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Audit & Assurance

Building a Culture of Accountability: The Evolution of Performance Statements Audits

Posted on 29th February 2024

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In both the Public and Private sectors, it is important that individuals, programs and
organisations are held to account to deliver performance outcomes. Within the
private sector, profitability is the measure most often used, however we are seeing
an evolution with the increased focus and priority given to Environmental, Social
and Governance (ESG) reporting. Within Government the Annual Performance
Statements is the way in which performance is measured and reported,
implemented with the introduction of the Public Governance, Performance and
Accountability Act 2013 (PGPA Act) which established the system through which
accountability for public resources is to be governed.

In the public sector Annual Performance Statements is a regular audit topic on
Internal Audit Work Programs. As the Australian National Audit Office (ANAO)
continues to expand its external audit program, internal audit functions can help
their agencies to prepare for external audit, and address findings and
recommendations from ANAO work program.

Audits of Annual Performance Statements started to find their way onto our work
programs around 2019 when the ANAO commenced its pilot program. These audits
were focussed on the accuracy of the data presented in the statements. As time
progresses, we are seeing more value being added by audits that assess the
measures themselves and flesh out grey areas beyond prescriptive rules. Providing
assurance that agencies have coverage of material or key activities, an appropriate
balance of efficiency, outcome and output measures and a rigorous approach to
measuring qualitative aspects of functions such as the provision of policy advice
can provide a richer and more complete performance story to the public.

Off the back of a number of years of these rolling audit programs and ANAO
insights, we are seeing Government agencies continuing to refine their measures,
moving towards quality over quantity to tell a more compelling performance story.
For example, the Department of Infrastructure, Transport, Regional Development,
Communications and the Arts (DITRDCA) has reduced their measures from 85 in the
2021-22 Corporate Plan to 45 in 2023-24 and the Department of Treasury
consolidated its key activities from five to three in 2023-24 to allow for a more
long-term strategic view on its performance. The processes supporting the
planning, selecting, monitoring, reporting and validating of measures are also useful
for Internal Audit to provide insight and their process expertise.

But what is the next iteration of these audits? As we move beyond accuracy and
grey areas within the process, how can we continue to drive better performance

Value can be added by Internal Audits with objectives to assess how the
performance measures and statements are being used drive to better performance.
This is harder to quantify and evaluate than when we assess the measures
themselves and the processes that support them. As internal auditors, we have an
obligation to bring value through our audits, identify performance improvements
and look for opportunities to continue to mature.

Critical to achieving performance outcomes is the concept of accountability and
who is accountable to drive performance of an organisation, function or capability.
Internal Audit can consider how are individuals held to account, how they are using this performance information to make decisions that lead to better performance
(or are they waiting for the end of the reporting period with a rearward
facing view)?

Accountability refers to the obligation or willingness of individuals to take
responsibility for their actions, decisions, and the outcomes resulting from them. It
involves acknowledging and accepting the consequences—both positive and
negative—of one’s actions and fulfilling commitments made to others. In a broader
sense, accountability is a fundamental aspect of ethical and responsible behaviour
in personal, professional, and organisational contexts. It implies a commitment to
transparency, integrity, and the understanding that actions have an impact on
individuals, teams, and the overall performance of an organisation. In an
accountability-driven environment, team members are free to share knowledge,
provide constructive criticism, and own their successes and failures without fear of

A culture of accountability can be very difficult to build. Within Government, with
less reliance on profit as a means of measuring performance and there are often
less tangible measures of performance. Arguably accountability can still be difficult
in the private sector, how individuals are held to account for driving performance
isn’t always easy while maintaining a positive and healthy work culture. Successful
performance goes beyond financial results and companies are starting to more
actively measure and monitor other aspects of performance through ESG reporting.
A culture of accountability in an organisation requires a number of conditions to be
present. Listed here are some criteria you can assess to form a view on the culture
of accountability that in turn supports performance outcomes:

Leadership Role Modelling

Leaders should consistently demonstrate and model accountability in their actions
and decisions. When employees see leaders taking responsibility for their actions,
it sets a positive example for the entire organisation.

Clear Expectations and Communication

Clearly communicated expectations for individual and team accountability. Ensure
that everyone understands their roles, responsibilities, and the impact of their work
on the overall success of the capability, function and organisation.

Regular monitoring of Performance Metrics and KPIs

Regularly track and communicate progress, holding teams accountable for meeting
these performance standards or to make decisions and adjustments when
performance is lacking.
Recognise and reward individuals and teams for their accountability and successful
outcomes. This can be through both formal recognition programs and informal
acknowledgment of a job well done.

Accountability Framework

An accountability framework that outlines the consequences for both meeting and
not meeting expectations that is transparent and consistently applied across the

Training and Development

Training programs that focus on accountability, teamwork, and communication to
help employees develop the skills they need to take ownership of their work and
collaborate effectively across silos.

Cross-Functional Collaboration

Collaboration across different departments and teams is encouraged and
facilitated, fostering a culture where individuals understand the interconnectedness
of their work with others and the overall performance of the organisation.

Feedback Mechanisms

Regular feedback mechanisms, such as performance reviews and 360-degree
feedback, to provide individuals with insights into their personal performance in
relation to their accountabilities for the organisations performance. The link
between individual role and performance measure is clear and constructive
feedback is provided to foster a culture of continuous improvement.

Conflict Resolution Training

Training on conflict resolution to help teams address issues constructively. A
culture that addresses conflicts openly and seeks solutions promotes

Continuous Improvement Culture

A culture of continuous improvement where mistakes are seen as opportunities to
learn and grow rather than as reasons for blame where employees are encouraged
and expected to share lessons learned from both successes and failures.

Employee Involvement

Involve accountable employees in decision-making processes and give them a
sense of ownership to take action to achieve in the organisation’s goals. When
employees feel a connection to the organisation’s mission, they are more likely to
take accountability for their contributions.

With these elements present, performance reporting can be more than just a tick
the box exercise, it can drive performance outcomes that are achieved through the
performance reporting and its supporting processes.

When setting the objective for your next audit of Performance Statements, think of
performance measures beyond an exercise for corporate reporting or to prepare for
an ANAO audit – consider how you can build upon the maturation of measures and
processes to factor how performance measures can and should be used by the
organisation to reinforce accountability and support decision making the improve
the performance outcomes.

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