our audit services. –Instead our focus is on providing assurance that management controls within audited arrangements provide appropriate assurance that the risk of corruption and money laundering is well managed, and that anti-corruption and anti-money laundering strategies and agencies are performing appropriately. –If concerns about corruption or money laundering are identified during audit activities, there is an established protocol to refer these to the specialist anti-corruption and anti-money laundering agencies.  Overall, ANAO is comfortable with current arrangements and does not see a pressing need to change the legislative mandate or develop specialist in-house detection and investigation capabilities.

3 ANAO role in anti-corruption and anti-money laundering: summary assessment  Why are we comfortable? –The system as it is currently structured, is working reasonably well: rates of known and estimated official corruption and money laundering are very low in Australia, by global standards, and the available trend information is flat/downwards, suggesting that the problems are stable or even improving. –Without a sense of ‘crisis’ there is unlikely to be parliamentary support for changes to ANAO legislation/mandate or financial support for increased audit activity. –The key issue for the ANAO is to monitor changes within Australia, and if worrying trends emerge, to take action (drawing on the work of this research project).  An interesting observation about cause/effect –The ANAO has a relatively weak and indirect approach to combating corruption and money laundering. However, rates of corruption and money laundering in Australia are low  This suggests that, the absence of strong/direct SAI arrangements does not automatically mean that rates of corruption/money laundering will be high.  Proposition: strong/direct SAI arrangements are primarily a reaction to the failure (or perceived failure) of other government mechanisms to control corruption and money laundering

4 ANAO role in anti-corruption and anti-money laundering: considerations for our project  3 things to consider in developing our report and any better practice guidance: 1.Context is vital  Report needs to recognise the impact of the operating context for each SAI, including rates and nature of corruption /money laundering and their respective mandates/models  Guidance needs to be able to be tailored to each SAI’s needs and contexts – perhaps a matrix of options to choose from? 2.Proportionality is important  if the problem is small you don’t need a big response!  If the problem is small and the trend information is neutral or positive, then there will be little support for change (‘the system is working’)  If either of these preconditions are not met, then conditions will be more positive for introducing stronger audit arrangements.

5 ANAO role in anti-corruption and anti-money laundering: considerations for our project  3 things to consider in developing our report and any better practice guidance (continued): 3.Realism is important  Systemic issues such as endemic corruption are beyond the capability of an SAI to resolve on its own. SAIs are one part of a political, social and economic system and our audit activity should be viewed in this light  If stronger audit arrangements are considered necessary, careful consideration needs to be given to defining a realistic desired outcome, and how the SAI can assure itself that its actions (and not the actions of others) are achieving the desired effect

6 Further information  Web:  Address: GPO Box 707, Canberra ACT 2601 Australia   Tel: 61 (0)