Review approach

1.8  In accordance with the provisions of section 20(1)(c) of the Auditor-General Act 1997, the ANAO and the DMO have entered into an agreement facilitating this review. The ANAO's review of the individual PDSSs (contained in Part 3 of this report) has been conducted in accordance with the Australian Standard on Assurance Engagements (ASAE) 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information issued by the Australian Auditing and Assurance Standards Board.

1.9  The agreement for the ANAO's review of the PDSSs excludes from the review's scope future dates or events (including forecasts on delivering the capability set out in Measures of Materiel Capability Performance), risks and issues. By its nature, this information relates to events and depends on circumstances that have not yet occurred or may not occur, or have occurred but have not yet been identified. Accordingly, the conclusion of this review does not provide any assurance in relation to this information.

1.10  Table 3 below lists the PDSS items which are out of scope for the review due to their high levels of inherent uncertainty.

Table 3
ANAO's review of 2010-11 PDSSs: Items in the PDSS that are out of scope

1.11  The DMO, as part of the review process and in consultation with the ANAO, developed an MPR Work Plan which incorporates the PDSS guidelines. The PDSS guidelines provide direction to the DMO's project offices in providing complete and accurate PDSSs and supporting information for the ANAO to then review.

1.12  The PDSS guidelines, which were endorsed by the JCPAA in May 2011, set out the requirements for the DMO project offices to provide complete and accurate PDSSs and supporting information for the ANAO to review. JCPAA Report 422, Review of the 2009-10 Defence Materiel Organisation Major Projects Report, also made nine recommendations to further improve the transparency and accountability of the PDSSs.

1.13  Our review of the information presented in the individual PDSSs included:

•  an examination of each PDSS;

•  a review of relevant processes and procedures used by the DMO in the preparation of the PDSSs;

•  an assessment of the systems and controls that support project financial management, risk management, and project status reporting;

•  a review of documents and information relevant to the PDSSs;

•  interviews with persons responsible for the preparation of the PDSSs and those responsible for the management of the 28 projects;

•  taking account of industry contractor comments provided to the DMO on draft PDSS information;

•  sign-offs by the DMO managers attesting to the accuracy of the PDSSs;

•  an examination of confirmations from the Australian Defence Force (ADF) Capability Managers relating to each project's progress toward IMR, FMR, IOC and FOC; and

•  an examination of the statement and management representations by the acting CEO DMO.

1.14  While our work is appropriate for the purpose of providing a review report in accordance with ASAE 3000, our review is not as extensive as individual project performance audits conducted by the ANAO, in terms of the nature and scope of project issues covered, and the extent to which evidence is required by the ANAO. Consequently, the level of assurance provided by this review in relation to the 28 Major Projects is less than that typically provided by our performance audits.