Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697629485614.pdf (Australia)
JOINT COMMITTEE OF PUBLIC ACCOUNTS AND AUDIT Inquiry on Commonwealth Financial Statements Australian National Audit Office No.33 – Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2016 Reference No: SQ17-000078 CONTEXT The long-term financial sustainability of the National Disability Insurance Scheme (NDIS or Scheme) and the successful transition to full Scheme operations by July 2019 requires a clear focus on the implementation of critical priorities, effective identification and management of risk and comprehensive monitoring of performance.
Timely and effective close out of audit findings contributes to financial sustainability and the integrity of outlays.

RESPONSE TO QUESTIONS 1) How can NDIA constructively and effectively address the audit findings?

Answer: The ANAO 2015-16 financial statements audit identified one Category A finding, two Category B findings and one Category C finding.

With the exception of the Category A finding, all other findings are considered to have been addressed by the National Disability Insurance Agency (NDIA).
The NDIA is addressing the Category A finding through a range of overarching measures including: • Expanding its risk management framework to be responsive to the scale, complexity and speed of the NDIS rollout.

• Building and maintaining a strong control and assurance environment that assists in the monitoring of high quality participant outcomes and supports financial sustainability.
• Adopting a risk-based integrated assurance approach, supported by sophisticated data • analytics (aligned with Australian Auditing Standards) to support compliance.

Implementing a governance structure to oversee the NDIA’s assurance activities aligned to Australian Prudential Regulation Authority guidelines.
The NDIA is also implementing a comprehensive payment integrity program, based on recommendations from recent reviews including: • Strategic advice from Mr Roger Wilkins AO, former Secretary of the Attorney-General's Department, regarding the NDIA’s potential exposure to payment integrity related risks.

• A comprehensive payment integrity diagnostic supported by McKinsey and Co, that refined the NDIA’s understanding of the potential sources of exposure.
• The ANAO findings and observations from its 2015-16 financial statements audit.

The payment integrity program includes 32 new initiatives to strengthen compliance including expanded prevention activities, quality assurance reviews and specialist detection and investigation capabilities.

Eleven initiatives have commenced with the balance scheduled as priority activities over the next 18 months.
Page 1 Commonwealth Financial Statements - Inquiry based on Auditor-General's report 33 (2016-17)Submission 4 As part of these initiatives, a comprehensive program of quality assurance testing has commenced, including for Scheme access (participant eligibility), plan approvals, provider registrations and payment correctness.

Significant additional testing activity in these areas has been identified and is scheduled to be completed in Quarter 4 of 2016-17.
A technology enablement project is also underway to improve the existing quality control (pre decision) processes through introduction of checking of risk-based Scheme access and plan approval decisions.

This is scheduled to be implemented across 2017.

Both testing regimes are based on statistically valid sampling techniques which will allow for extrapolation of results to the full Scheme outlays.
Further, the Scheme Actuary undertakes actuarial monitoring and comprehensive scheme-wide investigations of data quality and integrity issues, analysis of experience and comparison of actual with expected.

Drawing together actuarial monitoring and information from other sources enables identification of emerging areas of risk, or “hot spots”, for further investigation.

This allows cost-effective targeting of resources towards these known areas.
Most recently, the NDIA has commenced a process to review the experience of participants and providers as they engage with the NDIA along their respective pathways.

This process includes both listening to providers and participants, synthesising insights from other work recently completed and then developing comprehensive plans to improve their experiences.

This will be an important contribution to more robust processes, decisions and sustainable outcomes.
2) Which other entities (public or private sector) could NDIA learn from, e.g.

in terms of reforms in health and aged care?

Answer: The NDIA has undertaken reviews which have drawn on the experience of industry experts and has benchmarked a wide-range of government, private and public insurance schemes, including the Swedish social insurance scheme and New Zealand’s Accident Compensation Commission (ACC).
NDIA staff have visited the ACC to gain deeper insights into its audit, risk and fraud processes and experience.

The NDIA has seconded the National Manager Compliance from the Department of Human Services to assist in the design and implementation of operational assurance activities.

This includes providing strategic input into the design and implementation of a new technology project to deliver the additional quality control procedures for Scheme access and plan approval.
The NDIA has established relationships with federal agencies that have extensive experience with payment integrity and responding to provider sharp practices, including: • The Department of Health; • The Department of Employment; and • The Department of Veterans’ Affairs.

Each agency has shared their risk management and compliance frameworks and program experiences.
The NDIA continues to closely liaise with the Department of Social Services to draw from its experience in provider management and fraud prevention programs.

The NDIA also actively participates in the Commonwealth fraud forum and has recently joined the Commonwealth’s Chief Risk Officers’ network.

The NDIA has also drawn insights from the experiences of European and North American disability services in their oversight and delivery of self-management programs for people with disability.
Page 2 Commonwealth Financial Statements - Inquiry based on Auditor-General's report 33 (2016-17)Submission 4 3) Has the NDIA internal audit process considered these issues?

If so, what were its observations?

If not Why not?

Answer: The NDIA maintains an annual risk-based internal audit plan which is designed to test the efficacy of the NDIA’s critical control across key areas of potential exposure.
The findings of all reviews are presented to the NDIA’s Audit Committee which also reviews management responses to the findings and monitors implementation of required actions.

The NDIA’s 2015-16 internal audit plan identified two internal audit projects of direct relevance to the ANAO finding.

These reviews were designed to examine key controls and assurance activities relating to the risks associated with self-management and payment integrity.
An internal audit review of the NDIA’s self-management processes was undertaken in May 2016.

The scope of the internal audit review examined the participant self-management processes the NDIA has in place covering self-planning, self-implementation and self-management.

It was noted that there is a need for greater governance over self-management processes and a requirement to tailor and adapt existing processes to reflect the nuances in self-management, including payment claiming.
The review recognised that a payment audit program was in place, however, it was not statistically valid as the program was in its infancy.

In response, the NDIA has appointed an SES officer to coordinate a cross-functional working group to oversee the implementation of agreed management actions in response to the audit findings.

A fraud monitoring and prevention internal audit review was finalised in May 2016.

The review identified a number of recommendations to improve controls in this area.
With the exception of one remaining management action relating to the implementation of a comprehensive communications strategy (due for completion by 30 June 2017), all actions arising from the review have been implemented.
The 2016-17 internal audit plan also includes two further reviews of relevance to the Category A finding that will be complete by 30 June 2017: • Data integrity adequacy to support better decision making and payment controls; and • Decision making for plan reviews to support quality decision making.
The NDIA’s focus on the Category A issues will continue with three other internal audits planned for 2017-18: • A review of scheme costs; • Review of planning processes; and • Effectiveness of controls within the organisational structure.

Page 3 Commonwealth Financial Statements - Inquiry based on Auditor-General's report 33 (2016-17)Submission 4