The current trend towards increased contracting with the private sector for the provision of government services provides a challenge, not only for agencies' accountability, but also for auditors' actual ability to access the relevant records. Concern on audit access to contractors records and premises were reflected in a recent report of the Joint Committee of Public Accounts and Audit (JCPAA).123
In the interest of securing access to premises and records, the ANAO has been encouraging the inclusion in contracts of model access clauses. These clauses give the agency and the Auditor-General access to contractors' premises and the right to inspect and copy documentation and records directly related to the contract. While the need for the external auditor to have access to the premises of third party service providers is likely, in practice, to be required in very few situations, where necessary it would contribute to an audit being undertaken in an efficient and cooperative manner. As well, such access is important for both management performance and accountability and any access required for an external auditor is unlikely to exceed that required for sound management: audit and management's interests in access are likely to coincide.
The inclusion of access provisions within agency contracts to enable performance and financial auditing is particularly important in maintaining the thread of accountability with government agencies' growing reliance on partnering with the private sector and on contractors' quality assurance systems. In some cases, such accountability is necessary in relation to government assets, including records, located on private sector premises.
Nonetheless, the ANAO found that agencies have not fully embraced these opportunities. An examination of 35 contracts for business support processes across eight agencies124 found only two contracts referring to possible access by the Auditor-General. None of the contracts reviewed, which had been entered into since the ANAO provided advice on standard access clauses, included the recommended provisions. Furthermore, the level of consideration given to the inclusion of such access provisions in those contracts by agencies was not apparent. This is unlikely to foster optimum performance or contribute to appropriate accountability.
Regardless of the access powers that may be available to auditors, however, the appropriate satisfaction of accountability relies, self-evidently, on the relevant information being retained in an appropriate form in the first instance. As highlighted by an audit conducted by ANAO into the effectiveness and probity of policy development processes and implementation related to Magnetic Resonance Imaging (MRI) Services,125 properly documenting all aspects of the decision-making process is a key element of sound administration and accountability. Failure to do so can result in considerable damage to the reputation of, as well as a loss of confidence in, the agency, minister and government.
However, the increasing trend towards electronic communication and record keeping techniques poses significant challenges in terms of auditors' traditional evidentiary standards. ANAO is also ready confronting situations in which traditional forms of documentary evidence are not available. For example, in a recent performance audit of the Health Group IT outsourcing tender process, ANAO's capacity to examine the management of the probity aspects of that tender was limited by deficiencies in the contemporaneous records made.126 In a number of areas, the recollection of individuals was the only means of establishing important elements of the sequence of events.127
As electronic communications between agencies and outsourced service providers increase, it becomes more important to ensure that the standards of accountability expected for the performance of government functions are understood and complied with by the relevant private sector partners. In close partnership with National Archives, ANAO recently undertook what we then called an Assurance and Control Assessment audit focusing on agencies' record keeping, which made a number of recommendations directed at assisting agencies to improve their ability to appropriately capture, control and preserve official records.128