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  • Appendix 5: External scrutineers’ reports

    Australian National Audit Office

    During 2016–17, the ANAO tabled seven performance audits specific to the ATO. The complete audit reports are available at anao.gov.auExternal Link.

    Details of the ANAO’s financial audits of the ATO are provided in Part 4 of this report.

    TABLE 5.7 ANAO reports, 2016–17

    Report

    Summary

    Conduct of the external compliance assurance process pilot

    (tabled 31 August 2016)

    The objective of the audit was to assess the effectiveness of the ATO’s external compliance assurance process (ECAP) pilot conducted with large business taxpayers.

    The ANAO did not make any recommendations. It did, however, identify key lessons for future ATO pilots, and more widely for pilots in all public sector entities, as follows:

    • A sound evidence base should be established to support any decision to expand external compliance assurance processes beyond large business taxpayers.
    • Planning for future pilots should include sufficient time to resolve case selection issues and establish a pool of taxpayer cases as early as possible when the pilot commences.
    • A proportionate focus on quality checking processes for ATO staff involved in a pilot would provide greater certainty for the staff involved and senior management about the introduction of a new review process.
     

    Meeting revenue commitments from compliance measures

    (tabled 12 September 2016)

    The objective of the audit was to assess the effectiveness of the ATO in achieving revenue commitments established under specific Budget-funded compliance measures.

    The ANAO made three recommendations, including that the ATO use a comprehensive set of performance indicators and guidelines for the consistent treatment of revenue collected through its ongoing business activities. We disagreed with recommendations 1 (in part) and recommendation 3.

    Australian Taxation Office’s implementation of recommendations

    (tabled 9 February 2017)

    The objective of the audit was to examine the effectiveness of the ATO’s monitoring and implementation of the recommendations about its administration made by the ANAO and parliamentary committees.

    The ANAO did not make any recommendations, however it did make four suggestions for improvement aimed at:

    • considering the likely impact of recommendations being implemented before providing a management response to any performance audit or parliamentary committee recommendation
    • improving the timeliness of implementing recommendations
    • improving the Audit and Risk Committee’s annual report to the Commissioner of Taxation to explicitly address the committee’s monitoring function for performance audit and parliamentary committee recommendations
    • establishing a baseline or indicators to measure the impact of new review arrangements being introduced in 2016–17 to provide assurance about the adequate implementation of ANAO performance audit recommendations by business areas.

    We largely agreed to explore these suggestions for improvement.

    Cybersecurity follow-up audit
    (cross-entity audit with DHS and Department of Immigration and Border Protection)

    (tabled 15 March 2017)

    The objective of the audit was to re-assess compliance of the three entities with the 'top four' mandatory strategies in the Australian Government Information Security Manual. The audit also aimed to examine the typical challenges faced by entities to achieve and maintain their desired ICT security posture.

    The ANAO made two recommendations, which were agreed to by the ATO. The recommendations related to the need for the three entities to:

    • periodically assess their cybersecurity activities to provide assurance that the activities are accurately aligned with the outcomes of the top four mitigation strategies and entities’ own ICT security objectives
    • improve their governance arrangements to ensure robust risk management, appropriate priority and executive oversight, and that these arrangements are regularly reviewed to ensure they are effective.
     

    Child support collection arrangements between the Department of Human Services and the Australian Taxation Office

    (tabled 15 May 2017)

    The objective of the audit was to examine cooperation between the Department of Human Services (DHS) and the ATO for child support collection activities, including tax return lodgment enforcement activities, tax refund intercepts, and information exchange.

    The ANAO made five recommendations in the report and we agreed to the four recommendations relating to the ATO.

    The recommendations in the report broadly relate to:

    • improving management of shared risks
    • improving case selection, prioritisation processes and compliance activities
    • DHS increasing scrutiny and consideration of income information determined by the ATO
    • identifying and improving assurance mechanisms between the two agencies, and implementing a continuous program improvement approach
    • implementing improved performance and effectiveness measures.
     

    Managing underperformance in the Australian Public Service

    (tabled 23 May 2017)

    The objective of this cross-agency audit was to examine the management of underperformance in the Australian Public Service (APS) drawing on submissions from eight agencies.

    The ANAO report concluded there is room for improvement in managing underperformance across the APS. The report does not rank agencies on how well they manage underperformance overall, and no formal recommendations were made for any agency.

    In the report, there are eight key learnings that apply to all agencies. The ATO agrees with the key learnings which focus on:

    • streamlining processes where possible, improving transparency in underperformance processes
    • providing more information and ongoing support to managers who supervise underperforming staff
    • more effectively using probation for new employees who do not meet the requisite standards.
     

    MyGov digital services
    (cross-entity audit with DHS and DTA)

    (tabled 27 June 2017)

    The objective of this audit was to assess the effectiveness of DHS’s implementation of myGov, as at November 2016.

    The audit found that the implementation of the myGov platform was largely effective but this was hampered by government services not joining myGov and not fully adopting the myGov functionalities.

    The audit confirmed that the ATO uses all available myGov functionality, including the single digital credential, the ‘update your details’ service and the digital inbox.

    The ANAO made two recommendations and one suggestion for improvement for DHS and the Digital Transformation Agency (DTA), relating to:

    • targeting and supporting agencies to provided services through myGov
    • establishment of a performance framework
    • identifying and assessing whether undelivered original myGov specifications are still required.

    The ATO supports the recommendations and area for improvement and will support the DTA’s efforts to establish a performance framework.

    Inspector-General of Taxation

    The Inspector-General of Taxation (IGT) released two reports relating to the ATO during 2016–17. The reports are available at igt.gov.auExternal Link.

    TABLE 5.8 Inspector‑General of Taxation reports, 2016–17

    Report

    Summary

    Review into the Taxpayers’ Charter and taxpayer protections

    (released 13 December 2016)

    The objective of the review was to identify opportunities to improve taxpayer protections and avenues for redress.

    The IGT made four recommendations that correlated to the following four investigation themes:

    • the framework for taxpayer rights and protections
    • compensation and other avenues for redress
    • model litigant obligations
    • cross-border information exchanges.

    The ATO agreed, agreed in principle or partially agreed with all the recommendations, except for sub-recommendation 3(c) to which we disagreed.

    Review into the Australian Taxation Office’s employer obligations compliance activities

    (released 24 May 2017)

    The objective of the review was to investigate concerns raised relating to the following themes:

    • the lack of a clear distinction between employees and contractors and associated costs
    • the costs of compliance for employers, including various record-keeping or reporting requirements, as well as adopting new initiatives such as Single Touch Payroll and the Small Business Superannuation Clearing House
    • expansion of ATO employer obligations compliance activities
    • the punitive nature of the super guarantee charge rules.

    The IGT made 11 recommendations across the following areas:

    • certainty and protection for employee/contractor decision making
    • rigorous testing for Single Touch Payroll, with a low- or no-cost option and alternative methods when facing technological challenges
    • developing a capability for the Small Business Superannuation Clearing House to receive various files
    • a reduction in compliance costs for the fringe benefits tax regime
    • expanding the taxable payments reporting system to the engagement of contractors across all industries and incorporating it into Single Touch Payroll when fully developed
    • improving the ATO’s PAYG withholding and superannuation risk-identification process
    • ensuring superannuation entitlements are paid promptly
    • publicly announce ATO areas of fringe benefits tax compliance focus for future years
    • providing practical guidance to ATO staff relating to the principles contained in Our approach to information gathering booklet
    • improving training, monitoring quality assessment results and improving ‘reasons for decision’ templates
    • increasing employers’ awareness of the ATO’s differentiated approach to non-compliance with super guarantee and to measure effectiveness after an appropriate amount of time

    The ATO agreed in full or in part with seven of the recommendations, and disagreed with two recommendations. Two of the recommendations are for government to consider.

     

      Last modified: 30 Oct 2017QC 53720