Chief auditor chides defensive bureaucrats

Paul Osborne

Public service chiefs have been warned not to dismiss criticism lightly, as it could improve the performance of their departments and agencies.

Auditor-General Grant Hehir said in his annual report the banking royal commission had exposed the need for more effective governance, and the "culture" to support it, in the private and public sectors.

"While requiring compliance with mandated rules is necessary for good governance, proactive engagement and leadership from senior executives is necessary to establish a culture of performance and accountability," he wrote in the report, tabled in federal parliament this week.

He said openness to criticism and learning helps to build an effective culture.

"Organisations which respond to external criticism defensively or dismissively ... put at risk their ability to build an effective governance culture (and learn)."

Mr Hehir said the most significant issue for him in his role to date had been the attorney-general ordering certain information be omitted from an audit report about the Army's light protected vehicles.

The order also required omission of parts of the audit conclusion in the report.

"This resulted in, for the first time, an ANAO performance audit being tabled with a disclaimer of conclusion to the effect that I was not able to prepare a report that expressed a clear conclusion on the audit objective in accordance with the ANAO Auditing Standards," he wrote.

He said the possibility of further similar orders from the attorney-general "poses an ongoing risk to the work of the ANAO and the independence of the auditor-general".

Mr Hehir recommended his governing legislation, the Auditor-General Act, be reviewed this term to take into account his concerns and others raised during a recent inquiry by the parliament's joint committee of public accounts and audit.