Assuring Centrelink Payments – The Role of
The Auditor-General Audit Report No.43 2005–06 Performance Audit Assuring Centrelink Payments – The Role of the Random Sample Survey Programme Department of Families, Community Services and Indigenous Affairs Department of Employment and Workplace Relations Department of Education, Science and Training Centrelink Australian National Audit Office 1.1 ȱ © Commonwealth of Australia 2006 ISSN 1036–7632 ISBN 0 642 80905 4 COPYRIGHT INFORMATION This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney-General’s Department, Robert Garran Offices, National Circuit Canberra ACT 2600 http://www.ag.gov.au/cca ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 2 Canberra ACT 31 May 2006 Dear Mr President Dear Mr Speaker The Australian National Audit Office has undertaken a performance audit in the Department of Families, Community Services and Indigenous Affairs, Department of Employment and Workplace Relations, Department of Education, Science and Training and Centrelink in accordance with the authority contained in the Auditor-General Act 1997. I present the report of this audit and the accompanying brochure to the Parliament. The report is titled Assuring Centrelink Payments – The Role of the Random Sample Survey Programme. Following its tabling in Parliament, the report will be placed on the Australian National Audit Office’s Homepage—http://www.anao.gov.au. Yours sincerely Ian McPhee Auditor-General The Honourable the President of the Senate The Honourable the Speaker of the House of Representatives Parliament House Canberra ACT ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 3 AUDITING FOR AUSTRALIA The Auditor-General is head of the Australian National Audit Office. The ANAO assists the Auditor-General to carry out his duties under the Auditor-General Act 1997 to undertake performance audits and financial statement audits of Commonwealth public sector bodies and to provide independent reports and advice for the Parliament, the Government and the community. The aim is to improve Commonwealth public sector administration and accountability. For further information contact: The Publications Manager Australian National Audit Office GPO Box 707 Canberra ACT 2601 Telephone: (02) 6203 7505 Fax: (02) 6203 7519 Email: [email protected] ANAO audit reports and information about the ANAO are available at our internet address: http://www.anao.gov.au Audit Team Kerri Bradford Natalie Whiteley Fran Holbert ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 4 Contents Abbreviations.................................................................................................................. 7 Glossary ......................................................................................................................... 9 Summary and Recommendations ............................................................................ 13 Summary ...................................................................................................................... 15 Background ............................................................................................................. 15 How the RSS is used .............................................................................................. 16 Audit Approach........................................................................................................ 21 Key Findings ........................................................................................................... 21 Overall audit conclusion .......................................................................................... 29 Recommendations .................................................................................................. 30 Agency Responses ................................................................................................. 31 Recommendations ....................................................................................................... 32 Audit Findings and Conclusions .............................................................................. 35 1. Introduction ............................................................................................................. 37 Background ............................................................................................................. 37 Overview of the Random Sample Survey ............................................................... 38 Audit approach ........................................................................................................ 42 Structure of the report ............................................................................................. 45 2. The RSS process .................................................................................................... 46 Background ............................................................................................................. 46 The sample ............................................................................................................. 47 The review............................................................................................................... 47 Results recording .................................................................................................... 48 Quality assurance ................................................................................................... 49 How agencies use the Random Sample Survey .................................................... 49 3. Meeting the Major Objective of the RSS Programme............................................. 51 Background ............................................................................................................. 51 Purpose of the RSS ................................................................................................ 53 RSS data and calculating the accuracy of outlays.................................................. 54 Inherent limitation of the programme ...................................................................... 64 Other limitations of the programme......................................................................... 72 Use of RSS data ..................................................................................................... 79 4. Meeting the Other Objectives of the Programme ................................................... 86 Background ............................................................................................................. 86 Measure the reasons for incorrect payment and rigorous information on how incorrect payment occurs................................................................................... 87 Effectiveness of the compliance framework/control framework.............................. 93 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 5 5. Operation of the Random Sample Survey .............................................................. 98 Governance............................................................................................................. 98 Operational issues affecting identification of non-disclosure ................................ 101 Attribution of error ................................................................................................. 104 Timing and resources issues ................................................................................ 106 Questionnaire........................................................................................................ 108 Sound practice ...................................................................................................... 111 Quality assurance ................................................................................................. 112 RSS Reviewers ..................................................................................................... 114 Appendix ................................................................................................................... 121 Appendix 1: Centrelink’s Prevention and Review Activities ................................. 123 Series Titles................................................................................................................ 125 Better Practice Guides ............................................................................................... 129 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 6 Abbreviations ANAOȱ AustralianȱNationalȱAuditȱOfficeȱ ASOȱ AreaȱSupportȱOfficeȱ BAFȱ BusinessȱAssuranceȱFrameworkȱ BPAȱ BusinessȱPartnershipȱAgreementȱ CEOȱ ChiefȱExecutiveȱOfficerȱ CSCȱ CustomerȱServiceȱCentreȱ CSOȱ CustomerȱServiceȱOfficerȱ DESTȱ DepartmentȱofȱEducation,ȱScienceȱandȱTrainingȱ DEWRȱ DepartmentȱofȱEmploymentȱandȱWorkplaceȱRelationsȱ DOCȱ OnȬlineȱDocumentationȱ FaCSȱ Departmentȱ ofȱ Familyȱ andȱ Communityȱ Services,ȱ theȱ predecessorȱdepartmentȱtoȱFaCSIA.ȱ FaCSȱPBSȱ PortfolioȱBudgetȱStatementsȱforȱtheȱFamilyȱandȱCommunityȱ ServicesȱPortfolioȱ FaCSIAȱ Departmentȱ ofȱ Families,ȱ Communityȱ Servicesȱ andȱ IndigenousȱAffairsȱ IRSȱ IntegratedȱReviewȱSystemȱ KPIȱ KeyȱPerformanceȱIndicatorȱ MLRȱ MarriageȬlikeȱRelationshipȱ MoGȱ MachineryȱofȱGovernmentȱ NSOȱ NationalȱSupportȱOfficeȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 7 PAȱ PerformanceȱAssessmentȱ PBSȱ PortfolioȱBudgetȱStatementsȱ PCRȱ PaymentȱCorrectnessȱReportȱ PWCȱ PriceWaterhouseCoopersȱActuarialȱ QOLȱ QualityȱOnȬlineȱ RSSȱ RandomȱSampleȱSurveyȱ SLAȱ ServiceȱLevelȱAgreementȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 8 Glossary Administrativeȱ Errorȱ Thisȱ typeȱ ofȱ errorȱ includesȱ errorȱ causedȱ byȱ Centrelinkȱ staff,ȱsystemsȱorȱambiguousȱrules.ȱ CustomerȱErrorȱ Errorȱ orȱ omissionȱ byȱ theȱ customerȱ inȱ providingȱ informationȱtoȱCentrelink.ȱ CustomerȱNonȬ disclosureȱ Whereȱ aȱ customerȱ doesȱ notȱ informȱ Centrelinkȱ ofȱ changedȱ circumstancesȱ whichȱ mayȱ affectȱ his/herȱ entitlement.ȱȱ Compliance/Controlȱ Toȱ confirmȱ thatȱ customersȱ areȱ receivingȱ theirȱ correctȱ entitlements,ȱ Centrelink’sȱ compliance/controlȱ Frameworkȱ frameworkȱ isȱ specificallyȱ aimedȱ atȱ theȱ prevention,ȱ detectionȱ andȱ deterrenceȱ ofȱ incorrectȱ paymentsȱ andȱ fraud.ȱ Inaccuracyȱofȱ outlaysȱ Theȱ inaccuracyȱ ofȱ outlaysȱ figureȱ isȱ calculatedȱ byȱ dividingȱ theȱ sumȱ ofȱ fortnightlyȱ dollarȱ amountsȱ ofȱ variationsȱ (upwardȱ variation,ȱ downwardȱ variation,ȱ cancellation/suspension)ȱ byȱ theȱ sumȱ ofȱ theȱ fortnightlyȱ paymentsȱ toȱ allȱ sampledȱ customers,ȱ theȱ percentageȱ figureȱisȱthenȱcalculated.ȱToȱgetȱtheȱaccuracyȱofȱoutlaysȱ thisȱfigureȱisȱsubtractedȱfromȱ100ȱperȱcent.ȱ NonȬverifiableȱ Errorȱ Whenȱ thereȱ isȱ insufficientȱ informationȱ toȱ determineȱ whetherȱaȱdecisionȱisȱcorrectȱorȱnot.ȱ Paymentȱ‘Accuracy’ȱ UnderȱtheȱBusinessȱAssuranceȱFrameworkȱaȱpaymentȱisȱ consideredȱ ‘accurate’ȱ if:ȱ theȱ rightȱ personȱ isȱ paid;ȱ underȱ inȱtheȱBAFȱ theȱrightȱprogramme;ȱatȱtheȱrightȱrate;ȱforȱtheȱrightȱdate;ȱ andȱeveryȱtimeȱaȱpaymentȱisȱmade.ȱTheȱlastȱrequirementȱ recognisesȱ theȱ obligationȱ ofȱ theȱ customerȱ toȱ adviseȱ ofȱ changesȱinȱcircumstancesȱthatȱmayȱaffectȱtheirȱpaymentȱ entitlements.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 9 Paymentȱ‘Accuracy’ȱ Paymentȱ accuracyȱ isȱ calculatedȱ byȱ subtractingȱ theȱ inȱtheȱRSSȱ percentageȱofȱreviewsȱwhereȱtheȱpaymentȱwasȱfoundȱtoȱ beȱ inaccurateȱ fromȱ 100ȱ perȱ cent.ȱ Paymentȱ inaccuracyȱ isȱ theȱpercentageȱofȱreviewsȱwhichȱhaveȱerrorsȱwhichȱhaveȱ aȱ dollarȱ impactȱ onȱ payments,ȱ irrespectiveȱ ofȱ theȱ sourceȱ ofȱ error,ȱ thatȱ isȱ customerȱ errorȱ orȱ Centrelinkȱ administrativeȱ error.ȱ Thatȱ is,ȱ accuracyȱ alsoȱ includesȱ customerȱ errorȱ which,ȱ usingȱ theȱ BAFȱ definition,ȱ isȱ outsideȱCentrelink’sȱdecisionȬmakingȱcontrol.ȱȱ Paymentȱ ‘Correctness’ȱinȱtheȱ BAFȱ UnderȱtheȱBusinessȱAssuranceȱFramework,ȱaȱpaymentȱisȱ consideredȱ ‘correct’ȱ if:ȱ theȱ rightȱ personȱ isȱ paid;ȱ underȱ theȱrightȱprogramme;ȱatȱtheȱrightȱrate;ȱandȱforȱtheȱrightȱ date(s).ȱ‘Correctness’ȱisȱconsidered,ȱinȱtheȱcontextȱofȱtheȱ Businessȱ Assuranceȱ Framework,ȱ toȱ relateȱ onlyȱ toȱ decisionȬmakingȱprocessesȱwithinȱCentrelink’sȱcontrol.ȱ Paymentȱ ‘correctness’ȱinȱtheȱ RSSȱȱ CentrelinkȱadvisedȱtheȱANAOȱthatȱpaymentȱcorrectnessȱ inȱtheȱRSSȱis:ȱtheȱpercentageȱofȱreviewsȱwithoutȱaȱdollarȱ impactȱ errorȱ basedȱ onȱ informationȱ providedȱ byȱ theȱ customer.ȱThisȱdefinitionȱclarifiesȱthatȱcustomerȱerrorȱisȱ excludedȱ fromȱ theȱ calculationȱ ofȱ paymentȱ correctness.ȱ Centrelinkȱ proceduralȱ errorsȱ thatȱ doȱ notȱ impactȱ onȱ theȱ customer’sȱpaymentȱareȱalsoȱexcluded.ȱ Paymentȱ ‘correctness’ȱinȱtheȱ RSSȱ–ȱANAOȱ definitionȱ Theȱ percentageȱ ofȱ paymentȱ correctnessȱ isȱ foundȱ byȱ subtractingȱ theȱ percentageȱ ofȱ reviewsȱ foundȱ toȱ beȱ incorrectȱ fromȱ 100ȱ perȱ cent.ȱ Paymentȱ incorrectness,ȱ asȱ identifiedȱ byȱ theȱ ANAOȱ usingȱ RSSȱ data,ȱ isȱ theȱ percentageȱofȱcustomersȱinȱtheȱRSSȱsampleȱwhoȱhaveȱanȱ errorȱ inȱ theirȱ record,ȱ whichȱ leadsȱ toȱ anȱ errorȱ inȱ theirȱ payment,ȱthatȱhasȱaȱdollarȱimpact.ȱȱ Purchaserȱ departmentsȱ ThisȱrefersȱtoȱFaCSIA,ȱDEWRȱandȱDEST,ȱeachȱofȱwhichȱ purchasesȱserviceȱdeliveryȱservicesȱfromȱCentrelink.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 10 Glossary QualityȱOnȬlineȱ (QOL)ȱ Centrelink’sȱonȬlineȱqualityȱassuranceȱtool,ȱwhereȱeitherȱ 5ȱ perȱ centȱ orȱ 100ȱ perȱ centȱ ofȱ aȱ CSO’sȱ work,ȱ dependingȱ onȱ his/herȱ experience,ȱ isȱ referredȱ toȱ aȱ qualifiedȱ officer,ȱ whoȱchecksȱforȱcompletenessȱandȱcorrectness.ȱ RollingȱRandomȱ SampleȱSurveyȱ Theȱ Rollingȱ Randomȱ Sampleȱ Surveyȱ isȱ aȱ pointȬinȬtimeȱ analysisȱofȱsampledȱcustomers’ȱcircumstances,ȱdesignedȱ toȱestablishȱwhetherȱcustomersȱareȱbeingȱcorrectlyȱpaid.ȱ RRSȱCoordinatorȱ TheȱRSSȱcoordinatorsȱheadȱtheȱRSSȱteamsȱinȱeachȱArea.ȱ TheyȱareȱresponsibleȱforȱmanagingȱtheȱRSSȱprocessȱandȱ forȱliaisonȱwithȱCentrelink’sȱNationalȱSupportȱOffice.ȱ RRSȱReviewerȱ RSSȱ Reviewers,ȱ situatedȱ inȱ eachȱ Centrelinkȱ Area,ȱ areȱ responsibleȱforȱconductingȱtheȱRSSȱreview.ȱȱ ȱ ȱ ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 11 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 12 Summary and Recommendations ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 13 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 14 Summary Background 1. Inȱ 2004–05,ȱ Centrelinkȱ wasȱ responsibleȱ forȱ theȱ administrationȱ ofȱ moreȱ thanȱ $63ȱ billionȱ inȱ programmeȱ paymentsȱ deliveredȱ onȱ behalfȱ ofȱ 25ȱ purchaserȱ departments.ȱ Theȱ vastȱ majorityȱ ofȱ theseȱ outlaysȱ onȱ programmeȱ paymentsȱ (someȱ95ȱperȱcent)ȱrelateȱtoȱthreeȱkeyȱpurchaserȱdepartments,ȱtheȱDepartmentȱ ofȱ Families,ȱ Communityȱ Servicesȱ andȱ Indigenousȱ Affairsȱ (FaCSIA),ȱ theȱ Departmentȱ ofȱ Employmentȱ andȱ Workplaceȱ Relationsȱ (DEWR)ȱ andȱ theȱ DepartmentȱofȱEducation,ȱScienceȱandȱTrainingȱ(DEST).ȱ 2. Aȱ keyȱ elementȱ ofȱ theȱ strategyȱ usedȱ byȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ toȱ assureȱ theȱ integrityȱ ofȱ theȱ significantȱ Australianȱ Governmentȱ outlaysȱ onȱ theȱ variousȱCentrelinkȱpaymentsȱforȱwhichȱtheyȱareȱrespectivelyȱresponsible1ȱisȱtheȱ Randomȱ Sampleȱ Surveyȱ Programme.ȱ Theȱ Randomȱ Sampleȱ Surveyȱ (RSS)ȱ isȱ aȱ pointȬinȬtimeȱ analysisȱ ofȱ sampledȱ customers’ȱ circumstances,ȱ designedȱ toȱ establishȱwhetherȱcustomersȱareȱbeingȱcorrectlyȱpaid.2ȱȱ 3. Underȱ Socialȱ Securityȱ Law3,ȱ customersȱ areȱ requiredȱ toȱ discloseȱ toȱ Centrelinkȱ informationȱ aboutȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstancesȱthatȱaffectȱtheirȱentitlement.ȱHowever,ȱthereȱareȱrisksȱassociatedȱ withȱ aȱ relianceȱ onȱ disclosureȱ byȱ customersȱ becauseȱ individualsȱ canȱ failȱ toȱ reportȱrelevantȱchangesȱwhenȱtheyȱoccurȱeitherȱthroughȱlackȱofȱunderstandingȱ ofȱtheirȱobligations,ȱomissions,ȱmistakes,ȱorȱdeliberatelyȱmisrepresentingȱtheirȱ circumstances.ȱ Centrelinkȱ usesȱ powersȱ underȱ theȱ Socialȱ Securityȱ (Administration)ȱActȱ1999ȱtoȱcompelȱrandomlyȱselectedȱcustomersȱtoȱparticipateȱ inȱaȱRSSȱreview,ȱandȱtoȱprovideȱinformationȱonȱtheirȱcircumstances.4ȱȱ 4. Theȱ RSSȱ sampleȱ designȱ involvesȱ stratifiedȱ sampling5ȱ acrossȱ theȱ 15ȱ CentrelinkȱAreas.ȱCentrelinkȱRSSȱReviewersȱsituatedȱwithinȱeachȱAreaȱconductȱ theȱ RSSȱ reviewsȱ inȱ faceȬtoȬfaceȱ interviewsȱ withȱ selectedȱ customers.ȱ However,ȱ 1 Until October 2004, the former Department of Family and Community Services was responsible for all of the programme payments covered by the RSS Programme. Following major machinery of government (MoG) changes that occurred at that time, DEWR and DEST now each are responsible for some of these programme payments. See Chapter 1 for further information. 2 Department of Family and Community Services, Annual Report 2004–05, p. 277. 3 The Social Security Law comprises the Social Security Act 1991, the Social Security (Administration) Act 1999 and the Social Security (International Agreements) Act 1999. 4 Social Security (Administration) Act 1999, in particular section 63 and section 192. 5 The population is divided into subpopulations (strata) and random samples are taken of each stratum. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 15 fileȱ reviewsȱ areȱ conductedȱ inȱ casesȱ whereȱ aȱ faceȬtoȬfaceȱ interviewȱ isȱ notȱ possible,ȱorȱifȱcustomersȱvoluntarilyȱcancelȱtheirȱpaymentsȱbeforeȱtheȱinterviewȱ canȱbeȱconducted.ȱ 5. Customersȱ areȱ requiredȱ toȱ provideȱ detailedȱ evidenceȱ onȱ theirȱ currentȱ circumstancesȱduringȱanȱRSSȱreview.ȱTheȱReviewerȱmayȱalsoȱundertakeȱthirdȱ partyȱ verificationȱ ofȱ theȱ informationȱ providedȱ byȱ theȱ customer,ȱ suchȱ asȱ checkingȱ withȱ banksȱ andȱ employers.ȱ Anȱ RSSȱ reviewȱ mayȱ confirmȱ thatȱ aȱ customerȱisȱreceivingȱaȱcorrectȱpaymentȱorȱresultȱinȱaȱcancellationȱorȱvariationȱ ofȱtheȱcustomer’sȱpaymentȱand/orȱidentificationȱofȱaȱdebtȱorȱunderȱpayment.ȱ 6. Centrelinkȱ currentlyȱ runsȱ theȱ RSSȱ onȱ behalfȱ ofȱ theȱ threeȱ purchaserȱ departments.ȱTheȱRSSȱisȱrunȱannuallyȱforȱallȱmajorȱCentrelinkȱpayments6,ȱandȱ minorȱ paymentsȱ areȱ coveredȱ overȱ aȱ threeȬyearȱ cycle.ȱ Agenciesȱ advisedȱ theȱ ANAOȱ that,ȱ toȱ date,ȱ theȱ RSSȱ Programmeȱ costsȱ someȱ $4.5ȱ millionȱ aȱ yearȱ toȱ conduct.ȱ How the RSS is used 7. Theȱ purchaserȱ departmentsȱ useȱ theȱ RSSȱ Programmeȱ primarilyȱ toȱ measureȱ theȱ levelȱ ofȱ accuracyȱ ofȱ outlaysȱ onȱ incomeȱ supportȱ paymentsȱ deliveredȱ byȱ Centrelink.ȱ Otherȱ purposesȱ forȱ whichȱ theȱ departmentsȱ useȱ theȱ RSSȱ Programmeȱ areȱ toȱ provideȱ aȱ measureȱ ofȱ theȱ effectivenessȱ ofȱ complianceȱ andȱ otherȱ reviewȱ activityȱ andȱ toȱ measureȱ theȱ levelȱ ofȱ Centrelink’sȱ administrativeȱ error,ȱ againstȱ aȱ targetȱ agreedȱ betweenȱ theȱ purchaserȱ departmentsȱ andȱ Centrelinkȱ underȱ theȱ individualȱ agencies’ȱ Businessȱ PartnershipȱAgreementsȱ(BPAs).ȱȱ 8. Atȱ theȱ timeȱ ofȱ theȱ audit,ȱ aȱ replacementȱ programmeȱ forȱ theȱ RSSȱ Programmeȱ wasȱ beingȱ developedȱ byȱ DEWRȱ andȱ DEST.ȱ DEWRȱ informedȱ theȱ ANAOȱonȱ16ȱDecemberȱ2005ȱthat:ȱ Atȱtheȱsameȱtimeȱasȱtheȱfieldworkȱwasȱconductedȱforȱthisȱaudit,ȱaȱreviewȱofȱtheȱ lapsingȱRSSȱbudgetȱmeasureȱwasȱundertaken,ȱledȱbyȱDEWR.ȱThisȱreviewȱwasȱ completedȱ inȱ Octoberȱ andȱ hasȱ informedȱ thinkingȱ inȱ DEWRȱ andȱ DESTȱ aboutȱ arrangementsȱ thatȱ mightȱ applyȱ fromȱ 1ȱ Julyȱ 2006.ȱ Theseȱ mattersȱ areȱ beingȱ considered.ȱȱ 6 Major payments are Age Pension, Youth Allowance, Parenting Payment (Single and Partnered), Disability Support Pension, and Newstart Allowance. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 16 Summary 9. Theȱ ANAOȱ notesȱ thatȱ DEWRȱ andȱ DESTȱ bothȱ receivedȱ additionalȱ fundingȱ toȱ expandȱ theȱ RSSȱ programme,ȱ underȱ aȱ fraudȱ andȱ complianceȱ measureȱinȱtheȱ2006–07ȱBudget.ȱȱ Business Assurance Framework 10. Theȱ BAFȱ providesȱ ‘performanceȱ assuranceȱ toȱ theȱ Australianȱ Government,ȱ Centrelink’sȱ keyȱ stakeholders,ȱ purchaserȱ departments,ȱ theȱ Board7ȱ andȱ customers.’8ȱ BAFsȱ areȱ includedȱ inȱ allȱ keyȱ Centrelinkȱ BPAsȱ toȱ provideȱassuranceȱonȱtheȱintegrityȱofȱoutlays,ȱtoȱidentifyȱrisksȱandȱtheȱcontrolȱ frameworksȱ thatȱ mitigateȱ thoseȱ risks.ȱ RSSȱ resultsȱ areȱ theȱ primaryȱ qualityȱ assuranceȱtoolȱforȱtheȱBAF.ȱ9ȱȱ 11. InȱadditionȱtoȱtheȱRSS,ȱCentrelinkȱalsoȱundertakesȱaȱbroaderȱassuranceȱ programmeȱ asȱ partȱ ofȱ itsȱ controlȱ framework.ȱ Thisȱ programmeȱ includesȱ aȱ numberȱofȱpreventionȱandȱreviewȱactivitiesȱincludingȱdataȱmatchingȱandȱotherȱ riskȱ reviews.ȱ Theȱ otherȱ reviewȱ activitiesȱ areȱ targetedȱ towardsȱ specificȱ customers,ȱ whereasȱ theȱ RSSȱ Programmeȱ isȱ sampledȱ acrossȱ theȱ entireȱ Centrelinkȱ customerȱ populationȱ forȱ aȱ particularȱ payment.10ȱ Theseȱ otherȱ preventionȱandȱreviewȱactivitiesȱareȱdetailedȱinȱAppendixȱ1.ȱ 12. UnderȱtheȱBAF,ȱaȱpaymentȱisȱconsideredȱ‘correct’ȱif:ȱtheȱrightȱpersonȱisȱ paid;ȱ underȱ theȱ rightȱ programme;ȱ atȱ theȱ rightȱ rate;ȱ andȱ forȱ theȱ rightȱ date(s).ȱ ‘Correctness’ȱisȱconsidered,ȱinȱtheȱcontextȱofȱtheȱBAF,ȱtoȱrelateȱonlyȱtoȱdecisionȬ makingȱprocessesȱwithinȱCentrelink’sȱcontrol.ȱTheȱpaymentȱcorrectnessȱtargetȱ containedȱ inȱ theȱ individualȱ agencies’ȱ BPAsȱ isȱ aȱ measureȱ ofȱ Centrelink’sȱ administrativeȱ errorsȱ thatȱ haveȱ anȱ impactȱ onȱ payment;ȱ itȱ doesȱ notȱ takeȱ intoȱ accountȱcustomerȱerror.ȱ 13. Theȱ RSSȱ takesȱ aȱ sampleȱ ofȱ customersȱ andȱ identifiesȱ errorsȱ inȱ theȱ informationȱheldȱbyȱCentrelinkȱcomparedȱwithȱtheȱinformationȱobtainedȱfromȱ theȱRSSȱinterviewȱandȱfollowȬupȱprocedures.ȱ 14. RSSȱ errorȱ dataȱ forȱ theȱ fullȱ yearȱ 2004–05ȱ areȱ shownȱ inȱ theȱ followingȱ table.ȱ 7 The Centrelink Board of Management was abolished upon commencement of amendments to the Commonwealth Service Delivery Agency Act 1997 on 1 October 2005. The authority which formerly rested with the Board now rests with the Chief Executive Officer (CEO) of Centrelink. 8 Centrelink, Annual Report 2004–05, pp. 37–39. 9 ibid. 10 A range of customers are excluded from selection in the RSS, including those who are currently being reviewed in another Centrelink process and those who reside in remote areas. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 17 Table 1 RSS error results for the full year 2004–05 Type of error Reviews with no error Number Percentage 5 496 54.7 1 562 15.5 944 9.4 2 990 29.8 342 3.4 Total reviews with error 4 552 45.3 Total number of reviews 10 048 100.0 Reviews with error Reviews with an error with no dollar impact Reviews with Centrelink administrative error with no AB dollar impact Reviews with an error with dollar impact Reviews with Centrelink administrative error with ABC dollar impact Notes: A) Additional data supplied to the ANAO by Centrelink not included in report from which the remaining results reported in this table were sourced. B) The number of reviews with a customer error with or without a dollar impact cannot be calculated by subtracting administrative error from the total number of reviews with an error with or without a dollar impact. This is because a review can have multiple errors. Centrelink also advised the ANAO that it could not provide the break down of reviews with a customer error with and without a dollar impact, without significant additional work. C) The payment correctness figure of 96.6 per cent discussed in paragraphs 20 to 22 is calculated by subtracting the figure for reviews with Centrelink administrative error with dollar impact (3.4 per cent) from 100 per cent. Source: Rolling Random Sample Surveys, Final Results Quarter 4 of 2004–2005, including full year, Compliance and Review, Centrelink, February 2006. 15. AsȱcanȱbeȱseenȱfromȱTableȱ1,ȱsomeȱ45ȱperȱcentȱofȱCentrelinkȱcustomersȱ surveyedȱinȱtheȱfullȱyearȱ2004–05ȱhadȱatȱleastȱoneȱerrorȱinȱtheirȱrecord.ȱOverȱaȱ thirdȱ (1ȱ661ȱ cases)ȱ ofȱ theseȱ hadȱ multipleȱ errors.11ȱ Forȱ errorsȱ withȱ aȱ dollarȱ impactȱ onȱ payment,ȱ 18.8ȱperȱ centȱ resultedȱ inȱ aȱ cancellationȱ orȱ variationȱ toȱ payment,ȱ 54.5ȱperȱ centȱ resultedȱ inȱ aȱ debt,ȱ andȱ 26.7ȱperȱ centȱ resultedȱ inȱ aȱ cancellationȱorȱvariationȱandȱaȱdebt.ȱȱ 16. Forȱtheȱfullȱyearȱ2004–05,ȱtheȱtotalȱvalueȱofȱcustomerȱdebtsȱraisedȱasȱaȱ resultȱ ofȱ allȱ RSSȱ reviewsȱ wasȱ $3ȱ213ȱ810.ȱ Theȱ averageȱ valueȱ ofȱ allȱ debtsȱ wasȱ 11 Centrelink, Rolling Random Sample Surveys, Final Results Quarter 4 of 2004–2005, including full year, Compliance and Review, February 2006, p. 11. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 18 Summary $1ȱ034.ȱAroundȱaȱthirdȱofȱdebtsȱwereȱunderȱ$50.12ȱApproximatelyȱ20ȱperȱcentȱofȱ debtsȱwereȱoverȱ$1ȱ000,ȱincludingȱ4.3ȱperȱcentȱofȱdebtsȱwhichȱwereȱoverȱ$5ȱ000.ȱ 17. Theȱ RSSȱ furtherȱ categorisesȱ reviewsȱ withȱ anȱ errorȱ intoȱ thoseȱ withȱ aȱ Centrelinkȱadministrativeȱerrorȱand/orȱaȱcustomerȱerrorȱwithȱnoȱdollarȱimpactȱ andȱthoseȱwithȱaȱCentrelinkȱadministrativeȱerrorȱand/orȱaȱcustomerȱerrorȱwithȱ aȱdollarȱimpact.ȱȱ 18. Inȱ 2004–05,ȱ Centrelinkȱ identifiedȱ oneȱ orȱ moreȱ errorsȱ inȱ 4ȱ552ȱ ofȱ theȱ 10ȱ048ȱ RSSȱ reviewsȱ conducted,ȱ withȱ theȱ totalȱ numberȱ ofȱ 7ȱ037ȱ errorsȱ distributedȱ acrossȱ theseȱ 4ȱ552ȱ reviews.ȱ Centrelinkȱ RSSȱ Reviewersȱ determinedȱ thatȱ 78ȱperȱ centȱ ofȱ theseȱ errorsȱ wereȱ dueȱ toȱ customerȱ errorȱ (thatȱ isȱ customerȱ actionȱ orȱ inaction).ȱ Theȱ remainingȱ 22ȱperȱ centȱ wereȱ categorisedȱ asȱ dueȱ toȱ Centrelinkȱ administrativeȱ errorȱ (predominatelyȱ incompleteȱ processing),ȱ albeitȱ thatȱ onlyȱ 5.1ȱ perȱ centȱ ofȱ theseȱ errorsȱ (orȱ 3.4ȱ perȱ centȱ ofȱ reviews)ȱ hadȱ anȱ immediateȱimpactȱonȱtheȱcustomer’sȱpayment.ȱ 19. Thisȱ informationȱ isȱ usedȱ toȱ calculateȱ paymentȱ correctness.ȱ Theȱ definitionȱagreedȱbetweenȱCentrelinkȱandȱpurchaserȱdepartmentsȱforȱpaymentȱ correctnessȱ isȱ calculatedȱ onlyȱ takingȱ intoȱ accountȱ reviewsȱ withȱ aȱ Centrelinkȱ administrativeȱ errorȱ withȱ aȱ dollarȱ impact.ȱ Anyȱ errorȱ attributedȱ toȱ customerȱ actionȱ orȱ inaction,ȱ andȱ anyȱ administrativeȱ errorȱ withȱ noȱ dollarȱ impactȱ isȱ excluded.ȱ 20. Centrelinkȱreportedȱinȱitsȱ2004–05ȱAnnualȱReportȱthat:ȱ Sinceȱ[this]ȱrandomȱsamplingȱprocessȱbeganȱinȱJulyȱ2002,ȱCentrelink’sȱpaymentȱ correctnessȱfiguresȱhaveȱexceededȱ95ȱperȱcentȱ[theȱBPAȱtarget]ȱeveryȱquarter,ȱ withȱanȱannualȱfigureȱforȱ2004–05ȱofȱ96.8ȱperȱcent.13ȱ 21. TheȱpaymentȱcorrectnessȱfigureȱreportedȱinȱCentrelink’sȱannualȱreportȱ isȱbasedȱonȱpreliminaryȱdataȱfromȱtheȱRSSȱcollectedȱinȱtheȱfirstȱthreeȱquartersȱ ofȱ 2004–05.14ȱ Theȱ figureȱ isȱ derivedȱ byȱ takingȱ theȱ numberȱ ofȱ reviewsȱ withȱ aȱ 12 Centrelink automatically waives debts of less than $50, as it is not cost effective to recover these debts. The power to waive in this circumstance is provided under section 1237AAA(1) of the Social Security Act 1991. 13 Centrelink, Annual Report 2004–05, p. 39. 14 The final validated results of the RSS for 2004–05 were not available until February 2006. Accordingly, these results were not available for inclusion in agencies’ 2004–05 Annual Reports. Centrelink advised the ANAO in April 2006 that the purchaser departments had agreed that the Centrelink’s CEO’s Statements of Assurance for 2004–05 be based on the first three quarters of data for 2004–05 as the fourth quarter data would not be available by the time the Statements of Assurance were required. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 19 Centrelinkȱ administrativeȱ errorȱ withȱ aȱ dollarȱ impactȱ asȱ aȱ percentageȱ ofȱ theȱ sampledȱpopulation,ȱandȱsubtractingȱthisȱnumberȱfromȱ100ȱperȱcent.15ȱȱ 22. Centrelink’sȱ 96.8ȱ perȱ centȱ reportedȱ paymentȱ correctnessȱ forȱ 2004–05ȱ doesȱ notȱ meanȱ thatȱ 96.8ȱ perȱ centȱ ofȱ customersȱ receivedȱ aȱ correctȱ paymentȱ inȱ thatȱyear.ȱAsȱidentifiedȱinȱTableȱ1,ȱtheȱRSSȱshowedȱthatȱinȱ2004–05ȱsomeȱ30ȱperȱ centȱ ofȱ customersȱ hadȱ anȱ errorȱ thatȱ hadȱ aȱ dollarȱ impactȱ onȱ theirȱ payment,ȱ meaningȱ thatȱ paymentȱ correctnessȱ (usingȱ theȱ ordinaryȱ meaningȱ ofȱ theȱ term)ȱ wasȱaroundȱ70ȱperȱcent.ȱȱ 23. Whileȱ theȱ proportionȱ ofȱ paymentsȱ thatȱ wereȱ incorrectȱ wasȱ aroundȱ 30ȱperȱ cent,ȱ manyȱ ofȱ theȱ individualȱ paymentȱ variationsȱ areȱ small.ȱ Givenȱ thatȱ theȱ RSSȱ isȱ aȱ pointȱ inȱ timeȱ analysis,ȱ theȱ variationsȱ relateȱ toȱ aȱ fortnightlyȱ payment.ȱTheȱlargestȱvariationȱwillȱoccurȱinȱtheȱcaseȱofȱaȱpaymentȱcancellation,ȱ thatȱ is,ȱ theȱ largestȱ variationȱ willȱ equalȱ theȱ customer’sȱ entireȱ fortnightlyȱ payment.ȱHowever,ȱgivenȱthatȱmanyȱ variationsȱareȱ small,ȱthenȱtheȱ impactȱ onȱ outlaysȱ isȱ notȱ large.ȱ Nevertheless,ȱ evenȱ aȱ smallȱ variationȱ willȱ haveȱ economicȱ andȱotherȱimpactsȱonȱanȱindividualȱcustomer.ȱ Calculation of the accuracy of outlays 24. Asȱnotedȱinȱparagraphȱ7,ȱtheȱprimaryȱuseȱtoȱwhichȱtheȱthreeȱpurchaserȱ departmentsȱ putȱ theȱ RSSȱ programmeȱ isȱ toȱ measureȱ theȱ levelȱ ofȱ accuracyȱ ofȱ outlaysȱonȱincomeȱsupportȱpaymentsȱdeliveredȱbyȱCentrelink.ȱ 25. Toȱ doȱ this,ȱ theȱ purchaserȱ departmentsȱ haveȱ toȱ firstȱ identifyȱ theȱ ‘totalȱ paymentȱ inaccuracy’.ȱ Thatȱ isȱ theȱ percentageȱ ofȱ RSSȱ reviewsȱ thatȱ haveȱ errorsȱ whichȱhaveȱaȱdollarȱimpactȱonȱpayments,ȱirrespectiveȱofȱtheȱsourceȱofȱtheȱerrorȱ (thatȱisȱcustomerȱerrorȱorȱCentrelinkȱadministrativeȱerror).ȱ 26. Theȱ inaccuracyȱ ofȱ outlaysȱ isȱ thenȱ calculatedȱ byȱ dividingȱ theȱ sumȱ ofȱ fortnightlyȱ dollarȱ amountsȱ ofȱ variationsȱ (upwardȱ variation,ȱ downwardȱ variation,ȱ cancellation/suspension)ȱ byȱ theȱ sumȱ ofȱ theȱ fortnightlyȱ paymentsȱ toȱ allȱ sampledȱ customers,ȱ theȱ percentageȱ figureȱ isȱ thenȱ calculated.ȱ Toȱ getȱ theȱ accuracyȱ ofȱ outlaysȱ theȱ purchaserȱ departmentsȱ thenȱ subtractȱ thisȱ figureȱ fromȱ 100ȱperȱcent.ȱ 27. FaCSIAȱadvisedȱtheȱANAOȱthat,ȱbasedȱonȱtheȱRSSȱdata,ȱtheȱaccuracyȱofȱ outlaysȱforȱ2004–05ȱwasȱ97.9ȱperȱcentȱforȱthoseȱmajorȱsocialȱsecurityȱpaymentsȱ 15 The relevant final validated results for 2004–05 are set out in Table 1 and using these figures it can be seen that the final payment correctness figure for 2004–05 is 96.6 per cent, within 0.2 per cent of the preliminary figure reported in Centrelink’s 2004–05 Annual Report. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 20 Summary madeȱ byȱ Centrelinkȱ onȱ behalfȱ ofȱ FaCSIA.16ȱ DEWRȱ advisedȱ theȱ ANAOȱ onȱ 9ȱDecemberȱ 2005ȱ thatȱ itsȱ assessmentȱ ofȱ theȱ resultsȱ ofȱ theȱ RSSȱ betweenȱȱ 1ȱ Julyȱ 2004ȱ andȱ 31ȱ Marchȱ 2005ȱ showȱ thatȱ theȱ averageȱ inaccuracyȱ rateȱ forȱ workingȱageȱpaymentsȱwasȱ4.2ȱperȱcent.ȱThisȱequatesȱtoȱ95.8ȱperȱcentȱofȱoutlaysȱ onȱCentrelinkȱpaymentsȱforȱwhichȱDEWRȱisȱresponsibleȱbeingȱaccurate.ȱȱ Audit Approach 28. Theȱ overallȱ objectiveȱ ofȱ theȱ auditȱ wasȱ toȱ assessȱ whetherȱ theȱ RSSȱ Programmeȱ isȱ effectiveȱ andȱ efficientȱ inȱ providingȱ assuranceȱ onȱ theȱ levelsȱ ofȱ paymentȱ errorȱ andȱ theȱ resultantȱ risksȱ toȱ theȱ integrityȱ ofȱ Australianȱ GovernmentȱoutlaysȱforȱpaymentsȱadministeredȱbyȱCentrelink.ȱ 29. Specifically,ȱtheȱauditȱassessedȱwhether:ȱ x theȱRSSȱProgrammeȱmeetsȱtheȱobjectivesȱoutlinedȱforȱitȱinȱtheȱPortfolioȱ BudgetȱStatementsȱunderȱwhichȱfundingȱwasȱprovided;ȱ x thereȱisȱanȱadequateȱmethodologyȱunderpinningȱtheȱRSSȱreviews;ȱ x theȱRSSȱreviewsȱareȱconductedȱeffectivelyȱandȱefficiently,ȱandȱadequateȱ qualityȱassuranceȱmechanismsȱexistȱtoȱassureȱtheȱresultsȱobtainedȱfromȱ theȱRSSȱreviews;ȱandȱ x reportingȱ byȱ theȱ agenciesȱ ofȱ theȱ resultsȱ ofȱ theȱ RSSȱ Programmeȱ isȱ adequateȱ andȱ takesȱ intoȱ considerationȱ theȱ issuesȱ identifiedȱ inȱ Auditȱ Reportȱ No.ȱ 44ȱ 2002–03ȱ Reviewȱ ofȱ theȱ Parentingȱ Paymentȱ Singleȱ Program,ȱ andȱAuditȱReportȱNo.ȱ17ȱ2002–03ȱAgeȱPensionȱEntitlements.ȱ Key Findings Meeting the Major Objective of the RSS Programme (Chapter 3) 30. Theȱ ANAOȱ examinedȱ theȱ extentȱ toȱ whichȱ theȱ RSSȱ meetsȱ theȱ majorȱ objectiveȱ ofȱ theȱ RSSȱ Programme,ȱ thatȱ is,ȱ toȱ measureȱ theȱ levelȱ ofȱ incorrectȱ payment.ȱTheȱANAOȱalsoȱexaminedȱtheȱrelatedȱobjectiveȱtoȱdetectȱundeclaredȱ changedȱcircumstances.17ȱ Importance of error 31. Theȱfigureȱforȱtheȱaccuracyȱofȱoutlaysȱisȱtheȱmostȱvisibleȱoutputȱofȱtheȱ RSSȱ process.ȱ However,ȱ theȱ dataȱ onȱ errorȱ collectedȱ byȱ theȱ RSSȱ isȱ alsoȱ ofȱ 16 These payments are Age Pension, Carers Payment and Child Disability Allowance. 17 Portfolio Budget Statements 2001–02, Family and Community Services Portfolio, p. 188. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 21 importanceȱ inȱ identifyingȱ theȱ sizeȱ andȱ natureȱ ofȱ error.ȱ Theȱ dataȱ provideȱ informationȱ regardingȱ theȱ qualityȱ ofȱ administrationȱ ofȱ Centrelinkȱ payments,ȱ andȱ ultimately,ȱ theȱ qualityȱ ofȱ serviceȱ deliveredȱ toȱ customers.ȱ Theȱ impactȱ ofȱ errorȱonȱtheȱcostȱofȱprovidingȱservicesȱisȱalsoȱofȱimportance.ȱ 32. Twoȱ studiesȱ haveȱ highlightedȱ theȱ importanceȱ ofȱ errorȱ (bothȱ customerȱ andȱadministrativeȱerror)ȱforȱCentrelink’sȱeffectiveȱandȱefficientȱadministrationȱ ofȱ payments.ȱ First,ȱ theȱ 2004ȱ Allenȱ Consultingȱ Groupȱ reportȱ FaCSȱ andȱ Centrelink:ȱ Complianceȱ Reviewȱ raisedȱ theȱ impactȱ ofȱ error.ȱ Secondly,ȱ anȱ internalȱ studyȱ conductedȱ byȱ Centrelinkȱ inȱ 2004,ȱ Projectȱ Charlotte,ȱ highlightedȱ theȱ importanceȱofȱidentifyingȱerror.ȱPreviousȱANAOȱperformanceȱauditsȱhaveȱalsoȱ raisedȱissuesȱrelatingȱtoȱerror.18ȱ 33. TheȱAllenȱConsultingȱGroupȱreportȱstatedȱthat:ȱ whileȱanȱ[administrative]ȱerrorȱmayȱbeȱimmaterialȱtoȱpaymentȱtodayȱ–ȱsuchȱasȱ aȱcodingȱerrorȱ–ȱitȱrepresentsȱtheȱpossibilityȱthatȱcomplianceȱcontrolsȱcouldȱbeȱ precludedȱ fromȱ identifyingȱ futureȱ paymentȱ inaccuracy…Fromȱ thisȱ perspective,ȱ administrativeȱ errorsȱ –whetherȱ materialȱ toȱ outlaysȱ orȱ notȱ –ȱ mayȱ contributeȱtoȱunderlyingȱinaccuracy.19ȱ 34. Centrelink’sȱ Projectȱ Charlotteȱ lookedȱ atȱ determiningȱ theȱ causeȱ ofȱ customerȱerror.ȱTheȱAnalysisȱReportȱfromȱtheȱprojectȱstatedȱthat:ȱ Customerȱ errorȱ createsȱ anȱ amountȱ ofȱ reworkȱ orȱ additionalȱ workȱ whichȱ impactsȱonȱstaff’sȱcapacity.ȱItȱisȱalsoȱcostlyȱinȱbothȱadministrationȱandȱprogramȱ expenditure.20ȱ Robustness of RSS estimates 35. Thereȱ areȱ aȱ rangeȱ ofȱ issuesȱ whichȱ impactȱ onȱ theȱ robustnessȱ ofȱ theȱ estimatesȱ ofȱ incorrectȱ payment21ȱ calculatedȱ fromȱ theȱ RSSȱ dataȱ (andȱ henceȱ theȱ 18 ANAO Audit Report No.44 2002–03, Review of the Parenting Payment Single Program; and ANAO Audit Report No.17 2002–03, Age Pension Entitlements. 19 The Allen Consulting Group, FaCS and Centrelink: Compliance Review, Final Report, January 2004, p.43. 20 Centrelink, “Charlotte” – the Web Unfurls, Analysis Report, December 2004, p. 7. 21 Incorrect payment, as identified in the RSS, is the number of customers in the RSS sample who have an error in their record, which leads to an error in their payment, that has a dollar impact. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 22 Summary accuracyȱ ofȱ outlaysȱ estimate22).ȱ Butȱ theȱ ANAOȱ foundȱ thatȱ theȱ majorȱ issueȱ affectingȱ theȱ robustnessȱ ofȱ theȱ RSSȱ estimatesȱ isȱ theȱ inabilityȱ ofȱ theȱ RSSȱ toȱ uncoverȱ allȱ incorrectȱ paymentsȱ dueȱ toȱ theȱ inherentȱ problemȱ thatȱ notȱ allȱ customersȱ willȱ discloseȱ allȱ ofȱ theirȱ circumstancesȱ and/orȱ allȱ ofȱ theȱ changesȱ inȱ theirȱ circumstances,ȱ evenȱ whenȱ askedȱ inȱ aȱ faceȬtoȬfaceȱ interview.ȱ Customerȱ nonȬdisclosureȱ isȱ aȱ formȱ ofȱ nonȬsamplingȱ errorȱ and,ȱ therefore,ȱ cannotȱ beȱ addressedȱthroughȱaȱgreaterȱsampleȱsize.ȱ 36. Accordingly,ȱ noȱ surveyȱ methodȱ toȱ identifyȱ theȱ levelȱ ofȱ Centrelinkȱ paymentsȱaffectedȱbyȱerrorȱwillȱbeȱ100ȱperȱcentȱaccurate.ȱInȱaddition,ȱtheȱcostȱ ofȱ uncoveringȱ allȱ customerȱ nonȬdisclosure,ȱ evenȱ ifȱ aȱ robustȱ methodologyȱ toȱ achieveȱthisȱwasȱidentified,ȱisȱlikelyȱtoȱbeȱprohibitive.ȱ 37. However,ȱ currentȱreportingȱbyȱagenciesȱbasedȱonȱtheȱRSSȱ programmeȱ dataȱ doesȱ notȱ reflectȱ theȱ limitationsȱ ofȱ theȱ data.ȱ Theȱ currentȱ reportingȱ ofȱ theȱ estimatesȱofȱtheȱaccuracyȱofȱoutlaysȱonȱCentrelinkȱpaymentsȱsuggestsȱaȱlevelȱofȱ precisionȱthatȱisȱnotȱableȱtoȱbeȱsupportedȱbyȱdataȱfromȱtheȱRSSȱProgramme.23ȱȱ Information on the potential extent of customer non-disclosure of all circumstances and/or changes in circumstances 38. TheȱextentȱofȱcustomerȱnonȬdisclosureȱofȱallȱtheirȱcircumstancesȱand/orȱ changesȱinȱcircumstancesȱisȱunknown.ȱHowever,ȱthereȱisȱsomeȱresearchȱwhichȱ providesȱsomeȱinformationȱonȱtheȱpotentialȱextentȱofȱnonȬdisclosureȱinȱgeneral,ȱ andȱinȱrelationȱtoȱcashȬinȬhandȱpaymentsȱinȱparticular.ȱ 39. Inȱ earlyȱ 2005,ȱ FaCSIA,ȱDEWRȱandȱDESTȱcommissionedȱ researchȱ toȱ beȱ undertakenȱtoȱinformȱtheȱdevelopmentȱofȱtheȱKeepingȱtheȱSystemȱFairȱCampaignȱ (badgedȱ asȱ Supportȱ theȱ Systemȱ thatȱ Supportsȱ Youȱ whenȱ releasedȱ inȱ Septemberȱ 2005).ȱ 40. Theȱ researchȱ foundȱ thatȱ thereȱ wasȱ ‘aȱ highȱ levelȱ ofȱ toleranceȱ ofȱ andȱ acceptanceȱofȱnonȬcompliantȱbehavioursȱandȱpractices.ȱThereȱwasȱwidespreadȱ sympathyȱandȱempathyȱwithȱindividualsȱwhoȱdidȱnotȱreportȱcertainȱchangesȱinȱ 22 To calculate the accuracy of outlays, the purchaser departments first have to calculate the level of inaccuracy of outlays. The inaccuracy of outlays is calculated by dividing the sum of fortnightly dollar amounts of variations (upward variation, downward variation, cancellation/suspension) identified in the RSS by the sum of the fortnightly payments to all sampled customers, the percentage figure is then calculated. To derive the estimate of the accuracy of outlays, this figure is subtracted from 100 per cent. So from the 2004–05 RSS results, FaCSIA calculated that the 2.1 per cent of outlays on Centrelink payments for which FaCSIA is responsible had been inaccurate in that year. Subtracting 2.1 per cent from 100 per cent gives 97.9 per cent as the accuracy of outlays estimate for FaCSIA payments in 2004–05. 23 For example, FaCSIA, in its 2004–05 Annual Report reported the accuracy of outlays in respect of those Centrelink payments for the department is responsible at 97.9 per cent. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 23 theirȱ circumstances.’24ȱ Theȱ researchȱ suggestedȱ thatȱ ‘nonȬreportingȱ isȱ increasinglyȱbecomingȱnormalisedȱbehaviour’.25ȱ 41. Inȱ2003,ȱtheȱRegulatoryȱInstitutionsȱNetworkȱatȱtheȱAustralianȱNationalȱ Universityȱ conductedȱ aȱ nationalȱ survey,ȱ partȱ ofȱ whichȱ relatedȱ toȱ theȱ cashȱ economy.ȱ Theȱ surveyȱ wasȱ anonymousȱ andȱ respondentsȱ wereȱ selectedȱ fromȱ aȱ stratifiedȱ randomȱ sampleȱ ofȱ Australianȱ households.ȱ Theȱ surveyȱ foundȱ thatȱ 9.4ȱperȱ centȱ ofȱ respondentsȱ hadȱ workedȱ forȱ cashȬinȬhandȱ paymentsȱ (cashȬinȬ handȱwasȱdefinedȱasȱcashȱmoneyȱthatȱtaxȱisȱnotȱpaidȱon).26ȱ 42. Importantly,ȱinȱtheȱcontextȱofȱtheȱRSS,ȱtheȱsurveyȱfoundȱthatȱthoseȱwhoȱ wereȱ inȱ receiptȱ ofȱ aȱ governmentȱ benefitȱ wereȱ moreȱ likelyȱ toȱ beȱ engagingȱ inȱ cashȱeconomyȱactivitiesȱ(11ȱperȱcentȱofȱbeneficiaries,ȱcomparedȱwithȱ8ȱperȱcentȱ ofȱ nonȬbeneficiaries),ȱ althoughȱ thereȱ wereȱ noȱ significantȱ differencesȱ inȱ theȱ amountȱ ofȱ moneyȱ earned.27ȱ Thisȱ reinforcedȱ aȱ similarȱ findingȱ fromȱ surveysȱ conductedȱinȱ2000ȱandȱ2002.28ȱ Limitations of steps taken in the RSS process to detect customer nondisclosure of all circumstances or changes in circumstances 43. Theȱ RSSȱ hasȱ aȱ twoȬpartȱ methodology.ȱ First,ȱ theȱ selectedȱ customerȱ isȱ requiredȱtoȱparticipateȱinȱaȱfaceȬtoȬfaceȱinterviewȱwithȱanȱRSSȱReviewer29ȱusingȱ aȱstructuredȱquestionnaire.ȱSecondly,ȱtheȱRSSȱReviewerȱundertakesȱfollowȬupȱ proceduresȱ toȱ obtainȱ informationȱ fromȱ thirdȱ partiesȱ (suchȱ asȱ employersȱ andȱ banks)ȱandȱfromȱotherȱsourcesȱ(forȱexampleȱCentrelink’sȱownȱdatabaseȱandȱtheȱ electoralȱroll).ȱ 44. AsȱaȱmeansȱofȱgoingȱsomeȱwayȱtoȱovercomingȱnonȬdisclosureȱbyȱnonȬ compliantȱ customers,ȱ theȱ RSSȱ questionnaireȱ hasȱ beenȱ designedȱ toȱ includeȱ aȱ numberȱofȱ‘trigger’ȱquestions.ȱDependingȱonȱtheȱcustomer’sȱanswerȱtoȱanyȱofȱ theseȱ questions,ȱ thereȱ mayȱ beȱ anȱ indicatorȱ promptingȱ furtherȱ inquiryȱ intoȱ anȱ aspectȱ ofȱ theirȱ circumstances.ȱ However,ȱ duringȱ fieldworkȱ forȱ thisȱ audit,ȱ Centrelinkȱstaffȱinterviewedȱbyȱ theȱANAOȱadvisedȱ thatȱ whileȱtheseȱ ‘triggers’ȱ 24 Orima Research, Report on the Developmental Research for the Keeping the System Fair Campaign, March 2005, p. 19. 25 ibid., p. 5. 26 Regulatory Institutions Network, Australian National University Monika Reinhart, Jenny Job and Valerie Braithwaite, Untaxed Cash Work: Feeding Mouths, Lining Wallets. Report for the Department of Family and Community Services, March 2004, p. 30. 27 ibid., p. 56. 28 ibid., p. 54. 29 This is not always the case. In some Areas, staff who are not RSS staff conduct the interview. This is examined in further detail in Chapter 5. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 24 Summary uncoveredȱsomeȱcasesȱofȱnonȬdisclosure,ȱtheyȱwereȱunsuccessfulȱinȱidentifyingȱ otherȱcases.ȱȱ 45. Further,ȱwhileȱ someȱ Reviewersȱ advisedȱ theȱ ANAOȱ thatȱ theyȱ followedȱ upȱonȱdoubtsȱthatȱtheȱcustomerȱwasȱdisclosingȱrelevantȱinformationȱregardingȱ his/herȱcircumstances,ȱothersȱindicatedȱthatȱtheyȱdidȱnot,ȱstatingȱtheyȱbelievedȱ theyȱdidȱnotȱhaveȱtheȱevidenceȱtoȱallowȱtheȱconductȱofȱsuchȱfollowȬupȱaction.ȱ Aȱ numberȱ ofȱ RSSȱ staffȱ interviewedȱ alsoȱ statedȱ that,ȱ dueȱ toȱ timeȱ pressures,ȱ followȬupȱworkȱwasȱnotȱalwaysȱundertaken.ȱ Use of RSS data 46. Theȱaccuracyȱofȱoutlaysȱfigureȱisȱusedȱbyȱagenciesȱtoȱprovideȱassuranceȱ toȱ theȱ Parliamentȱ andȱ theȱ communityȱ thatȱ Centrelinkȱ paymentsȱ areȱ accurateȱ andȱ that,ȱ ultimately,ȱ publicȱ fundsȱ areȱ appropriatelyȱ expended.ȱ Thereȱ areȱ twoȱ issuesȱrelatedȱtoȱhowȱagenciesȱhaveȱbeenȱusingȱtheȱRSSȱdataȱasȱsetȱoutȱbelow.ȱ Transparency 47. Asȱ discussedȱ inȱ paragraphȱ 37,ȱ theȱ accuracyȱ ofȱ outlaysȱ figureȱ derivedȱ fromȱRSSȱdataȱhasȱbeenȱreportedȱbyȱagenciesȱwithȱnoȱreferenceȱtoȱitsȱinherentȱ limitations.ȱ Inȱ addition,ȱ aȱ reportedȱ accuracyȱ ofȱ 97.9ȱ perȱ cent30,ȱ whichȱ isȱ veryȱ highȱandȱgoesȱtoȱoneȱdecimalȱpoint,ȱsuggestsȱaȱlevelȱofȱprecisionȱthatȱtheȱRSSȱ dataȱ cannotȱ provide.ȱ Usersȱ ofȱ theȱ informationȱ mayȱ beȱ givenȱ aȱ falseȱ senseȱ ofȱ confidenceȱ regardingȱ bothȱ theȱ robustnessȱ ofȱ theȱ figureȱ andȱ theȱ accuracyȱ ofȱ outlays.ȱ 48. Thisȱ findingȱ mirrorsȱ theȱ recommendationȱ ofȱ Auditȱ Reportȱ No.ȱ 44ȱȱ 2002–03ȱReviewȱofȱtheȱParentingȱPaymentȱSingleȱProgramȱwhichȱstatedȱthatȱ‘FaCSȱ shouldȱ ensureȱ thatȱ theȱ limitationsȱ ofȱ theȱ RSSȱ methodologyȱ areȱ transparentȱ toȱ relevantȱstakeholdersȱandȱthatȱallȱstakeholdersȱareȱmadeȱawareȱofȱtheȱdegreeȱofȱ confidenceȱFaCSȱhasȱinȱtheȱmethodology’.31ȱ Unclear reporting 49. Asȱdiscussedȱinȱparagraphsȱ17–21,ȱwhileȱtheȱRSSȱfigureȱgenerallyȱcitedȱ isȱ theȱ measureȱ ofȱ theȱ accuracyȱ ofȱ outlays,ȱ Centrelinkȱ alsoȱ reportsȱ aȱ figureȱ forȱ theȱ correctnessȱ ofȱ paymentsȱ inȱ itsȱ Annualȱ Reportȱ andȱ toȱ theȱ purchaserȱ departments.ȱInȱCentrelink’sȱ2004–05ȱAnnualȱReportȱpaymentȱcorrectnessȱwasȱ 30 FaCSIA’s estimate of the accuracy of outlays in 2004–05 for those major social security payments made by Centrelink on behalf of FaCSIA. Similarly, DEWR’s estimate for the accuracy of the outlays in 2004–05 for those major social security payments made by Centrelink on behalf of DEWR was 95.8 per cent. 31 ANAO Audit Report No. 44 2002–03, op. cit., p.72. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 25 reportedȱ asȱ 96.8ȱperȱ cent.ȱ Centrelink’sȱ paymentȱ correctnessȱ figure,ȱ whichȱ isȱ alsoȱderivedȱfromȱRSSȱdata,ȱisȱaȱmeasureȱofȱaȱtargetȱcontainedȱinȱtheȱindividualȱ agencies’ȱ BPAs.32ȱ Theȱ paymentȱ correctnessȱ figureȱ containedȱ inȱ theȱ BPAsȱ isȱ actuallyȱaȱmeasureȱofȱCentrelink’sȱadministrativeȱerrorsȱwhichȱhaveȱanȱimpactȱ onȱpayment.ȱ 50. Thisȱ figureȱ ofȱ 96.8ȱ perȱ centȱ ‘paymentȱ correctness’ȱ comparesȱ withȱ forȱ exampleȱ theȱ 97.9ȱ perȱ centȱ accuracyȱ ofȱ outlaysȱ figureȱ reportedȱ byȱ FaCSIAȱ forȱ thoseȱmajorȱsocialȱsecurityȱpaymentsȱmadeȱbyȱCentrelinkȱonȱbehalfȱofȱFaCSIAȱ However,ȱtheyȱareȱmeasuresȱofȱveryȱdifferentȱ factors.ȱ Givenȱtheseȱfiguresȱ areȱ ofȱsimilarȱmagnitude,ȱthisȱinȱitselfȱmayȱcauseȱsomeȱconfusionȱregardingȱwhatȱ thisȱpaymentȱcorrectnessȱfigureȱisȱmeasuring.ȱ 51. Whileȱ theȱ definitionȱ ofȱ paymentȱ correctnessȱ mayȱ beȱ agreedȱ andȱ understoodȱ betweenȱ Centrelinkȱ andȱ theȱ purchaserȱ departments,ȱ externalȱ reportsȱquotingȱpaymentȱcorrectnessȱmayȱbeȱmisleadingȱtoȱtheȱoutsideȱreader.ȱ Theȱ statementȱ thatȱ Centrelinkȱ paymentȱ correctnessȱ inȱ 2004–05ȱ wasȱ 96.8ȱ perȱ cent,ȱ givenȱ theȱ ordinaryȱ meaningȱ ofȱ theȱ wordsȱ ‘paymentȱ correctness’,ȱ wouldȱ suggestȱ thatȱ 96.8ȱperȱ centȱ ofȱ customersȱ receiveȱ aȱ correctȱ payment.ȱ However,ȱ theȱ RSSȱ dataȱ showȱ thatȱ itȱ isȱ actuallyȱ aroundȱ 70ȱ perȱ centȱ ofȱ customersȱ whoȱ receiveȱ aȱ correctȱ paymentȱ (seeȱ Tableȱ 1),ȱ albeitȱ thatȱ theȱ variationsȱ requiredȱ toȱ makeȱ correctȱ theȱ someȱ 30ȱ perȱ centȱ ofȱ paymentsȱ whichȱ hadȱ beenȱ foundȱ toȱ beȱ incorrectȱ wereȱ mostlyȱ small,ȱ givenȱ itȱ relatesȱ onlyȱ toȱ aȱ singleȱ fortnight’sȱ payment.ȱ 52. ItȱisȱusefulȱforȱtheȱpurchaserȱdepartmentsȱtoȱuseȱtheȱRSSȱdataȱtoȱgainȱanȱ insightȱintoȱtheȱlevelȱofȱCentrelinkȱadministrativeȱerrorȱandȱitsȱimpactȱonȱbothȱ theȱ numberȱ ofȱ customersȱ receivingȱ aȱ correctȱ paymentȱ andȱ alsoȱ theȱ overallȱ accuracyȱofȱoutlays.ȱHowever,ȱinȱtheȱabsenceȱofȱreadersȱofȱCentrelink’sȱAnnualȱ ReportȱbeingȱprovidedȱwithȱaȱdefinitionȱofȱwhatȱCentrelinkȱmeansȱbyȱpaymentȱ correctness,ȱ aȱ readerȱ mayȱ notȱ understandȱ thatȱ theȱ onlyȱ errorsȱ includedȱ inȱ calculatingȱ theȱ paymentȱ correctnessȱ figureȱ reportedȱ relatedȱ toȱ Centrelinkȱ administrativeȱerrorsȱwithȱanȱimpactȱonȱpayment,ȱandȱthatȱcustomerȱerrorsȱareȱ excluded.ȱ Theȱ ANAOȱ suggestsȱ thatȱ futureȱ externalȱ reportingȱ ofȱ Centrelink’sȱ 32 Centrelink’s Annual Report 2004–05 states (p. 39): ‘To ensure effective delivery of government programs, random sample survey results are used to assure the correctness and accuracy of social security program outlays and are the primary quality assurance tool for the Business Assurance Framework……The target for payment correctness is set at 95 per cent. Since this random sampling process began in July 2002, Centrelink’s payment correctness figures have exceeded 95 per cent every quarter, with an annual figure for 2004–05 of 96.8 per cent.’ This is opposed to the 97.9 per cent accuracy of outlays result for 2004–05 for FaCSIA payments only. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 26 Summary performanceȱ againstȱ thisȱ targetȱ inȱ theȱ BPAsȱ wouldȱ beȱ clearerȱ ifȱ itȱ wereȱ toȱ conveyȱaȱfocusȱonȱadministrativeȱcorrectnessȱratherȱthanȱpaymentȱcorrectness.ȱ Meeting the Other Objectives of RSS Programme (Chapter 4) 53. TheȱfollowingȱsectionsȱexamineȱtheȱextentȱtoȱwhichȱtheȱRSSȱProgrammeȱ meetsȱ theȱ remainingȱ objectivesȱ forȱ theȱ Programmeȱ asȱ articulatedȱ inȱ annualȱ reportsȱandȱrelevantȱFaCSȱPortfolioȱBudgetȱStatements.ȱ Measure the reasons for incorrect payment and rigorous information on how incorrect payment occurs 54. Partȱ ofȱ theȱ purposeȱ forȱ whichȱ theȱ RSSȱ wasȱ originallyȱ fundedȱ wasȱ toȱ measureȱ theȱ reasonsȱ forȱ incorrectȱ paymentȱ andȱ toȱ provideȱ rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱwhichȱcustomersȱdoȱnotȱfulfilȱtheirȱobligationsȱtoȱadviseȱofȱchangesȱinȱtheirȱ personalȱandȱfinancialȱcircumstances).33ȱ 55. Theȱ RSSȱ doesȱ provideȱ informationȱ onȱ theȱ reasonsȱ forȱ paymentȱ incorrectnessȱ toȱ theȱ extentȱ thatȱ itȱ detectsȱ this.ȱ However,ȱ theȱ RSSȱ doesȱ notȱ provideȱrigorousȱ‘informationȱonȱtheȱcircumstancesȱunderȱwhichȱcustomersȱdoȱ notȱfulfilȱtheirȱobligationsȱtoȱadviseȱofȱchangesȱinȱtheirȱpersonalȱandȱfinancialȱ circumstances’,ȱ thatȱ is,ȱ theȱ RSSȱ doesȱ notȱ provideȱ informationȱ onȱ whyȱ customersȱdoȱnotȱfulfilȱtheirȱobligations.ȱ 56. Inȱ anyȱ case,ȱ theȱ ANAOȱ notesȱ thatȱ Centrelinkȱ alreadyȱ holdsȱ detailedȱ informationȱ onȱ theȱ reasonsȱ forȱ paymentȱ incorrectness,ȱ causedȱ byȱ customerȱ error,ȱ collectedȱ throughȱ itsȱ reviewȱ andȱ complianceȱ activities.ȱ However,ȱ thisȱ informationȱisȱnotȱrecordedȱinȱCentrelink’sȱIntegratedȱReviewȱSystem34,ȱandȱisȱ consequentlyȱnotȱeasilyȱaggregatedȱandȱanalysed.ȱ Effectiveness of the compliance framework/control framework and identification of emerging risks 57. Theȱ RSSȱ doesȱ notȱ provideȱ aȱ directȱ measureȱ ofȱ theȱ effectivenessȱ ofȱ theȱ compliance/controlȱ frameworkȱ becauseȱ itȱ doesȱ notȱ directlyȱ testȱ this.ȱ Rather,ȱ thereȱ isȱ anȱ inferenceȱ thatȱ positiveȱ resultsȱ inȱ theȱ RSSȱ equateȱ withȱ theȱ compliance/controlȱframeworkȱbeingȱeffective.ȱȱ 33 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p.137. 34 The Integrated Review System (IRS) is Centrelink's computer system for recording the outcomes of review activity, including outcomes from the compliance and fraud teams, programme and service profiling reviews. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 27 58. Theȱ RSSȱ questionnaireȱ doesȱ notȱ includeȱ anyȱ questionsȱ regardingȱ theȱ outcomesȱ ofȱ anyȱ compliance/controlȱ activityȱ aȱ customerȱ mayȱ haveȱ beenȱ subjectedȱtoȱpriorȱtoȱselectionȱinȱtheȱRSS.ȱThereȱisȱalsoȱnoȱfollowȬupȱduringȱtheȱ RSSȱprocessȱtoȱmatchȱbackȱtoȱanyȱcomplianceȱactivityȱtheȱcustomerȱmayȱhaveȱ beenȱinvolvedȱinȱtoȱseeȱifȱitȱwasȱeffective.ȱThatȱis,ȱwhereȱanȱerrorȱisȱidentifiedȱ duringȱtheȱRSSȱprocess,ȱthereȱisȱnoȱcheckingȱbackȱinȱtheȱcustomerȱrecordȱtoȱseeȱ ifȱ thereȱ wasȱ anyȱ previousȱ complianceȱ activityȱ thatȱ hadȱ failedȱ toȱ identifyȱ theȱ error.ȱ 59. Usingȱ theȱidentificationȱofȱ incorrectȱ paymentȱ fromȱtheȱ RSSȱasȱ aȱ proxyȱ forȱ theȱ effectivenessȱ ofȱ theȱ compliance/controlȱ frameworkȱ mayȱ leadȱ toȱ anȱ overestimateȱ ofȱ theȱ levelȱ ofȱ effectiveness,ȱ dueȱ toȱ theȱ potentialȱ thatȱ theȱ RSSȱ isȱ notȱ detectingȱ allȱ casesȱ ofȱ paymentȱ errors,ȱ particularlyȱ inȱ relationȱ toȱ theȱ mostȱ nonȬcompliantȱcustomers.ȱ 60. WhileȱsomeȱemergingȱrisksȱmayȱbeȱidentifiedȱinȱtheȱRSS,ȱthoseȱrelatingȱ toȱ theȱ mostȱ nonȬcompliantȱ mayȱ notȱ beȱ identified,ȱ leadingȱ toȱ skewedȱ data.ȱ Inȱ thisȱ circumstance,ȱ ifȱ complianceȱ activityȱ isȱ targetedȱ onȱ theȱ basisȱ ofȱ risksȱ identifiedȱthroughȱtheȱRSS,ȱthereȱisȱalsoȱaȱriskȱthatȱcomplianceȱactivityȱwillȱnotȱ beȱ directedȱ toȱ theȱ mostȱ nonȬcompliantȱ customers,ȱ andȱ therefore,ȱ mayȱ notȱ beȱ theȱmostȱcostȱeffective.ȱ Operation of the Random Sample Survey (Chapter 5) 61. Theȱ ANAOȱ examinedȱ theȱ operationȱ ofȱ theȱ RSSȱ Programmeȱ andȱ concludedȱ thatȱ thereȱ wereȱ aȱ rangeȱ ofȱ issuesȱ withȱ theȱ operationȱ ofȱ theȱ RSSȱ Programme.ȱ Theseȱ issuesȱ ultimatelyȱ affectȱ theȱ qualityȱ ofȱ dataȱ producedȱ fromȱ theȱRSS.ȱAccordingly,ȱaddressingȱtheȱopportunitiesȱtoȱimproveȱtheȱoperationȱofȱ theȱRSSȱprogrammeȱwillȱimproveȱtheȱqualityȱofȱtheȱdataȱproduced.ȱHowever,ȱ theseȱ improvementsȱ willȱ notȱ addressȱ theȱ inherentȱ problemȱ ofȱ customerȱ nonȬ disclosure.ȱ 62. Theȱ ANAOȱ considersȱ thatȱ purchaserȱ departmentȱ shouldȱ implementȱ improvementsȱtoȱtheȱgovernanceȱofȱtheȱRSSȱprogrammeȱtoȱgainȱaȱgreaterȱlevelȱ ofȱassuranceȱregardingȱtheȱoperationȱofȱtheȱprogrammeȱandȱtoȱallowȱthemȱtoȱ betterȱ assessȱ theȱ efficiency,ȱ effectivenessȱ andȱ independence35ȱ ofȱ Centrelink’sȱ 35 Independence in this context involves, first, that the RSS teams are not in the position of reviewing decisions they may have themselves made. Secondly, that RSS teams are independent of Centrelink staff who make payment decisions, given that RSS Reviewers conduct interviews with customers in CSCs among Centrelink Officers who made the decisions being reviewed. Thirdly, that the RSS teams are independent of the Area Management, given that Area Management are responsible for the quality of work in their Area and the quality of Area performance is monitored. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 28 Summary operationȱofȱtheȱRSSȱProgramme.ȱThereȱareȱalsoȱaȱrangeȱofȱoperationalȱissuesȱ whichȱ affectȱ theȱ identificationȱ ofȱ nonȬdisclosureȱ byȱ customersȱ ofȱ changesȱ inȱ theirȱ circumstances,ȱ includingȱ differencesȱ amongstȱ RSSȱ Reviewersȱ inȱ approachesȱtoȱprobingȱandȱfollowingȱupȱonȱdoubts.ȱȱ 63. TheȱANAOȱfoundȱthatȱtheȱqualityȱofȱtheȱdataȱcollectionȱforȱtheȱRSSȱwasȱ alsoȱaffectedȱbyȱissuesȱwith:ȱ x qualityȱassuranceȱofȱtheȱconductȱandȱresultsȱofȱtheȱRSS;ȱȱ x recruitment,ȱtrainingȱandȱperformanceȱmanagementȱofȱRSSȱstaff;ȱ x questionnaireȱdesign;ȱ x CentrelinkȱstaffȱotherȱthanȱRSSȱReviewersȱconductingȱtheȱinterview;ȱandȱ x theȱattributionȱofȱerrorȱbetweenȱCentrelinkȱandȱitsȱcustomers.ȱ Overall audit conclusion 64. Theȱ RSSȱ Programmeȱ isȱ aȱ toolȱ usedȱ byȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ primarilyȱ forȱ theȱ purposeȱ ofȱ measuringȱ theȱ levelȱ ofȱ accuracyȱ ofȱ someȱ $63ȱbillionȱ inȱ Australianȱ Governmentȱ outlaysȱ onȱ incomeȱ supportȱ paymentsȱ deliveredȱ byȱ Centrelink.ȱ Theseȱ purchaserȱ departmentsȱ alsoȱ useȱ theȱ RSSȱ Programmeȱtoȱprovideȱaȱmeasureȱofȱtheȱeffectivenessȱofȱcomplianceȱandȱotherȱ reviewȱactivity,ȱandȱtoȱmeasureȱtheȱlevelȱofȱCentrelink’sȱadministrativeȱerror.ȱ 65. TheȱANAOȱacknowledgesȱtheȱpurchaserȱdepartments’ȱeffortsȱtoȱfindȱaȱ methodȱ toȱ measureȱ theȱ accuracyȱ ofȱ outlays,ȱ andȱ toȱ monitorȱ theȱ levelȱ ofȱ Centrelink’sȱadministrativeȱerror,ȱandȱtheȱvalueȱofȱsuchȱinformation.ȱHowever,ȱ theȱ RSSȱ isȱ unableȱ toȱ uncoverȱ allȱ incorrectȱ paymentsȱ dueȱ toȱ theȱ inherentȱ limitationȱthatȱnotȱallȱcustomersȱwillȱdiscloseȱallȱofȱtheirȱcircumstancesȱand/orȱ allȱ ofȱ theȱ changesȱ inȱ theirȱ circumstances,ȱ evenȱ whenȱ askedȱ inȱ aȱ faceȬtoȬfaceȱ interview.ȱ 66. Theȱ ANAOȱ recognisesȱ thatȱ noȱ surveyȱ methodȱ toȱ identifyȱ theȱ levelȱ ofȱ Centrelinkȱ paymentsȱ affectedȱ byȱ errorȱ willȱ beȱ 100ȱ perȱ centȱ accurate.ȱ Inȱ addition,ȱ theȱ costȱ ofȱ uncoveringȱ allȱ customerȱ nonȬdisclosure,ȱ evenȱ ifȱ aȱ robustȱ methodologyȱtoȱachieveȱthisȱwasȱidentified,ȱisȱlikelyȱtoȱbeȱprohibitive.ȱ 67. Notwithstandingȱthis,ȱtheȱRSSȱprogrammeȱhasȱbeenȱreliedȱuponȱbyȱtheȱ purchaserȱ departmentsȱ andȱ Centrelinkȱ toȱ provideȱ aȱ measureȱ ofȱ Centrelink’sȱ achievementȱ againstȱ anȱ agreedȱ targetȱ inȱ theȱ individualȱ agencies’ȱ BPAsȱ forȱ Centrelink’sȱ paymentȱ correctness,ȱ andȱ isȱ theȱ keyȱ plankȱ inȱ theȱ assuranceȱ ofȱ aroundȱoneȬthirdȱofȱAustralianȱGovernmentȱoutlays.ȱȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 29 68. Whileȱanȱinternalȱdefinitionȱofȱpaymentȱcorrectnessȱmayȱbeȱagreedȱandȱ understoodȱ betweenȱ Centrelinkȱ andȱ theȱ purchaserȱ departments,ȱ externalȱ reportsȱ quotingȱ paymentȱ correctnessȱ basedȱ onȱ thisȱ definitionȱ mayȱ beȱ misleadingȱ toȱ theȱ outsideȱ reader.ȱ Centrelinkȱ reportedȱ inȱ itsȱ 2004–05ȱ Annualȱ Reportȱ paymentȱ correctnessȱ ofȱ 96.8ȱ perȱ cent.ȱ Usingȱ theȱ ordinaryȱ meaningȱ ofȱ theȱwordsȱ‘paymentȱcorrectness’,ȱthisȱwouldȱsuggestȱtoȱaȱreaderȱthatȱ96.8ȱperȱ centȱofȱcustomersȱreceiveȱaȱcorrectȱpayment.ȱHowever,ȱtheȱRSSȱdataȱshowȱthatȱ itȱisȱaroundȱ70ȱperȱcentȱofȱcustomersȱwhoȱreceiveȱaȱcorrectȱpayment.ȱ 69. Theȱ ANAOȱ suggestsȱ thatȱ futureȱ externalȱ reportingȱ ofȱ Centrelink’sȱ performanceȱ againstȱ thisȱ targetȱ inȱ theȱ BPAsȱ wouldȱ beȱ clearerȱ ifȱ itȱ wereȱ toȱ conveyȱaȱfocusȱonȱadministrativeȱcorrectnessȱratherȱthanȱpaymentȱcorrectness.ȱ 70. Theȱ figureȱ reportedȱ byȱ agenciesȱ forȱ theȱ accuracyȱ ofȱ outlaysȱ (forȱ example,ȱ97.9ȱperȱcentȱforȱFaCSIAȱpaymentsȱinȱ2004–05,ȱandȱ95.8ȱperȱcentȱforȱ DEWRȱpayments)ȱsuggestsȱaȱlevelȱofȱprecisionȱthatȱisȱnotȱableȱtoȱbeȱsupportedȱ byȱ dataȱ fromȱ theȱ RSSȱ Programmeȱ dueȱ toȱ theȱ inherentȱ limitationȱ thatȱ notȱ allȱ customersȱwillȱdiscloseȱallȱofȱtheirȱcircumstancesȱtoȱCentrelink.ȱ 71. TheȱpurchaserȱdepartmentsȱhaveȱreceivedȱadditionalȱBudgetȱfundingȱtoȱ increaseȱ theȱ sampleȱ sizesȱ forȱ theȱ RSSȱ programme.ȱ Whileȱ thereȱ mayȱ beȱ otherȱ benefitsȱrealisableȱfromȱtheȱincreaseȱinȱtheȱsampleȱsize,ȱthisȱwillȱnotȱaddressȱtheȱ nonȬsamplingȱ errorȱ associatedȱ withȱ customerȱ nonȬdisclosure.ȱ Asȱ notedȱ inȱ paragraphȱ 35,ȱ customerȱ nonȬdisclosureȱ isȱ aȱ formȱ ofȱ nonȬsamplingȱ errorȱ and,ȱ therefore,ȱ cannotȱ beȱ addressedȱ throughȱ aȱ greaterȱ sampleȱ size.ȱ Theȱ purchaserȱ departmentsȱ areȱ alsoȱ proposingȱ enhancementsȱ toȱ theȱ RSSȱ programmeȱ toȱ uncoverȱ furtherȱ nonȬdisclosure,ȱ however,ȱ theseȱ willȱ not,ȱ inȱ themselves,ȱ uncoverȱallȱnonȬdisclosure.ȱȱ 72. TheȱANAOȱconsidersȱthatȱitȱisȱimportantȱthatȱagenciesȱuseȱtheȱaccuracyȱ ofȱoutlaysȱfigureȱcalculatedȱfromȱRSSȱdataȱasȱanȱindicativeȱmeasureȱofȱtheȱlevelȱ ofȱ accuracyȱ ofȱ outlaysȱ onȱ Centrelinkȱ payments,ȱ recognisingȱ itsȱ inherentȱ limitations.ȱ Theȱ indicativeȱ RSSȱ measureȱ wouldȱ needȱ toȱ beȱ appropriatelyȱ supplementedȱ by,ȱ andȱ usedȱ inȱ conjunctionȱ with,ȱ otherȱ relevantȱ informationȱ collectedȱbyȱCentrelinkȱandȱtheȱpurchaserȱdepartmentsȱtoȱprovideȱtheȱrequiredȱ levelȱofȱassuranceȱforȱtheseȱsignificantȱAustralianȱGovernmentȱoutlays.ȱ Recommendations 73. Theȱ ANAOȱ madeȱ nineȱ recommendationsȱ aimedȱ at,ȱ first,ȱ ensuringȱ theȱ RSSȱdataȱwereȱappropriatelyȱusedȱandȱreported,ȱandȱsecondly,ȱimprovingȱtheȱ operationȱofȱtheȱRSSȱprogramme.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 30 Summary Agency Responses FaCSIA 74. Assuranceȱ onȱ theȱ accuracyȱ ofȱ paymentsȱ madeȱ onȱ FaCSIA’sȱ behalfȱ byȱ Centrelinkȱisȱanȱimportantȱissue.ȱWeȱwelcomeȱtheȱANAO’sȱrecommendationsȱ asȱ theyȱ willȱ enhanceȱ FaCSIA’sȱ reportingȱ ofȱ RSSȱ dataȱ andȱ strengthenȱ theȱ governanceȱandȱmanagementȱofȱtheȱRSSȱprogramme.ȱFaCSIAȱagreesȱwithȱtheȱ recommendationsȱcontainedȱinȱtheȱreport.ȱ DEWR 75. Theȱ Departmentȱ ofȱ Employmentȱ andȱ Workplaceȱ Relationsȱ (DEWR)ȱ recognisesȱ theȱ importantȱ roleȱ ofȱ theȱ Randomȱ Sampleȱ Surveyȱ inȱ providingȱ assuranceȱ onȱ theȱ accuracyȱ ofȱ outlays,ȱ andȱ inȱ enablingȱ improvementsȱ toȱ paymentȱ accuracy,ȱ includingȱ measurementȱ ofȱ transactionalȱ error.ȱ Theȱ commitmentȱtoȱthisȱmeasureȱisȱreflectedȱinȱtheȱrecentȱbudgetȱannouncementȱtoȱ extendȱ Randomȱ Sampleȱ Surveysȱ forȱ allȱ workingȱ ageȱ paymentsȱ forȱ aȱ furtherȱ fourȱ years.ȱ DEWRȱ supportȱ theȱ ANAOȱ auditȱ findingsȱ andȱ agreesȱ withȱ theȱ recommendations.ȱ DEST 76. TheȱDepartmentȱofȱEducation,ȱScienceȱandȱTrainingȱ(DEST)ȱagreesȱwithȱ theȱ auditȱ report’sȱ overallȱ findingsȱ andȱ supportsȱ itsȱ recommendations.ȱ Theȱ implementationȱ ofȱ theȱ recommendationsȱ willȱ enhanceȱ theȱ governanceȱ andȱ operationȱ ofȱ theȱ Randomȱ Sampleȱ Surveyȱ (RSS)ȱ Programmeȱ andȱ DEST’sȱ reportingȱofȱtheȱRSSȱdata.ȱ Centrelink 77. Centrelinkȱwelcomesȱthisȱreportȱ andȱ considersȱ thatȱ implementationȱofȱ itsȱ recommendationsȱ willȱ enhanceȱ administrationȱ ofȱ theȱ randomȱ sampleȱ surveyȱ andȱ reportingȱ ofȱ itsȱ dataȱ andȱ theȱ correctnessȱ ofȱ Centrelink’sȱ decisionȱ making.ȱCentrelinkȱagreesȱwithȱtheȱrecommendationsȱinȱtheȱreport.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 31 Recommendations ȱ Use and Reporting of RSS data Recommendation No.1 Para 3.137 Theȱ ANAOȱ recommendsȱ thatȱ Centrelinkȱ makeȱ transparent,ȱ inȱ itsȱ Annualȱ Reportȱ andȱ anyȱ otherȱ documentsȱ whereȱ theȱ agencyȱ reportsȱ onȱ itsȱ levelȱ ofȱ paymentȱ correctness,ȱ howȱ theȱ paymentȱ correctnessȱ figureȱ isȱ derivedȱ andȱ inȱ particularȱ thatȱ theȱ figureȱ reportedȱ relatesȱ onlyȱ toȱ Centrelinkȱ administrativeȱ errorȱ identifiedȱ byȱ theȱ RSSȱ andȱ doesȱ notȱ includeȱ errorȱ identifiedȱinȱtheȱRSSȱbutȱattributedȱtoȱcustomerȱactionȱorȱ inaction.ȱ Centrelinkȱresponse:ȱAgreed.ȱȱ Recommendation No.2 Para 3.142 TheȱANAOȱrecommendsȱthatȱwhenȱreportingȱdataȱfromȱ theȱ RSS,ȱ Centrelink,ȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ ensureȱ that:ȱ (a) theȱ sourceȱ andȱ limitationsȱ ofȱ theȱ dataȱ areȱ transparent,ȱ toȱ enableȱ readersȱ toȱ properlyȱ interpretȱ theȱ dataȱ andȱ haveȱ confidenceȱ inȱ theȱ results;ȱandȱ (b) statisticsȱ indicatingȱ theȱ proportionȱ ofȱ customersȱ correctlyȱ paidȱ areȱ clearlyȱ distinguishedȱ fromȱ statisticsȱ indicatingȱ theȱ netȱ effectȱ ofȱ incorrectȱ paymentsȱonȱgovernmentȱoutlays.ȱ Agencyȱ responses:ȱ Allȱ fourȱ agenciesȱ agreedȱ withȱ theȱ recommendation.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 32 Recommendations Recommendation No.3 Para 4.27 Theȱ ANAOȱ recommendsȱ that,ȱ followingȱ reviewȱ andȱ complianceȱ activities,ȱ Centrelinkȱ aggregatesȱ andȱ analysesȱinformationȱregardingȱtheȱreasonsȱidentifiedȱforȱ paymentȱ incorrectnessȱ toȱ enableȱ robustȱ review,ȱ byȱ bothȱ Centrelinkȱ andȱ theȱ purchaserȱ departments,ȱ ofȱ theȱ dataȱ collectedȱthroughȱtheseȱactivities.ȱ Centrelinkȱresponse:ȱAgreed.ȱ Recommendation No.4 Para 4.52 Theȱ ANAOȱ recommendsȱ thatȱ Centrelink,ȱ FaCSIA,ȱ DEWRȱ andȱ DEST,ȱ whenȱ usingȱ theȱ resultsȱ ofȱ theȱ RSSȱ toȱ measureȱ theȱ effectivenessȱ ofȱ theȱ control/complianceȱ frameworkȱandȱtoȱidentifyȱanyȱemergingȱrisks,ȱtakeȱintoȱ accountȱtheȱpossibleȱskewingȱofȱdataȱdueȱtoȱunidentifiedȱ nonȬdisclosureȱbyȱcustomersȱofȱallȱtheirȱcircumstancesȱorȱ relevantȱchangesȱinȱtheirȱcircumstances.ȱ Agencyȱ responses:ȱ Allȱ fourȱ agenciesȱ agreedȱ withȱ theȱ recommendation.ȱ Operational Improvements Recommendation No.5 Para 5.15 TheȱANAOȱrecommendsȱthatȱFaCSIA,ȱDEWRȱandȱDESTȱ putȱ inȱ placeȱ proceduresȱ toȱ assureȱ themselvesȱ thatȱ Centrelink’sȱ operationȱ ofȱ theȱ RSSȱ isȱ efficient,ȱ effectiveȱ andȱconductedȱindependentlyȱwithinȱCentrelink.ȱ Agencyȱresponses:ȱFaCSIA,ȱDEWRȱandȱDESTȱallȱagreedȱ withȱtheȱrecommendation.ȱ Recommendation No.6 Para 5.31 Theȱ ANAOȱ recommendsȱ thatȱ Centrelinkȱ includeȱ informationȱ onȱ theȱ purposeȱ ofȱ theȱ RSSȱ inȱ recruitmentȱ andȱtrainingȱmaterialsȱforȱRSSȱReviewers,ȱandȱthatȱAreaȱ RSSȱstaffȱareȱprovidedȱwithȱinformationȱonȱtheȱoutcomesȱ ofȱtheȱRSS,ȱgivenȱthatȱitȱisȱtheȱfinalȱproductȱofȱtheirȱwork.ȱ Centrelinkȱresponse:ȱAgreed.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 33 Recommendation No.7 Para 5.66 Theȱ ANAOȱ recommendsȱ thatȱ Centrelink,ȱ DEWR,ȱ DESTȱ andȱFaCSIAȱreviewȱtheȱdesignȱofȱtheȱRSSȱquestionnaireȱ inȱorderȱto:ȱ (a) reduceȱtheȱcomplexityȱofȱtheȱquestionnaire;ȱ (b) improveȱ sequencingȱ throughȱ theȱ questionnaire;ȱ andȱ (c) limitȱ questionȱ repetitionȱ whenȱ usingȱ additionalȱ specialisedȱmodules.ȱȱ Agencyȱ responses:ȱ Allȱ fourȱ agenciesȱ agreedȱ withȱ theȱ recommendation.ȱ Recommendation No.8 Para 5.74 TheȱANAOȱrecommendsȱthatȱCentrelinkȱreviewȱtheȱRSSȱ Teamȱ Roomȱ database,ȱ withȱ aȱ viewȱ toȱ improvingȱ itsȱ useability,ȱ andȱ thatȱ theȱ informationȱ itȱ containsȱ isȱ bothȱ currentȱandȱrelevantȱtoȱRSSȱstaff.ȱȱ Centrelinkȱresponse:ȱAgreed.ȱ Recommendation No.9 Para 5.113 TheȱANAOȱrecommendsȱthatȱCentrelink:ȱ (a) developȱandȱimplementȱnationalȱselectionȱcriteriaȱ forȱRSSȱReviewers;ȱ (b) developȱ andȱ implementȱ aȱ nationalȱ trainingȱ packageȱforȱallȱRSSȱstaff;ȱandȱ (c) ensureȱ appropriateȱ Performanceȱ Assessmentȱ proceduresȱareȱinȱplaceȱforȱallȱRSSȱReviewers.ȱ Centrelinkȱresponse:ȱAgreed.ȱ ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 34 Audit Findings and Conclusions ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 35 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 36 1. Introduction ThisȱchapterȱprovidesȱanȱoverviewȱofȱtheȱRandomȱSampleȱSurveyȱ(RSS)ȱProgramme,ȱ includingȱtheȱroleȱ ofȱtheȱRSSȱProgrammeȱasȱsetȱoutȱinȱrelevantȱ department’sȱannualȱ reportsȱ andȱ inȱ relevantȱ Portfolioȱ Budgetȱ Statementsȱ forȱ theȱ Familyȱ andȱ Communityȱ ServicesȱPortfolioȱ(FaCSȱPBS);ȱandȱtheȱapproachȱtoȱtheȱaudit.ȱ Background 1.1 Inȱ 2004–05,ȱ Centrelinkȱ wasȱ responsibleȱ forȱ theȱ administrationȱ ofȱ moreȱ thanȱ$63ȱbillionȱinȱprogrammeȱpayments36ȱdeliveredȱonȱbehalfȱofȱ25ȱpurchaserȱ departments.37ȱ Theȱ vastȱ majorityȱ ofȱ theseȱ outlaysȱ onȱ programmeȱ paymentsȱ (someȱ95ȱperȱcent)ȱrelateȱtoȱthreeȱkeyȱpurchaserȱdepartments,ȱtheȱDepartmentȱ ofȱ Families,ȱ Communityȱ Servicesȱ andȱ Indigenousȱ Affairsȱ (FaCSIA)38,ȱ theȱ Departmentȱ ofȱ Employmentȱ andȱ Workplaceȱ Relationsȱ (DEWR)ȱ andȱ theȱ DepartmentȱofȱEducation,ȱScienceȱandȱTrainingȱ(DEST).ȱ 1.2 Aȱ keyȱ elementȱ ofȱ theȱ strategyȱ usedȱ byȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ toȱ assureȱ theȱ integrityȱ ofȱ theȱ significantȱ Australianȱ Governmentȱ outlaysȱ onȱ theȱ variousȱ Centrelinkȱ paymentsȱ forȱ whichȱ theyȱ areȱ respectivelyȱ responsible39,ȱ isȱ theȱRandomȱSampleȱSurveyȱProgramme.ȱTheȱRandomȱSampleȱSurveyȱ(RSS)ȱisȱ aȱ pointȬinȬtimeȱ analysisȱ ofȱ sampledȱ customers’ȱ circumstances,ȱ designedȱ toȱ establishȱwhetherȱcustomersȱareȱbeingȱcorrectlyȱpaid.40ȱ 1.3 Forȱtheȱfinancialȱyearȱ2004–05,ȱFaCSIAȱreportedȱaccuracyȱofȱoutlaysȱasȱ 97.9ȱperȱcent41ȱforȱthoseȱmajorȱsocialȱsecurityȱpaymentsȱmadeȱbyȱCentrelinkȱonȱ 36 Centrelink, Annual Report 2004–05, p. 5. 37 ibid., p.11. 38 Until 24 January 2006, this department was known as the Department of Family and Community Services (FaCS). However, following changes announced by the Prime Minister on that day the Office of Indigenous Policy Coordination will become part of a new Families, Community Services and Indigenous Affairs Portfolio and the department is now known as FaCSIA. For simplicity, the department’s new name is used throughout this report except where documents produced by the department under its former name are quoted. 39 Until October 2004, the former Department of Family and Community Services was responsible for all of the programme payments covered by the RSS Programme. Following major machinery of government (MoG) changes that occurred at that time, DEWR and DEST now each are responsible for some of these programme payments. See paragraphs 1.5 and 1.6 for further information. 40 Department of Family and Community Services, Annual Report 2004–05, p. 277. Random Sample Surveys form part of Stage One of the Business Assurance Framework (BAF), assuring the correctness and accuracy of social security outlays. The BAF is the reporting mechanism designed to provide an integrated and comprehensive set of assurances about Centrelink’s performances. 41 FaCS inaccuracy Table 2004–05, provided to the ANAO on 1 September 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 37 behalfȱ ofȱ FaCSIA.42ȱ DEWRȱ advisedȱ theȱ ANAOȱ onȱ 9ȱ Decemberȱ 2005ȱ thatȱ itsȱ assessmentȱ ofȱ theȱ resultsȱ ofȱ theȱ RSSȱ betweenȱ 1ȱ Julyȱ 2004ȱ andȱ 31ȱ Marchȱ 2005ȱ showȱthatȱtheȱ averageȱinaccuracyȱ rateȱ forȱ workingȱageȱ paymentsȱ wasȱ 4.2ȱ perȱ cent.ȱThisȱequatesȱtoȱ95.8ȱperȱcentȱofȱoutlaysȱbeingȱaccurate.ȱ Centrelinkȱ currentlyȱ runsȱ theȱ RSSȱ onȱ behalfȱ ofȱ theȱ threeȱ purchaserȱ 1.4 departments.43ȱAgenciesȱadvisedȱtheȱANAOȱthat,ȱtoȱdate,ȱtheȱRSSȱProgrammeȱ costsȱinȱtotalȱsomeȱ$4.5ȱmillionȱaȱyearȱtoȱconduct.44ȱ October 2004 Machinery of Government changes 1.5 Onȱ 22ȱ Octoberȱ 2004,ȱ theȱ Primeȱ Ministerȱ announcedȱ machineryȱ ofȱ governmentȱ(MoG)ȱchangesȱaffecting,ȱamongȱotherȱthings,ȱtheȱadministrationȱ ofȱ policyȱ relatingȱ toȱ incomeȱ supportȱ paymentsȱ andȱ relatedȱ programmes.ȱ Previously,ȱ Centrelinkȱ wasȱ locatedȱ inȱ theȱ Familyȱ andȱ Communityȱ Servicesȱ Portfolioȱ and,ȱ whileȱ itȱ hadȱ agreementsȱ inȱ placeȱ withȱ otherȱ agenciesȱ suchȱ asȱ DEWRȱandȱDESTȱforȱtheȱdeliveryȱofȱsomeȱservices,ȱtheȱoverwhelmingȱbulkȱofȱ Centrelink’sȱ activitiesȱ relatedȱ toȱ itsȱ deliveryȱ ofȱ servicesȱ onȱ behalfȱ ofȱ theȱ thenȱ DepartmentȱofȱFamilyȱandȱCommunityȱServices.ȱ 1.6 AsȱaȱresultȱofȱtheȱchangesȱannouncedȱbyȱtheȱPrimeȱMinister,ȱCentrelinkȱ isȱnowȱanȱagencyȱofȱtheȱDepartmentȱofȱHumanȱServicesȱwithinȱtheȱFinanceȱandȱ Administrationȱ Portfolio.ȱ Inȱ addition,ȱ DEWRȱ nowȱ hasȱ policyȱ responsibility,ȱ andȱ accountabilityȱ forȱ expenditure,ȱ forȱ theȱ deliveryȱ ofȱ workingȱ ageȱ incomeȱ supportȱpaymentsȱ(majorȱworkingȱageȱpaymentsȱincludeȱNewstart,ȱParentingȱ Paymentȱ Partneredȱ andȱ Single,ȱ Youthȱ Allowanceȱ forȱ nonȬstudents,ȱ Disabilityȱ SupportȱPensionȱandȱMatureȱAgeȱAllowance).ȱDEST,ȱsimilarly,ȱnowȱhasȱpolicyȱ responsibility,ȱ andȱ accountabilityȱ forȱ expenditure,ȱ forȱ incomeȱ supportȱ paymentsȱforȱstudents,ȱincludingȱYouthȱAllowanceȱforȱstudents.ȱ 1.7 TheȱfollowingȱsectionȱprovidesȱanȱoverviewȱofȱtheȱRSS.ȱ Overview of the Random Sample Survey 1.8 AccordingȱtoȱtheȱFaCSȱAnnualȱReportȱ2004–05:ȱ Rollingȱrandomȱsampleȱsurveysȱprovideȱaȱkeyȱmeasureȱofȱtheȱeffectivenessȱofȱ complianceȱ andȱ otherȱ reviewȱ activity.ȱ Theȱ surveysȱ provideȱ aȱ measureȱ forȱ 42 These payments are Age Pension, Carers Payment and Child Disability Allowance. 43 The October 2004 machinery of government changes impacted on the governance of the RSS Programme. These issues are analysed in more detail in Chapter 5 (see paragraphs 5.1 to 5.14). 44 Advice contained in FaCSIA email to the ANAO dated 20 October 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 38 Introduction accuracyȱ ofȱ outlays,ȱ andȱ areȱ aȱ meansȱ toȱ facilitateȱ externalȱ assuranceȱ asȱ requiredȱunderȱtheȱbusinessȱassuranceȱframework.45ȱȱ 1.9 Theȱ RSSȱ isȱ runȱ annuallyȱ forȱ allȱ majorȱ Centrelinkȱ payments46,ȱ andȱ forȱ minorȱ paymentsȱ areȱ coveredȱ overȱ aȱ threeȬyearȱ cycle.ȱ Duringȱ 2004–05ȱ Centrelinkȱundertook,ȱonȱFaCSIA’sȱbehalf,ȱtheȱRSSȱreviewsȱofȱ2ȱ200ȱrandomlyȱ selectedȱcustomersȱreceivingȱbenefits,ȱincludingȱtheȱAgeȱPensionȱ(1ȱ500),ȱCarerȱ Paymentȱ(350)ȱandȱCarerȱAllowanceȱ(350).ȱȱ 1.10 Duringȱ 2004–05,ȱ Centrelinkȱ undertook,ȱ onȱ DEWR’sȱ behalf,ȱ theȱ RSSȱ ofȱ 6ȱ350ȱ paymentȱ recipientsȱ including,ȱ Parentingȱ Paymentȱ Partneredȱ (1ȱ500),ȱ ParentingȱPaymentȱSingleȱ(1ȱ500),ȱDisabilityȱSupportȱPensionȱ(1ȱ500),ȱNewstartȱ Allowanceȱ (1ȱ500),ȱ andȱ Matureȱ Ageȱ Allowanceȱ (350).ȱ Inȱ addition,ȱ Centrelinkȱ undertookȱ1ȱ500ȱYouthȱAllowanceȱreviewsȱonȱbehalfȱofȱDEWRȱandȱDEST.ȱȱ 1.11 FaCSIA,ȱ andȱ moreȱ recentlyȱ DEWRȱ andȱ DEST,ȱ throughȱ Centrelink,ȱ reviewȱ customersȱ selectedȱ inȱ theȱ particularȱ RSSȱ sampleȱ toȱ ascertainȱ ifȱ theyȱ haveȱnotifiedȱCentrelinkȱofȱchangesȱtoȱtheirȱcircumstancesȱinȱaȱtimelyȱmanner,ȱ asȱ wellȱ asȱ ensuringȱ thatȱ decisionsȱ madeȱ byȱ Centrelinkȱ staffȱ inȱ relationȱ toȱ theȱ paymentȱ haveȱ beenȱ correct.ȱ Theȱ levelȱ ofȱ incorrectȱ paymentȱ isȱ determinedȱ forȱ theȱ sampleȱ byȱ identifyingȱ casesȱ withȱ eitherȱ increases,ȱ decreasesȱ orȱ cancellationsȱ toȱ fortnightlyȱ customerȱ paymentsȱ inȱ theȱ recipientȱ population.ȱ Chapterȱ2ȱprovidesȱmoreȱdetailȱonȱtheȱRSSȱprocess.ȱ Significance of the RSS Programme 1.12 Theȱ 2004–05ȱ Annualȱ Assuranceȱ Statementȱ providedȱ byȱ Centrelinkȱ toȱ FaCSIAȱplacesȱaȱgreatȱdealȱofȱimportanceȱonȱtheȱroleȱofȱRSS:ȱ Theȱ controlȱ andȱ assuranceȱ frameworkȱ usedȱ toȱ reportȱ theȱ 2004–05ȱ PCRȱ [PaymentȱCorrectnessȱReport]ȱisȱveryȱsimilarȱtoȱthatȱusedȱinȱtheȱ2003–04ȱPCR.ȱ Theȱ Rollingȱ Randomȱ Sampleȱ Surveyȱ (RRSS)ȱ resultsȱ formȱ anȱ integralȱ andȱ importantȱassuranceȱforȱfourȱofȱtheȱfiveȱRisks.47ȱ 1.13 DEWRȱ andȱ DESTȱ alsoȱ receiveȱ similarȱ Annualȱ Assuranceȱ Statementsȱ fromȱCentrelinkȱinȱrespectȱofȱthoseȱpaymentsȱthatȱCentrelinkȱdeliversȱonȱtheirȱ behalf.ȱ Theȱ extentȱ ofȱ relianceȱ thatȱ theȱ purchaserȱ departmentsȱ andȱ Centrelinkȱ placeȱ onȱ theȱ dataȱ generatedȱ byȱ theȱ RSSȱ Programme,ȱ andȱ containedȱ inȱ theȱ 45 FaCS, Annual Report 2004–05, Vol. 2, p. 277. 46 Major payments are Age Pension, Youth Allowance, Parenting Payment (Single and Partnered), Disability Support Pension, and Newstart Allowance. 47 Department of Family and Community Services, Risk and Assessment Audit Committee Meeting, Agenda Item 3: Centrelink Assurance Statement, 2 August 2005, p. 1. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 39 annualȱ Paymentȱ Correctnessȱ Reportsȱ Centrelinkȱ providesȱ toȱ eachȱ ofȱ theȱ purchaserȱdepartments,ȱisȱillustratedȱbelowȱinȱFigureȱ1.1.ȱ Figure 1.1 Risks and the relevant assurance as set out in Centrelink’s 2004–05 Payment Correctness Reports to the purchaser departmentsA Risk 1. Centrelink incorrectly assess customer eligibility for income support 2. Centrelink makes incorrect decisions about customers payment rate 3. Systems pay customer incorrectly Assurance Rolling Random Sample Reviews Assurance also from Centrelink’s Internal Audit, and Risk Reviews Rolling Random Sample Reviews Assurance also from Centrelink’s Internal Audit, and Risk Reviews Rolling Random Sample Reviews Assurance also provided by Systems Security and Centrelink Internal Audit Centrelink’s Chief Financial Officer 4. Systems are not available to pay customers Mainframe Disaster Recovery tests Disaster Recovery Plans Data Security RefreshB 5. Customers are not providing the correct information either at claim or when circumstances change Rolling Random Sample Reviews Notes: A) The same risks and assurance are set out in each of the Payment Correctness Reports Centrelink provided to the three purchaser departments. B) ‘Refresh’ refers to the IT Refresh group of projects currently underway in Centrelink that aim to improve and modernise the current systems used within Centrelink to meet the demands of modern Government policy and service delivery. IT Refresh is a Government-funded initiative for which $364.9 million in funding was approved in the 2003–04 Budget. Sources: Centrelink/FaCS Payment Correctness Report 2004–05, Centrelink/DEWR Payment Correctness Report 2004–05, Centrelink/DEST Payment Correctness Report 2004–05. 1.14 TheȱsignificanceȱofȱtheȱRSSȱdataȱwasȱfurtherȱemphasisedȱbyȱDEWRȱinȱ commentsȱ theȱ agencyȱ providedȱ toȱ theȱ ANAOȱ inȱ Decemberȱ 2005.ȱ DEWRȱ advisedȱ thatȱ theȱ RSSȱ providesȱ importantȱ informationȱ forȱ theȱ agencies,ȱ notȱ readilyȱobtainedȱbyȱalternativeȱmeansȱandȱcommentedȱthat:ȱȱ Itȱ isȱ importantȱ thatȱ thereȱ areȱ robustȱ estimates,ȱ withȱ identifiedȱ limitations,ȱ toȱ theȱ extentȱ necessary,ȱ ofȱ theȱ levelȱ ofȱ outlayȱ accuracyȱ andȱ howȱ thatȱ levelȱ isȱ changingȱoverȱtime.ȱ 1.15 CommentsȱprovidedȱtoȱtheȱANAOȱonȱ7ȱDecemberȱ2005ȱbyȱFaCSIAȱalsoȱ emphasiseȱtheȱimportanceȱofȱtheȱRSSȱProgramme:ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 40 Introduction TheȱRSSȱsamplesȱcustomersȱacrossȱtheȱmajorȱincomeȱsupportȱprogrammesȱforȱ FaCS[IA],ȱ DEWRȱ andȱ DEST.ȱ Asȱ aȱ result,ȱ theȱ dataȱ fromȱ theȱ RSSȱ isȱ moreȱ representativeȱthanȱdataȱfromȱreviewsȱwhichȱareȱtargetedȱatȱspecificȱrisks.ȱ How the RSS is different to other Centrelink review activity 1.16 Underȱ Socialȱ Securityȱ Law48,ȱ customersȱ areȱ requiredȱ toȱ discloseȱ toȱ Centrelinkȱ informationȱ aboutȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstancesȱthatȱaffectȱtheirȱentitlement.ȱHowever,ȱthereȱareȱrisksȱassociatedȱ withȱ aȱ relianceȱ onȱ disclosureȱ byȱ customersȱ becauseȱ individualsȱ canȱ failȱ toȱ reportȱrelevantȱchangesȱwhenȱtheyȱoccurȱeitherȱthroughȱlackȱofȱunderstandingȱ ofȱtheirȱobligations,ȱomissions,ȱmistakes,ȱorȱdeliberatelyȱmisrepresentingȱtheirȱ circumstances.ȱ Centrelinkȱ usesȱ powersȱ underȱ theȱ Socialȱ Securityȱ (Administration)ȱActȱ1999ȱtoȱcompelȱrandomlyȱselectedȱcustomersȱtoȱparticipateȱ inȱaȱRSSȱreview,ȱandȱtoȱprovideȱinformationȱonȱtheirȱcircumstances.49ȱȱ 1.17 Centrelinkȱ hasȱ aȱ riskȱ managementȱ strategyȱ toȱ minimiseȱ theȱ potentialȱ forȱincorrectȱpaymentsȱbyȱinvolvingȱcustomersȱinȱaȱvarietyȱofȱreviewȱprocesses.ȱ Theȱ riskȱ managementȱ strategyȱ focusesȱ onȱ threeȱ objectives––prevention,ȱ detectionȱandȱdeterrence.50ȱ 1.18 InȱadditionȱtoȱtheȱRSS,ȱCentrelinkȱalsoȱundertakesȱaȱbroaderȱassuranceȱ programmeȱ asȱ partȱ ofȱ itsȱ controlȱ framework.ȱ Thisȱ programmeȱ includesȱ aȱ numberȱofȱpreventionȱandȱreviewȱactivitiesȱincludingȱdataȱmatchingȱandȱotherȱ riskȱ reviews.ȱ Theȱ otherȱ reviewȱ activitiesȱ areȱ targetedȱ towardsȱ specificȱ customers,ȱ whereasȱ theȱ RSSȱ Programmeȱ isȱ sampledȱ acrossȱ theȱ entireȱ Centrelinkȱ customerȱ populationȱ forȱ aȱ particularȱ payment.51ȱ Theseȱ otherȱ preventionȱandȱreviewȱactivitiesȱareȱdetailedȱinȱAppendixȱ1.ȱ 48 The Social Security Law comprises the Social Security Act 1991, the Social Security (Administration) Act 1999 and the Social Security (International Agreements) Act 1999. 49 Social Security (Administration) Act 1999, in particular section 63 and section 192. 50 The Business Partnership Agreement 2001–04 between FaCS (as it was then) and Centrelink defines these as: 51 x Prevention—having systems and procedures in place to minimise the risk of incorrect payment occurring. x Detection—having processes aimed at detecting incorrect payments as soon as possible and promptly correcting any incorrect payments that have occurred. x Deterrence—promoting voluntary compliance through creating a public recognition of the risks and penalties involved in attempting to defraud Centrelink, including the likelihood of detection, recovery of debts and possible prosecution. A range of customers are excluded from selection in the RSS, including those who are currently being reviewed in another Centrelink process and those who reside in remote areas. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 41 Previous ANAO Audits 1.19 Previousȱ auditsȱ conductedȱ byȱ theȱ ANAOȱ haveȱ examinedȱ variousȱ aspectsȱofȱtheȱRSSȱProgramme.ȱTheȱ2002–03ȱperformanceȱauditȱofȱtheȱParentingȱ PaymentȱSingleȱProgramȱsoughtȱtoȱexamine:ȱ theȱ effectivenessȱ ofȱ FaCS’ȱ methodologyȱ forȱ estimatingȱ theȱ levelsȱ ofȱ riskȱ ofȱ incorrectȱ paymentȱ toȱ PPSȱ customersȱ andȱ theȱ impactȱ ofȱ theseȱ incorrectȱ paymentsȱ onȱ theȱ integrityȱ ofȱ programȱ outlays,ȱ asȱ measuredȱ throughȱ theȱȱ 2001–02ȱRSSȱofȱtheȱParentingȱPaymentȱSingleȱpayment.52ȱ 1.20 ANAOȱ Auditȱ Reportȱ No.17ȱ 2002–03ȱ Ageȱ Pensionȱ Entitlements,ȱ examined:ȱ whetherȱ theȱ sourceȱ ofȱ errorȱ wasȱ correctlyȱ attributedȱ inȱ customerȱ recordsȱ assessedȱ byȱ FaCSȱ andȱ Centrelinkȱ asȱ containingȱ anȱ errorȱ inȱ theȱ 2000–01ȱ Ageȱ PensionȱRSS.53ȱ 1.21 TheȱANAOȱAuditȱonȱtheȱParentingȱPaymentȱSingleȱProgramȱfound:ȱ‘thatȱ theȱ RSSȱ methodologyȱ wasȱ incompleteȱ andȱ thatȱ thereȱ wereȱ problemsȱ withȱ itsȱ implementation’.54ȱ Theȱ ANAOȱ Auditȱ onȱ Ageȱ Pensionȱ Entitlementsȱ recommendedȱ that:ȱ ‘Inȱ orderȱ toȱ ensureȱ theȱ reliabilityȱ ofȱ performanceȱ informationȱ obtainedȱ throughȱ theȱ Randomȱ Sampleȱ Surveyȱ ...ȱ bothȱ FaCSȱ andȱ Centrelinkȱ strengthenȱ theirȱ qualityȱ assuranceȱ checksȱ onȱ theȱ attributionȱ ofȱ errorsȱidentifiedȱthroughȱtheȱSurveys’.55ȱ 1.22 Whileȱ previousȱ auditsȱ haveȱ examinedȱ theȱ RSS,ȱ inȱ particularȱ theȱ estimationȱ methodology56,ȱ theȱ currentȱ auditȱ lookedȱ atȱ theȱ RSSȱ moreȱ broadly.ȱ Theȱfollowingȱsectionsȱprovideȱmoreȱdetailȱonȱ theȱscopeȱandȱmethodologyȱofȱ thisȱaudit.ȱ Audit approach 1.23 Theȱ overallȱ objectiveȱ ofȱ theȱ auditȱ wasȱ toȱ assessȱ whetherȱ theȱ RSSȱ Programmeȱ isȱ effectiveȱ andȱ efficientȱ inȱ providingȱ assuranceȱ onȱ theȱ levelsȱ ofȱ paymentȱ errorȱ andȱ theȱ resultantȱ risksȱ toȱ theȱ integrityȱ ofȱ Australianȱ GovernmentȱoutlaysȱforȱpaymentsȱadministeredȱbyȱCentrelink.ȱ 52 ANAO Audit Report No.44 2002–03, op. cit., p. 15. 53 ANAO Audit Report No.17 2002–03, op. cit., p. 15. 54 ANAO Audit Report No.44 2002–03, op. cit., pp. 21–22. 55 ANAO Audit Report No.17 2002–03, op. cit., p. 24. 56 That is, the methodology used to estimate the accuracy of outlays using the estimate of error identified in the RSS. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 42 Introduction 1.24 Specifically,ȱtheȱauditȱassessedȱwhether:ȱ x theȱRSSȱProgrammeȱmeetsȱtheȱobjectivesȱoutlinedȱforȱitȱinȱtheȱPortfolioȱ BudgetȱStatement(s)ȱunderȱwhichȱfundingȱwasȱprovided;ȱ x thereȱisȱanȱadequateȱmethodologyȱunderpinningȱtheȱRSSȱreviews;ȱ x theȱRSSȱreviewsȱareȱconductedȱeffectivelyȱandȱefficiently,ȱandȱadequateȱ qualityȱassuranceȱmechanismsȱexistȱtoȱassureȱtheȱresultsȱobtainedȱfromȱ theȱRSSȱreviews;ȱandȱ x reportingȱ byȱ theȱ agenciesȱ ofȱ theȱ resultsȱ ofȱ theȱ RSSȱ Programmeȱ isȱ adequateȱ andȱ takesȱ intoȱ considerationȱ theȱ issuesȱ identifiedȱ inȱ Auditȱ Reportȱ No.ȱ 44ȱ 2002–03ȱ Reviewȱ ofȱ theȱ Parentingȱ Paymentȱ Singleȱ Program,ȱ andȱAuditȱReportȱNo.ȱ17ȱ2002–03ȱAgeȱPensionȱEntitlements.ȱ 1.25 Originally,ȱ theȱ auditȱ approachȱ wasȱ intendedȱ toȱ haveȱ aȱ widerȱ scope.ȱ Thatȱis,ȱtheȱauditȱteamȱplannedȱtoȱassessȱwhetherȱtheȱestimationȱmethodologyȱ (usedȱ byȱ agenciesȱ toȱ calculate,ȱ fromȱ theȱ resultsȱ ofȱ theȱ RSS,ȱ anȱ estimateȱ ofȱ theȱ accuracyȱ ofȱ outlays)ȱ operatedȱ effectivelyȱ andȱ efficientlyȱ andȱ theȱ resultantȱ estimateȱ ofȱ theȱ levelȱ ofȱ paymentȱ errorȱ wasȱ robust.ȱ Theȱ needȱ toȱ examineȱ theȱ estimationȱ methodologyȱ wasȱ identified,ȱ inȱ part,ȱ dueȱ toȱ findingsȱ inȱ Auditȱ ReportȱNo.ȱ44ȱ2002–03ȱReviewȱofȱtheȱParentingȱPaymentȱSingleȱProgram,ȱrelatedȱtoȱ theȱuseȱofȱtheȱsoȱcalledȱ‘residual’ȱmethodology.57ȱ 1.26 Atȱtheȱstartȱofȱtheȱaudit,ȱFaCSIAȱadvisedȱitȱdidȱnotȱintendȱtoȱreportȱinȱ futureȱ onȱ theȱ levelȱ ofȱ paymentȱ accuracyȱ usingȱ theȱ residualȱ methodology.ȱ Instead,ȱ itȱ wouldȱ reportȱ theȱ ‘raw’ȱ levelȱ ofȱ accuracy.ȱ Thatȱ is,ȱ theȱ levelȱ ofȱ accuracyȱ estimatedȱ byȱ usingȱ theȱ RSSȱ errorȱ estimate,ȱ withȱ noȱ furtherȱ manipulationȱofȱtheȱdataȱtoȱtakeȱaccountȱofȱCentrelink’sȱcomplianceȱactivities.ȱ Inȱ addition,ȱ duringȱ theȱ audit,ȱ theȱ ANAO’sȱ auditȱ fieldworkȱ andȱ analysisȱ establishedȱ thatȱ theȱ rawȱ RSSȱ dataȱ isȱ affectedȱ byȱ anȱ unknownȱ levelȱ ofȱ nonȬ disclosureȱbyȱparticipatingȱcustomersȱ(seeȱChapterȱ3ȱforȱmoreȱdetail)ȱasȱwellȱasȱ aȱnumberȱofȱoperationalȱissues.ȱȱ 1.27 Accordingly,ȱ givenȱ theȱ discontinuanceȱ ofȱ theȱ useȱ ofȱ theȱ residualȱ methodologyȱ byȱ FaCSIA,ȱ coupledȱ withȱ theȱ identificationȱ ofȱ issuesȱ relatingȱ toȱ theȱ qualityȱ ofȱ theȱ rawȱ RSSȱ data,ȱ theȱ ANAOȱ reȬscopedȱ theȱ auditȱ andȱ didȱ notȱ pursueȱtheȱestimationȱmethodology.ȱ 57 The RSS methodology estimated controlled and residual levels of incorrectness and was based on a series of assumptions, designed to simulate the workings of specific elements of the existing control framework. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 43 1.28 Subsequently,ȱDEWRȱreportedȱinȱitsȱ2004–05ȱAnnualȱReportȱusingȱtheȱ residualȱ methodology.ȱ However,ȱ theȱ ANAOȱ notesȱ theȱ adviceȱ fromȱ DEWRȱ discussedȱfurtherȱinȱparagraphȱ1.30ȱconcerningȱdevelopmentȱofȱaȱreplacementȱ programme.ȱ 1.29 Allȱ fourȱ agenciesȱ involvedȱ inȱ theȱ RSSȱ Programmeȱ alsoȱ haveȱ otherȱ paymentȱ assuranceȱ mechanisms.58ȱ However,ȱ theȱ scopeȱ ofȱ theȱ auditȱ didȱ notȱ extendȱ toȱ theseȱ mechanisms,ȱ otherȱ thanȱ toȱ noteȱ andȱ acknowledgeȱ theseȱ mechanismsȱasȱpartȱofȱtheȱcontextȱinȱwhichȱtheȱRSSȱProgrammeȱoperates.ȱ 1.30 Atȱ theȱ timeȱ ofȱ theȱ audit,ȱ aȱ replacementȱ programmeȱ forȱ theȱ RSSȱ Programmeȱ wasȱ beingȱ developedȱ byȱ DEWRȱ andȱ DEST.ȱ DEWRȱ informedȱ theȱ ANAOȱonȱ16ȱDecemberȱ2005ȱthat:ȱ Atȱtheȱsameȱtimeȱasȱtheȱfieldworkȱwasȱconductedȱforȱthisȱaudit,ȱaȱreviewȱofȱtheȱ lapsingȱRSSȱbudgetȱmeasureȱwasȱundertaken,ȱledȱbyȱDEWR.ȱThisȱreviewȱwasȱ completedȱ inȱ Octoberȱ andȱ hasȱ informedȱ thinkingȱ inȱ DEWRȱ andȱ DESTȱ aboutȱ arrangementsȱ thatȱ mightȱ applyȱ fromȱ 1ȱ Julyȱ 2006.ȱ Theseȱ mattersȱ areȱ beingȱ considered.ȱȱ 1.31 Inȱ addition,ȱ commentsȱ providedȱ byȱ FaCSIAȱ toȱ theȱ ANAOȱ onȱ 7ȱDecemberȱ2005ȱstatedȱthat:ȱȱ Atȱtheȱtimeȱofȱtheȱaudit,ȱFaCSȱwas,ȱandȱstillȱis,ȱdevelopingȱaȱnewȱapproachȱtoȱ assuranceȱ thatȱ acknowledgesȱ theȱ limitationsȱ ofȱ theȱ RSSȱ dataȱ andȱ placesȱ anȱ increasedȱemphasisȱonȱaȱbroaderȱrangeȱofȱassuranceȱmechanisms.ȱ 1.32 TheȱANAOȱconductedȱtheȱfieldworkȱforȱtheȱauditȱandȱmadeȱtheȱauditȱ findingsȱinȱthisȱcontext.ȱȱ 1.33 Theȱ ANAOȱ notesȱ thatȱ DEWRȱ andȱ DESTȱ bothȱ receivedȱ additionalȱ fundingȱ toȱ expandȱ theȱ RSSȱ programme,ȱ underȱ aȱ fraudȱ andȱ complianceȱ measureȱinȱtheȱ2006–07ȱBudget.ȱȱ Audit methodology 1.34 Fieldworkȱ forȱ thisȱ auditȱ wasȱ primarilyȱ conductedȱ betweenȱ Juneȱ andȱ Octoberȱ2005.ȱTheȱmethodologyȱforȱtheȱauditȱincluded:ȱȱ x examiningȱ theȱ extentȱ toȱ whichȱ theȱ RSSȱ hasȱ metȱ theȱ PBSȱ fundingȱ objectivesȱforȱtheȱProgramme;ȱ x examiningȱtheȱoperationȱofȱtheȱRSSȱreviewsȱbyȱCentrelink;ȱ 58 For example compliance and review activity. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 44 Introduction x assessingȱtheȱqualityȱassuranceȱmechanismsȱusedȱbyȱCentrelinkȱandȱtheȱ purchaserȱdepartments;ȱ x assessingȱtheȱeffectivenessȱofȱtheȱreportingȱofȱtheȱresultsȱofȱtheȱRSSȱandȱ theȱconsequentȱassessedȱlevelȱofȱpaymentȱaccuracy;ȱȱ x assessingȱ theȱ governanceȱ ofȱ theȱ RSSȱ betweenȱ Centrelinkȱ andȱ theȱ purchaserȱdepartments;ȱandȱ x assessingȱotherȱrelevantȱRSSȱpoliciesȱandȱprocedures.ȱ 1.35 Toȱobtainȱauditȱevidence,ȱtheȱauditȱteam:ȱ x analysedȱ keyȱ agencyȱ hardȱ andȱ softȱ copyȱ documentation,ȱ files,ȱ agencyȱ Intranetȱandȱdiscussionȱdatabases;ȱ x examinedȱCentrelink’sȱpoliciesȱandȱproceduresȱtoȱadministerȱtheȱRSS;ȱ x interviewedȱ RSSȱ teamsȱ (responsibleȱ forȱ theȱ operationȱ ofȱ theȱ RSSȱ reviews)ȱusingȱaȱstandardȱquestionnaireȱforȱconsistency.ȱTheȱinterviewsȱ wereȱconductedȱinȱNationalȱSupportȱOfficeȱ(NSO)ȱandȱinȱfourȱofȱtheȱ15ȱ CentrelinkȱAreas;ȱ x interviewedȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ staffȱ responsibleȱ forȱ RSSȱ oversight,ȱmonitoringȱandȱcoordinationȱwithȱCentrelink;ȱandȱȱ x conductedȱgeneralȱresearchȱintoȱtheȱadministrationȱandȱreportingȱofȱtheȱ RSSȱandȱtheȱlevelȱofȱpaymentȱaccuracy.ȱ Structure of the report 1.36 Thisȱ reportȱ containsȱ fiveȱ chapters.ȱ Chapterȱ 2ȱ providesȱ anȱ overviewȱ ofȱ theȱ RSSȱ process.ȱ Chaptersȱ 3ȱ andȱ 4ȱ examineȱ theȱ extentȱ toȱ whichȱ theȱ RSSȱ Programmeȱmeetsȱtheȱobjectivesȱforȱtheȱprogramme,ȱasȱsetȱoutȱinȱtheȱ variousȱ relevantȱ department’sȱ annualȱ reportsȱ andȱ Portfolioȱ Budgetȱ Statements.ȱ Chapterȱ5ȱcoversȱtheȱoperationalȱaspectsȱofȱtheȱRSSȱincludingȱtheȱgovernanceȱ ofȱ theȱ RSSȱ operations,ȱ operationalȱ issuesȱ relatingȱ toȱ customerȱ nonȬdisclosure,ȱ theȱ RSSȱ questionnaire,ȱ timingȱ andȱ resourceȱ issuesȱ inȱ conductingȱ RSSȱ interviews,ȱtheȱqualityȱofȱRSSȱinterviews,ȱandȱqualityȱassuranceȱissues.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 45 2. The RSS process Thisȱ chapterȱ discussesȱ theȱ RSSȱ processȱ includingȱ theȱ sample,ȱ theȱ reviewȱ andȱ qualityȱ assuranceȱprocedures.ȱ Background 2.1 Theȱ purchaserȱ departmentsȱ useȱ theȱ RSSȱ Programmeȱ primarilyȱ toȱ measureȱ theȱ levelȱ ofȱ accuracyȱ ofȱ outlaysȱ onȱ incomeȱ supportȱ paymentsȱ deliveredȱ byȱ Centrelink.ȱ Otherȱ purposesȱ forȱ whichȱ theȱ departmentsȱ useȱ theȱ RSSȱ Programmeȱ areȱ toȱ provideȱ aȱ measureȱ ofȱ theȱ effectivenessȱ ofȱ complianceȱ andȱ otherȱ reviewȱ activityȱ andȱ toȱ measureȱ theȱ levelȱ ofȱ Centrelink’sȱ administrativeȱ error,ȱ againstȱ aȱ targetȱ agreedȱ betweenȱ theȱ purchaserȱ departmentsȱ andȱ Centrelinkȱ underȱ theȱ individualȱ agencies’ȱ Businessȱ PartnershipȱAgreementsȱ(BPAs).ȱȱ 2.2 Theȱ RSSȱ Programmeȱ wasȱ firstȱ mentionedȱ asȱ aȱ Budgetȱ measureȱ inȱ theȱ 1999–2000ȱ Portfolioȱ Budgetȱ Statementsȱ forȱ theȱ Familyȱ andȱ Communityȱ ServicesȱPortfolioȱ(FaCSȱPBS).ȱTheȱFaCSȱPBSȱforȱ1999–2000ȱstateȱtheȱfollowingȱ underȱtheȱheadingȱofȱ‘SurveyȱofȱtheȱLevelȱandȱReasonsȱforȱIncorrectȱPaymentsȱ forȱMajorȱIncomeȱSupportȱPayments’:ȱ ThisȱmeasureȱprovidedȱforȱtheȱentitlementȱofȱaȱrandomȱsampleȱofȱCentrelinkȱ customersȱ toȱ beȱ reviewedȱ toȱ measureȱ theȱ levelȱ ofȱ andȱ reasonsȱ forȱ incorrectȱ paymentȱ …ȱ Measurementȱ ofȱ theȱ levelȱ ofȱ andȱ reasonsȱ forȱ incorrectȱ paymentȱ willȱ contributeȱ toȱ aȱ greaterȱ appreciationȱ ofȱ theȱ extentȱ toȱ whichȱ theȱ overallȱ complianceȱstrategyȱisȱeffectiveȱandȱaȱbetterȱunderstandingȱofȱemergingȱrisksȱ whichȱareȱnotȱcurrentlyȱadequatelyȱaddressedȱinȱtheȱstrategy.59ȱȱ 2.3 Theȱ 1999–2000ȱ FaCSȱ PBSȱ detailsȱ theȱ impactȱ ofȱ theȱ Budgetȱ measureȱ asȱ follows:ȱ Dataȱgatheredȱinȱthisȱsurveyȱwillȱprovideȱmoreȱrigorousȱinformationȱonȱhowȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱ toȱ adviseȱ ofȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstances)ȱ andȱ allowȱ forȱ betterȱ targetingȱ ofȱ complianceȱ activityȱ andȱresources,ȱwithȱdownstreamȱbenefitsȱinȱcontrollingȱprogrammeȱoutlays.60ȱ 2.4 Fundingȱ forȱ theȱ RSSȱ Programmeȱ wasȱ alsoȱ providedȱ inȱ theȱ Budgetsȱ ofȱ 2001–02ȱ andȱ 2002–03.ȱ RSSȱ wereȱ undertakenȱ asȱ individualȱ Budgetȱ initiativesȱ 59 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, p. 137. 60 ibid. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 46 The RSS process andȱ wereȱ targetedȱ atȱ individualȱ payments,ȱ untilȱ theȱ rollingȱ samples61ȱ wereȱ introducedȱinȱ2002–03.ȱ 2.5 Priorȱ toȱ theȱ majorȱ MoGȱ changesȱ inȱ Octoberȱ 2004,ȱ FaCSIAȱ andȱ Centrelinkȱ enteredȱ intoȱ detailedȱ negotiationsȱ onȱ theȱ specificȱ outputsȱ requiredȱ fromȱ theȱ conductȱ ofȱ theȱ RSS.ȱ FaCSIAȱ providedȱ theȱ detailedȱ specificationsȱ forȱ theȱsampleȱselectionȱmethodology,ȱtheȱdataȱrequirementsȱandȱtheȱspecificȱtestsȱ forȱqualityȱofȱtheȱRSSȱoutput.ȱFaCSIAȱalsoȱparticipatedȱinȱtheȱdevelopmentȱofȱ theȱ reviewȱ packagesȱ usedȱ byȱ Centrelinkȱ toȱ conductȱ theȱ RSSȱ reviews.ȱ Specifications,ȱ includingȱ testsȱ toȱ assureȱ onȱ dataȱ quality,ȱ wereȱ detailedȱ inȱ aȱ projectȱplanȱsignedȱoffȱbyȱbothȱparties.ȱ 2.6 Asȱ aȱ resultȱ ofȱ theȱ Octoberȱ 2004ȱ MoGȱ changes,ȱ bothȱ DESTȱ andȱ DEWRȱ areȱ nowȱ involvedȱ inȱtheȱoperationȱ ofȱtheȱRSSȱ Programmeȱ forȱ studentȱ incomeȱ supportȱ payments,ȱ andȱ workingȱ ageȱ incomeȱ supportȱ paymentsȱ respectively.ȱ Givenȱ thatȱ theseȱ agenciesȱ haveȱ onlyȱ recentlyȱ becomeȱ involvedȱ inȱ theȱ RSSȱ Programme,ȱmuchȱofȱtheȱanalysisȱofȱthisȱreportȱfocusesȱonȱhowȱCentrelinkȱandȱ FaCSIAȱhaveȱmanagedȱandȱusedȱtheȱRSSȱProgrammeȱandȱresults.ȱ The sample 2.7 Theȱ sampleȱ designȱ involvesȱ stratifiedȱ sampling62ȱ acrossȱ theȱȱ 15ȱCentrelinkȱAreas.63ȱExclusionsȱtoȱtheȱsampleȱbothȱbeforeȱandȱafterȱsamplingȱ areȱdecidedȱonȱbyȱFaCSIA,ȱDEWR,ȱDESTȱandȱCentrelink,ȱandȱareȱmadeȱexplicitȱ inȱ theȱ projectȱ planȱ forȱ eachȱ RSSȱ undertaken.ȱ Examplesȱ ofȱ preȬsamplingȱ exclusionsȱ areȱ customersȱ whoȱ areȱ currentlyȱ involvedȱ inȱ anotherȱ Centrelinkȱ reviewȱ orȱ liveȱ inȱ aȱ remoteȱ area.ȱ PostȬsamplingȱ reasonsȱ forȱ exclusionȱ couldȱ includeȱ suchȱ eventsȱ asȱ theȱ deathȱ ofȱ aȱ customerȱ afterȱ beingȱ selectedȱ forȱ theȱ review,ȱorȱidentificationȱthatȱaȱcustomerȱhasȱhadȱanȱRSSȱreviewȱinȱtheȱpastȱ12ȱ months.ȱ Centrelinkȱ alsoȱ reportsȱ toȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ onȱ theȱ demographicȱinformationȱonȱtheȱsample.ȱȱȱ The review 2.8 Centrelinkȱ RSSȱ Reviewersȱ situatedȱ withinȱ eachȱ Areaȱ conductȱ theȱ RSSȱ reviewsȱ inȱ faceȬtoȬfaceȱ interviewsȱ withȱ selectedȱ customers.ȱ However,ȱ fileȱ 61 Rolling samples are conducted every week across 12 months of the year (excluding Christmas/New Year). The sample is provided on a quarterly basis. 62 The population is divided into subpopulations (strata) and random samples are taken of each stratum. 63 Centrelink’s Customer Service Centres (CSCs) and various services are grouped together into 15 geographical areas across Australia, each with an Area Support Office (ASO) headed by an Area Manager. These ASOs provide management, administrative and operational support for CSCs. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 47 reviewsȱareȱconductedȱinȱcasesȱ whereȱ aȱ faceȬtoȬfaceȱ interviewȱ isȱ notȱ possible,ȱ orȱ ifȱ customersȱ voluntarilyȱ cancelȱ theirȱ paymentsȱ beforeȱ theȱ interviewȱ canȱ beȱ conducted.ȱȱ 2.9 FaCSIA,ȱ DEWRȱ andȱ DEST,ȱ asȱ theȱ purchaserȱ departments,ȱ retainȱ theȱ primaryȱ responsibilityȱ forȱ theȱ RSSȱ Programme,ȱ whileȱ theȱ Complianceȱ andȱ Reviewȱ Branchȱ ofȱ Centrelinkȱ Nationalȱ Supportȱ Officeȱ (NSO)ȱ providesȱ theȱ operationalȱ managementȱ ofȱ theȱ programme.ȱ NSOȱ providesȱ fundingȱ forȱ theȱ conductȱofȱtheȱRSSȱreviewsȱtoȱeachȱAreaȱSupportȱOfficeȱ(ASO).ȱHowever,ȱtheȱ numberȱofȱRSSȱReviewersȱemployedȱinȱeachȱAreaȱandȱtheȱprocessesȱfollowedȱ forȱtheirȱselectionȱandȱtrainingȱareȱatȱeachȱASO’sȱdiscretion.ȱȱ 2.10 Centrelinkȱ RSSȱ Reviewersȱ useȱ paperȬbasedȱ reviewȱ packagesȱ toȱ collectȱ andȱ recordȱ informationȱ fromȱ customers.ȱ Informationȱ collectedȱ includesȱ customers’ȱ personalȱ circumstances,ȱ suchȱ asȱ income,ȱ assets,ȱ andȱ dependants.ȱ Reviewersȱ thenȱ completeȱ aȱ checklistȱ toȱ identifyȱ anyȱ anomaliesȱ betweenȱ theȱ informationȱprovidedȱbyȱtheȱcustomerȱduringȱtheȱRSSȱinterviewȱandȱtheȱdataȱ heldȱbyȱCentrelink.ȱȱ 2.11 Theȱ reviewȱ generallyȱ requiresȱ theȱ customersȱ toȱ provideȱ detailedȱ evidenceȱ onȱ theirȱ currentȱ circumstances.ȱ Theȱ Reviewerȱ mayȱ alsoȱ undertakeȱ thirdȱ partyȱ verificationȱ ofȱ theȱ informationȱ providedȱ byȱ theȱ customer,ȱ suchȱ asȱ checkingȱwithȱbanksȱandȱemployers.ȱȱ 2.12 Ifȱ theȱ reviewȱ uncoversȱ anȱ error,ȱ itȱ mayȱ resultȱ inȱ aȱ cancellationȱ orȱ variationȱ ofȱ theȱ customer’sȱ paymentȱ andȱ mayȱ alsoȱ resultȱ inȱ aȱ debtȱ orȱ underȱ payment.ȱȱ Results recording 2.13 Inȱ additionȱ toȱ completionȱ ofȱ theȱ paperȱ reviewȱ packagesȱ theȱ resultsȱ ofȱ theȱreviewȱareȱalsoȱrecordedȱinȱseveralȱCentrelinkȱinformationȱsystems,ȱnamelyȱ theȱ Paymentȱ System,ȱ theȱ Integratedȱ Reviewȱ System,ȱ theȱ Randomȱ Reviewȱ ResultsȱSystemȱandȱtheȱDebtȱManagementȱandȱInformationȱSystem.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 48 The RSS process Quality assurance 2.14 Qualityȱ assuranceȱ occursȱ atȱ threeȱ levelsȱ includingȱ theȱ Areaȱ andȱ NSOȱ levelsȱwithinȱCentrelinkȱandȱbyȱpaymentȱexpertsȱinȱFaCSIAȱandȱDEWR.ȱDESTȱ willȱ shortlyȱ commenceȱ conductingȱ itsȱ ownȱ qualityȱ assuranceȱ process,ȱ inȱ theȱ meantimeȱ DESTȱ hasȱ reliedȱ onȱ FaCSIAȱ toȱ conductȱ itsȱ partȱ inȱ theȱ RSSȱ process.ȱ Theȱdiagramȱbelowȱoutlinesȱtheȱprocess.ȱ Figure 2.1 The Quality Assurance Process Area Based QA Performed by RSS Coordinator or Payment Expert National Quality Assurance Performed by experts seconded from the CSC/Area office network External Validation Performed by payment experts from FaCSIA and DEWR Source: Centrelink. 2.15 Qualityȱ assuranceȱ checksȱ ofȱ 100ȱ perȱ centȱ ofȱ casesȱ areȱ undertakenȱ byȱ AreaȱRSSȱCoordinators.ȱAȱrandomȱselectionȱofȱcasesȱforȱallȱAreasȱisȱcheckedȱbyȱ NSO,ȱincludingȱcasesȱwhereȱtheȱreviewȱresultsȱinȱaȱdebt,ȱcancellation,ȱvariationȱ andȱpresentȱrateȱtoȱcontinue.ȱAsȱtheȱqualityȱassuranceȱchecksȱtakeȱplace,ȱNSOȱ providesȱongoingȱfeedbackȱtoȱtheȱAreas.ȱAȱQualityȱControlȱreportȱisȱprovidedȱ toȱAreasȱatȱtheȱendȱofȱtheȱprocess.ȱȱ 2.16 FaCSIA,ȱDEWRȱandȱnowȱDESTȱconductȱtheirȱownȱqualityȱassuranceȱonȱ copiesȱ ofȱ theȱ paperȬbasedȱ reviewȱ packagesȱ forȱ thoseȱ casesȱ whereȱ theȱ reviewȱ resultsȱ inȱ aȱ variationȱ toȱ payment;ȱ andȱ aȱ sampleȱ ofȱ casesȱ withoutȱ paymentȱ variation.ȱ DEWR’sȱ qualityȱ assuranceȱ processȱ alsoȱ includesȱ validatingȱ theȱ resultsȱ againstȱ theȱ electronicȱ paymentȱ andȱ reviewȱ systemsȱ toȱ ensureȱ thatȱ resultsȱhaveȱbeenȱrecordedȱcorrectly.ȱIssuesȱwithȱtheȱqualityȱassuranceȱprocessȱ areȱexaminedȱinȱmoreȱdetailȱinȱChapterȱ5.ȱ How agencies use the Random Sample Survey 2.17 Centrelinkȱ outlinedȱ howȱ itȱ usesȱ theȱ RSSȱ informationȱ inȱ itsȱ 2004–05ȱ AnnualȱReportȱasȱfollows:ȱȱ Toȱensureȱeffectiveȱdeliveryȱofȱgovernmentȱprograms,ȱrandomȱsampleȱsurveyȱ resultsȱareȱusedȱtoȱassureȱandȱimproveȱtheȱcorrectnessȱandȱaccuracyȱofȱsocialȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 49 securityȱ programȱ outlaysȱ andȱ areȱ theȱ primaryȱ qualityȱ assuranceȱ toolȱ forȱ theȱ BusinessȱAssuranceȱFramework.64ȱ 2.18 DEST,ȱ DEWRȱ andȱ FaCSIAȱ alsoȱ useȱ theȱ resultsȱ ofȱ theȱ RSSȱ inȱ theirȱ financialȱ statementsȱ andȱ annualȱ reports.ȱ Inȱ addition,ȱ DEWRȱ informedȱ theȱ ANAOȱ inȱ Decemberȱ 2005ȱ thatȱ theȱ RSSȱ resultȱ isȱ reportedȱ inȱ DEWR’sȱ monthlyȱ internalȱ Employmentȱ Servicesȱ Summaryȱ Report.ȱ Theȱ purchaserȱ departmentsȱ andȱCentrelinkȱalsoȱuseȱtheȱdataȱtoȱfeedȱintoȱcomplianceȱprogrammes,ȱsuchȱasȱ serviceȱprofiling.65ȱȱ 64 Centrelink, Annual Report 2004–05, p. 39. 65 Service profiling is a method of selectively targeting Centrelink services and assistance to its customers. Profiling is supported by an information technology tool that checks a customer's record for the predictors or characteristics which are relevant to the service being provided. It then determines the most appropriate pattern of actions, recognising that not all customers require the same level of service. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 50 3. Meeting the Major Objective of the RSS Programme Thisȱ chapterȱ examinesȱ theȱ extentȱ toȱ whichȱ theȱ Randomȱ Sampleȱ Surveyȱ Programmeȱ meetsȱtheȱmajorȱobjectiveȱforȱtheȱprogramme,ȱasȱsetȱoutȱinȱdepartmentalȱannualȱreportsȱ andȱtheȱvariousȱrelevantȱPortfolioȱBudgetȱStatements.ȱ Background 3.1 Centrelink’sȱ 2004–05ȱ Annualȱ Assuranceȱ Statementȱ toȱ theȱ Secretaryȱ ofȱ FaCSIAȱinȱrespectȱofȱtheȱCentrelinkȱpaymentsȱforȱwhichȱFaCSIAȱisȱresponsibleȱ statedȱthat:ȱ TheȱrollingȱRandomȱSampleȱSurveysȱcommencedȱonȱ1ȱJulyȱ2002ȱtoȱprovideȱaȱ measureȱforȱtheȱaccuracyȱofȱoutlays.ȱ 3.2 BothȱFaCSIA’sȱandȱDEWR’sȱAnnualȱReportsȱforȱ2004–05ȱstateȱthatȱtheȱ RSSȱ Programmeȱ providesȱ informationȱ onȱ theȱ accuracyȱ ofȱ outlaysȱ andȱ areȱ designedȱtoȱestablishȱwhetherȱcustomersȱareȱbeingȱcorrectlyȱpaid.66ȱTherefore,ȱ theȱRSSȱ Programmeȱ seeksȱ toȱ identifyȱincorrectȱ payments.ȱ Budgetȱfundingȱ forȱ theȱprogrammeȱreflectsȱthisȱpurpose,ȱasȱcanȱbeȱseenȱfromȱtheȱvariousȱFaCSȱPBSȱ underȱwhichȱfundingȱwasȱprovided.ȱ 3.3 Asȱ outlinedȱ inȱ Chapterȱ 1,ȱ Budgetȱ fundingȱ forȱ theȱ Randomȱ Sampleȱ SurveyȱProgrammeȱ(RSS)ȱwasȱprovidedȱinȱtheȱBudgetsȱofȱ1999–2000,ȱ2001–02,ȱ andȱ2002–03,ȱwithȱtheȱ2002–03ȱBudgetȱmeasureȱprovidingȱfundingȱforȱtheȱRSSȱ untilȱtheȱendȱofȱtheȱfinancialȱyearȱ2005–06.ȱȱ 3.4 FaCSIAȱ acquiredȱ fundingȱ inȱ theȱ 2004–05ȱ Budgetȱ forȱ theȱ continuedȱ operationȱofȱtheȱRSSȱpostȬ1ȱJulyȱ2006,ȱinȱrespectȱofȱthoseȱpaymentsȱforȱwhichȱitȱ hasȱ policyȱ responsibility.67ȱ Asȱ discussedȱ inȱ Chapterȱ 1,ȱ DEWRȱ andȱ DESTȱ undertookȱaȱreviewȱofȱtheȱRSS,ȱtheȱfindingsȱofȱwhichȱhaveȱinformedȱthinkingȱ aboutȱ newȱ arrangementsȱ (seeȱ paragraphȱ 1.30).ȱ Theȱ ANAOȱ notesȱ thatȱ DEWRȱ andȱ DESTȱ bothȱ receivedȱ additionalȱ fundingȱ toȱ expandȱ theȱ RSSȱ programme,ȱ underȱaȱfraudȱandȱcomplianceȱmeasureȱinȱtheȱ2006–07ȱBudget.ȱȱ 66 67 FaCS, Annual Report 2004–05, p. 277; and DEWR, Annual Report 2004–05, p. 39. FaCSIA’s samples for the RSS will include: x 5 000 Age Pension, 250 Carer Allowance and 750 Carer Payment customers in 2006–07; x 10 000 Rent Assistance customers in each of 2005–06 and 2006–07; and x 1 200 Family Tax Benefit recipients and 2 000 Child Care Benefit recipients in 2005–06. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 51 3.5 Theȱ objectivesȱ ofȱ theȱ RSS,ȱ asȱ articulatedȱ overȱ timeȱ inȱ relevantȱ annualȱ FaCSȱPBS,ȱareȱasȱfollow:ȱȱ x measureȱtheȱlevelȱofȱincorrectȱpayment;68ȱ x detectȱundeclaredȱchangedȱcircumstances;69ȱ x measureȱtheȱreasonsȱforȱincorrectȱpayment;70ȱȱ x provideȱ moreȱ rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱ toȱ adviseȱ ofȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstances);71ȱ x contributeȱ toȱ aȱ greaterȱ appreciationȱ ofȱ theȱ extentȱ toȱ whichȱ theȱ overallȱ complianceȱstrategyȱisȱeffectiveȱandȱaȱbetterȱunderstandingȱofȱemergingȱ risksȱnotȱcurrentlyȱadequatelyȱaddressedȱinȱtheȱstrategy;72ȱandȱ x provideȱ continuousȱ dataȱ onȱ theȱ effectivenessȱ ofȱ theȱ overallȱ controlȱ frameworkȱforȱmanagingȱpayments.73ȱ 3.6 ThisȱchapterȱwillȱexamineȱtheȱextentȱtoȱwhichȱtheȱRSSȱmeetsȱtheȱfirstȱofȱ theseȱ objectives,ȱ thatȱ is,ȱ toȱ measureȱ theȱ levelȱ ofȱ incorrectȱ payment,ȱ asȱ wellȱ asȱ theȱ objectiveȱ toȱ detectȱ undeclaredȱ changedȱ circumstances,ȱ asȱ thisȱ isȱ linkedȱ toȱ theȱfirstȱobjective.ȱTheȱchapterȱalsoȱexaminesȱtheȱdataȱproducedȱfromȱtheȱRSS,ȱ howȱ theȱ accuracyȱ ofȱ outlaysȱ isȱ calculatedȱ andȱ theȱ inherentȱ andȱ otherȱ limitationsȱofȱtheȱprogramme.ȱ 68 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137. 69 Portfolio Budget Statements 2001–02, Family and Community Services Portfolio, p. 188. 70 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137. 71 ibid. 72 ibid. 73 Portfolio Budget Statements 2002–03, Family and Community Services Portfolio, p. 186. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 52 Meeting the Major Objective of the RSS Programme Purpose of the RSS 3.7 Inȱ itsȱ 2004–05ȱ Annualȱ Report,ȱ FaCSȱ statedȱ thatȱ theȱ RSSȱ ‘provideȱ aȱ measureȱ forȱ accuracyȱ ofȱ outlays,ȱ andȱ areȱ aȱ meansȱ toȱ facilitateȱ externalȱ assuranceȱasȱrequiredȱunderȱtheȱBusinessȱAssuranceȱFrameworkȱ(BAF74)’.75ȱȱȱ 3.8 FaCSIA,ȱ andȱ nowȱ DEWRȱ andȱ DESTȱ (sinceȱ theȱ Octoberȱ 2004ȱ MoGȱ changes),ȱreportȱtheȱRSSȱdataȱinȱtheirȱfinancialȱstatements,ȱandȱinȱtheirȱannualȱ reports,ȱ asȱ providingȱ assuranceȱ asȱ toȱ theȱ accuracyȱ ofȱ Australianȱ Governmentȱ outlaysȱ onȱ socialȱ securityȱ payments.ȱ Inȱ 2004–05,ȱ theseȱ outlaysȱ amountedȱ toȱ someȱ $63ȱ billionȱ orȱ aroundȱ oneȬthirdȱ ofȱ governmentȱ outlays.ȱ Definitionsȱ of,ȱ andȱissuesȱrelatedȱto,ȱpaymentȱaccuracyȱareȱdiscussedȱfurtherȱinȱtheȱfollowingȱ section.ȱ 3.9 Centrelinkȱ alsoȱ placesȱ heavyȱ relianceȱ onȱ theȱ RSSȱ dataȱ inȱ providingȱ itsȱ Annualȱ Assuranceȱ Statementsȱ toȱ FaCSIA,ȱ DEWRȱ andȱ DEST.ȱ Eachȱ Annualȱ Assuranceȱ Statementȱ fromȱ theȱ CEOȱ ofȱ Centrelinkȱ toȱ theȱ respectiveȱ purchaserȱ departmentsȱformsȱpartȱofȱtheȱoverallȱFinancialȱStatementȱAssuranceȱProcess.ȱ Itȱ contributesȱ toȱ theȱ assuranceȱ toȱ eachȱ departmentalȱ Secretaryȱ inȱ signingȱ offȱ theirȱ department’sȱ Financialȱ Statementsȱ asȱ beingȱ materiallyȱ correctȱ inȱ respectȱ ofȱpaymentsȱdeliveredȱbyȱCentrelinkȱonȱbehalfȱofȱtheȱdepartment.76ȱ 3.10 Centrelinkȱ alsoȱ usesȱ theȱ RSSȱ dataȱ inȱ itsȱ annualȱ reports,ȱ andȱ inȱ mediaȱ releases,ȱ toȱ evidenceȱ Centrelink’sȱ levelȱ ofȱ achievementȱ inȱ termsȱ ofȱ paymentȱ correctness.ȱȱ 3.11 Forȱtheȱfinancialȱyearȱ2004–05,ȱFaCSIAȱreportedȱaccuracyȱofȱoutlaysȱasȱ 97.9ȱperȱcent77ȱforȱthoseȱmajorȱsocialȱsecurityȱpaymentsȱmadeȱbyȱCentrelinkȱonȱ behalfȱ ofȱ FaCSIA.78ȱ Thisȱ meansȱ thatȱ FaCSIAȱ considersȱ thatȱ theȱ resultsȱ ofȱ theȱ RSSȱinȱ2004–05ȱdemonstratedȱthatȱ97.9ȱperȱcentȱofȱtheȱdollarsȱpaidȱoutȱinȱthatȱ financialȱyear,ȱforȱthoseȱmajorȱsocialȱsecurityȱpaymentsȱmadeȱbyȱCentrelinkȱonȱ 74 The Business Assurance Framework (BAF) is the reporting mechanism agreed between Centrelink and FaCSIA that is designed to provide an integrated and comprehensive set of assurances about Centrelink’s performances. Pending the development of revised Business Partnership Agreements between Centrelink and FaCSIA and DEWR, the relevant parts of the FaCS/Centrelink Business Alliance Agreement 2004–2008 (which commenced from 1 July 2004), including the BAF, continue to apply in relation to the social security payments covered by that agreement. DEST and Centrelink have signed a BPA which expires on 30 June 2008. 75 FaCS, Annual Report 2004–05, p. 277. 76 FaCS, Risk and Assessment Audit Committee Meeting, op. cit. 77 FaCS inaccuracy Table 2004–05, provided to the ANAO on 1 September 2005. 78 These payments are Age Pension, Carers Payment and Child Disability Allowance. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 53 behalfȱ ofȱ FaCSIA,ȱ wereȱ correctlyȱ paidȱ toȱ customersȱ whoȱ wereȱ entitledȱ toȱ receiveȱthoseȱpayments.79ȱ 3.12 DEWRȱ advisedȱ theȱ ANAOȱ onȱ 9ȱ Decemberȱ 2005ȱ thatȱ theȱ resultsȱ ofȱ theȱ RSSȱbetweenȱ1ȱJulyȱ2004ȱandȱ31ȱMarchȱ2005ȱshowȱthatȱtheȱaverageȱinaccuracyȱ rateȱforȱworkingȱageȱpaymentsȱwasȱ4.2ȱperȱcent.ȱThisȱequatesȱtoȱ95.8ȱperȱcentȱofȱ outlaysȱbeingȱaccurate.ȱHowȱtheȱRSSȱdataȱareȱderivedȱandȱhowȱtheȱestimatesȱofȱ accuracyȱofȱoutlaysȱareȱcalculatedȱareȱexaminedȱinȱtheȱnextȱsection.ȱ RSS data and calculating the accuracy of outlays RSS data––identification of error 3.13 Theȱ RSSȱ takesȱ aȱ sampleȱ ofȱ customersȱ andȱ identifiesȱ errorsȱ inȱ theȱ informationȱheldȱbyȱCentrelinkȱcomparedȱwithȱtheȱinformationȱobtainedȱfromȱ theȱinterviewȱandȱfollowȬupȱprocedures.ȱȱ 3.14 OnceȱallȱinformationȱfromȱtheȱinterviewȱandȱfollowȬupȱproceduresȱhasȱ beenȱ collected,ȱ theȱ RSSȱ Reviewerȱ takesȱ theȱ informationȱ andȱ identifiesȱ casesȱ withȱ anȱ errorȱ inȱ theȱ record.ȱ Theȱ RSSȱ Reviewer’sȱ nextȱ stepȱ isȱ toȱ identifyȱ theȱ sourceȱofȱtheȱerrorȱ(thatȱisȱtheȱcustomerȱorȱCentrelink)ȱandȱthenȱtoȱdetermineȱ whetherȱ theȱ customer’sȱ paymentȱ needsȱ toȱ beȱ amended.ȱ Changesȱ toȱ theȱ customer’sȱpaymentȱmayȱbeȱaȱcancellation,ȱanȱupwardȱorȱdownwardȱvariationȱ and/orȱ aȱ debtȱ orȱ anȱ underpayment.ȱ Theȱ ‘dollarȱ impact’ȱ ofȱ theȱ errorȱ isȱ thenȱ calculated.ȱȱ 3.15 RSSȱ errorȱ dataȱ forȱ theȱ fullȱ yearȱ 2004–05ȱ areȱ shownȱ inȱ theȱ followingȱ table.ȱ 79 This is not the same as 97.9 per cent of Centrelink customers having accurate payments. The accuracy of outlays figure refers to the estimate of the proportion of the total amount of dollars paid that was correctly paid to entitled customers while the inaccuracy of payments, (which equates to the term incorrect payment as used in this report) as identified in the RSS is the percentage of customers in the RSS sample who have an error in their record, which leads to an error in their payment, that has a dollar impact. This figure was some 30 per cent in the full year 2004–05. This is examined further in the section on identification of error. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 54 Meeting the Major Objective of the RSS Programme Table 3.1 RSS error results for the full year 2004–05 Type of error Number Reviews with no error Percentage 5 496 54.7 1 562 15.5 944 9.4 2 990 29.8 342 3.4 Total reviews with error 4 552 45.3 Total number of reviews 10 048 100.0 Reviews with error Reviews with an error with no dollar impact Reviews with Centrelink administrative error with no AB dollar impact Reviews with an error with dollar impact Reviews with Centrelink administrative error with ABC dollar impact Notes: A) Additional data supplied to the ANAO by Centrelink not included in report from which the remaining results reported in this table were sourced. B) The number of reviews with a customer error with or without a dollar impact cannot be calculated by subtracting administrative error from the total number of reviews with an error with or without a dollar impact. This is because a review can have multiple errors. Centrelink also advised the ANAO that it could not provide the break down of reviews with a customer error with and without a dollar impact, without significant additional work. C) The payment correctness figure of 96.6 per cent is calculated by subtracting this figure (3.4 per cent) from 100 per cent. Source: Rolling Random Sample Surveys, Final Results Quarter 4 of 2004–2005, including full year, Compliance and Review, Centrelink, February 2006. 3.16 Asȱ canȱ beȱ seenȱ fromȱ theȱ Tableȱ 3.1,ȱ someȱ 45ȱ perȱ centȱ ofȱ customersȱ surveyedȱinȱtheȱfullȱyearȱ2004–05ȱhadȱatȱleastȱoneȱerrorȱinȱtheirȱrecord.ȱOverȱaȱ thirdȱ(1ȱ661ȱcases)ȱofȱtheseȱhadȱmultipleȱerrors.80ȱ 3.17 Almostȱ30ȱperȱcentȱofȱcustomersȱhadȱanȱerrorȱthatȱhadȱaȱdollarȱimpactȱ onȱpayment,ȱmeaningȱthatȱpaymentȱincorrectnessȱ(inȱtheȱordinaryȱmeaningȱofȱ theȱwords)ȱwasȱ30ȱperȱcent.ȱHowȱthisȱtranslatesȱtoȱFaCSIA’sȱconclusionȱthatȱtheȱ fullȱ yearȱ resultsȱ ofȱ theȱ RSSȱ forȱ 2004–05ȱ indicatesȱ thatȱ thereȱ wasȱ 97.9ȱperȱ centȱ accuracyȱofȱoutlaysȱforȱCentrelinkȱpaymentsȱforȱwhichȱFaCSIAȱisȱresponsibleȱisȱ analysedȱbelowȱ(seeȱparagraphsȱ3.46–3.57).ȱ 80 Centrelink, Rolling Random Sample Surveys, Final Results Quarter 4 of 2004–2005, including full year, Compliance and Review, February 2006, p. 11. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 55 3.18 Inȱ 2004–05,ȱ Centrelinkȱ identifiedȱ oneȱ orȱ moreȱ errorsȱ inȱ 4ȱ552ȱ ofȱ theȱ 10ȱ048ȱ RSSȱ reviewsȱ conducted,ȱ withȱ theȱ totalȱ numberȱ ofȱ 7ȱ037ȱ errorsȱ distributedȱ acrossȱ theseȱ 4ȱ552ȱ reviews.ȱ Centrelinkȱ RSSȱ Reviewersȱ determinedȱ thatȱ 78ȱperȱ centȱ ofȱ theseȱ errorsȱ wereȱ dueȱ toȱ customerȱ errorȱ (thatȱ isȱ customerȱ actionȱ orȱ inaction).ȱ Theȱ remainingȱ 22ȱperȱ centȱ wereȱ categorisedȱ asȱ dueȱ toȱ Centrelinkȱ administrativeȱ errorȱ (predominatelyȱ incompleteȱ processing),ȱ albeitȱ thatȱ onlyȱ 5.1ȱ perȱ centȱ ofȱ theseȱ errorsȱ (orȱ 3.4ȱ perȱ centȱ ofȱ reviews)ȱ hadȱ anȱ immediateȱimpactȱonȱtheȱcustomer’sȱpayment.ȱProblemsȱwithȱtheȱattributionȱofȱ errorȱbetweenȱCentrelinkȱandȱitsȱcustomersȱareȱexaminedȱinȱChapterȱ5.ȱ 3.19 Forȱerrorsȱwithȱaȱdollarȱimpactȱonȱpayment,ȱ18.8ȱperȱcentȱresultedȱinȱaȱ cancellationȱ orȱ variationȱ toȱ payment,ȱ 54.5ȱperȱ centȱ resultedȱ inȱ aȱ debt,ȱ andȱ 26.7ȱperȱcentȱresultedȱinȱaȱcancellationȱorȱvariationȱandȱaȱdebt.ȱȱ 3.20 Forȱtheȱfullȱyearȱ2004–05,ȱtheȱtotalȱvalueȱofȱcustomerȱdebtsȱraisedȱasȱaȱ resultȱ ofȱ allȱ RSSȱ reviewsȱ wasȱ $3ȱ213ȱ810.ȱ Theȱ averageȱ valueȱ ofȱ allȱ debtsȱ wasȱ $1ȱ034.ȱAroundȱaȱthirdȱofȱdebtsȱwereȱunderȱ$50.81ȱApproximatelyȱ20ȱperȱcentȱofȱ debtsȱwereȱoverȱ$1ȱ000,ȱincludingȱ4.3ȱperȱcentȱofȱdebtsȱwhichȱwereȱoverȱ$5ȱ000.ȱ Theȱtotalȱvalueȱofȱpartnerȱdebts82ȱwasȱ$564ȱ140.ȱ 3.21 TheȱRSSȱalsoȱidentifiesȱaȱrangeȱofȱunderpayments,ȱthatȱis,ȱcasesȱwhereȱ customersȱareȱreceivingȱlessȱthanȱtheirȱentitlementȱandȱwhereȱCentrelinkȱowesȱ theȱ customerȱ money.ȱ Ofȱ thoseȱ customersȱ surveyedȱ inȱ theȱ fullȱ yearȱ 2004–05,ȱ 6.8ȱperȱ centȱ hadȱ anȱ underpayment,ȱ withȱ theȱ totalȱ valueȱ ofȱ customerȱ underpaymentsȱ inȱ theȱ yearȱ calculatedȱ asȱ $57ȱ563ȱ andȱ partnerȱ underpaymentsȱ withȱaȱtotalȱvalueȱofȱ$9ȱ011.ȱ Payment correctness 3.22 Centrelinkȱ andȱ theȱ purchaserȱ departmentsȱ haveȱ agreedȱ differentȱ definitionsȱ ofȱ ‘paymentȱ correctness’ȱ andȱ ‘paymentȱ accuracy’,ȱ andȱ Centrelinkȱ hasȱprovidedȱtheȱfollowingȱinformationȱonȱ‘paymentȱcorrectness’:ȱ Paymentȱ correctnessȱ isȱ theȱ percentageȱ ofȱ [RSS]ȱ reviewsȱ withoutȱ aȱ dollarȱ impactȱ errorȱbasedȱ onȱ informationȱ providedȱ byȱ theȱ customer.ȱ Thisȱ definitionȱ clarifiesȱ thatȱ customerȱ errorȱ isȱ excludedȱ fromȱ theȱ calculationȱ ofȱ paymentȱ 81 Centrelink automatically waives debts of less than $50.00, as it is not cost effective to recover these debts. The power to waive in this circumstance is provided under section 1237AAA(1) of the Social Security Act 1991. 82 Centrelink advised the ANAO on 8 November 2005 that ‘Partners in receipt of an Income Support payment are required to attend the RSS interview, complete their section of the Questionnaire and their entitlement is reviewed. This includes verification of their circumstances. These partners are involved from the time the review commences.’ Therefore partner debt is calculated separately from the customer debt. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 56 Meeting the Major Objective of the RSS Programme correctness.ȱCentrelinkȱproceduralȱerrorsȱthatȱdoȱnotȱimpactȱonȱtheȱcustomer’sȱ paymentȱareȱalsoȱexcluded.83ȱ 3.23 Underȱ theȱ Businessȱ Assuranceȱ Frameworkȱ (BAF),ȱ developedȱ inȱ conjunctionȱwithȱFaCSIA,ȱaȱpaymentȱisȱconsideredȱ‘correct’ȱif:ȱtheȱrightȱpersonȱ isȱpaid;ȱunderȱtheȱrightȱprogramme;ȱatȱtheȱrightȱrate;ȱandȱforȱtheȱrightȱdate(s).ȱ ‘Correctness’ȱisȱconsidered,ȱinȱtheȱcontextȱofȱtheȱBAF,ȱtoȱrelateȱonlyȱtoȱdecisionȬ makingȱprocessesȱwithinȱCentrelink’sȱcontrol.ȱTheȱpaymentȱcorrectnessȱtargetȱ containedȱ inȱ theȱ individualȱ agencies’ȱ BPAsȱ isȱ aȱ measureȱ ofȱ Centrelink’sȱ administrativeȱerrorsȱthatȱhaveȱanȱimpactȱonȱcustomers’ȱpayments,ȱitȱdoesȱnotȱ takeȱintoȱaccountȱcustomerȱerror.ȱ 3.24 Theȱ relevantȱ finalȱ validatedȱ RSSȱ resultsȱ forȱ 2004–05ȱ areȱ setȱ outȱ inȱ Tableȱ3.1ȱ and,ȱ usingȱ theseȱ figures,ȱ itȱ canȱ beȱ seenȱ thatȱ theȱ finalȱ BPAȱ paymentȱ correctnessȱ figureȱ forȱ 2004–05ȱ isȱ 96.6ȱ perȱ cent.ȱ Thisȱ isȱ foundȱ byȱ takingȱ theȱ numberȱofȱreviewsȱwithȱanȱadministrativeȱerrorȱwithȱaȱdollarȱimpactȱ(342ȱfromȱ Tableȱ 3.1)ȱ asȱ aȱ percentageȱ ofȱ theȱ totalȱ numberȱ ofȱ reviewsȱ completedȱ (10ȱ048),ȱ givingȱ 3.4ȱperȱ centȱ paymentȱ incorrectnessȱ andȱ subtractingȱ thatȱ numberȱ fromȱ 100.84ȱ 3.25 CentrelinkȱadvisedȱtheȱANAOȱonȱ3ȱFebruaryȱ2006,ȱthatȱ‘Centrelinkȱwillȱ notȱinȱfutureȱreportȱ orȱ referȱtoȱpaymentȱ accuracy,ȱCentrelinkȱ willȱ continueȱ toȱ reportȱonȱpaymentȱcorrectnessȱandȱwillȱcontinueȱtoȱprovideȱallȱrelevantȱdataȱtoȱ eachȱpolicyȱdepartmentȱtoȱenableȱtheirȱreportingȱofȱpaymentȱaccuracy’.ȱȱ 3.26 Centrelinkȱ hasȱ advisedȱ theȱ ANAOȱ thatȱ theȱ policyȱ departmentsȱ thatȱ purchaseȱCentrelink’sȱservicesȱtoȱdeliverȱprogrammeȱpaymentsȱareȱresponsibleȱ forȱreportingȱpaymentȱaccuracy.ȱPaymentȱaccuracyȱisȱcalculatedȱbyȱsubtractingȱ theȱpercentageȱofȱreviewsȱwhereȱtheȱpaymentȱwasȱfoundȱtoȱbeȱinaccurateȱfromȱ 100ȱ perȱ cent.ȱ Paymentȱ inaccuracyȱ isȱ theȱ percentageȱ ofȱ reviewsȱ whichȱ haveȱ errorsȱ whichȱ haveȱ aȱ dollarȱ impactȱ onȱ payments,ȱ irrespectiveȱ ofȱ theȱ sourceȱ ofȱ error,ȱ thatȱ isȱ customerȱ errorȱ orȱ Centrelinkȱ administrativeȱ error.ȱ Accordingly,ȱ theȱcalculationȱofȱpaymentȱaccuracyȱalsoȱincludesȱcustomerȱerror,ȱwhichȱunderȱ theȱBAFȱisȱconsideredȱoutsideȱCentrelink’sȱdecisionȬmakingȱcontrol.ȱ 3.27 Theȱ ANAOȱ notes,ȱ however,ȱ thatȱ Centrelinkȱ andȱ theȱ purchaserȱ departmentsȱ bothȱ haveȱ aȱ responsibilityȱ forȱ maintainingȱ theȱ integrityȱ ofȱ theȱ 83 Centrelink advice to the ANAO, 20 January 2006. 84 This figure is within 0.2 per cent of the preliminary figure for payment correctness reported in Centrelink’s 2004–05 Annual Report which had been calculated on the basis of preliminary data based on the results of the first three quarters of the RSS in 2004–05. The final validated results for the 2004–05 RSS were not available until February 2006. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 57 socialȱsecurityȱsystem,ȱandȱmeetingȱtheȱwiderȱoutcomesȱthatȱtheȱgovernmentȱisȱ seeking.ȱ Whileȱ theȱ purchaserȱ departmentsȱ haveȱ overallȱ responsibility,ȱ Centrelink,ȱasȱtheȱserviceȱdeliverer,ȱisȱtheȱagencyȱwhichȱhasȱdirectȱcontactȱwithȱ customers,ȱ andȱ isȱ thereforeȱ inȱ theȱ bestȱ positionȱ toȱ assessȱ andȱ limitȱ paymentȱ inaccuracy,ȱinȱconsultationȱwithȱtheȱpurchaserȱdepartments.ȱȱ 3.28 Centrelink’sȱ serviceȱ deliveryȱ responsibilitiesȱ includeȱ assistingȱ customersȱ toȱ complyȱ withȱ theirȱ obligations.ȱ Centrelinkȱ isȱ alsoȱ responsibleȱ forȱ ensuringȱ staffȱ areȱ properlyȱ trained,ȱ toȱ minimiseȱ administrativeȱ error.ȱ Theȱ ANAOȱ alsoȱ notesȱ thatȱ Centrelinkȱ hasȱ wellȱ developedȱ fraudȱ detection,ȱ debtȱ preventionȱandȱcomplianceȱactivitiesȱdesignedȱtoȱlimitȱpaymentȱinaccuracy,ȱasȱ wellȱ asȱ educationȱ activitiesȱ andȱ informationȱ productsȱ designedȱ toȱ assistȱ customersȱtoȱcomplyȱwithȱtheirȱresponsibilities.ȱ 3.29 Centrelinkȱ acknowledgedȱ theseȱ responsibilitiesȱ inȱ respectȱ ofȱ programmeȱpaymentsȱinȱitsȱ2003–04ȱAnnualȱReport,ȱwhichȱstated:ȱ Theseȱ paymentsȱ comeȱ withȱ clearȱ boundariesȱ andȱ Centrelinkȱ staffȱ haveȱ aȱ responsibilityȱtoȱmakeȱcorrectȱdecisionsȱandȱtoȱhelpȱcitizensȱkeepȱinformationȱ aboutȱtheirȱcircumstancesȱupȱtoȱdate.ȱDuringȱtheȱyear,ȱensuringȱtheȱintegrityȱofȱ outlaysȱ byȱ controllingȱ fraudȱ andȱ incorrectȱ paymentsȱ continuedȱ toȱ beȱ aȱ majorȱ priority.ȱ Toȱ confirmȱ thatȱ customersȱ areȱ receivingȱ theirȱ correctȱ entitlements,ȱ Centrelink’sȱ complianceȱ activitiesȱ areȱ specificallyȱ aimedȱ atȱ theȱ prevention,ȱ detectionȱandȱdeterrenceȱofȱ[incorrect]ȱpaymentsȱandȱfraud.85ȱ 3.30 Theȱ ANAOȱ previouslyȱ notedȱ inȱ Auditȱ Reportȱ No.17ȱ 2002–03,ȱ Ageȱ PensionȱEntitlementsȱthat:ȱ …FaCSȱandȱCentrelinkȱareȱresponsibleȱforȱtheȱintegrityȱofȱoutlaysȱasȱaȱwhole.ȱ Inȱthisȱlight,ȱtheȱagenciesȱshouldȱnotȱinterpretȱtheirȱresponsibilitiesȱnarrowly,ȱ throughȱattributingȱerrors.86ȱ 3.31 Theȱ ANAOȱ wouldȱ expectȱ Centrelink’sȱ internalȱ reportingȱ toȱ includeȱ aȱ focusȱ onȱ paymentȱaccuracyȱ toȱ facilitateȱ remedialȱ actionȱ whereȱ necessary.ȱ Theȱ importanceȱofȱerrorȱisȱexaminedȱinȱmoreȱdetailȱinȱparagraphsȱ3.33–3.45.ȱ 3.32 Forȱ theȱ restȱ ofȱ thisȱ reportȱ theȱ ANAOȱ usesȱ theȱ termȱ ‘paymentȱ incorrectness’ȱtoȱmeanȱtheȱnumberȱofȱcustomersȱinȱtheȱRSSȱsampleȱwhoȱhaveȱ anȱ errorȱ inȱ theirȱ record,ȱ whichȱ leadsȱ toȱ anȱ errorȱ inȱ theirȱ payment,ȱ thatȱ hasȱ aȱ dollarȱ impact.ȱ Thisȱ reflectsȱ theȱ ordinaryȱ meaningȱ ofȱ theȱ words,ȱ andȱ theȱ meaningȱ asȱ usedȱ inȱ theȱ relevantȱ FaCSȱ PBSȱ whichȱ providedȱ fundingȱ forȱ theȱ 85 Centrelink, Annual Report 2003–04, p. 5. 86 ANAO Audit Report No.17 2002–03, op. cit., p. 56. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 58 Meeting the Major Objective of the RSS Programme RSS,ȱbutȱisȱdifferentȱtoȱtheȱdefinitionȱascribedȱbyȱCentrelinkȱtoȱthisȱterm,ȱthatȱisȱ theȱ percentageȱ ofȱ RSSȱ reviewsȱ withȱ aȱ Centrelinkȱ administrativeȱ errorȱ whichȱ hasȱaȱdollarȱimpactȱonȱpayment.ȱ Importance of error 3.33 Theȱfigureȱforȱtheȱaccuracyȱofȱoutlaysȱisȱtheȱmostȱvisibleȱoutputȱofȱtheȱ RSSȱprocess.ȱHowever,ȱtheȱdataȱonȱerrorȱcollectedȱbyȱtheȱRSSȱisȱofȱimportanceȱ inȱ identifyingȱ theȱ sizeȱ andȱ natureȱ ofȱ error.ȱ Theȱ dataȱ provideȱ informationȱ regardingȱ theȱ qualityȱ ofȱ administrationȱ ofȱ Centrelinkȱ payments,ȱ andȱ ultimately,ȱtheȱqualityȱofȱserviceȱdeliveredȱtoȱcustomers.ȱTheȱimpactȱofȱerrorȱonȱ theȱcostȱofȱprovidingȱservicesȱisȱalsoȱofȱimportance.ȱ 3.34 Twoȱ studiesȱ haveȱ highlightedȱ theȱ importanceȱ ofȱ errorȱ (bothȱ customerȱ andȱadministrativeȱerror)ȱforȱCentrelink’sȱeffectiveȱandȱefficientȱadministrationȱ ofȱ payments.ȱ First,ȱ theȱ 2004ȱ Allenȱ Consultingȱ Groupȱ reportȱ FaCSȱ andȱ Centrelink:ȱ Complianceȱ Review87ȱ raisedȱ theȱ impactȱ ofȱ error,ȱ and,ȱ secondly,ȱ anȱ internalȱstudyȱconductedȱbyȱCentrelinkȱinȱ2004,ȱProjectȱCharlotte,ȱhighlightedȱ theȱimportanceȱofȱidentifyingȱerror.ȱPreviousȱANAOȱperformanceȱauditsȱhaveȱ alsoȱraisedȱissuesȱrelatingȱtoȱerror.88ȱ Non-ANAO studies 3.35 TheȱAllenȱConsultingȱGroupȱreportȱstatedȱthat:ȱ whileȱanȱ[administrative]ȱerrorȱmayȱbeȱimmaterialȱtoȱpaymentȱtodayȱ–ȱsuchȱasȱ aȱcodingȱerrorȱ–ȱitȱrepresentsȱtheȱpossibilityȱthatȱcomplianceȱcontrolsȱcouldȱbeȱ precludedȱ fromȱ identifyingȱ futureȱ paymentȱ inaccuracy…Fromȱ thisȱ perspective,ȱadministrativeȱerrorsȱ–ȱwhetherȱmaterialȱtoȱoutlaysȱorȱnotȱ–ȱmayȱ contributeȱtoȱunderlyingȱinaccuracy.89ȱ 87 The Allen Consulting Group was engaged by the then Department of Family and Community Services to undertake a review requested by the then Minister for Family and Community Services for which the terms of reference were: x ‘to provide an independent assessment of the nature, scope, efficiency and effectiveness of current compliance activities undertaken by FaCS and Centrelink; and x to outline the scope for taking a more systematic approach to compliance, including cost effective measures or strategies to; o improve the accuracy of payments, reduce the level of Commonwealth outlays or inaccurate benefit entitlements; and o improve the efficiency and effectiveness of compliance arrangements.’ The Allen Consulting Group, FaCS and Centrelink: Compliance Review, Final Report, January 2004, p. xvi. 88 ANAO Audit Report No.44 2002–03, op. cit.; and ANAO Audit Report No.17 2002–03, op. cit. 89 The Allen Consulting Group, op. cit., p. 43 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 59 3.36 Theȱreportȱgoesȱonȱtoȱstate:ȱ Forȱ customerȱ errorȱ toȱ beȱ minimised,ȱ clientsȱ needȱ toȱ understandȱ theȱ rulesȱ toȱ whichȱtheyȱmustȱcomply,ȱbeȱableȱtoȱcomplyȱwithȱtheȱrulesȱandȱbeȱmotivatedȱtoȱ comply.ȱThisȱreliesȱonȱadministrativeȱaccuracyȱandȱprofessionalism,ȱasȱwellȱasȱ appropriateȱpaymentȱdesignȱandȱcustomerȱeducation.90ȱ 3.37 Centrelink’sȱ Projectȱ Charlotteȱ lookedȱ atȱ determiningȱ theȱ causeȱ ofȱ customerȱerror.ȱTheȱAnalysisȱReportȱfromȱtheȱprojectȱstatedȱthat:ȱ Customerȱ errorȱ createsȱ anȱ amountȱ ofȱ reworkȱ orȱ additionalȱ workȱ whichȱ impactsȱonȱstaff’sȱcapacity.ȱItȱisȱalsoȱcostlyȱinȱbothȱadministrationȱandȱprogramȱ expenditure.91ȱ 3.38 Centrelinkȱ administrativeȱ error,ȱ toȱ theȱ extentȱ thatȱ itȱ occurs,ȱ willȱ haveȱ similarȱimpactsȱnotwithstandingȱthatȱtheȱ2004–05ȱresultsȱofȱtheȱRSSȱattributedȱ 78ȱperȱcentȱofȱerrorsȱtoȱcustomersȱandȱ22ȱperȱcentȱtoȱCentrelinkȱadministrativeȱ error.ȱ ANAO Audit Reports 3.39 Error,ȱ regardlessȱ ofȱ whetherȱ itȱ isȱ asȱ aȱ resultȱ ofȱ customerȱ errorȱ orȱ Centrelinkȱerror,ȱandȱwhetherȱorȱnotȱitȱhasȱanȱimpactȱonȱpayment,ȱrepresentsȱaȱ costȱtoȱCentrelink,ȱandȱimpactsȱonȱtheȱqualityȱofȱservice.ȱȱ 3.40 Inȱrecognitionȱofȱthis,ȱANAOȱAuditȱReportȱNo.17ȱ2002–03,ȱAgeȱPensionȱ Entitlementsȱstatedȱinȱrelationȱtoȱadministrativeȱerrorsȱthat:ȱ x theyȱrepresentȱaȱriskȱtoȱoutlays;ȱ x theyȱrepresentȱanȱevidentiaryȱrisk,ȱsinceȱcorrectȱproceduresȱareȱneededȱ toȱ ensureȱ thatȱ FaCSȱ andȱ Centrelinkȱ canȱ conductȱ appealsȱ andȱ prosecutionsȱ(withȱconsequentialȱimpactȱonȱoutlays);ȱ x theyȱrepresentȱaȱcommunityȱperceptionȱrisk,ȱinȱthatȱcorrectȱproceduresȱ areȱ neededȱ toȱ ensureȱ thatȱ theȱ communityȱ perceivesȱ thatȱ thereȱ isȱ accountabilityȱforȱpublicȱmonies;ȱandȱ x theyȱ canȱ assistȱ inȱ identifyingȱ areasȱ whereȱ [Customerȱ Serviceȱ Officersȱ (CSOs)]ȱ areȱ experiencingȱ difficultyȱ inȱ applyingȱ legislation,ȱ policyȱ orȱ procedures,ȱ sinceȱ theȱ causeȱ ofȱ theȱ errorȱ isȱ theȱ failureȱ ofȱ theȱ CSOȱ toȱ applyȱcorrectȱprocedures,ȱratherȱthanȱtheȱimpactȱonȱoutlays.92ȱ 3.41 However,ȱtheȱreportȱalsoȱwentȱonȱtoȱsayȱthat:ȱ 90 ibid., p. 44. 91 Centrelink, “Charlotte” – the Web Unfurls, Analysis Report, op. cit., p. 7. 92 ANAO Audit Report No.17 2002–03, op. cit., p. 55. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 60 Meeting the Major Objective of the RSS Programme …Centrelinkȱ andȱ theȱ customerȱ interactȱ inȱ aȱ complexȱ andȱ dynamicȱ manner.ȱ Whileȱitȱisȱusefulȱtoȱdetermineȱaȱsourceȱforȱerrorsȱ[customerȱorȱadministrativeȱ error],ȱinȱorderȱtoȱfocusȱeffortsȱtoȱpreventȱorȱcorrectȱthem,ȱFaCSȱandȱCentrelinkȱ areȱresponsibleȱforȱtheȱintegrityȱofȱoutlaysȱasȱaȱwhole.ȱInȱthisȱlight,ȱtheȱagenciesȱ shouldȱ notȱ interpretȱ theirȱ responsibilitiesȱ narrowly,ȱ throughȱ attributingȱ errors.93ȱ 3.42 Theseȱ findingsȱ andȱ commentsȱ remainȱ validȱ notȱ onlyȱ forȱ FaCSIAȱ andȱ CentrelinkȱbutȱalsoȱforȱDEWRȱandȱDESTȱgivenȱtheirȱcurrentȱresponsibilities.ȱ 3.43 Theȱ importanceȱ ofȱ errorȱ wasȱ furtherȱ highlightedȱ inȱ ANAOȱ Auditȱ Reportȱ No.44ȱ 2002–03,ȱ Reviewȱ ofȱ theȱ Parentingȱ Paymentȱ Singleȱ Program,ȱ whichȱ statedȱthat:ȱ Inȱreportingȱonȱpaymentȱerrors,ȱallȱerrorsȱshouldȱbeȱreported,ȱwhetherȱtheyȱareȱ madeȱ byȱ Centrelinkȱ orȱ theȱ customer.ȱ FaCS,ȱ andȱ ultimatelyȱ theȱ Parliament,ȱ shouldȱbeȱableȱtoȱeasilyȱassessȱtheȱaccuracyȱofȱprogramȱoutlays,ȱandȱtheȱrangeȱ andȱnumberȱofȱerrorsȱmade,ȱirrespectiveȱofȱtheirȱsource.94ȱ 3.44 Theȱ auditȱ reportȱ alsoȱ statedȱ thatȱ errorsȱ foundȱ inȱ theȱ conductȱ ofȱ newȱ childȱreviewsȱwere:ȱ …aȱ departureȱ fromȱ expectedȱ practice,ȱ whichȱ representsȱ aȱ riskȱ toȱ qualityȱ customerȱservice,ȱtheȱefficiencyȱofȱprogramȱdeliveryȱandȱCentrelink’sȱabilityȱtoȱ conductȱcomplianceȱactivity,ȱallȱofȱwhichȱhaveȱassociatedȱcosts.95ȱȱ 3.45 ReportingȱofȱRSSȱdataȱisȱexaminedȱfurtherȱinȱtheȱsectionȱonȱuseȱofȱtheȱ RSSȱdataȱ(seeȱparagraphsȱ3.119–3.141).ȱ Calculation of accuracy of outlays 3.46 Toȱ measureȱ theȱ levelȱ ofȱ accuracyȱ ofȱ outlaysȱ onȱ incomeȱ supportȱ paymentsȱ deliveredȱ byȱ Centrelink,ȱ theȱ purchaserȱ departmentsȱ haveȱ toȱ firstȱ identifyȱtheȱ‘totalȱpaymentȱinaccuracy’.ȱThatȱisȱtheȱpercentageȱofȱRSSȱreviewsȱ thatȱ haveȱ errorsȱ whichȱ haveȱ aȱ dollarȱ impactȱ onȱ payments,ȱ irrespectiveȱ ofȱ theȱ sourceȱofȱtheȱerrorȱ(thatȱisȱcustomerȱerrorȱorȱCentrelinkȱadministrativeȱerror).ȱ 3.47 Theȱ accuracyȱ ofȱ outlaysȱ isȱ calculatedȱ byȱ subtractingȱ theȱ percentageȱ ofȱ inaccuracyȱofȱoutlaysȱfromȱ100ȱperȱcent.ȱTheȱinaccuracyȱofȱoutlaysȱisȱcalculatedȱ byȱ dividingȱ theȱ sumȱ ofȱ fortnightlyȱ dollarȱ amountsȱ ofȱ variationsȱ (upwardȱ variation,ȱ downwardȱ variation,ȱ cancellation/suspension)ȱ byȱ theȱ sumȱ ofȱ theȱ 93 ibid., p. 56. 94 ANAO Audit Report No.44 2002–03, op. cit., p. 54. 95 ibid., p. 91. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 61 fortnightlyȱ paymentsȱ toȱ allȱ sampledȱ customers,ȱ theȱ percentageȱ figureȱ isȱ thenȱ calculated.96ȱȱ 3.48 FaCSIA’ȱ sȱ calculationȱ forȱ 2004–05ȱ foundȱ anȱ inaccuracyȱ ofȱ 2.1ȱ perȱ centȱ forȱ thoseȱ majorȱ socialȱ securityȱ paymentsȱ madeȱ byȱ Centrelinkȱ onȱ behalfȱ ofȱ FaCSIA.ȱ Basedȱ onȱ this,ȱ FaCSIAȱ claimsȱ 97.9ȱ perȱ centȱ accuracyȱ ofȱ outlaysȱ inȱ 2004–05,ȱthatȱisȱthatȱ97.9ȱperȱcentȱofȱoutlaysȱonȱsocialȱsecurityȱpaymentsȱmadeȱ byȱCentrelinkȱonȱbehalfȱofȱFaCSIAȱwereȱcorrectlyȱpaid.ȱTheȱcomparableȱfigureȱ forȱDEWRȱwasȱ4.2ȱperȱcentȱinaccuracy,ȱorȱ95.8ȱperȱcentȱaccuracyȱofȱoutlays.ȱȱ 3.49 Thisȱ comparesȱ withȱ theȱ dataȱ reportedȱ inȱ paragraphȱ 3.17ȱ thatȱ aroundȱ 30ȱperȱcentȱofȱthoseȱcustomersȱsampledȱinȱtheȱRSSȱhadȱanȱincorrectȱpayment.ȱ FaCSIAȱaskedȱtheȱANAOȱtoȱnoteȱthatȱnearlyȱ30ȱperȱcentȱpaymentȱincorrectnessȱ isȱ notȱ inconsistentȱ withȱ 2ȱ perȱ centȱ outlayȱ inaccuracy,ȱ givenȱ thatȱ manyȱ ofȱ theȱ individualȱpaymentȱvariationsȱareȱveryȱsmall.97ȱȱ 3.50 Theȱ ANAOȱ acceptsȱ thatȱ thisȱ isȱ correctȱ andȱ thatȱ manyȱ ofȱ theȱ incorrectȱ paymentsȱdetectedȱthroughȱtheȱRSSȱprocessȱareȱveryȱsmall.ȱGivenȱthatȱtheȱRSSȱ isȱ aȱ pointȱinȱtimeȱanalysis,ȱtheȱvariationsȱ relateȱtoȱ aȱ fortnightlyȱpayment.ȱ Theȱ largestȱ variationȱ willȱ occurȱ inȱ theȱ caseȱ ofȱ aȱ paymentȱ cancellation,ȱ thatȱ is,ȱ theȱ largestȱ variationȱ willȱ equalȱ theȱ customer’sȱ entireȱ fortnightlyȱ payment.ȱ Therefore,ȱgivenȱthatȱmanyȱvariationsȱareȱsmall,ȱthenȱtheȱimpactȱonȱoutlaysȱisȱ notȱ large.ȱ Nevertheless,ȱ evenȱ aȱ smallȱ variationȱ willȱ haveȱ economicȱ andȱ otherȱ impactsȱonȱanȱindividualȱcustomer.ȱ 3.51 ȱHowever,ȱ asȱ outlinedȱ laterȱ inȱ thisȱ chapter,ȱ theȱ ANAOȱ hasȱ foundȱ thatȱ theȱ RSSȱ processȱ doesȱ notȱ haveȱ theȱ capacityȱ toȱ identifyȱ allȱ casesȱ ofȱ nonȬ disclosureȱ (andȱ soȱ allȱ incorrectȱ payments)ȱ particularlyȱ whereȱ aȱ customerȱ isȱ determinedȱ notȱ toȱ discloseȱ informationȱ thatȱ willȱ affectȱ theirȱ payment.ȱ Accordingly,ȱ theȱ potentialȱ existsȱ thatȱ theȱ paymentȱ variationsȱ notȱ detectedȱ byȱ theȱ RSSȱ process,ȱ beingȱ thoseȱ applyingȱ toȱ theȱ mostȱ nonȬcompliantȱ customers,ȱ mayȱbeȱlargerȱthanȱtheȱvariationsȱdetectedȱinȱtheȱRSS.ȱ 3.52 Forȱtheȱfirstȱtimeȱinȱ2004–05,ȱFaCSIAȱincludedȱconfidenceȱintervals98ȱforȱ theȱ inaccuracyȱ figureȱ reportedȱ byȱ theȱ department.ȱ Tableȱ 3.2ȱ showsȱ FaCSIA’sȱ estimatesȱofȱinaccuracyȱofȱoutlaysȱandȱconfidenceȱboundsȱforȱtheȱAgeȱPensionȱ (theȱlargestȱFaCSIAȱpayment),ȱforȱ2003–2005.ȱ 96 FaCSIA advice to the ANAO, 7 December 2005. 97 ibid. 98 The confidence interval gives a range of values which are likely to cover the true but unknown value. A study which quotes a confidence interval of 95 per cent, is stating that should that study be repeated 100 times, the results will fall within the range of the confidence interval 95 times. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 62 Meeting the Major Objective of the RSS Programme ȱ ȱ Table 3.2 FaCS estimates of inaccuracy of outlays and confidence bounds for the Age Pension for 2003–2005 Estimate $m (%) Estimate $m (%) Estimate $m (%) Lower 95% confidence bounds Upper 2003 267.4 (1.52) $351.5 (2.00) $435.6 (2.47) 2004 253.6 (1.36) $331.5 (1.76) $409.3 (2.17) 2005 291.2 (1.49) $401.3 (2.04) $511.5 (2.60) Source: FaCS, Risk Assessment and Audit Committee Meeting 2 August 2005, Agenda Item 2, Rolling Random Sample Results. 3.53 Tableȱ 3.2ȱ showsȱ thatȱ forȱ theȱ Ageȱ Pension,ȱ theȱ estimatedȱ rangeȱ forȱ theȱ amountȱofȱinaccuracyȱofȱoutlaysȱforȱ2005ȱwasȱ$291.2ȱmillionȱtoȱ$511.5ȱmillion.ȱ However,ȱtheȱconfidenceȱintervalȱreportedȱhereȱonlyȱprovidesȱaȱmeasureȱofȱtheȱ samplingȱ error99ȱ associatedȱ withȱ theȱ RSS.ȱ Theȱ confidenceȱ intervalȱ doesȱ notȱ accountȱforȱnonȬsamplingȱerror.100ȱ 3.54 TheȱRSSȱdoesȱnotȱpickȱupȱallȱcasesȱofȱnonȬdisclosure.ȱThisȱisȱbecause:ȱ x evenȱ whenȱ askedȱ inȱ aȱ faceȬtoȬfaceȱ interview,ȱ notȱ allȱ customersȱ willȱ declareȱallȱofȱtheirȱcircumstancesȱand/orȱchangesȱinȱtheirȱcircumstancesȱ (nonȬsamplingȱerrorȱthroughȱcustomerȱresponseȱbias);ȱ x theȱ followȬupȱ proceduresȱ usedȱ byȱ theȱ RSSȱ Reviewersȱ doȱ notȱ workȱ effectivelyȱinȱallȱcasesȱ(nonȬsamplingȱerrorȱthroughȱmethod);ȱandȱȱ 99 In any survey there are two sources of error, sampling error and non-sampling error. Sampling error occurs when data are collected from a sample rather than the entire population. Estimates of sampling error, such as standard error, can be calculated mathematically. See <http://www.qgm.qld.gov.au/00_downloads/spp_1991/ptd_s7.pdf >. 100 Non-sampling error consists of systematic and variable error. This is harder to measure. Systematic error or bias can result from of a number of sources, including: x biased sample selection (for example, data from which the sample is obtained excludes members of the population); x inappropriate survey method (for example, using a mail back survey to obtain complex information); x interviewers’ behaviours (such as, leading respondents or mis-recording answers); x respondents’ behaviours (such as, refusals, poor recall or protecting personal interests); and x poor questionnaire design (for example, misleading or ambiguous questions, or poor sequencing). See < http://www.qgm.qld.gov.au/00_downloads/spp_1991/ptd_s7.pdf >. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 63 x RSSȱ Reviewersȱ doȱ notȱ reviewȱ uniformlyȱ (nonȬsamplingȱ errorȱ throughȱ interviewerȱbehaviour).ȱ 3.55 Theseȱ limitationsȱ areȱ discussedȱ inȱ laterȱ sectionsȱ ofȱ thisȱ chapter.ȱ Theȱ nonȬsamplingȱerrorȱoutlinedȱinȱparagraphȱ3.54ȱisȱnotȱmeasuredȱ(andȱisȱdifficultȱ toȱ measure)ȱ butȱ itȱ isȱ importantȱ toȱ keepȱ inȱ mindȱ whenȱ usingȱ theȱ dataȱ andȱ inȱ interpretingȱtheȱresultsȱofȱtheȱRSSȱasȱitȱcanȱintroduceȱaȱsystematicȱbias.ȱ 3.56 FaCSIAȱ hasȱ beenȱ providedȱ additionalȱ Budgetȱ funding101ȱ toȱ allowȱ anȱ increasedȱsampleȱsizeȱforȱRSSȱreviewsȱforȱFaCSIAȱpaymentsȱfromȱ1ȱJulyȱ2006.ȱ Thisȱ isȱ toȱ allowȱ forȱ aȱ greaterȱ levelȱ ofȱ statisticalȱ validityȱ forȱ theȱ RSSȱ results.ȱ However,ȱ anȱ increasedȱ sampleȱ sizeȱ willȱ notȱ overcomeȱ theȱ problemȱ ofȱ nonȬ samplingȱerror.ȱ 3.57 Theȱ ANAOȱ alsoȱ notesȱ thatȱ anyȱ increaseȱ inȱ theȱ sampleȱ sizeȱ requiresȱ aȱ concomitantȱ increaseȱ inȱ Centrelink’sȱ capabilityȱ toȱ undertakeȱ RSSȱ interviews.ȱȱ TheȱissueȱregardingȱtheȱabilityȱofȱCentrelinkȱtoȱrecruitȱandȱtrainȱadditionalȱRSSȱ staffȱwithȱtheȱrequisiteȱskillsȱandȱexperienceȱtoȱundertakeȱthisȱincreasedȱworkȬ loadȱisȱexaminedȱinȱChapterȱ5.ȱ 3.58 Theȱ followingȱ sectionȱ examinesȱ theȱ limitationsȱ ofȱ theȱ programmeȱ inȱ meetingȱtheȱmajorȱobjectiveȱtoȱmeasureȱtheȱlevelȱofȱincorrectȱpayment,ȱandȱtheȱ alliedȱ limitationsȱ inȱ uncoveringȱ customerȱ nonȬdisclosureȱ ofȱ allȱ circumstancesȱ and/orȱchangedȱcircumstances.ȱ Inherent limitation of the programme 3.59 Thereȱ areȱ aȱ rangeȱ ofȱ issuesȱ whichȱ impactȱ onȱ theȱ robustnessȱ ofȱ theȱ estimatesȱofȱincorrectȱpayment102ȱcalculatedȱfromȱtheȱRSSȱdataȱ(andȱhenceȱtheȱ accuracyȱ ofȱ outlaysȱ estimate103)ȱ butȱ theȱ ANAOȱ foundȱ thatȱ theȱ majorȱ issueȱ 101 FaCSIA has obtained funding for the RSS under the Debt Prevention Research and Development Measure outlined in the Portfolio Budget Statements 2004–05, Family and Community Services Portfolio. In 2006–07, FaCSIA samples for the RSS will include 5 000 Age Pension, 250 Carer Allowance, 750 Carer Payment, and 10 000 Rent Assistance customers. 102 Incorrect payment, as identified in the RSS, is the number of customers in the RSS sample who have an error in their record, which leads to an error in their payment, that has a dollar impact. 103 To calculate the accuracy of outlays, the purchaser departments first have to calculate the level of inaccuracy of outlays. The inaccuracy of outlays is calculated by dividing the sum of fortnightly dollar amounts of variations (upward variation, downward variation, cancellation/suspension) identified in the RSS by the sum of the fortnightly payments to all sampled customers, the percentage figure is then calculated. To derive the estimate of the accuracy of outlays, this figure is subtracted from 100 per cent. So from the 2004–05 RSS results, FaCSIA calculated that the 2.1 per cent of outlays on Centrelink payments for which FaCSIA is responsible had been inaccurate in that year. Subtracting 2.1 per cent from 100 per cent gives 97.9 per cent as the accuracy of outlays estimate for FaCSIA payments in 2004–05. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 64 Meeting the Major Objective of the RSS Programme affectingȱ theȱ robustnessȱ ofȱ theȱ RSSȱ estimatesȱ isȱ theȱ inabilityȱ ofȱ theȱ RSSȱ toȱ uncoverȱ allȱ incorrectȱ paymentsȱ dueȱ toȱ theȱ inherentȱ problemȱ thatȱ notȱ allȱ customersȱ willȱ discloseȱ allȱ ofȱ theirȱ circumstancesȱ and/orȱ allȱ ofȱ theȱ changesȱ inȱ theirȱcircumstances,ȱevenȱwhenȱaskedȱinȱaȱfaceȬtoȬfaceȱinterview.ȱ Accordingly,ȱ noȱ surveyȱ methodȱ toȱ identifyȱ theȱ levelȱ ofȱ Centrelinkȱ 3.60 paymentsȱaffectedȱbyȱerrorȱwillȱbeȱ100ȱperȱcentȱaccurate.ȱInȱaddition,ȱtheȱcostȱ ofȱ uncoveringȱ allȱ customerȱ nonȬdisclosure,ȱ evenȱ ifȱ aȱ robustȱ methodologyȱ toȱ achieveȱ thisȱ wasȱ identified,ȱ isȱ likelyȱ toȱ beȱ prohibitive.ȱ Theȱ followingȱ sectionsȱ examineȱtheȱinherentȱproblemȱofȱcustomerȱnonȬdisclosureȱofȱallȱcircumstancesȱ and/orȱchangesȱinȱcircumstances,ȱandȱprovideȱsomeȱindicativeȱinformationȱonȱ theȱpossibleȱextentȱofȱcustomerȱnonȬdisclosure.ȱ Customer non-disclosure of all circumstances or changed circumstances 3.61 Theȱ RSSȱ providesȱ anȱ estimateȱ ofȱ incorrectȱ payments.ȱ Itȱ doesȱ thisȱ byȱ identifyingȱ casesȱ whereȱ theȱ informationȱ securedȱ throughȱ theȱ RSSȱ reviewȱ processȱonȱcustomers’ȱcircumstancesȱisȱdifferentȱfromȱthatȱheldȱbyȱCentrelink,ȱ andȱdetectingȱifȱthereȱisȱaȱfinancialȱimpactȱonȱtheȱcustomer’sȱpaymentȱarisingȱ fromȱthisȱdifference.ȱ 3.62 DifferencesȱmayȱbeȱdueȱtoȱidentificationȱinȱtheȱRSSȱReviewȱprocessȱof:ȱ x nonȬdeclarationȱand/orȱunderȬdeclarationȱbyȱtheȱcustomerȱofȱincomeȱorȱ assets;ȱ x theȱ customerȱ notȱ havingȱ previouslyȱ reportedȱ allȱ circumstancesȱ and/orȱ changesȱinȱtheirȱcircumstancesȱatȱtheȱtimeȱtheyȱoccurred;ȱȱ x aȱ changeȱ ofȱ circumstancesȱ occurringȱ withinȱ theȱ reportingȱ period104;ȱ and/orȱ x Centrelinkȱadministrativeȱerror.ȱ 3.63 Therefore,ȱ toȱ fullyȱ meetȱ itsȱ objectiveȱ toȱ measureȱ theȱ levelȱ ofȱ incorrectȱ payment,ȱtheȱRSSȱprocessȱmustȱinvolveȱdetectionȱofȱundeclaredȱcircumstancesȱ and/orȱchangesȱinȱcircumstancesȱ(andȱanyȱalliedȱfinancialȱimpact).ȱȱ 104 Customers are given a period of time to report changes in their circumstances. The RSS review may occur within this period and before the customer has reported the change. In this case the change is not ‘undeclared’. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 65 Capacity of the RSS to detect non-disclosure of all or changed circumstances 3.64 Becauseȱ theȱ RSSȱ Reviewȱ processȱ involvesȱ callingȱ inȱ aȱ customerȱ andȱ completelyȱreviewingȱhis/herȱentitlement,ȱitȱhasȱtheȱcapacityȱtoȱdetectȱwhereȱaȱ customer’sȱpaymentȱisȱincorrectȱinȱaȱrangeȱofȱcasesȱsuchȱasȱwhere:ȱ x customersȱ mayȱ haveȱ overlookedȱ theirȱ responsibilityȱ toȱ reportȱ allȱ theirȱ circumstancesȱand/orȱchangesȱinȱtheirȱcircumstancesȱbutȱareȱwillingȱtoȱ discloseȱtheseȱwhenȱaskedȱinȱanȱRSSȱinterview;ȱ x customersȱdidȱnotȱfullyȱunderstandȱtheirȱobligationsȱtoȱdiscloseȱbutȱareȱ happyȱ toȱ doȱ soȱ whenȱ theseȱ areȱ explainedȱ againȱ duringȱ theȱ RSSȱ interview;ȱ x customersȱprovideȱinformationȱatȱtheȱRSSȱinterviewȱwhich,ȱonȱfurtherȱ investigationȱ byȱ Centrelink––suchȱ asȱ contactȱ withȱ employersȱ orȱ educationalȱinstitutions,ȱleadsȱtoȱtheȱdetectionȱofȱanȱincorrectȱpayment;ȱ orȱ x onȱ review,ȱ aȱ Centrelinkȱ administrativeȱ errorȱ isȱ detectedȱ whichȱ hasȱ impactedȱonȱaȱcustomer’sȱpayment.ȱȱ 3.65 However,ȱtheȱANAOȱfoundȱthatȱthereȱareȱsignificantȱlimitationsȱinȱtheȱ capacityȱ ofȱ theȱ RSSȱ Programmeȱ toȱ detectȱ undeclaredȱ circumstancesȱ and/orȱ changesȱinȱcircumstances,ȱandȱsoȱidentifyȱallȱerrors.ȱThis,ȱtherefore,ȱleadsȱtoȱanȱ underestimateȱofȱtheȱlevelȱofȱpaymentȱincorrectnessȱandȱlimitsȱtheȱcapacityȱofȱ theȱprogrammeȱtoȱmeasureȱtheȱaccuracyȱofȱoutlays.ȱȱ 3.66 Thisȱ isȱ becauseȱ ifȱ aȱ customerȱ attendsȱ anȱ RSSȱ reviewȱ butȱ doesȱ not,ȱ forȱ whateverȱreason,ȱprovideȱaccurateȱinformationȱonȱtheirȱcircumstancesȱtheȱRSSȱ processȱ mayȱ notȱ otherwiseȱ detectȱ aȱ changeȱ inȱ theȱ customer’sȱ circumstancesȱ affectingȱtheirȱentitlement.ȱȱ 3.67 Theȱ problemȱ ofȱ undetectedȱ nonȬdisclosureȱ ofȱ allȱ customers’ȱ circumstancesȱ and/orȱ changesȱ inȱ circumstancesȱ occursȱ asȱ aȱ resultȱ ofȱ theȱ relianceȱinȱtheȱRSSȱprocessȱonȱcustomers’ȱcompleteȱdisclosureȱregardingȱtheirȱ circumstances.ȱ Thisȱ isȱ exacerbatedȱ toȱ anȱ extentȱ asȱ aȱ resultȱ ofȱ problemsȱ withȱ howȱCentrelinkȱcarriesȱoutȱtheȱRSSȱ(theseȱareȱanalysedȱfurtherȱinȱChapterȱ5).ȱȱ 3.68 Theȱ undetectedȱ nonȬdisclosureȱ isȱ ofȱ importanceȱ asȱ itȱ leadsȱ toȱ anȱ underestimateȱ ofȱ theȱ levelȱ ofȱ incorrectȱ payment,ȱ andȱ inȱ turnȱ underminesȱ theȱ robustnessȱ ofȱ theȱ RSSȱ dataȱ usedȱ toȱ calculateȱ theȱ accuracyȱ ofȱ outlays.ȱ Thisȱ bringsȱ intoȱ questionȱ theȱ veryȱ highȱ andȱ preciseȱ levelsȱ ofȱ accuracyȱ reportedȱȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 66 Meeting the Major Objective of the RSS Programme (inȱ2004–05ȱ97.9ȱperȱcentȱinȱtheȱcaseȱofȱFaCSIA,ȱandȱ95.8ȱperȱcentȱforȱDEWR),ȱ andȱalsoȱtheȱwayȱtheȱaccuracyȱlevelȱisȱreported.ȱȱ 3.69 Mostȱ ofȱ theȱ RSSȱ Coordinatorsȱ andȱ Reviewersȱ theȱ ANAOȱ interviewedȱ duringȱthisȱaudit,ȱthatȱisȱtheȱpeopleȱcollectingȱtheȱdata,ȱsawȱnonȬdisclosureȱasȱaȱ problem.ȱExamplesȱofȱRSSȱCoordinators’ȱandȱReviewers’ȱcommentsȱinȱrelationȱ toȱnonȬdisclosureȱareȱlistedȱinȱFigureȱ3.1ȱbelow.ȱ Figure 3.1. RSS Reviewers’ comments highlighting the problem of non-disclosure x Ifȱ peopleȱ areȱ honestȱ weȱ willȱ findȱ outȱ changes.ȱ Ifȱ theyȱ haven’tȱ toldȱ usȱ elsewhere,ȱ thenȱ youȱ haveȱ toȱ wonderȱ ifȱ they’llȱ tellȱ youȱ atȱ [anȱ RSS]ȱ interview.ȱ Youȱmayȱhaveȱsuspicions,ȱbutȱtriggersȱrelyȱonȱhonesty.ȱ x Peopleȱwhoȱwon’tȱtellȱyouȱtheȱtruthȱwon’tȱtellȱyouȱanywayȱ[method]ȱyouȱdoȱit.ȱ x Someȱcoverȱtheirȱtracksȱwell,ȱothersȱdon’t.ȱ x Findingȱ nonȬdisclosureȱ isȱ sometimesȱ aȱ matterȱ ofȱ luck,ȱ sometimesȱ aȱ matterȱ ofȱ investigation.ȱButȱhowȱdeepȱyouȱcanȱgoȱisȱlimitedȱdueȱtoȱtimeȱandȱresources.ȱ x Ifȱ earningsȱ haveȱ neverȱ beenȱ recordedȱ you’dȱ haveȱ noȱ ideaȱ ifȱ theyȱ wereȱ employed.ȱ x Weȱ won’tȱ pickȱ upȱ cashȬinȬhandȱ paymentsȱ unlessȱ theyȱ areȱ foundȱ inȱ theȱ customer’sȱbankȱaccount.ȱWeȱareȱsolelyȱdependentȱonȱcustomersȱtoȱbeȱhonestȱ inȱthisȱregard.ȱ x Weȱ can’tȱ alwaysȱ proveȱ anȱ MLRȱ [MarriageȬlikeȱ Relationship].ȱ Iȱ canȱ haveȱ aȱ senseȱ thatȱ somethingȱ isȱ notȱ right,ȱ butȱ can’tȱ proveȱ it.ȱ CashȬinȬhandȱ isȱ alsoȱ difficult.ȱ x RegardingȱMLRs,ȱifȱtheyȱdon’tȱtellȱusȱweȱwon’tȱknow.ȱ ȱ Source: ANAO Fieldwork. 3.70 Inȱtheȱcourseȱofȱtheȱaudit,ȱallȱfourȱagenciesȱinvolvedȱadvisedȱtheȱANAOȱ thatȱ theyȱ wereȱ awareȱ thatȱ nonȬdisclosureȱ wouldȱ necessarilyȱ occur.ȱ However,ȱ FaCSIAȱ advisedȱ theȱ ANAOȱ onȱ 7ȱ Decemberȱ 2005ȱ thatȱ theȱ potentialȱ forȱ nonȬ disclosureȱinȱaȱRSSȱinterviewȱisȱnoȱgreaterȱthanȱforȱotherȱCentrelinkȱinterviews.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 67 TheȱANAOȱacceptsȱthatȱnoȱestimateȱwillȱbeȱcompletelyȱaccurate.ȱHowever,ȱtheȱ RSSȱisȱdesignedȱtoȱfindȱtheȱerrorȱinȱotherȱCentrelinkȱprocesses.ȱ 3.71 Inȱ responseȱ toȱ issuesȱ papersȱ fromȱ thisȱ audit,ȱ Centrelinkȱ advisedȱ theȱ ANAOȱonȱ3ȱFebruaryȱ2006ȱthat:ȱ Inȱ relationȱ toȱ theȱ Randomȱ Sampleȱ Programmeȱ andȱ theȱ identificationȱ ofȱ nonȱ disclosureȱ Centrelinkȱ isȱ notȱ currentlyȱ askedȱ inȱ itsȱ Businessȱ Partnershipȱ Agreementȱ withȱ theȱ policyȱ departmentsȱ toȱ useȱ theȱ RSSȱ Programmeȱ forȱ thisȱ purpose.ȱHowever,ȱallȱstaffȱareȱexpectedȱtoȱexerciseȱdutyȱofȱcareȱinȱallȱaspectsȱ ofȱ theȱ administrationȱ ofȱ Governmentȱ outlays.ȱ Theȱ useȱ ofȱ theȱ RSSȱ forȱ theȱ additionalȱ purposeȱ ofȱ nonȱdeclarationȱ detectionȱ couldȱ beȱ renegotiatedȱ byȱ theȱ policyȱ departmentsȱ withȱ Centrelinkȱ whenȱ issuesȱ suchȱ asȱ cost,ȱ timelinessȱ andȱ performanceȱindicatorsȱwouldȱbeȱtakenȱintoȱaccount.ȱ 3.72 However,ȱ theȱ ANAOȱ notesȱ thatȱ theȱ purchaserȱ departmentsȱ stateȱ thatȱ theȱ RSSȱ isȱ designedȱ toȱ establishȱ whetherȱ customersȱ areȱ beingȱ correctlyȱ paidȱ (seeȱ paragraphȱ 3.2).ȱ Theȱ mostȱ prevalentȱ causeȱ ofȱ incorrectȱ paymentȱ isȱ nonȬ complianceȱbyȱcustomersȱwithȱtheirȱobligationȱtoȱnotifyȱCentrelinkȱofȱchangesȱ inȱtheirȱcircumstances.105ȱTherefore,ȱifȱtheȱRSSȱisȱtoȱidentifyȱanythingȱotherȱthanȱ Centrelinkȱadministrativeȱerrorȱorȱcustomerȱmistakes,ȱthenȱitȱmustȱnecessarilyȱ aimȱ toȱ identifyȱ customerȱ nonȬdisclosure.ȱ Thisȱ isȱ whyȱ theȱ RSSȱ includesȱ aȱ numberȱ ofȱ proceduresȱ toȱ identifyȱ suchȱ nonȬdisclosureȱ (forȱ example,ȱ triggerȱ questions106ȱandȱfollowȬupȱprocedures107).ȱ 3.73 Theȱ importanceȱ ofȱ identifyingȱ nonȬdisclosureȱ isȱ reinforcedȱ givenȱ theȱ roleȱ ofȱ theȱ RSSȱ asȱ aȱ toolȱ toȱ measureȱ theȱ effectivenessȱ ofȱ theȱ complianceȱ framework.108ȱ Toȱ performȱ thisȱ role,ȱ theȱ RSSȱ wouldȱ needȱ toȱ identifyȱ nonȬ disclosureȱ whichȱ hasȱ escapedȱ theȱ complianceȱ net.ȱ Moreȱ informationȱ onȱ thisȱ FaCSȱPBSȱobjectiveȱforȱtheȱRSSȱProgrammeȱisȱatȱparagraphsȱ4.40–4.48.ȱȱ 105 The final results of the RSS in 2004–05 indicate that of all customer errors, 53.7 per cent were the result of customers’ failure to update Centrelink of changes in circumstances and 35.8 per cent were because of customers’ failure to declare circumstances fully. 106 A ‘trigger question’ is a question which may indicate the possibility of a change in circumstances, for example a the identification of a new person in the household may lead to additional questions regarding the existence of a marriage-like relationship. 107 Follow-up procedures include contacting employers for further information or banks for bank account details. 108 Namely to ‘[provide] a greater appreciation of the extent to which the overall compliance strategy is effective and a better understanding of emerging risks not currently adequately addressed in the strategy’. Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 68 Meeting the Major Objective of the RSS Programme 3.74 Whileȱ theȱ actualȱ levelȱ ofȱ nonȬdisclosureȱ isȱ unknown,ȱ thereȱ isȱ someȱ informationȱavailableȱwhichȱgivesȱanȱindicationȱofȱtheȱpotentialȱextentȱofȱnonȬ disclosure.ȱThisȱisȱexaminedȱinȱmoreȱdetailȱbelowȱ(seeȱparagraphsȱ3.75ȱ–ȱ3.87).ȱ Information on the potential extent of non-disclosure 3.75 Theȱ followingȱ sectionsȱ outline,ȱ first,ȱ recentȱ researchȱ commissionedȱ byȱ FaCSIA,ȱDEWRȱandȱDEST,ȱinvolvingȱaȱsmallȱstudyȱofȱcustomersȱandȱothersȱinȱ theȱ community,ȱ whichȱ hasȱ providedȱ someȱ informationȱ aboutȱ customerȱ toleranceȱ levelsȱ forȱ nonȬdisclosure.ȱ Secondly,ȱ theȱ resultsȱ areȱ examinedȱ ofȱ researchȱ onȱ theȱ sizeȱ ofȱ theȱ cashȱ economy,ȱ whichȱ providesȱ someȱ indicativeȱ informationȱ onȱ theȱ possibleȱ impactȱ ofȱ nonȬdisclosureȱ ofȱ cashȬinȬhandȱ payments,ȱ andȱ alsoȱ onȱ theȱ participationȱ ofȱ welfareȱ paymentȱ recipientsȱ inȱ theȱ cashȱeconomy.ȱ Tolerance for non-disclosure 3.76 Inȱearlyȱ2005,ȱFaCSIA,ȱDEWRȱ andȱDESTȱ commissionedȱ researchȱtoȱbeȱ undertakenȱtoȱinformȱtheȱdevelopmentȱofȱtheȱKeepingȱtheȱSystemȱFairȱCampaignȱ (badgedȱ asȱ Supportȱ theȱ Systemȱ thatȱ Supportsȱ Youȱ whenȱ releasedȱ inȱ Septemberȱ 2005).ȱTheȱresearchȱwasȱbasedȱonȱfocusȱgroupsȱwithȱaȱsmallȱnumberȱofȱpeopleȱ (119ȱinȱtotal),ȱincludingȱbothȱCentrelinkȱpaymentȱrecipientsȱandȱnonȬrecipients.ȱ Participationȱ wasȱ anonymousȱ withȱ noȱ penaltiesȱ forȱ disclosure.ȱ Whileȱ theȱ researchȱ mayȱ stillȱ underestimateȱ nonȬdisclosureȱ (becauseȱ ofȱ theȱ possibleȱ perceptionȱofȱpenalties),ȱitȱprovidesȱgoodȱindicativeȱinformation.ȱȱ 3.77 Theȱ researchȱ providesȱ aȱ rangeȱ ofȱ informationȱ onȱ communityȱ attitudesȱ toȱ disclosingȱ informationȱ toȱ Centrelinkȱ onȱ customers’ȱ circumstances,ȱ andȱ highlightsȱ theȱ potentialȱ forȱ nonȬdisclosureȱ ofȱ changedȱ circumstances.ȱ Thisȱ providesȱ someȱ supportingȱ informationȱ onȱ theȱ potentialȱ forȱ nonȬdisclosureȱ inȱ theȱ RSS,ȱ withȱ aȱ concomitantȱ underȬidentificationȱ ofȱ casesȱ whereȱ theȱ informationȱ providedȱ toȱ Centrelinkȱ toȱ supportȱ paymentsȱ isȱ notȱ correctȱ andȱ consequentȱunderestimationȱofȱtheȱlevelȱofȱincorrectȱpaymentsȱoccurs.ȱ 3.78 Theȱ researchȱ foundȱ thatȱ thereȱ wasȱ ‘aȱ highȱ levelȱ ofȱ toleranceȱ ofȱ andȱ acceptanceȱofȱnonȬcompliantȱbehavioursȱandȱpractices.ȱThereȱwasȱwidespreadȱ sympathyȱandȱempathyȱwithȱindividualsȱwhoȱdidȱnotȱreportȱcertainȱchangesȱinȱ theirȱ circumstances.’109ȱ Theȱ researchȱ suggestedȱ thatȱ ‘nonȬreportingȱ isȱ increasinglyȱbecomingȱnormalisedȱbehaviour’.110ȱ 109 Orima Research, Report on the Developmental Research for the Keeping the System Fair Campaign, March 2005, p. 19. 110 ibid., p. 5. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 69 3.79 Researchȱ wasȱ alsoȱ undertakenȱ intoȱ theȱ motivatorsȱ ofȱ nonȬcompliance.ȱ Thisȱ informationȱ providesȱ anotherȱ layerȱ thatȱ supportsȱ theȱ premiseȱ thatȱ nonȬ disclosureȱ willȱ occurȱ inȱ theȱ RSS.ȱ Figureȱ 3.2ȱ setsȱ outȱ theseȱ motivators,ȱ whichȱ wereȱfoundȱtoȱbeȱvariedȱandȱcomplex.ȱ Figure 3.2 Centrelink customer motivators for non-compliance x Aȱ beliefȱ amongȱ someȱ paymentȱ recipientsȱ thatȱ itȱ wasȱ theirȱ “right”ȱ toȱ receiveȱ andȱmaximiseȱtheirȱbenefits;ȱ x Aȱ beliefȱ thatȱ nonȬcompliantȱ behaviourȱ isȱ beneficialȱ forȱ theȱ economyȱ asȱ itȱ generatesȱmoreȱincomeȱ(andȱhenceȱmoreȱspending);ȱ x AȱviewȱofȱnonȬcomplianceȱasȱaȱ“victimlessȱcrime”;ȱȱ x Aȱ perceptionȱ thatȱ theȱ costȱ associatedȱ withȱ welfareȱ nonȬcomplianceȱ wasȱ insignificantȱinȱvalueȱcomparedȱtoȱthatȱofȱcorporateȱnonȬcompliance;ȱ x Aȱ lackȱ ofȱ desireȱ toȱ “doȱ theȱ rightȱ thing”ȱ towardȱ Centrelink––thereȱ wasȱ aȱ perceptionȱ thatȱ insufficiencyȱ ofȱ paymentsȱ andȱ poorȱ customerȱ serviceȱ fromȱ Centrelinkȱdidȱnotȱwarrantȱreciprocatingȱthroughȱcompliantȱbehaviour;ȱandȱ x Aȱ desireȱ toȱ protectȱ aȱ thirdȱ partyȱ fromȱ theȱ impactȱ ofȱ notifyingȱ Centrelinkȱ ofȱ changesȱ inȱ circumstancesȱ (e.g.ȱ notȱ wantingȱ toȱ getȱ anȱ employerȱ inȱ troubleȱ forȱ payingȱ cashȬinȬhandȱ orȱ notȱ wantingȱ aȱ partnerȱ toȱ discloseȱ his/herȱ personalȱ detailsȱtoȱCentrelinkȱasȱaȱresultȱofȱreportingȱchangesȱinȱlivingȱarrangements).111ȱ Source: Orima Research, Report on the Developmental Research for the Keeping the System Fair Campaign, March 2005. 3.80 Theȱ researchȱ reportedȱ thatȱ typesȱ ofȱ nonȬreporting,ȱ whichȱ wereȱ consideredȱ acceptableȱ byȱ focusȱ groupȱ participants,ȱ includedȱ changesȱ inȱ circumstancesȱ thatȱ wereȱ irregularȱ (forȱ exampleȱ irregularȱ cashȬinȬhandȱ jobs)ȱ andȱchangesȱinȱcircumstancesȱthatȱwereȱuncertainȱorȱunstableȱ(forȱexampleȱnotȱ knowingȱ whetherȱ aȱ newȱ marriageȬlikeȱ relationshipȱ wouldȱ beȱ permanentȱ orȱ longȱterm).112ȱ 3.81 InȱadditionȱtoȱfindingȱthatȱthereȱwasȱtoleranceȱforȱnotȱreportingȱcashȬinȬ handȱpayments,ȱtheȱstudyȱalsoȱlookedȱatȱtheȱlevelsȱofȱincomeȱearnedȱthatȱwereȱ consideredȱ acceptableȱ toȱ notȱ report.ȱ Theȱ researchȱ foundȱ thatȱ notȱ reportingȱ earningsȱ ofȱ $100ȱ aȱ weekȱ wasȱ generallyȱ perceivedȱ asȱ notȱ beingȱ serious.ȱ Notȱ untilȱ earningsȱ wereȱ moreȱ thanȱ $300ȱ aȱ weekȱ didȱ someȱ studyȱ participantsȱ considerȱthatȱnotȱreportingȱwasȱveryȱserious.ȱȱ 111 Orima Research, op. cit., p. 6 and p. 25. 112 Orima Research, op. cit., p. 20. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 70 Meeting the Major Objective of the RSS Programme 3.82 TheȱANAOȱacceptsȱthatȱthisȱresearchȱwasȱconductedȱwithȱfocusȱgroupsȱ involvingȱ aȱ smallȱ groupȱ ofȱ peopleȱ (119ȱ inȱ total),ȱ includingȱ bothȱ Centrelinkȱ paymentȱrecipientsȱandȱnonȬrecipients.ȱHowever,ȱgivenȱthatȱparticipationȱwasȱ anonymousȱ withȱ noȱ penaltiesȱ forȱ disclosure,ȱ theȱ ANAOȱ considersȱ thatȱ theȱ conditionsȱwereȱrightȱtoȱpromptȱfrankȱresponsesȱfromȱparticipantsȱandȱthatȱtheȱ resultsȱ ofȱ theȱ researchȱ areȱ indicativeȱ thatȱ bothȱ nonȬreportingȱ ofȱ allȱ circumstancesȱ and/orȱ changesȱ inȱ circumstancesȱ byȱ someȱ customersȱ participatingȱ inȱ theȱ RSSȱ isȱ likelyȱ toȱ occur,ȱ andȱ thatȱ theȱ associatedȱ levelsȱ ofȱ unreportedȱ incomeȱ mayȱ beȱ substantial.ȱ Thisȱ hasȱ implicationsȱ forȱ theȱ robustnessȱofȱtheȱRSSȱaccuracyȱdata.ȱȱ Cash economy 3.83 Theȱsizeȱofȱtheȱcashȱeconomyȱisȱdifficultȱtoȱestimate.ȱTheȱCashȱEconomyȱ TaskȱForceȱ(setȱupȱbyȱtheȱCommissionerȱforȱTaxationȱinȱ1996)ȱhasȱstated:ȱ Currently,ȱthereȱisȱnoȱofficialȱorȱreliableȱestimateȱofȱtheȱsizeȱofȱtheȱAustralianȱ cashȱ economyȱ orȱ theȱ revenueȱ foregone.ȱ Academicȱ studiesȱ estimateȱ theȱ cashȱ economyȱtoȱbeȱbetweenȱ3.5ȱ%ȱandȱ13.4ȱ%ȱofȱGDP.ȱUsingȱ1995/96ȱGDPȱfiguresȱ asȱ aȱ baseȱ andȱ anȱ effectiveȱ averageȱ taxȱ rateȱ ofȱ 23%,ȱ theseȱ studiesȱ suggestȱ thatȱ theȱ annualȱ amountȱ ofȱ incomeȱ taxȱ revenueȱ foregoneȱ couldȱ beȱ betweenȱ $3.9ȱbillionȱandȱ$15.1ȱbillion.113ȱ 3.84 Inȱ2003,ȱtheȱRegulatoryȱInstitutionsȱNetworkȱatȱtheȱAustralianȱNationalȱ Universityȱ conductedȱ aȱ nationalȱ survey114,ȱ partȱ ofȱ whichȱ relatedȱ toȱ theȱ cashȱ economy.ȱ Theȱ surveyȱ wasȱ anonymousȱ andȱ respondentsȱ wereȱ selectedȱ fromȱ aȱ stratifiedȱ randomȱ sampleȱ ofȱ Australianȱ households.ȱ Theȱ surveyȱ foundȱ thatȱ 9.4ȱperȱ centȱ ofȱ respondentsȱ hadȱ workedȱ forȱ cashȬinȬhandȱ paymentsȱ (cashȬinȬ handȱwasȱdefinedȱasȱcashȱmoneyȱthatȱtaxȱisȱnotȱpaidȱon).115ȱȱ 3.85 Importantly,ȱinȱtheȱcontextȱofȱtheȱRSS,ȱtheȱsurveyȱfoundȱthatȱthoseȱwhoȱ wereȱ inȱ receiptȱ ofȱ aȱ governmentȱ benefitȱ wereȱ moreȱ likelyȱ toȱ beȱ engagingȱ inȱ cashȱeconomyȱactivitiesȱ(11ȱperȱcentȱofȱbeneficiaries,ȱcomparedȱwithȱ8ȱperȱcentȱ ofȱ nonȬbeneficiaries),ȱ althoughȱ thereȱ wereȱ noȱ significantȱ differencesȱ inȱ theȱ 113 <http://www.ato.gov.au/businesses/content.asp?doc=/content/39065.htm&page=13&H13>. 114 The survey used a stratified random sample, with 80 000 questionnaires delivered to households. The analysis referred to in this audit report relates to data from 3 323 respondents. 115 Regulatory Institutions Network, Australian National University Monika Reinhart, Jenny Job and Valerie Braithwaite, Untaxed Cash Work: Feeding Mouths, Lining Wallets. Report for the Department of Family and Community Services, March 2004, p. 30. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 71 amountȱ ofȱ moneyȱ earned.116ȱ Thisȱ reinforcedȱ aȱ similarȱ findingȱ fromȱ surveysȱ conductedȱinȱ2000ȱandȱ2002.117ȱ 3.86 Aȱ 2002–03ȱ survey118ȱ ofȱ Australianȱ taxpayersȱ foundȱ thatȱ 23ȱperȱ centȱ ofȱ respondentsȱindicatedȱthatȱtheyȱwereȱpaidȱincomeȱinȱcash.ȱOfȱthose,ȱ12ȱperȱcentȱ saidȱtheyȱdeclaredȱnoneȱofȱthisȱincomeȱinȱtheirȱtaxȱreturn.119ȱ 3.87 Theȱaboveȱdataȱgiveȱsomeȱindicationȱthatȱtheȱsizeȱofȱtheȱcashȱeconomyȱ isȱsignificant,ȱthatȱthoseȱinȱreceiptȱofȱgovernmentȱbenefitsȱareȱmoreȱlikelyȱtoȱbeȱ engagingȱ inȱ cashȱ economyȱ activities,ȱ andȱ thatȱ thereȱ isȱ aȱ propensityȱ toȱ notȱ declareȱ cashȬinȬhandȱ income.ȱ Thisȱ indicativeȱ information,ȱ coupledȱ withȱ theȱ findingsȱofȱANAOȱfieldȱwork,ȱisȱimportantȱinȱidentifyingȱthatȱnonȬdisclosureȱisȱ likelyȱ toȱ beȱ anȱ issueȱ forȱ theȱ RSS,ȱ evenȱ thoughȱ thereȱ areȱ processesȱ withinȱ theȱ RSSȱ designedȱ toȱ uncoverȱ suchȱ nonȬdisclosure.ȱ Thisȱ hasȱ implicationsȱ forȱ theȱ robustnessȱofȱtheȱRSSȱaccuracyȱdata.ȱȱ Other limitations of the programme Limitations in the steps taken in the RSS process to detect customer non-disclosure of all circumstances or changes in circumstances 3.88 Theȱ followingȱ sectionȱ examinesȱ theȱ limitationsȱ ofȱ theȱ RSSȱ processesȱ designedȱ toȱ identifyȱ customerȱ nonȬdisclosure,ȱ andȱ raisesȱ someȱ operationalȱ issues.ȱIssuesȱrelatedȱtoȱtheȱoperationȱofȱtheȱRSSȱ(includingȱnonȬdisclosure)ȱareȱ examinedȱinȱdetailȱinȱChapterȱ5.ȱ Methodology 3.89 Theȱ RSSȱ hasȱ aȱ twoȬpartȱ methodology.ȱ First,ȱ theȱ selectedȱ customerȱ isȱ requiredȱ toȱ participateȱ inȱ aȱ faceȬtoȬfaceȱ interviewȱ withȱ anȱ RSSȱ Reviewer120ȱ usingȱ aȱ structuredȱ questionnaire.ȱ Questions,ȱ similarȱ toȱ thoseȱ inȱ aȱ newȱ claimȱ process,ȱ areȱ askedȱ toȱ ascertainȱ theȱ customer’sȱ currentȱ circumstancesȱ and,ȱ hence,ȱ his/herȱ eligibilityȱ andȱ paymentȱ rate.ȱ Theȱ interviewȱ usesȱ aȱ setȱ 116 ibid., p. 56. 117 ibid., p. 54. 118 The survey elicited responses from a representative sample of 965 taxpayers. 119 Michael Wenzel, Kristina Murphy, Eliza Ahmed and Malcolm Mearns, Preliminary Findings from ‘The what’s fair and what’s unfair survey about justice issues in the Australian tax context’, Centre for Tax System Integrity Working Paper 59, April 2004, p. 35. 120 This is not always the case. In some Areas, staff who are not RSS staff conduct the interview. This is examined in further detail in Chapter 5. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 72 Meeting the Major Objective of the RSS Programme questionnaire,ȱ whichȱ isȱ developedȱ byȱ Centrelinkȱ andȱ theȱ threeȱ purchaserȱ departments.ȱThisȱquestionnaireȱisȱtestedȱbeforeȱgoingȱintoȱtheȱfield.ȱ 3.90 Secondly,ȱtheȱRSSȱReviewerȱundertakesȱfollowȬupȱproceduresȱtoȱobtainȱ informationȱfromȱthirdȱpartiesȱ(suchȱasȱemployersȱandȱbanks)ȱandȱfromȱotherȱ sourcesȱ (forȱ exampleȱ Centrelink’sȱ ownȱ databaseȱ andȱ theȱ electoralȱ roll),ȱ toȱ confirmȱ theȱ customer’sȱ circumstancesȱ and/orȱ toȱ identifyȱ possibleȱ nonȬ disclosureȱ ofȱ changedȱ customerȱcircumstances.ȱTheȱ informationȱfromȱ theȱ twoȱ partsȱ ofȱ theȱ methodologyȱ isȱ thenȱ usedȱ toȱ identifyȱ error,ȱ itsȱ sourceȱ andȱ anyȱ alliedȱchangesȱtoȱpayment.ȱ Interview 3.91 Thereȱ isȱ theȱ potentialȱ forȱ nonȬdisclosureȱ toȱ occurȱ inȱ theȱ interviewȱ because,ȱtoȱanȱextent,ȱitȱreliesȱonȱtheȱcustomer’sȱcompleteȱdisclosureȱofȱhis/herȱ circumstances,ȱ thatȱ is,ȱ his/herȱ earnings,ȱ assets,ȱ maritalȱ statusȱ andȱ otherȱ circumstancesȱ relatedȱ toȱ eligibilityȱ forȱ receivingȱ Centrelinkȱ payments.ȱ Centrelinkȱ acknowledgedȱ thisȱ limitationȱ inȱ 2000,ȱ inȱ anȱ internalȱ Minuteȱ toȱ theȱ thenȱCEO.ȱTheȱMinuteȱstatedȱthat:ȱ Identificationȱofȱundeclaredȱincomeȱinȱcasesȱwhereȱnoȱtriggers,ȱorȱevidenceȱofȱ earningsȱ isȱ providedȱ byȱ theȱ customersȱ isȱ difficultȱ inȱ theȱ [RSS]ȱ interviewȱ alone.121ȱ 3.92 Theȱ Minuteȱ goesȱ onȱ toȱ sayȱ thatȱ theȱ processȱ toȱ identifyȱ undeclaredȱ incomeȱ‘reliesȱonȱtheȱsuiteȱofȱcontrolsȱprovidedȱbyȱdataȱmatchingȱroutinesȱandȱ otherȱtargetedȱreviewȱprocesses’.122ȱHowever,ȱthisȱcreatesȱaȱcircularȱargument,ȱ asȱoneȱobjectiveȱofȱtheȱRSSȱisȱtoȱmeasureȱtheȱeffectivenessȱofȱtheseȱcontrols.ȱ 3.93 Aȱ projectȱ planȱ developedȱ inȱ 2000ȱ forȱ theȱ Ageȱ Pensionȱ RSSȱ includedȱ aȱ sectionȱ onȱ projectȱ risks.ȱ Theȱ identifiedȱ risksȱ wereȱ asȱ follows:ȱ politicalȱ issues;ȱ projectȱ management;ȱ systemsȱ issues;ȱ teams/resources;ȱ andȱ reviewȱ staffȱ experience/knowledge.123ȱ However,ȱ theȱ potentialȱ forȱ nonȬdisclosureȱ byȱ customersȱinȱtheȱRSSȱprocessȱwasȱnotȱidentifiedȱasȱaȱrisk.ȱȱ 3.94 Theȱ potentialȱ forȱ identifyingȱ nonȬdisclosureȱ inȱ theȱ RSSȱ processȱ isȱ furtherȱ limitedȱ dueȱ toȱ variationsȱ inȱ theȱ levelȱ ofȱ probingȱ undertakenȱ byȱ theȱ variousȱ RSSȱ Reviewersȱ toȱ identifyȱ allȱ customerȱ circumstances.ȱ Suchȱ probingȱ mayȱ uncoverȱ nonȬdisclosure.ȱ Duringȱ fieldworkȱ forȱ theȱ audit,ȱ theȱ ANAOȱ 121 Centrelink, Minute on Random Sample Survey Results to the CEO from the Deputy General Manager, Performance Assurance and Evaluation, March 2000. 122 ibid. 123 Centrelink, Project Plan – Age Pension Random Sample Survey, August 2000, p. 7. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 73 identifiedȱ variationsȱ inȱ theȱ extentȱ ofȱ probingȱ undertakenȱ byȱ variousȱ RSSȱ ReviewersȱandȱthisȱisȱexaminedȱinȱmoreȱdetailȱinȱChapterȱ5.ȱȱ 3.95 Theȱ1999–2000ȱFaCSȱ PBS,ȱ underȱ whichȱ fundingȱ wasȱ firstȱ providedȱ forȱ theȱRSSȱProgramme,ȱstatesȱoneȱofȱtheȱobjectivesȱofȱtheȱRSSȱisȱtoȱprovideȱmoreȱ rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱ toȱ adviseȱ ofȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstances).124ȱ Theȱ ANAOȱ foundȱ that,ȱwhereȱaȱcustomerȱdoesȱdiscloseȱaȱpreviouslyȱunreportedȱchangeȱinȱhis/herȱ circumstancesȱduringȱtheȱRSSȱreview,ȱquestionsȱtoȱuncoverȱwhyȱtheyȱdidȱnotȱ reportȱ theȱ changeȱ areȱ notȱ askedȱ and,ȱ therefore,ȱ notȱ answered.ȱ Inȱ thisȱ circumstance,ȱ theȱ RSSȱ interviewȱ cannotȱ uncoverȱ theȱ reasonsȱ whyȱ customersȱ haveȱnotȱcompliedȱwithȱtheirȱobligations.ȱ 3.96 Further,ȱinȱDecemberȱ2005,ȱFaCSIAȱprovidedȱtheȱANAOȱwithȱinternalȱ legalȱ advice125ȱ thatȱ itȱ hadȱ obtainedȱ inȱ responseȱ toȱ thisȱ audit.ȱ Thisȱ adviceȱ suggestsȱthatȱRSSȱReviewersȱmayȱinȱfactȱbeȱunableȱtoȱaskȱcustomersȱquestionsȱ relatingȱtoȱwhyȱtheyȱareȱnonȬcompliant.ȱTheȱchiefȱreasonȱgivenȱforȱthisȱisȱdueȱ toȱ theȱ possibilityȱ ofȱ selfȬincriminationȱ (seeȱ paragraphȱ 4.17ȱ forȱ furtherȱ information).ȱ 3.97 Thisȱ issueȱ andȱ othersȱ relatedȱ toȱ reasonsȱ forȱ incorrectȱ paymentȱ areȱ analysedȱfurtherȱinȱChapterȱ4ȱinȱtheȱsectionȱonȱ‘reasonsȱforȱincorrectȱpaymentȱ andȱ rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occurs’ȱ (seeȱ paragraphsȱ 4.4ȱ–ȱ4.26).ȱ 3.98 Experienceȱ sinceȱ theȱ commencementȱ ofȱ theȱ RSSȱ Programmeȱ hasȱ demonstratedȱthatȱgoingȱthroughȱtheȱRSSȱquestionnaireȱwithȱaȱrandomȱsampleȱ ofȱ customersȱ whoȱ haveȱ beenȱ calledȱ inȱ forȱ anȱ interviewȱ willȱ elicitȱ aȱ rangeȱ ofȱ informationȱ regardingȱ previouslyȱ unreportedȱ circumstancesȱ and/orȱ changedȱ circumstances.ȱ Someȱ customers,ȱ thoseȱ whoȱ didȱ notȱ fullyȱ understandȱ theirȱ obligationsȱpreviously,ȱonceȱtheyȱhaveȱhadȱtheirȱobligationsȱexplainedȱtoȱthemȱ againȱ faceȬtoȬface,ȱ willȱ discloseȱ previouslyȱ undisclosedȱ circumstances.ȱ Someȱ otherȱcustomersȱmayȱdiscloseȱpreviouslyȱundisclosedȱcircumstancesȱduringȱanȱ RSSȱinterviewȱbecauseȱtheyȱwillȱbeȱuncomfortableȱinȱcontinuingȱtoȱnotȱdiscloseȱ inȱ aȱ faceȬtoȬfaceȱ interviewȱ withȱ aȱ Centrelinkȱ employee.ȱ However,ȱ goingȱ throughȱ theȱ processȱ ofȱ aȱ faceȬtoȬfaceȱ RSSȱ interviewȱ cannotȱ elicitȱ disclosureȱ ifȱ theȱcustomerȱisȱdeterminedȱnotȱtoȱdoȱso.ȱ 124 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137. 125 Contained in an email to the ANAO on 20 December 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 74 Meeting the Major Objective of the RSS Programme Triggers for further inquiry 3.99 AsȱaȱmeansȱofȱgoingȱsomeȱwayȱtoȱovercomingȱnonȬdisclosureȱbyȱnonȬ compliantȱ customers,ȱ theȱ RSSȱ questionnaireȱ hasȱ beenȱ designedȱ toȱ includeȱ aȱ numberȱofȱ‘trigger’ȱquestions.ȱDependingȱonȱtheȱcustomer’sȱanswerȱtoȱanyȱofȱ theseȱ questions,ȱ thereȱ mayȱ beȱ anȱ indicatorȱ promptingȱ furtherȱ inquiryȱ intoȱ anȱ aspectȱofȱtheirȱcircumstances.ȱThisȱmayȱleadȱtoȱtheȱuseȱofȱadditionalȱ‘modules’ȱ ofȱquestionsȱforȱcertainȱcircumstancesȱ(forȱexample,ȱmarriageȬlikeȱrelationshipsȱ orȱassets).ȱ 3.100 However,ȱduringȱfieldworkȱforȱthisȱaudit,ȱCentrelinkȱstaffȱinterviewedȱ byȱtheȱANAOȱadvisedȱthatȱtheseȱ‘triggers’ȱwereȱnotȱcompletelyȱeffective.ȱOtherȱ issuesȱ relatedȱ toȱ theȱ questionnaireȱ andȱ additionalȱ modulesȱ areȱ examinedȱ inȱ moreȱdetailȱinȱChapterȱ5.ȱ 3.101 Theȱ ANAOȱ identifiedȱ thatȱ cashȬinȬhandȱ paymentsȱ forȱ workȱ andȱ marriageȬlikeȱrelationshipsȱ(MLRs)ȱareȱtwoȱaspectsȱofȱaȱCentrelinkȱcustomer’sȱ circumstancesȱ whichȱ areȱ particularlyȱ difficultȱ toȱ detect,ȱ ifȱ theȱ customerȱ doesȱ notȱ complyȱ withȱ theirȱ obligationȱ toȱ discloseȱ informationȱ aboutȱ them.ȱ Theȱ followȬupȱ procedures,ȱ carriedȱ outȱ byȱ RSSȱ Reviewersȱ afterȱ anȱ RSSȱ interviewȱ withȱ aȱ customer,ȱ haveȱ theȱ capacityȱ toȱ identifyȱ someȱ cashȬinȬhandȱ paymentsȱ (through,ȱ forȱ example,ȱ unusualȱ bankȱ deposits)ȱ andȱ someȱ MLRsȱ (through,ȱ forȱ example,ȱtheȱidentificationȱofȱanotherȱpersonȱregisteredȱonȱtheȱelectoralȱroleȱatȱ theȱ sameȱ address).ȱ However,ȱ theseȱ proceduresȱ willȱ notȱ identifyȱ allȱ ofȱ theseȱ cases.ȱThisȱisȱexaminedȱfurtherȱbelow.ȱ Follow-up procedures 3.102 Whenȱ theȱ customersȱ selectedȱ forȱ theȱ RSSȱ areȱ firstȱ contactedȱ regardingȱ theȱrequirementȱtoȱattendȱanȱRSSȱinterview,ȱtheyȱareȱaskedȱtoȱbringȱaȱrangeȱofȱ informationȱ toȱ verifyȱ theirȱ circumstances.ȱ Theseȱ includeȱ bankȱ statements,ȱ proofȱofȱidentityȱinformationȱandȱstatementsȱofȱearnings.ȱAsȱpartȱofȱfollowȬupȱ proceduresȱ undertakenȱfollowingȱ anȱ RSSȱ interview,ȱ Reviewersȱ mayȱ contactȱ aȱ rangeȱ ofȱ peopleȱ forȱ corroborationȱ ofȱ customerȱ information,ȱ orȱ toȱ obtainȱ informationȱinȱcasesȱwhereȱcustomersȱdoȱnotȱprovideȱit.ȱȱ 3.103 Theȱ ANAOȱ hasȱ identifiedȱ aȱ numberȱ ofȱ issuesȱ regardingȱ theȱ operationȱ ofȱ theȱ followȬupȱ proceduresȱ andȱ theseȱ areȱ examinedȱ inȱ moreȱ detailȱ inȱ Chapterȱ5.ȱHowever,ȱofȱinterestȱhereȱisȱtheȱabilityȱofȱtheȱfollowȬupȱproceduresȱ toȱidentifyȱnonȬdisclosure.ȱ 3.104 Figureȱ 3.1ȱ setsȱ outȱ aȱ rangeȱ ofȱ commentsȱ madeȱ byȱ RSSȱ Reviewersȱ andȱ Coordinatorsȱ interviewedȱ byȱ theȱ ANAOȱ onȱ theȱ problemȱ ofȱ identifyingȱ nonȬ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 75 disclosureȱ andȱ weaknessesȱ inȱ theȱ followȬupȱ procedures.ȱ Theȱ followȬupȱ proceduresȱ employedȱ inȱ theȱ RSSȱ areȱ designedȱ forȱ theȱ soleȱ purposeȱ ofȱ uncoveringȱ nonȬdisclosure.ȱ Theȱ weaknessesȱ inȱ theȱ followȬupȱ proceduresȱ becomeȱmoreȱpronouncedȱifȱthereȱisȱinconsistencyȱinȱtheȱdegreeȱtoȱwhichȱRSSȱ interviewersȱ seekȱ toȱ followȬupȱ onȱ anyȱ doubtsȱ thatȱ theȱ customerȱ isȱ disclosingȱ relevantȱ informationȱ regardingȱ his/herȱ circumstances.ȱ Aȱ numberȱ ofȱ RSSȱ Reviewersȱ advisedȱ thatȱ theyȱ didȱ notȱ followȱ upȱ onȱ suchȱ concernsȱ asȱ theyȱ believedȱtheyȱdidȱnotȱhaveȱtheȱevidenceȱtoȱallowȱtheȱconductȱofȱsuchȱfollowȬupȱ action.ȱ Aȱ numberȱ ofȱ RSSȱ staffȱ interviewedȱ alsoȱ statedȱ that,ȱ dueȱ toȱ timeȱ pressures,ȱfollowȬupȱworkȱwasȱnotȱalwaysȱundertaken.ȱ 3.105 TheȱANAOȱfoundȱthatȱnonȬdisclosureȱofȱcircumstancesȱsuchȱasȱcashȬinȬ handȱpaymentsȱforȱworkȱandȱMLRsȱareȱparticularlyȱproblematic.ȱIfȱaȱcustomerȱ doesȱ notȱ discloseȱ suchȱ informationȱ duringȱ theȱ RSSȱ interview,ȱ thenȱ theȱ ReviewerȱreliesȱonȱusingȱtheȱinformationȱCentrelinkȱalreadyȱhasȱtoȱconductȱtheȱ RSSȱfollowȬupȱprocedures.ȱForȱexample,ȱtheȱReviewerȱwillȱuseȱinformationȱonȱ theȱ customer’sȱ Centrelinkȱ recordȱ regardingȱ currentȱ employersȱ andȱ bankȱ accountȱdetails.ȱ 3.106 However,ȱ ifȱ aȱ customerȱ doesȱ notȱ provideȱ allȱ relevantȱ informationȱ regardingȱ theirȱ personalȱ circumstancesȱ duringȱ anȱ RSSȱ interview,ȱ thenȱ Centrelink’sȱ followȬupȱ proceduresȱ willȱ beȱ constrainedȱ inȱ theirȱ effectiveness.ȱ Forȱ example,ȱ ifȱ theȱ customerȱ hasȱ notȱ disclosedȱ workȱ withȱ aȱ newȱ employer,ȱ thenȱ thisȱ newȱ employerȱ willȱ notȱ beȱ contactedȱ toȱ confirmȱ earnings.ȱ Duringȱ fieldworkȱ theȱ ANAOȱ uncoveredȱ otherȱ specificȱ examplesȱ ofȱ changedȱ circumstancesȱ whichȱ mayȱ notȱ necessarilyȱ beȱ detectedȱ duringȱ theȱ RSSȱ processȱ includingȱtheȱfollowȬupȱprocedures.126ȱ 3.107 TheȱfindingȱthatȱtheȱidentificationȱofȱMLRsȱisȱproblematicȱinȱtheȱcontextȱ ofȱ theȱ RSSȱ isȱ consistentȱ withȱ theȱ findingsȱ ofȱ Auditȱ Reportȱ No.44ȱ 2002–03,ȱ Reviewȱ ofȱ theȱ Parentingȱ Paymentȱ Singleȱ Program.ȱ Thisȱ auditȱ foundȱ thatȱ mostȱ Customerȱ Serviceȱ Officersȱ (CSOs)ȱ interviewed,ȱ whoȱ conductedȱ newȱ childȱ reviews127:ȱ 126 Centrelink advised the ANAO on 8 May 2006 that Centrelink does employ an extensive and wide range of compliance activities some of which are specifically designed to catch non-disclosure issues. 127 A new child review was a risk based program review carried out if a Parenting Payment Single customer had a child more than 40 weeks after the start date of receiving Parenting Payment Single benefits. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 76 Meeting the Major Objective of the RSS Programme believedȱtheyȱwereȱunableȱtoȱidentifyȱMLRsȱunlessȱtheȱcustomerȱadmittedȱtoȱit.ȱ However,ȱ theyȱ didȱ believeȱ thatȱ inȱ someȱ circumstancesȱ aȱ MLRȱ existedȱ whichȱ wasȱnotȱdisclosed.128ȱ 3.108 TheȱbirthȱofȱaȱnewȱchildȱisȱanȱindicatorȱthatȱaȱMLRȱmayȱexist.ȱHowever,ȱ evenȱ inȱ thisȱ circumstance,ȱ CSOsȱ advisedȱ theȱ ANAOȱ thatȱ identificationȱ ofȱ aȱ MLRȱisȱdifficult.ȱTheȱRSSȱinterviewȱprocess,ȱwhichȱwillȱoftenȱbeȱundertakenȱinȱ theȱabsenceȱofȱanyȱobviousȱindicatorȱofȱanȱMLR,ȱmayȱbeȱevenȱlessȱsuccessfulȱatȱ identifyingȱ nonȬdisclosureȱ ofȱ MLRsȱ thanȱ targetedȱ processesȱ suchȱ asȱ theȱ newȱ childȱreviewsȱforȱParentingȱPaymentȱSingleȱrecipients.ȱ Impact on the RSS of exclusions from the sample 3.109 Thereȱareȱaȱnumberȱofȱcustomersȱexcludedȱfromȱtheȱpossibilityȱofȱbeingȱ selectedȱforȱaȱRSSȱreview,ȱincludingȱcustomersȱwhoȱareȱcurrentlyȱunderȱreviewȱ throughȱ anotherȱ Centrelinkȱ process,ȱ andȱ thoseȱ whoȱ liveȱ inȱ remoteȱ areasȱ (seeȱ paragraphȱ 2.7).ȱ Thisȱ mayȱ impactȱ onȱ theȱ abilityȱ ofȱ theȱ RSSȱ toȱ estimateȱ theȱ accuracyȱofȱoutlays,ȱifȱtheȱcharacteristicsȱ(includingȱtheȱpropensityȱforȱerror)ȱofȱ thoseȱ customersȱ excludedȱ isȱ differentȱ fromȱ thatȱ ofȱ thoseȱ whoȱ completeȱ theȱ review.ȱ 3.110 FaCSIAȱ engagedȱ PriceWaterhouseCoopersȱ Actuarialȱ (PWC)ȱ toȱ undertakeȱ aȱ reviewȱ ofȱ theȱ randomȱ samplingȱ forȱ theȱ RSS.ȱ Inȱ particular,ȱ theȱ reviewȱexaminedȱtheȱexclusionȱofȱcustomersȱcurrentlyȱunderȱreview,ȱandȱthoseȱ inȱremoteȱareas.ȱ 3.111 TheȱPWCȱreviewȱfoundȱthat:ȱ Customersȱareȱexcludedȱifȱtheyȱareȱcurrentlyȱunderȱreview.129ȱWhileȱthisȱseemsȱ logicalȱ givenȱ theȱ intrusivenessȱ ofȱ theȱ reviews,ȱ oneȱ wouldȱ expectȱ thatȱ customersȱwithȱdataȱmatchingȱorȱriskȱprofilingȱreviews,ȱforȱexample,ȱwouldȱbeȱ moreȱ likelyȱ toȱ haveȱ aȱ paymentȱ variationȱ orȱ debtȱ thanȱ allȱ customersȱ notȱ currentlyȱundergoingȱsuchȱaȱreview.ȱTherefore,ȱbyȱexcludingȱtheseȱcustomersȱ itȱ seemsȱ likelyȱ thatȱ theȱ paymentȱ incorrectnessȱ resultȱ fromȱ theȱ [RSS]ȱ isȱ anȱ understatementȱofȱtheȱtrueȱposition.ȱItȱisȱpossibleȱtoȱpartiallyȱcorrectȱforȱthisȱbyȱ includingȱcustomersȱunderȱreviewȱinȱtheȱ[RSS]ȱsampleȱbutȱusingȱtheȱresultȱofȱ theȱ originalȱ nonȬ[RSS]ȱ review.ȱ However,ȱ thisȱ assumesȱ thatȱ theȱ nonȬ[RSS]ȱ reviewsȱareȱtotallyȱeffectiveȱwhichȱisȱunlikelyȱtoȱbeȱtrue.ȱ 128 ANAO Audit Report No. 44 2002–03, op. cit., p. 88. 129 Centrelink advised the ANAO on 9 May 2006 that customers are excluded from the RSS if they are undergoing another review and have been contacted by the review officer or they have an outstanding tip off registered on the system. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 77 Weȱhaveȱbeenȱgivenȱnoȱinformationȱonȱhowȱmanyȱcustomersȱareȱexcludedȱforȱ thisȱ reasonȱ butȱ noteȱ thatȱ thisȱ isȱ potentiallyȱ aȱ significantȱ issueȱ andȱ deservesȱ furtherȱthoughtȱandȱanalysis.130ȱ 3.112 Inȱrelationȱtoȱexclusionsȱdueȱtoȱremoteness,ȱtheȱPWCȱreviewȱfoundȱthat:ȱ Generallyȱspeaking,ȱtheȱcustomersȱexcludedȱdueȱtoȱremotenessȱareȱreasonablyȱ similarȱtoȱtheȱgeneralȱpopulation,ȱexceptȱthatȱtheyȱhaveȱlessȱtotalȱincomeȱandȱ assets,ȱ andȱ thereȱ areȱ moreȱ customersȱ withȱ partnersȱ onȱ benefits.ȱ Thisȱ makesȱ themȱ moreȱ likelyȱ toȱ beȱ receivingȱ incorrectȱ benefits.ȱ However,ȱ thereȱ areȱ offsettingȱ factorsȱ also.ȱ Overall,ȱ weȱ doȱ notȱ believeȱ thatȱ weȱ haveȱ sufficientȱ evidenceȱtoȱquantifyȱtheȱlikelyȱeffectȱofȱtheȱremotenessȱexclusionȱonȱtheȱoverallȱ assessedȱlevelȱofȱbenefitȱincorrectness.ȱ Ifȱ aȱ definitiveȱ conclusionȱ isȱ requiredȱ thenȱ weȱ suggestȱ thatȱ aȱ targetedȱ reviewȱ exerciseȱisȱcarriedȱout,ȱperhapsȱinȱaȱparticularȱremoteȱarea.ȱ Effect of underpayments and voluntary cancellations 3.113 Inȱ calculatingȱ theȱ dollarȱ impactȱ ofȱ paymentȱ error,ȱ thereȱ areȱ twoȱ areasȱ whichȱmayȱleadȱtoȱanȱunderestimateȱofȱtheȱsizeȱofȱtheȱdollarȱimpact.ȱTheseȱareȱ theȱcalculationȱofȱunderȱpayments,ȱandȱtheȱcalculationȱofȱtheȱdollarȱimpactȱinȱ casesȱwhereȱtheȱcustomerȱvoluntarilyȱcancelsȱhis/herȱpayment.ȱ Underpayments 3.114 Inȱcasesȱwhereȱaȱcustomerȱhasȱbeenȱunderpaid,ȱandȱtheȱunderpaymentȱ hasȱ beenȱ forȱ moreȱ thanȱ 13ȱ weeksȱ duration,ȱ theȱ calculationȱ ofȱ theȱ underpaymentȱwillȱbeȱlimitedȱtoȱ13ȱweeks.ȱThisȱoccursȱbecauseȱtheȱlegislationȱ limitsȱtheȱpaymentȱofȱarrearsȱtoȱ13ȱweeks,ȱnotwithstandingȱtheȱdurationȱofȱtheȱ underpayment.ȱTheȱincorrectȱpaymentsȱthatȱoccurredȱpriorȱtoȱtheȱ13ȱweeksȱareȱ alsoȱnotȱcalculatedȱforȱtheȱpurposesȱofȱtheȱRSS.ȱThisȱleadsȱtoȱanȱunderestimateȱ ofȱtheȱvalueȱofȱactualȱunderpaymentȱerrorȱdetectedȱbyȱtheȱRSS.ȱȱ 3.115 Inȱ anyȱ caseȱ whereȱ theȱ underpaymentȱ hasȱ occurredȱ becauseȱ theȱ customerȱfailedȱtoȱadviseȱCentrelinkȱofȱaȱchangeȱinȱtheirȱcircumstancesȱwhichȱ increasedȱ theirȱ entitlement,ȱ thenȱ theȱ legislationȱ isȱ clearȱ thatȱ arrearsȱ areȱ onlyȱ payableȱforȱ13ȱweeks.131ȱAccordingly,ȱnotȱcountingȱtheȱvalueȱofȱunderpaymentsȱ 130 PriceWaterhouseCoopers Actuarial, Family and Community Services Random Sampling Review, 19 October 2004, p.10. 131 If the error, leading to the underpayment, is clearly identifiable as due to Centrelink administrative error, then, while the legislation precludes the payment of arrears for more than 13 weeks, the customer may be entitled to seek compensation under the Australian Government Compensation for Detriment Caused by Defective Administration scheme. Such payments would generally be funded through other means than the Administered Appropriations related to the programme payments administered by Centrelink. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 78 Meeting the Major Objective of the RSS Programme madeȱ moreȱ thanȱ 13ȱ weeksȱ beforeȱ theȱ RSSȱ pointȱ inȱ timeȱ reviewȱ inȱ theȱ calculationȱ ofȱ theȱ accuracyȱ ofȱ outlaysȱ isȱ correct.ȱ However,ȱ theȱ ANAOȱ notesȱ thatȱ theyȱ representȱ errorsȱ inȱ paymentsȱ atȱ theȱ time.ȱ Ifȱ theȱ errorȱ hadȱ beenȱ identifiedȱ earlier,ȱ thenȱ theȱ customerȱ wouldȱ haveȱ beenȱ entitledȱ toȱ recoverȱ theȱ monies.ȱ 3.116 ThisȱmeansȱthatȱtheȱreportedȱresultsȱofȱtheȱRSSȱunderpaymentsȱdoȱnotȱ includeȱanȱaccurateȱestimateȱofȱtheȱdollarsȱpaidȱincorrectlyȱinȱtheseȱcases,ȱalbeitȱ thatȱthisȱdoesȱnotȱaffectȱtheȱcalculationȱofȱtheȱaccuracyȱofȱoutlays.ȱ Customer voluntary cancellation 3.117 OneȱpossibleȱoutcomeȱofȱanȱRSSȱreviewȱisȱtheȱcancellationȱofȱbenefit.ȱInȱ aȱ numberȱ ofȱ cases,ȱ customersȱ contactedȱ regardingȱ theirȱ selectionȱ forȱ participationȱ inȱ aȱ RSSȱ interview,ȱ chooseȱ toȱ voluntarilyȱ giveȱ upȱ theirȱ benefit.ȱ Thisȱmayȱbeȱdueȱtoȱtheȱcustomers’ȱknowledgeȱthatȱtheyȱareȱnoȱlongerȱeligible.ȱ Whereȱaȱcustomerȱcancelsȱhis/herȱpayment,ȱtheȱRSSȱreviewȱcontinuesȱasȱaȱfileȱ reviewȱ becauseȱ theȱ customerȱ canȱ noȱ longerȱ beȱ compelledȱ underȱ theȱ Socialȱ SecurityȱLawȱtoȱattendȱforȱanȱinterview.ȱ 3.118 WhileȱRSSȱReviewersȱseeȱtheseȱcancellationsȱasȱaȱpositiveȱoutcome,ȱtheȱ dataȱrelatedȱtoȱtheȱextentȱofȱanyȱdebtȱinȱtheseȱcasesȱwillȱbeȱlimitedȱtoȱthatȱtheȱ ReviewersȱcanȱidentifyȱfromȱexistingȱinformationȱheldȱinȱCentrelink’sȱrecords.ȱ Aȱdebtȱmayȱbeȱraised,ȱbutȱthisȱ mayȱnotȱ reflectȱ theȱ actualȱ sizeȱ ofȱ theȱ incorrectȱ paymentȱ andȱ thisȱ impactsȱ onȱ theȱ robustnessȱ ofȱ theȱ RSSȱ debtȱ data.ȱ However,ȱ thisȱdoesȱnotȱimpactȱonȱtheȱestimateȱofȱtheȱaccuracyȱofȱoutlays.ȱ Use of RSS data 3.119 Theȱprecedingȱanalysisȱshowsȱthatȱthereȱisȱanȱinherentȱlimitationȱinȱtheȱ RSSȱ processȱ regardingȱ itsȱ capacityȱ toȱ identifyȱ allȱ customerȱ nonȬdisclosure,ȱ leadingȱtoȱconcernsȱregardingȱtheȱrobustnessȱofȱtheȱdataȱproduced.ȱThisȱinȱturnȱ bringsȱ intoȱ questionȱ theȱ highȱ andȱ preciseȱ figureȱ forȱ theȱ accuracyȱ ofȱ outlaysȱ derivedȱandȱreportedȱfromȱtheȱRSSȱdata.ȱ 3.120 Asȱnotedȱinȱparagraphȱ3.8,ȱtheȱaccuracyȱofȱoutlaysȱfigure,ȱasȱcalculatedȱ usingȱ RSSȱ data,ȱ isȱ usedȱ byȱ FaCSIA,ȱ andȱ nowȱ DEWRȱ andȱ DESTȱ (sinceȱ theȱ Octoberȱ 2004ȱ MoGȱ changes)ȱ inȱ theirȱ financialȱ statements,ȱ andȱ inȱ theirȱ annualȱ reports,ȱ toȱ provideȱ assuranceȱ ofȱ theȱ accuracyȱ ofȱ outlaysȱ onȱ socialȱ securityȱ payments.ȱ Inȱ 2004–05,ȱ theseȱ outlaysȱ wereȱ someȱ $63ȱ billion.ȱ Centrelinkȱ reliedȱ heavilyȱ onȱ theȱ RSSȱ dataȱ inȱ itsȱ 2004–05ȱ Annualȱ Assuranceȱ Statementsȱ toȱ FaCSIA,ȱDEWRȱandȱDEST.ȱCentrelinkȱhasȱalsoȱusedȱtheȱRSSȱdataȱinȱitsȱannualȱ reports,ȱandȱinȱmediaȱreleasesȱinȱregardȱtoȱCentrelinkȱpaymentȱcorrectness.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 79 3.121 ThereȱareȱtwoȱissuesȱrelatedȱtoȱhowȱagenciesȱhaveȱbeenȱusingȱtheȱRSSȱ data,ȱandȱtheseȱareȱdiscussedȱinȱtheȱnextȱsections.ȱ Transparency 3.122 Theȱ accuracyȱ ofȱ outlaysȱ figureȱ isȱ usedȱ toȱ provideȱ assuranceȱ toȱ theȱ Parliamentȱ andȱ theȱ communityȱ thatȱ Centrelinkȱ paymentsȱ areȱ accurateȱ andȱ that,ȱultimately,ȱtaxpayers’ȱdollarsȱareȱappropriatelyȱexpended.ȱ 3.123 TheȱaccuracyȱofȱoutlaysȱfigureȱderivedȱfromȱRSSȱdataȱhasȱbeenȱreportedȱ byȱagenciesȱwithȱnoȱreferenceȱtoȱitsȱinherentȱandȱotherȱlimitations.ȱInȱaddition,ȱ aȱreportedȱaccuracyȱofȱ97.9ȱperȱcentȱsuggestsȱaȱlevelȱofȱprecisionȱthatȱisȱnotȱableȱ toȱ beȱ supportedȱ byȱ dataȱ fromȱ theȱ RSSȱ Programme.ȱ Usersȱ ofȱ theȱ informationȱ mayȱbeȱgivenȱaȱfalseȱsenseȱofȱconfidenceȱregardingȱbothȱtheȱrobustnessȱofȱtheȱ figureȱandȱtheȱaccuracyȱofȱoutlays.ȱ 3.124 GivenȱtheȱimportantȱusesȱforȱwhichȱtheȱRSSȱdata,ȱandȱestimationȱofȱtheȱ accuracyȱofȱoutlaysȱderivedȱfromȱthisȱdata,ȱareȱused,ȱtheȱANAOȱconsidersȱthatȱ itȱ isȱ importantȱ thatȱ theȱ methodȱ ofȱ collection,ȱ theȱ alliedȱ calculation,ȱ andȱ theȱ limitationsȱ ofȱ theȱ dataȱ areȱ transparentȱ inȱ reportsȱ usingȱ theȱ data.ȱ Thisȱ wouldȱ enableȱreadersȱofȱtheȱdataȱtoȱproperlyȱinterpretȱtheȱdataȱandȱhaveȱconfidenceȱinȱ theȱ results,ȱ particularlyȱ inȱ casesȱ whereȱ theȱ dataȱ areȱ usedȱ toȱ informȱ decisionȱ making.ȱ 3.125 Thisȱ findingȱ mirrorsȱ theȱ recommendationȱ ofȱ Auditȱ Reportȱ No.ȱ 44ȱȱ 2002–03ȱReviewȱofȱtheȱParentingȱPaymentȱSingleȱProgramȱwhichȱstatedȱthatȱFaCSȱ shouldȱ‘ensureȱthatȱtheȱlimitationsȱofȱtheȱRSSȱmethodologyȱareȱtransparentȱtoȱ relevantȱstakeholdersȱandȱthatȱallȱstakeholdersȱareȱmadeȱawareȱofȱtheȱdegreeȱofȱ confidenceȱFaCSȱhasȱinȱtheȱmethodology’.132ȱ Unclear reporting 3.126 Asȱ wellȱ asȱ concernsȱ regardingȱ theȱ lackȱ ofȱ transparencyȱ ofȱ theȱ limitationsȱ ofȱ theȱ data,ȱ thereȱ areȱ concernsȱ aboutȱ howȱ theȱ dataȱ areȱ reported.ȱ WhileȱtheȱRSSȱfigureȱgenerallyȱcitedȱisȱtheȱmeasureȱofȱtheȱaccuracyȱofȱoutlays,ȱ Centrelinkȱalsoȱreportsȱ aȱ figureȱ forȱ theȱ correctnessȱ ofȱ paymentsȱ inȱ itsȱ Annualȱ Reportȱ andȱ toȱ theȱ purchaserȱ departments.ȱ Theseȱ areȱ veryȱ similarȱ numbersȱ inȱ magnitude,ȱhowever,ȱtheyȱareȱmeasuresȱofȱveryȱdifferentȱfactors.ȱȱ 132 ANAO Audit Report No. 44 2002–03, op. cit., p. 72. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 80 Meeting the Major Objective of the RSS Programme 3.127 Theȱ accuracyȱ ofȱ outlaysȱ figureȱ derivedȱ fromȱ RSSȱ dataȱ hasȱ alsoȱ beenȱ reportedȱasȱaȱmeasureȱofȱtheȱaccuracyȱofȱpayments.133ȱTheseȱareȱtwoȱdifferentȱ concepts,ȱ andȱ reportingȱ theȱ accuracyȱ ofȱ outlaysȱ asȱ accuracyȱ ofȱ paymentsȱ isȱ misleading.ȱTheseȱtwoȱissuesȱareȱanalysedȱfurtherȱinȱtheȱfollowingȱsections.ȱ Accuracy of outlays and payment correctness 3.128 Centrelink’sȱAnnualȱReportȱ2004–05ȱstatesȱ(p.ȱ39):ȱ Toȱensureȱeffectiveȱdeliveryȱofȱgovernmentȱprograms,ȱrandomȱsampleȱsurveyȱ resultsȱ areȱ usedȱ toȱ assureȱ theȱ correctnessȱ andȱ accuracyȱ ofȱ socialȱ securityȱ programȱ outlaysȱ andȱ areȱ theȱ primaryȱ qualityȱ assuranceȱ toolȱ forȱ theȱ Businessȱ Assuranceȱ Framework……Theȱ targetȱforȱ paymentȱcorrectnessȱ isȱ setȱ atȱ 95ȱ perȱ cent.ȱ Sinceȱ thisȱ randomȱ samplingȱ processȱ beganȱ inȱ Julyȱ 2002,ȱ Centrelink’sȱ paymentȱcorrectnessȱfiguresȱhaveȱexceededȱ95ȱperȱcentȱeveryȱquarter,ȱwithȱanȱ annualȱfigureȱforȱ2004–05ȱofȱ96.8ȱperȱcent.ȱ 3.129 Thisȱ figureȱ ofȱ 96.8ȱ perȱ centȱ ‘paymentȱ correctness’ȱ comparesȱ with,ȱ forȱ example,ȱ theȱ 97.9ȱ perȱ centȱ accuracyȱ ofȱ outlaysȱ figureȱ reportedȱ byȱ FaCSIAȱ forȱ thoseȱmajorȱsocialȱsecurityȱpaymentsȱmadeȱbyȱCentrelinkȱonȱbehalfȱofȱFaCSIA.ȱ Givenȱ theseȱ figuresȱ areȱ ofȱ similarȱ magnitude,ȱ thisȱ inȱ itselfȱ mayȱ causeȱ someȱ confusionȱregardingȱwhatȱthisȱpaymentȱcorrectnessȱfigureȱisȱmeasuring.ȱ 3.130 Centrelink’sȱpaymentȱcorrectnessȱfigureȱ isȱ alsoȱ derivedȱ fromȱ RSSȱ dataȱ andȱ isȱ aȱ measureȱ ofȱ aȱ targetȱ containedȱ inȱ theȱ individualȱ agencies’ȱ BPAs.ȱ Theȱ paymentȱ correctnessȱ figureȱ containedȱ inȱ theȱ BPAsȱ isȱ actuallyȱ aȱ measureȱ ofȱ Centrelink’sȱadministrativeȱerrorsȱwhichȱhaveȱanȱimpactȱonȱpayment.ȱ 3.131 Asȱ examinedȱ aboveȱ (seeȱ paragraphsȱ 3.22ȱ toȱ 3.31),ȱ Centrelinkȱ usesȱ differentȱdefinitionsȱofȱcorrectnessȱandȱaccuracyȱasȱagreedȱunderȱtheȱBAF,ȱandȱ theȱ BAFȱ definitionȱ ofȱ paymentȱ correctnessȱ isȱ differentȱ fromȱ theȱ ordinaryȱ meaningȱofȱtheȱwords.ȱ 3.132 Usingȱ Centrelinkȱ andȱ theȱ purchaserȱ departments’ȱ definitionȱ ofȱ paymentȱcorrectnessȱ(seeȱparagraphȱ3.22),ȱandȱtheȱpercentageȱofȱreviewsȱwithȱ 133 For example, in a letter to The Border Mail by the then National Manager Communications for Centrelink, published in that newspaper on 16 December 2004, stated that: ‘An independently verified report found that in 2003–04 Centrelink achieved 97 per cent accuracy in payments. That report also found that the overwhelming majority (80 per cent) of the 3 per cent of payments with inaccuracies were caused by customer not advising Centrelink of changes in circumstances’. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 81 anȱ administrativeȱ errorȱ withȱ aȱ dollarȱ impactȱ fromȱ Tableȱ 3.1ȱ (thatȱ isȱ 3.4ȱ perȱ cent),ȱitȱcanȱbeȱseenȱthatȱtheȱfinalȱpaymentȱcorrectnessȱfigureȱisȱ96.6ȱperȱcent.ȱ134ȱ 3.133 Whileȱ thisȱ definitionȱ mayȱ beȱ agreedȱ andȱ understoodȱ betweenȱ Centrelinkȱ andȱ theȱ purchaserȱ departments,ȱ externalȱ reportsȱ quotingȱ paymentȱ correctnessȱ mayȱ beȱ misleadingȱ toȱ theȱ outsideȱ reader.ȱ Asȱ notedȱ inȱ paragraphsȱ 3.22ȱ toȱ 3.31,ȱ Centrelinkȱ reportedȱ inȱ itsȱ 2004–05ȱ Annualȱ Reportȱ paymentȱ correctnessȱ ofȱ 96.8ȱ perȱ cent.ȱ Usingȱ theȱ ordinaryȱ meaningȱ ofȱ theȱ wordsȱ ofȱ ‘paymentȱ correctness’ȱ thisȱ wouldȱ suggestȱ toȱ aȱ readerȱ thatȱ 96.8ȱ perȱ centȱ ofȱ customersȱreceiveȱaȱcorrectȱpayment.ȱȱ 3.134 Asȱ shownȱ earlierȱ (inȱ theȱ sectionȱ onȱ theȱ identificationȱ ofȱ error),ȱ theȱ definitionȱofȱpaymentȱincorrectnessȱusedȱbyȱtheȱANAOȱ(basedȱonȱtheȱordinaryȱ meaningȱ ofȱ theȱ term)ȱ isȱ theȱ percentageȱ ofȱ customersȱ inȱ theȱ RSSȱ sampleȱ whoȱ haveȱanȱerrorȱinȱtheirȱrecord,ȱwhichȱleadsȱtoȱanȱerrorȱinȱtheirȱpayment,ȱthatȱhasȱ aȱdollarȱimpact.ȱTheȱpercentageȱofȱpaymentȱcorrectnessȱisȱfoundȱbyȱsubtractingȱ theȱpaymentȱincorrectnessȱfigureȱfromȱ100ȱperȱcent.ȱForȱtheȱfullȱyearȱ2004–05,ȱ almostȱ30ȱperȱcentȱofȱcustomersȱinȱtheȱRSSȱsampleȱhadȱanȱerrorȱwithȱaȱdollarȱ impact.ȱ Thatȱ is,ȱ theȱ RSSȱ dataȱ showȱthatȱ itȱ isȱ aroundȱ 70ȱ perȱ centȱ ofȱ customersȱ whoȱreceiveȱaȱcorrectȱpayment.ȱ 3.135 ItȱisȱusefulȱforȱtheȱpurchaserȱdepartmentsȱtoȱuseȱtheȱRSSȱdataȱtoȱgainȱanȱ insightȱintoȱtheȱlevelȱofȱCentrelinkȱadministrativeȱerrorȱandȱitsȱimpactȱonȱbothȱ theȱ numberȱ ofȱ customersȱ receivingȱ aȱ correctȱ paymentȱ andȱ alsoȱ theȱ overallȱ accuracyȱofȱoutlays.ȱHowever,ȱinȱtheȱabsenceȱofȱreadersȱbeingȱprovidedȱwithȱaȱ definitionȱofȱwhatȱCentrelinkȱmeansȱbyȱpaymentȱcorrectness,ȱaȱreaderȱmayȱnotȱ understandȱ thatȱ theȱ onlyȱ errorsȱ includedȱ inȱ calculatingȱ theȱ paymentȱ correctnessȱfigureȱreportedȱinȱCentrelink’sȱannualȱreportȱrelatedȱtoȱCentrelinkȱ administrativeȱerrorsȱwithȱanȱimpactȱonȱpayment,ȱandȱthatȱcustomerȱerrorsȱareȱ excluded.ȱ Theȱ ANAOȱ suggestsȱ thatȱ futureȱ externalȱ reportingȱ ofȱ Centrelink’sȱ performanceȱ againstȱ thisȱ targetȱ inȱ theȱ BPAsȱ wouldȱ beȱ clearerȱ ifȱ itȱ wereȱ toȱ conveyȱaȱfocusȱonȱadministrativeȱcorrectnessȱratherȱthanȱpaymentȱcorrectness.ȱ 3.136 Inȱaddition,ȱtheȱANAOȱnotesȱthatȱwhileȱtheȱpaymentȱcorrectnessȱfigureȱ reportedȱinȱCentrelink’sȱ2004–05ȱAnnualȱReportȱisȱaȱpreliminaryȱfigureȱbasedȱ 134 This figure is within 0.2 per cent of the preliminary figure for payment correctness reported in Centrelink’s 2004–05 Annual Report which had been calculated on the basis of preliminary data based on the results of the first three quarters of the RSS in 2004–05. The final validated results for the 2004–05 RSS were not available until February 2006. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 82 Meeting the Major Objective of the RSS Programme onȱthreeȱquartersȱofȱ2004–05ȱRSSȱdata,ȱwhichȱhadȱnotȱundergoneȱfinalȱqualityȱ assuranceȱvalidation,ȱthisȱisȱnotȱnotedȱinȱtheȱannualȱreport.135ȱ Recommendation No.1 3.137 Theȱ ANAOȱ recommendsȱ thatȱ Centrelinkȱ makeȱ transparent,ȱ inȱ itsȱ AnnualȱReportȱandȱanyȱotherȱdocumentsȱwhereȱtheȱagencyȱreportsȱonȱitsȱlevelȱ ofȱpaymentȱcorrectness,ȱhowȱtheȱpaymentȱcorrectnessȱfigureȱisȱderivedȱandȱinȱ particularȱ thatȱ theȱ figureȱ reportedȱ relatesȱ onlyȱ toȱ Centrelinkȱ administrativeȱ errorȱidentifiedȱbyȱtheȱRSSȱandȱdoesȱnotȱincludeȱerrorȱidentifiedȱinȱtheȱRSSȱbutȱ attributedȱtoȱcustomerȱactionȱorȱinaction.ȱ Centrelink’s response 3.138 Agreed.ȱ Centrelinkȱ willȱ explainȱ clearlyȱ howȱ paymentȱ correctnessȱ isȱ derived,ȱwhatȱitȱdescribesȱandȱwhatȱitȱexcludes.ȱ Accuracy of outlays and accuracy of payments 3.139 Thereȱ isȱ alsoȱ someȱ interchangeȱ ofȱ theȱ termsȱ accuracyȱ ofȱ outlaysȱ andȱ accuracyȱ ofȱ payments.ȱ Asȱ analysedȱ above,ȱ theȱ inaccuracyȱ ofȱ outlaysȱ isȱ calculatedȱ byȱ dividingȱ theȱ sumȱ ofȱ fortnightlyȱ dollarȱ amountsȱ ofȱ variationsȱ (upwardȱ variation,ȱ downwardȱ variation,ȱ cancellation/suspension)ȱ byȱ theȱ sumȱ ofȱtheȱfortnightlyȱpaymentsȱtoȱallȱsampledȱcustomers,ȱtheȱpercentageȱfigureȱisȱ thenȱcalculated.ȱThisȱinaccuracyȱfigureȱisȱthenȱsubtractedȱfromȱ100ȱperȱcentȱtoȱ provideȱaȱfigureȱforȱtheȱaccuracyȱofȱoutlays.ȱ 3.140 However,ȱ theȱ inaccuracyȱ ofȱ paymentsȱ equatesȱ toȱ theȱ termȱ incorrectȱ paymentȱ asȱ usedȱ inȱ thisȱ report.ȱ Hence,ȱ theȱ RSSȱ dataȱ indicateȱ thatȱ paymentȱ accuracyȱisȱaroundȱ70ȱperȱcent,ȱkeepingȱinȱmindȱtheȱunderestimateȱofȱerrorȱinȱ theseȱdataȱdueȱtoȱcustomerȱnonȬdisclosureȱofȱchangedȱcircumstancesȱandȱotherȱ reasonsȱ(seeȱparagraphsȱ3.61–3.74).ȱȱ 3.141 Theȱunclearȱreportingȱthatȱhasȱoccurredȱmayȱhaveȱledȱreadersȱtoȱbelieveȱ that,ȱ forȱ example,ȱ 97.9ȱperȱ centȱ ofȱ Centrelinkȱ customersȱ receiveȱ anȱ accurateȱ payment,ȱwhileȱtheȱRSSȱdataȱinȱfactȱindicateȱthatȱitȱisȱ70ȱperȱcentȱofȱcustomersȱ whoȱreceiveȱanȱaccurateȱpayment,ȱalbeitȱthatȱmanyȱofȱtheȱpaymentȱvariationsȱ requiredȱ toȱ makeȱ theseȱ paymentsȱ correctȱ areȱ small,ȱ givenȱ itȱ relatesȱ onlyȱ toȱ aȱ singleȱfortnight’sȱpayment.ȱ 135 The ANAO notes Centrelink advice of March 2006 that validation of results occurs when all samples are completed, quality checked and externally verified by the three policy departments, FaCSIA, DEWR and DEST. This process was completed for the 2004–05 data in February 2006. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 83 Recommendation No.2 3.142 Theȱ ANAOȱ recommendsȱ thatȱ whenȱ reportingȱ dataȱ fromȱ theȱ RSS,ȱ Centrelink,ȱFaCSIA,ȱDEWRȱandȱDESTȱensureȱthat:ȱ (a) theȱsourceȱandȱlimitationsȱofȱtheȱdataȱareȱtransparent,ȱtoȱenableȱreadersȱ toȱproperlyȱinterpretȱtheȱdataȱandȱhaveȱconfidenceȱinȱtheȱresults;ȱandȱ (b) statisticsȱ indicatingȱ theȱ proportionȱ ofȱ customersȱ correctlyȱ paidȱ areȱ clearlyȱdistinguishedȱfromȱstatisticsȱindicatingȱtheȱnetȱeffectȱofȱincorrectȱ paymentsȱonȱgovernmentȱoutlays.ȱ FaCSIA’s response 3.143 Agreed.ȱ DEWR’s response 3.144 Agreed.ȱ DEST’s response 3.145 Agreed.ȱ Centrelink’s response 3.146 Agreed.ȱȱ Conclusion 3.147 TheȱpurposeȱofȱtheȱRSSȱisȱtoȱmeasureȱtheȱlevelȱofȱincorrectȱpaymentȱtoȱ Centrelinkȱ customers,ȱ alliedȱ toȱ thisȱ isȱ theȱ objectiveȱ toȱ detectȱ undeclaredȱ customerȱcircumstancesȱand/orȱchangedȱcircumstances.ȱTheȱANAOȱfoundȱthatȱ theȱRSSȱmeasuresȱtheȱlevelȱofȱincorrectȱpaymentȱtoȱsomeȱextent,ȱbutȱthatȱthereȱ areȱaȱnumberȱofȱinherentȱlimitationsȱandȱlimitationsȱinȱtheȱprocessȱwhichȱleadȱ toȱanȱunderestimateȱofȱtheȱactualȱlevelȱofȱincorrectȱpayment.ȱȱ 3.148 Thereȱ areȱ aȱ rangeȱ ofȱ issuesȱ whichȱ impactȱ onȱ theȱ robustnessȱ ofȱ theȱ estimateȱ ofȱ incorrectȱ payment136ȱ calculatedȱ fromȱ theȱ RSSȱ dataȱ (andȱ henceȱ theȱ 136 Incorrect payment, as identified in the RSS, is the number of customers in the RSS sample who have an error in their record, which leads to an error in their payment, that has a dollar impact. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 84 Meeting the Major Objective of the RSS Programme accuracyȱ ofȱ outlaysȱ estimate137)ȱ butȱ theȱ ANAOȱ foundȱ thatȱ theȱ majorȱ issueȱ affectingȱ theȱ robustnessȱ ofȱ theȱ RSSȱ estimatesȱ isȱ theȱ inabilityȱ ofȱ theȱ RSSȱ toȱ uncoverȱ allȱ incorrectȱ paymentsȱ dueȱ toȱ theȱ inherentȱ problemȱ thatȱ notȱ allȱ customersȱ willȱ discloseȱ allȱ ofȱ theirȱ circumstancesȱ and/orȱ allȱ ofȱ theȱ changesȱ inȱ theirȱ circumstances,ȱ evenȱ whenȱ askedȱ inȱ aȱ faceȬtoȬfaceȱ interview.ȱ Customerȱ nonȬdisclosureȱ isȱ aȱ formȱ ofȱ nonȬsamplingȱ error,ȱ andȱ thereforeȱ cannotȱ beȱ addressedȱthroughȱaȱgreaterȱsampleȱsize.ȱ 3.149 Accordingly,ȱ noȱ surveyȱ methodȱ toȱ identifyȱ theȱ levelȱ ofȱ Centrelinkȱ paymentsȱaffectedȱbyȱerrorȱwillȱbeȱ100ȱperȱcentȱaccurate.ȱInȱaddition,ȱtheȱcostȱ ofȱ uncoveringȱ allȱ customerȱ nonȬdisclosure,ȱ evenȱ ifȱ aȱ robustȱ methodologyȱ toȱ achieveȱthisȱwasȱidentified,ȱisȱlikelyȱtoȱbeȱprohibitive.ȱ 3.150 However,ȱ currentȱreportingȱbyȱagenciesȱbasedȱonȱtheȱRSSȱ programmeȱ dataȱ doesȱ notȱ reflectȱ theȱ limitationsȱ ofȱ theȱ data.ȱ Theȱ currentȱ reportingȱ ofȱ theȱ estimatesȱofȱtheȱaccuracyȱofȱoutlaysȱonȱCentrelinkȱpaymentsȱsuggestsȱaȱlevelȱofȱ precisionȱ thatȱ isȱ notȱ ableȱ toȱ beȱ supportedȱ byȱ dataȱ fromȱ theȱ RSSȱ Programme. 137 To calculate the accuracy of outlays, the purchaser departments first have to calculate the level of inaccuracy of outlays. The inaccuracy of outlays is calculated by dividing the sum of fortnightly dollar amounts of variations (upward variation, downward variation, cancellation/suspension) identified in the RSS by the sum of the fortnightly payments to all sampled customers, the percentage figure is then calculated. To derive the estimate of the accuracy of outlays, this figure is subtracted from 100 per cent. So from the 2004–05 RSS results, FaCSIA calculated that the 2.1 per cent of outlays on Centrelink payments for which FaCSIA is responsible had been inaccurate in that year. Subtracting 2.1 per cent from 100 per cent gives 97.9 per cent as the accuracy of outlays estimate for FaCSIA payments in 2004–05. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 85 4. Meeting the Other Objectives of the Programme Thisȱ chapterȱ examinesȱ theȱ extentȱ toȱ whichȱ theȱ Randomȱ Sampleȱ Surveyȱ Programmeȱ meetsȱtheȱotherȱobjectivesȱforȱtheȱprogramme,ȱasȱsetȱoutȱinȱdepartmentalȱannualȱreportsȱ andȱtheȱvariousȱrelevantȱPortfolioȱBudgetȱStatements.ȱ Background 4.1 Theȱ2004–05ȱFaCSȱAnnualȱReportȱstatedȱthat:ȱ FaCSȱcontinuallyȱmonitorsȱperformanceȱtoȱmeasureȱtheȱsuccessȱofȱtheȱcontrolȱ frameworkȱ andȱ serviceȱ providerȱ performance…Rollingȱ randomȱ sampleȱ surveysȱ provideȱ aȱ keyȱ measureȱ ofȱ theȱ effectivenessȱ ofȱ complianceȱ andȱ otherȱ reviewȱ activity…Theȱ ongoingȱ programmeȱ ofȱ randomȱ sampleȱ surveysȱ willȱ provideȱ continuousȱ informationȱ onȱ theȱ levelȱ of,ȱ andȱ reasonsȱ for,ȱ incorrectȱ paymentȱ asȱ wellȱ asȱ theȱ effectivenessȱ ofȱ theȱ overallȱ controlȱ frameworkȱ forȱ managingȱpaymentȱaccuracy.138ȱ 4.2 Theseȱ objectivesȱ mirrorȱ theȱ objectivesȱ ofȱ theȱ RSSȱ articulatedȱ overȱ timeȱ inȱrelevantȱannualȱFaCSȱPBSȱ(seeȱparagraphȱ3.5).ȱTheȱextentȱtoȱwhichȱtheȱRSSȱ meetsȱ theȱ firstȱ twoȱ ofȱ theseȱ objectivesȱ wasȱ analysedȱ inȱ theȱ previousȱ chapter.ȱ Theȱremainingȱobjectivesȱareȱasȱfollow:ȱ x measureȱtheȱreasonsȱforȱincorrectȱpayment;139ȱȱ x provideȱ moreȱ rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱ toȱ adviseȱ ofȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstances);140ȱ x contributeȱ toȱ aȱ greaterȱ appreciationȱ ofȱ theȱ extentȱ toȱ whichȱ theȱ overallȱ complianceȱstrategyȱisȱeffectiveȱandȱaȱbetterȱunderstandingȱofȱemergingȱ risksȱnotȱcurrentlyȱadequatelyȱaddressedȱinȱtheȱstrategy;141ȱandȱ x provideȱ continuousȱ dataȱ onȱ theȱ effectivenessȱ ofȱ theȱ overallȱ controlȱ frameworkȱforȱmanagingȱpayments.142ȱ 138 FaCS, Annual Report 2004–05, pp. 277–8. 139 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137. 140 ibid. 141 ibid. 142 Portfolio Budget Statements 2002–03, Family and Community Services Portfolio, p. 186. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 86 Meeting the Other Objectives of the Programme 4.3 Thisȱ chapterȱ examinesȱ theȱ extentȱ toȱ whichȱ theȱ RSSȱ meetsȱ theseȱ remainingȱobjectives.ȱ Measure the reasons for incorrect payment and rigorous information on how incorrect payment occurs 4.4 FaCSIAȱandȱ Centrelinkȱ eachȱ advisedȱ theȱ ANAOȱ thatȱ aȱ majorȱ purposeȱ ofȱ theȱ RSSȱ wasȱ toȱ identifyȱ theȱ reasonsȱ forȱ incorrectȱ payments.ȱ Thisȱ isȱ alsoȱ reflectedȱ inȱ relevantȱ FaCSȱ PBS,ȱ whichȱ statedȱ thatȱ aȱ primaryȱ purposeȱ ofȱ theȱ programmeȱ wasȱ toȱ ‘measureȱ theȱ reasonsȱ forȱ incorrectȱ payment’.143ȱ Alliedȱ toȱ thisȱ isȱ theȱ requirementȱ setȱ outȱ inȱ theȱ 1999–2000ȱ FaCSȱ PBSȱ forȱ theȱ RSSȱ Programmeȱtoȱprovideȱ‘rigorousȱinformationȱonȱhowȱincorrectȱpaymentȱoccursȱ (particularlyȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱ toȱ adviseȱ ofȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstances)’.144ȱ 4.5 TheȱANAOȱhasȱidentifiedȱtwoȱissuesȱregardingȱtheȱextentȱtoȱwhichȱtheȱ RSSȱmeetsȱtheseȱobjectives.ȱFirst,ȱthereȱareȱconcernsȱregardingȱtheȱabilityȱofȱtheȱ RSSȱtoȱcorrectlyȱmeasureȱtheȱreasonsȱforȱincorrectȱpayment.ȱSecondly,ȱthatȱtheȱ informationȱ collectedȱ byȱ theȱ RSSȱ doesȱ notȱ provideȱ rigorousȱ reasonsȱ forȱ howȱ incorrectȱpaymentȱoccurs,ȱparticularlyȱtheȱcircumstancesȱinȱwhichȱcustomerȱdoȱ notȱadviseȱofȱchangesȱinȱcircumstances,ȱratherȱitȱidentifiesȱtheȱextentȱofȱeachȱofȱ aȱseriesȱofȱknownȱreasons.ȱ 4.6 TheȱcapacityȱofȱtheȱRSSȱtoȱmeetȱtheseȱobjectivesȱisȱalsoȱaffectedȱbyȱtheȱ potentialȱforȱskewedȱinformationȱbeingȱproducedȱbyȱtheȱRSSȱonȱtheȱreasonsȱforȱ incorrectȱ paymentȱ andȱ howȱ itȱ occursȱ dueȱ toȱ theȱ unknownȱ levelȱ ofȱ nonȬ disclosureȱ byȱ customersȱ participatingȱ inȱ theȱ RSSȱ ofȱ allȱ theirȱ circumstancesȱ orȱ relevantȱchangesȱinȱtheirȱcircumstancesȱasȱexaminedȱinȱChapterȱ3.ȱ 4.7 Aȱ relatedȱ issueȱ concernsȱ theȱ extentȱ toȱ whichȱ Centrelinkȱ recordsȱȱ informationȱ onȱ theȱ reasonsȱ forȱ incorrectȱ paymentȱ collectedȱ throughȱ itsȱ otherȱ reviewȱandȱcomplianceȱactivityȱinȱitsȱIntegratedȱReviewȱSystemȱ(IRS).145ȱȱ 143 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, p. 137; Portfolio Budget Statements 2001–02, Family and Community Services Portfolio, p. 188; and Portfolio Budget Statements 2002–03, Family and Community Services Portfolio, p. 186. 144 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137. 145 The Integrated Review System (IRS) is Centrelink's computer system for recording the outcomes of review activity, including outcomes from the compliance and fraud teams, programme and service profiling reviews. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 87 Reasons for incorrect payment 4.8 Thereȱareȱaȱseriesȱofȱconditionsȱ(orȱcircumstances)ȱthatȱaȱcustomerȱmustȱ meetȱtoȱbeȱeligibleȱforȱaȱCentrelinkȱpayment,ȱandȱwhichȱwillȱdetermineȱtheȱrateȱ atȱwhichȱtheȱcustomerȱwillȱbeȱpaid.ȱTheseȱconditionsȱareȱdefinedȱinȱlegislation.ȱ Therefore,ȱ theȱ reasonsȱ forȱ anȱ incorrectȱ paymentȱ areȱ known,ȱ asȱ theseȱ willȱ beȱ alignedȱwithȱchangesȱinȱtheȱeligibilityȱconditions.ȱTheseȱareȱbuiltȱintoȱtheȱRSSȱ process,ȱ asȱ theȱ questionsȱ andȱ theȱ followȬupȱ proceduresȱ areȱ directlyȱ linkedȱ toȱ theȱ conditionsȱ ofȱ theȱ particularȱ paymentȱ theȱ customerȱ isȱ receiving.ȱ Theȱ RSSȱ doesȱnotȱidentifyȱanyȱnewȱinformationȱorȱreasons,ȱasȱtheȱreasonsȱareȱfinite.ȱ 4.9 Therefore,ȱtheȱRSSȱusesȱaȱpreȬexistingȱlistȱofȱreasonsȱforȱerror.ȱThisȱlistȱ canȱ haveȱ variationsȱ dependingȱ onȱ theȱ payment,ȱ forȱ example,ȱ theȱ needȱ forȱ aȱ careȱ giverȱ toȱ haveȱ aȱ careȱ receiverȱ inȱ Carersȱ Payment,ȱ orȱ forȱ Newstartȱ AllowanceȱrecipientsȱtoȱsatisfyȱtheȱActivityȱTest.146ȱ 4.10 Theȱ RSSȱ collectsȱ informationȱ onȱ theȱ extentȱ toȱ whichȱ eachȱ ofȱ theseȱ reasonsȱoccurȱforȱtheȱsampleȱofȱcustomersȱincludedȱinȱtheȱRSS.ȱAsȱisȱanalysedȱ furtherȱ (atȱ paragraphsȱ 4.29–4.31),ȱ theȱ mostȱ commonȱ reasonȱ forȱ incorrectȱ paymentȱisȱchangesȱinȱincomeȱorȱassets.ȱ 4.11 However,ȱ givenȱ thatȱ thereȱ isȱ anȱ unknownȱ levelȱ ofȱ nonȬdisclosureȱ byȱ nonȬcompliantȱcustomersȱinȱtheȱRSS,ȱthenȱtheȱabilityȱofȱtheȱRSSȱtoȱmeasureȱtheȱ extentȱofȱeachȱreasonȱforȱincorrectȱpaymentȱwillȱbeȱimperfect,ȱandȱmayȱinȱfactȱ leadȱ toȱ skewedȱ informationȱ regardingȱ theȱ reasons.ȱ Skewingȱ ofȱ informationȱ couldȱoccurȱdueȱtoȱtheȱpossibleȱunderȬrepresentationȱofȱinformationȱrelatedȱtoȱ theȱ mostȱ nonȬcompliantȱ customers.ȱ Forȱ theseȱ reasons,ȱ theȱ dataȱ onȱ theȱ distributionȱ ofȱ reasonsȱ forȱ incorrectȱ paymentȱ shouldȱ beȱ usedȱ withȱ someȱ caution.ȱ 146 Newstart and Youth Allowance recipients must meet an Activity Test to receive payment. The Activity Test is part of the customer’s Mutual Obligation responsibilities. To meet the Activity Test customers must: x demonstrate that they are actively looking for suitable paid work; x accept suitable work offers; x attend all job interviews; x agree to attend approved training courses or programs; x never leave a job, training course or program without a good reason; x give Centrelink accurate details about any income they have earned; and x enter into and carry out a Preparing for Work Agreement if asked. Customers must meet all the Activity Test requirements to continue receiving payment. If they do not meet these requirements, they may get an Activity Test penalty. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 88 Meeting the Other Objectives of the Programme Rigorous information on incorrect payment 4.12 TheȱANAOȱconsidersȱthatȱtoȱsatisfyȱtheȱFaCSȱPBSȱobjectiveȱforȱtheȱRSSȱ ofȱ providingȱ ‘rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱtoȱadviseȱofȱchangesȱinȱtheirȱpersonalȱandȱfinancialȱcircumstances)’ȱ wouldȱrequireȱtheȱRSSȱtoȱidentifyȱnotȱonlyȱwhichȱcondition/circumstanceȱhadȱ changed,ȱbutȱalsoȱhowȱandȱwhyȱthisȱoccurred.ȱȱ 4.13 Forȱ example,ȱ ifȱ aȱ Parentingȱ Paymentȱ Singleȱ customerȱ selectedȱ inȱ theȱ RSSȱsampleȱisȱfoundȱtoȱbeȱinȱaȱMLR,ȱwhichȱhasȱpreviouslyȱbeenȱundisclosed,ȱ thenȱ thisȱ leadsȱ toȱ anȱ errorȱ beingȱ recordedȱ forȱ theȱ RSS.ȱ However,ȱ theȱ RSSȱ processȱ doesȱ notȱ involveȱ eitherȱ askingȱ orȱ recordingȱ theȱ reasonsȱ whyȱ theȱ customerȱ hasȱ notȱ previouslyȱ disclosedȱ theȱ MLR.ȱ Thereȱ mayȱ beȱ aȱ rangeȱ ofȱ reasonsȱ forȱ this,ȱ suchȱ asȱ aȱ lackȱ ofȱ understandingȱ byȱ theȱ customerȱ ofȱ theȱ reportingȱrequirements,ȱthatȱhe/sheȱmayȱnotȱconsiderȱtheȱrelationshipȱanȱMLR,ȱ orȱthatȱhe/sheȱmayȱhaveȱbeenȱdeliberatelyȱwithholdingȱtheȱinformation.ȱȱ 4.14 Accordingly,ȱ whileȱ theȱ RSSȱ doesȱ provideȱ someȱ informationȱ onȱ theȱ reasonsȱ forȱ customerȱ error,ȱ suchȱ as:ȱ failureȱ toȱ complyȱ withȱ obligationsȱ forȱ continuousȱ entitlement;ȱ oneȬoffȱ instanceȱ whereȱ customerȱ providesȱ incorrectȱ informationȱ inȱ goodȱ faith;ȱ orȱ failureȱ toȱ updateȱ Centrelinkȱ ofȱ changesȱ inȱ circumstances,ȱitȱdoesȱnotȱprovideȱinformationȱonȱwhyȱthisȱhasȱoccurred.ȱȱ 4.15 Forȱ example,ȱ informationȱ inȱ theȱ Randomȱ Reviewȱ Resultsȱ System147ȱ recordsȱresponsesȱtoȱtheȱquestionȱ‘theȱreasonȱforȱtheȱcancellationȱorȱvariationȱtoȱ theȱrateȱofȱtheȱPrimaryȱPayment’.148ȱTheȱresponsesȱincludeȱ70ȱpossibleȱreasonsȱ suchȱ asȱ ‘Returnȱ toȱ fullȬtimeȱ work’ȱ orȱ ‘Noȱ longerȱ partnered’.ȱ However,ȱ theȱ reasonsȱunderlyingȱwhyȱtheseȱcircumstancesȱhaveȱoccurredȱareȱnotȱexploredȱorȱ recordedȱinȱtheȱsystem.ȱ 4.16 Theȱ informationȱ collectedȱ byȱ theȱ RSS,ȱ therefore,ȱ doesȱ notȱ addressȱ theȱ objectiveȱforȱtheȱRSSȱProgrammeȱsetȱoutȱinȱtheȱ1999–2000ȱFaCSȱPBSȱtoȱprovideȱ informationȱ onȱ theȱ circumstancesȱ inȱ whichȱ customersȱ doȱ notȱ fulfilȱ theirȱ obligationsȱtoȱadviseȱofȱchangesȱinȱtheirȱpersonalȱandȱfinancialȱcircumstances.ȱ Itȱonlyȱprovidesȱtheȱinformationȱthatȱthisȱdoesȱoccurȱ(whichȱisȱalreadyȱknown).ȱ TheȱmostȱcommonȱreasonȱforȱerrorȱidentifiedȱinȱtheȱRSSȱisȱtheȱcustomerȱfailingȱ 147 The Random Review Results System is a web-based application that is used to capture information about RSS reviews including errors detected as part of the review, and reasons for variation to the customer’s payment. 148 Centrelink, RRRS Questions and Answers for Combined Payment Types (Newstart Allowance), Quarter 1, 2005–06, July 2005 Release, pp. 1–2. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 89 toȱupdateȱCentrelinkȱofȱchangesȱinȱcircumstances––theȱveryȱissueȱtheȱFaCSȱPBSȱ identifies,ȱbutȱwhyȱthisȱoccursȱisȱunexaminedȱbyȱtheȱRSSȱprocess.ȱ 4.17 FaCSIAȱ hasȱ receivedȱ legalȱ adviceȱ regardingȱ whether,ȱ inȱ compellingȱ customersȱ toȱ participateȱ inȱ theȱ RSSȱ usingȱ theȱ Socialȱ Securityȱ Law149,ȱ questionsȱ canȱ beȱ askedȱ ofȱ nonȬcompliantȱ customers,ȱ suchȱ asȱ whyȱ theyȱ didȱ notȱ comply.ȱ Theȱlegalȱadviceȱprovidedȱstatedȱthat:ȱ Thisȱ isȱ aȱ complicatedȱ issueȱ …ȱ However,ȱ [asȱ discussedȱ withinȱ FaCS],ȱ anȱ informationȱgatheringȱinterviewȱmayȱnotȱnecessarilyȱbeȱtheȱmostȱappropriateȱ wayȱ ofȱ handlingȱ theseȱ matters,ȱ particularlyȱ asȱ Centrelinkȱ hasȱ experiencedȱ officersȱwhoȱareȱtrainedȱtoȱdealȱspecificallyȱwithȱtheseȱissues.ȱInȱaddition,ȱthereȱ mayȱ beȱ otherȱ issuesȱ involved,ȱ suchȱ asȱ possibleȱ selfȬincriminationȱ byȱ theȱ person.150ȱ 4.18 Inȱ lightȱ ofȱ thisȱ advice,ȱ itȱ wouldȱ beȱ prudentȱ forȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ toȱ considerȱ approachesȱ toȱ resolvingȱ thisȱ issueȱ toȱ informȱ theirȱ administrationȱofȱtheȱRSSȱprogramme.ȱ 4.19 Rigorousȱ informationȱ onȱ paymentȱ incorrectnessȱ wasȱ collectedȱ inȱ theȱ researchȱundertakenȱtoȱinformȱtheȱdevelopmentȱofȱtheȱKeepingȱtheȱSystemȱFairȱ Campaign,ȱasȱexaminedȱinȱChapterȱ3ȱ(seeȱparagraphsȱ3.76–3.82).ȱThisȱresearchȱ providedȱinȬdepthȱinformationȱonȱtheȱreasonsȱforȱnonȬdisclosure.ȱ 4.20 Theȱ ANAOȱ foundȱ thatȱ theȱ RSSȱ doesȱ notȱ provideȱ newȱ informationȱ onȱ typesȱ ofȱ paymentȱ incorrectnessȱ (asȱtheseȱ areȱknownȱ andȱ limitedȱbyȱeligibilityȱ criteria),ȱ andȱ doesȱ notȱ provideȱ rigorousȱ reasonsȱ forȱ howȱitȱ occurs.ȱ Comparedȱ withȱtheȱinformationȱcollectedȱinȱtheȱKeepingȱtheȱSystemȱFairȱresearch,ȱtheȱRSSȱ mayȱ notȱ beȱ anȱ efficient,ȱ effectiveȱ orȱ appropriateȱ wayȱ toȱ collectȱ suchȱ information.ȱȱ Centrelink information on reasons for payment incorrectness 4.21 Duringȱ ANAOȱ fieldwork,ȱ officersȱ ofȱ FaCSIAȱ informedȱ theȱ auditȱ teamȱ thatȱtheȱRSSȱwasȱtheȱonlyȱwayȱthatȱFaCSIAȱcouldȱobtainȱdetailedȱinformationȱ onȱ theȱ reasonsȱ forȱ incorrectȱ payment.ȱ FaCSIAȱ providedȱ informationȱ showingȱ theȱdifferenceȱbetweenȱexistingȱCentrelinkȱinformationȱ(onȱtheȱIRS)ȱonȱreasonsȱ forȱ paymentȱ variationȱ fromȱ otherȱ Centrelinkȱ reviewȱ activity,ȱ comparedȱ withȱ informationȱfromȱtheȱRSS.ȱ 149 In particular, section 63 and section 192. 150 Advice to the ANAO, FaCSIA email 20 December 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 90 Meeting the Other Objectives of the Programme 4.22 Forȱ example,ȱ inȱ oneȱ Ageȱ Pensionȱ caseȱ whereȱ theȱ IRSȱ reasonȱ forȱ variationȱ wasȱ recordedȱ asȱ Changeȱ inȱ Circumstances,ȱ two,ȱ moreȱ specific,ȱ reasonsȱwereȱrecordedȱonȱtheȱRSSȱsystem,ȱtheseȱbeingȱinvestmentȱincomeȱfromȱ banks/buildingȱsocietiesȱandȱincomeȱfromȱforeignȱpension.151ȱ 4.23 TheȱANAOȱdiscussedȱthisȱissueȱfurtherȱwithȱCentrelink,ȱparticularlyȱinȱ regardȱtoȱwhatȱinformationȱisȱcollectedȱandȱrecordedȱonȱIRSȱregardingȱreasonsȱ forȱchangesȱinȱpayment.ȱ 4.24 Centrelinkȱ informedȱ theȱ ANAOȱ thatȱ duringȱ reviewȱ andȱ complianceȱ processes,ȱ detailedȱ informationȱ onȱ reasonsȱ forȱ paymentȱ incorrectnessȱ areȱ collectedȱ andȱ recorded.ȱ However,ȱ theȱ detailedȱ reasonsȱ areȱ heldȱ inȱ theȱ customers’ȱDOCs,ȱnotȱcodedȱinȱtheȱIRS.ȱ 4.25 DOCsȱ areȱ onȬlineȱ documentation.ȱ Thisȱ isȱ aȱ freeȱ textȱ partȱ ofȱ eachȱ customer’sȱ computerȱ recordȱ thatȱ aȱ Centrelinkȱ officerȱ canȱ useȱ toȱ recordȱ informationȱ onȱ aȱ rangeȱ ofȱ issuesȱ relatedȱ toȱ theȱ customer.ȱ Givenȱ theȱ freeȱ textȱ natureȱ ofȱ theȱ DOCs,ȱ isolating,ȱ identifyingȱ andȱ capturingȱ dataȱ onȱ reasonsȱ forȱ incorrectȱpaymentȱacrossȱDOCsȱwouldȱnotȱbeȱeasy.ȱ 4.26 Theȱ ANAOȱ acceptsȱ thatȱ theȱ RSSȱ isȱ basedȱ onȱ aȱ randomȱ sampleȱ ofȱ customers,ȱ whileȱ reviewȱ andȱ complianceȱ activityȱ tendsȱ toȱ beȱ targeted.ȱ However,ȱ thereȱ isȱ aȱ wealthȱ ofȱ informationȱ collectedȱ duringȱ theseȱ activities,ȱ includingȱ reasonsȱ forȱ incorrectȱ payment.ȱ Theȱ ANAOȱ considersȱ thatȱ betterȱ utilisationȱofȱtheȱinformationȱcollectedȱthroughȱtheseȱactivitiesȱwouldȱprovideȱ significantȱinsightȱintoȱtheȱreasonsȱwhyȱandȱhowȱincorrectȱpaymentȱoccurs.ȱInȱ contrast,ȱ theȱ RSSȱ notwithstandingȱ thatȱ itȱ isȱ basedȱ onȱ aȱ randomȱ sampleȱ ofȱ allȱ customers,ȱisȱaȱlessȱeffectiveȱmechanismȱforȱcollectingȱthisȱinformation.ȱ Recommendation No.3 4.27 Theȱ ANAOȱ recommendsȱ that,ȱ followingȱ reviewȱ andȱ complianceȱ activities,ȱ Centrelinkȱ aggregatesȱ andȱ analysesȱ informationȱ regardingȱ theȱ reasonsȱidentifiedȱforȱpaymentȱincorrectnessȱtoȱenableȱrobustȱreview,ȱbyȱbothȱ Centrelinkȱandȱtheȱpurchaserȱdepartments,ȱofȱtheȱdataȱcollectedȱthroughȱtheseȱ activities.ȱ Centrelink’s response 4.28 151 Agreed.ȱ Advice to the ANAO, FaCSIA email 22 September 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 91 Change in reasons for incorrect payment 4.29 Theȱ reasonsȱ forȱ paymentȱ incorrectness,ȱ identifiedȱ throughȱ theȱ RSS,ȱ changeȱ littleȱ overȱ time.ȱ Invariably,ȱ asȱ couldȱ beȱ expected,ȱ theȱ mostȱ commonȱ reasonȱisȱincorrectȱpaymentsȱdueȱtoȱundeclaredȱchangesȱinȱincomeȱandȱassets.ȱ 4.30 Theȱ Newstartȱ Allowanceȱ RSSȱ pilot,ȱ conductedȱ betweenȱ Februaryȱ andȱ Mayȱ 1999,ȱ foundȱ thatȱ paymentȱ incorrectnessȱ wasȱ dueȱ mainlyȱ toȱ customers’ȱ failureȱ toȱ notifyȱ ofȱ changesȱ toȱ incomeȱ orȱ assets.152ȱ Theȱ reportȱ ofȱ theȱ resultsȱ ofȱ theȱRSSȱforȱQuarterȱ4ȱofȱ2004–05,ȱfoundȱthatȱtheȱmajorityȱofȱerrorsȱwereȱdueȱtoȱ incomeȱorȱassets,ȱwithȱ72.5ȱperȱcentȱofȱerrorsȱdueȱtoȱtheseȱtwoȱfactors.153ȱȱ 4.31 Inȱ addition,ȱ errorȱ isȱ overwhelminglyȱ attributedȱ toȱ customerȱ error.ȱ Forȱ theȱ fullȱ yearȱ 2004–05ȱ errorȱ attributedȱ byȱ Centrelinkȱ toȱ customerȱ errorȱ accountedȱ forȱ aroundȱ 80ȱ perȱ centȱ ofȱ errors,ȱ andȱ ofȱ these,ȱ theȱ mostȱ commonȱ reasonsȱ wasȱ failureȱ toȱ updateȱ Centrelinkȱ ofȱ changesȱ inȱ circumstances.154ȱ However,ȱRSSȱstaffȱinformedȱtheȱANAOȱduringȱfieldworkȱthatȱthereȱwouldȱbeȱ casesȱ whereȱ errorȱ wouldȱ beȱ incorrectlyȱ attributedȱ toȱ theȱ customer.ȱ Issuesȱ regardingȱtheȱattributionȱofȱerrorȱareȱanalysedȱinȱmoreȱdetailȱinȱChapterȱ5.ȱ Conclusion 4.32 Partȱ ofȱ theȱ purposeȱ forȱ whichȱ theȱ RSSȱ wasȱ originallyȱ fundedȱ wasȱ toȱ measureȱ theȱ reasonsȱ forȱ incorrectȱ paymentȱ andȱ toȱ provideȱ rigorousȱ informationȱ onȱ howȱ incorrectȱ paymentȱ occursȱ (particularlyȱ theȱ circumstancesȱ inȱwhichȱcustomersȱdoȱnotȱfulfilȱtheirȱobligationsȱtoȱadviseȱofȱchangesȱinȱtheirȱ personalȱandȱfinancialȱcircumstances).155ȱ 4.33 Theȱ RSSȱ doesȱ provideȱ informationȱ onȱ theȱ reasonsȱ forȱ paymentȱ incorrectness,ȱalbeitȱthatȱthisȱinformationȱisȱnotȱcompleteȱasȱitȱdoesȱnotȱincludeȱ undetectedȱ errorsȱ occurringȱ whereȱ customersȱ doȱ notȱ discloseȱ allȱ theirȱ circumstancesȱorȱchangesȱinȱtheirȱcircumstancesȱduringȱanȱRSSȱinterview.ȱTheȱ RSSȱ alsoȱ providesȱ someȱ informationȱ onȱ whatȱ particularȱ statutoryȱ obligationȱ theȱ customerȱ hasȱ notȱ fulfilledȱ whereȱ anȱ errorȱ isȱ detectedȱ duringȱ anȱ RSSȱ interviewȱeitherȱthroughȱdisclosureȱbyȱtheȱcustomerȱduringȱtheȱinterviewȱofȱaȱ previouslyȱ undisclosedȱ changeȱ inȱ circumstances,ȱ orȱ throughȱ subsequentȱ 152 Centrelink, Draft Minute, Random Sample Survey Pilot – Newstart Allowance, from Ms Sue Vardon, CEO of Centrelink to the then Minister for Community Services, September 1999. 153 Centrelink, Rolling Random Sample Surveys, Final Results Quarter 4 of 2004–2005, including full year, Compliance and Review, February 2006, p. 17. 154 ibid., p. 4. 155 Portfolio Budget Statements 1999–2000, Family and Community Services Portfolio, op. cit., p. 137. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 92 Meeting the Other Objectives of the Programme detectionȱofȱthisȱbyȱtheȱRSSȱReviewerȱ(seeȱparagraphsȱ3.102–3.108ȱonȱfollowȬupȱ procedures).ȱ 4.34 However,ȱ theȱ RSSȱ doesȱ notȱ provideȱ rigorousȱ ‘informationȱ onȱ theȱ circumstancesȱunderȱwhichȱcustomersȱdoȱnotȱfulfilȱtheirȱobligationsȱtoȱadviseȱ ofȱ changesȱ inȱ theirȱ personalȱ andȱ financialȱ circumstances’.ȱ Theȱ reasonsȱ forȱ paymentȱincorrectness,ȱasȱaȱresultȱofȱcustomerȱerror,ȱincludeȱfailureȱtoȱcomplyȱ withȱ obligationsȱ forȱ continuousȱ entitlement,ȱ oneȬoffȱ instancesȱ whereȱ theȱ customerȱ providesȱ incorrectȱ informationȱ inȱ goodȱ faith,ȱ orȱ failureȱ toȱ updateȱ Centrelinkȱ ofȱ changesȱ inȱ circumstances.ȱ However,ȱ theȱ RSSȱ doesȱ notȱ provideȱ informationȱonȱ whyȱtheseȱsituationsȱ arose,ȱforȱexampleȱbecauseȱ theȱcustomerȱ didȱnotȱunderstandȱorȱbecauseȱhe/sheȱdeliberatelyȱwithheldȱinformation.ȱȱ 4.35 Inȱ anyȱ case,ȱ theȱ ANAOȱ notesȱ thatȱ Centrelinkȱ alreadyȱ collectsȱ detailedȱ informationȱ onȱ theȱ reasonsȱ forȱ paymentȱ incorrectness,ȱ causedȱ byȱ customerȱ error,ȱthroughȱitsȱreviewȱandȱcomplianceȱactivities.ȱHowever,ȱthisȱinformationȱ isȱ notȱ recordedȱ inȱ Centrelink’sȱ IRSȱ system,ȱ andȱ isȱ consequentlyȱ notȱ easilyȱ aggregatedȱandȱanalysed.ȱ Effectiveness of the compliance framework/control framework 4.36 are:ȱ TwoȱofȱtheȱstatedȱobjectivesȱofȱtheȱRSSȱsetȱoutȱinȱtheȱvariousȱFaCSȱPBSȱ x aȱ greaterȱ appreciationȱ ofȱ theȱ extentȱ toȱ whichȱ theȱ overallȱ complianceȱ strategyȱ isȱ effectiveȱ andȱ aȱ betterȱ understandingȱ ofȱ emergingȱ risksȱ notȱ currentlyȱadequatelyȱaddressedȱinȱtheȱstrategy;156ȱandȱ x effectivenessȱ ofȱ theȱ overallȱ controlȱ frameworkȱ forȱ managingȱ payments.157ȱ 4.37 Inȱ lineȱ withȱ theseȱ objectives,ȱ Centrelinkȱ usedȱ theȱ RSSȱ toȱ provideȱ assuranceȱ inȱ itsȱ 2004–05ȱ Assuranceȱ Statementsȱ toȱ FaCS,ȱ DEWRȱ andȱ DESTȱ inȱ relationȱ toȱ risksȱ toȱ paymentȱ correctness.ȱ Inȱ particular,ȱ theȱ RSSȱ wasȱ usedȱ toȱ provideȱ assuranceȱ againstȱ Riskȱ 5:ȱ ‘Customersȱ notȱ providingȱ theȱ correctȱ informationȱeitherȱatȱclaimȱorȱwhenȱcircumstancesȱchange’.ȱ 156 ibid. 157 Portfolio Budget Statements 2002–03, Family and Community Services Portfolio, op. cit., 186. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 93 4.38 Theȱassuranceȱprovidedȱwasȱthat:ȱ Rollingȱ Randomȱ Sampleȱ Reviewsȱ provideȱ aȱ pointȬinȬtimeȱ analysisȱ ofȱ theȱ effectivenessȱofȱpreventativeȱandȱdetectiveȱcontrolsȱtoȱmaintainȱtheȱfourȱpillarsȱ ofȱ paymentȱ correctnessȱ (i.e.ȱ Rightȱ Person,ȱ Rightȱ Program,ȱ Rightȱ Rate,ȱ Rightȱ Date).ȱ 4.39 AnalysisȱearlierȱinȱthisȱchapterȱhasȱshownȱthatȱtheȱRSSȱisȱlimitedȱinȱitsȱ abilityȱ toȱ identifyȱ nonȬdisclosureȱ byȱ customersȱ ofȱ allȱ and/orȱ changedȱ circumstances,ȱandȱtherefore,ȱwillȱbeȱlimitedȱinȱrelationȱtoȱidentifyingȱpreviousȱ nonȬdisclosure.ȱOfȱinterestȱhereȱisȱtheȱabilityȱofȱtheȱRSSȱtoȱprovideȱassuranceȱasȱ toȱ theȱ effectivenessȱ ofȱ theȱ compliance/controlȱ framework,ȱ andȱ identifyȱ emergingȱrisksȱtoȱtheȱcomplianceȱframework.ȱ Effectiveness of the compliance/control framework 4.40 Theȱ RSSȱ doesȱ notȱ provideȱ aȱ directȱ measureȱ ofȱ theȱ effectivenessȱ ofȱ theȱ compliance/controlȱ frameworkȱ becauseȱ itȱ doesȱ notȱ directlyȱ testȱ this.ȱ Rather,ȱ thereȱ isȱ anȱ inferenceȱ thatȱ positiveȱ resultsȱ inȱ theȱ RSSȱ equateȱ withȱ theȱ compliance/controlȱframeworkȱbeingȱeffective.ȱ 4.41 Theȱ RSSȱ questionnaireȱ doesȱ notȱ includeȱ anyȱ questionsȱ regardingȱ theȱ outcomesȱ ofȱ anyȱ compliance/controlȱ activityȱ aȱ customerȱ mayȱ haveȱ beenȱ subjectedȱtoȱpriorȱtoȱselectionȱinȱtheȱRSS.ȱThereȱisȱalsoȱnoȱfollowȬupȱduringȱtheȱ RSSȱprocessȱtoȱmatchȱbackȱtoȱanyȱcomplianceȱactivityȱtheȱcustomerȱmayȱhaveȱ beenȱinvolvedȱinȱtoȱseeȱifȱitȱwasȱeffective.ȱThatȱis,ȱwhereȱanȱerrorȱisȱidentifiedȱ duringȱtheȱRSSȱprocess,ȱthereȱisȱnoȱcheckingȱbackȱinȱtheȱcustomerȱrecordȱtoȱseeȱ ifȱ thereȱ wasȱ anyȱ previousȱ complianceȱ activityȱ thatȱ hadȱ failedȱ toȱ identifyȱ theȱ error.ȱȱ 4.42 TheȱRSSȱReviewerȱdoesȱcodeȱwhetherȱtheȱcustomerȱhadȱaȱpreviousȱtypeȱ ofȱ review,ȱ whenȱthisȱ occurredȱandȱ whatȱtypeȱofȱreviewȱitȱ was,ȱ butȱthisȱ isȱ theȱ limitȱofȱtheȱinformationȱrecorded.ȱ 4.43 Inȱaddition,ȱtheȱRSSȱspecificallyȱexcludesȱcustomersȱwhoȱareȱcurrentlyȱ beingȱreviewed,ȱorȱhaveȱhadȱanȱIRSȱreviewȱinȱtheȱtwoȱweeksȱpriorȱtoȱdrawingȱ theȱ sample.158ȱ Thisȱ groupȱ wouldȱ provideȱ theȱ mostȱ upȱ toȱ dateȱ informationȱ onȱ whetherȱtheȱcomplianceȱreviewsȱhadȱbeenȱsuccessful,ȱbearingȱinȱmindȱtheȱissueȱ ofȱnonȬdisclosureȱinȱtheȱRSS.ȱ 4.44 Theȱ ANAOȱ acknowledgesȱ thatȱ theȱ RSSȱ isȱ aȱ pointȬinȬtimeȱ review,ȱ andȱ thatȱ anȱ errorȱ identifiedȱ atȱ thatȱ pointȱ mayȱ notȱ haveȱ existedȱ atȱ theȱ timeȱ ofȱ 158 Centrelink, Rolling Random Sample Survey Guidelines, February 2005, p. 12. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 94 Meeting the Other Objectives of the Programme previousȱcomplianceȱactivity.ȱHowever,ȱwithȱnoȱdirectȱmatching,ȱwhetherȱthisȱ isȱtheȱcaseȱisȱunknown.ȱTheȱconverseȱsituationȱmayȱalsoȱexist,ȱwhereȱthereȱisȱnoȱ errorȱ inȱ theȱ customer’sȱ paymentȱ atȱ theȱ timeȱ ofȱ anȱ RSSȱ review,ȱ anȱ errorȱ mayȱ haveȱ beenȱ undetectedȱ inȱ previousȱ complianceȱ activity.ȱ Forȱ example,ȱ aȱ customerȱmayȱ haveȱbeenȱ participatingȱinȱ anȱundetectedȱ cashȬinȬhandȱactivityȱ atȱtheȱtimeȱofȱtheȱcomplianceȱreview.ȱThisȱactivityȱmayȱhaveȱendedȱatȱtheȱtimeȱ theȱRSSȱreviewȱtookȱplaceȱandȱthereforeȱwillȱnotȱbeȱidentifiedȱinȱtheȱprocess.ȱȱ 4.45 Toȱ testȱ theȱ effectivenessȱ ofȱ controlȱ activityȱ (forȱ example,ȱ preventiveȱ controls),ȱ theȱ RSSȱ wouldȱ needȱ toȱ askȱ questionsȱ regardingȱ whetherȱ customersȱ wereȱ awareȱ ofȱ theseȱ controls,ȱ andȱ whetherȱ theyȱ changedȱ theirȱ behaviourȱ becauseȱ ofȱ them.ȱ Thisȱ alsoȱ appliesȱ toȱ complianceȱ activities.ȱ However,ȱ theseȱ behaviouralȱquestionsȱareȱnotȱaskedȱduringȱtheȱRSSȱprocess.ȱ 4.46 Centrelinkȱ hasȱ conductedȱ someȱ researchȱ intoȱ overpaymentsȱ identifiedȱ byȱtheȱRSS,ȱandȱassessedȱtheseȱagainstȱtheȱcomplianceȱprogram.ȱTheȱresearchȱ foundȱ thatȱ inȱ 2003–04,ȱ approximatelyȱ 57ȱ perȱ centȱ ofȱ casesȱ wouldȱ haveȱ beenȱ detectedȱbyȱtheȱagency’sȱcurrentȱcomplianceȱactivities.159ȱ 4.47 Thisȱanalysisȱmayȱoverestimateȱtheȱtotalȱproportionȱofȱcasesȱofȱincorrectȱ paymentsȱ thatȱ wouldȱ haveȱ beenȱ identifiedȱ byȱ complianceȱ activity,ȱ dueȱ toȱ theȱ potentialȱthatȱtheȱRSSȱisȱnotȱdetectingȱallȱcasesȱofȱpaymentȱerrors,ȱparticularlyȱ inȱ relationȱ toȱ theȱ mostȱ nonȬcompliantȱ customers.ȱ Therefore,ȱ makingȱ assumptionsȱ regardingȱ theȱ effectivenessȱ ofȱ theȱ complianceȱ frameworkȱ usingȱ RSSȱdataȱhasȱaȱlevelȱofȱrisk.ȱ 4.48 UsingȱtheȱRSSȱestimatesȱofȱtheȱaccuracyȱofȱoutlaysȱasȱaȱproxyȱmeasureȱ forȱ theȱ effectivenessȱ ofȱ theȱ compliance/controlȱ frameworkȱ doesȱ notȱ properlyȱ takeȱ accountȱ ofȱ theȱ highȱ levelȱ ofȱ errorȱ detectedȱ byȱ theȱ RSS.ȱ Whileȱ theȱ figuresȱ forȱ theȱ accuracyȱ ofȱ outlaysȱ asȱ measuredȱ byȱ theȱ RSSȱ mayȱ beȱ veryȱ highȱ (currentlyȱ 97.9ȱ perȱ centȱ forȱ FaCSIAȱ paymentsȱ andȱ 95.8ȱ perȱ centȱ forȱ DEWRȱ payments),ȱ theȱ associatedȱ levelȱ ofȱ incorrectȱ paymentȱ isȱ alsoȱ quiteȱ high,ȱ atȱȱ 30ȱ perȱ centȱ forȱ theȱ fullȱ yearȱ 2004–05.ȱ Inȱ addition,ȱ oneȱ orȱ moreȱ errorsȱ wereȱ detectedȱinȱ45ȱperȱcentȱofȱreviewsȱconductedȱinȱtheȱfullȱyearȱ2004–05.ȱȱ Emerging risks 4.49 UsingȱtheȱRSSȱasȱaȱmethodȱtoȱidentifyȱemergingȱrisksȱtoȱtheȱcomplianceȱ strategyȱ needsȱ toȱ beȱ undertakenȱ withȱ someȱ caution.ȱ Whileȱ theȱ RSSȱ doesȱ 159 Centrelink, Overpayments Analysis: Random Sample Survey, Financial Year 2003/04, Evaluation Report, December 2004, p. 5. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 95 provideȱsomeȱinformationȱonȱtheȱcharacteristicsȱofȱcustomersȱwhoȱhaveȱerror,ȱ andȱwhyȱtheȱerrorȱhasȱoccurred,ȱtheȱdataȱmayȱbeȱskewed.ȱ 4.50 Asȱ examinedȱ previously,ȱ theȱ mostȱ nonȬcompliantȱ customersȱ mayȱ notȱ beȱidentifiedȱinȱtheȱRSS.ȱThoseȱcustomersȱwhoȱdidȱnotȱfullyȱunderstandȱtheirȱ obligations,ȱorȱwhoȱwillȱcomplyȱinȱaȱfaceȬtoȬfaceȱinterviewȱmayȱbeȱmoreȱlikelyȱ toȱ discloseȱ changedȱ circumstances.ȱ However,ȱ thoseȱ whoȱ haveȱ highȱ toleranceȱ forȱnonȬdisclosureȱ(asȱidentifiedȱinȱtheȱKeepingȱtheȱSystemȱFairȱresearch)ȱmayȱbeȱ theȱleastȱlikelyȱtoȱbeȱidentifiedȱinȱtheȱRSSȱprocess.ȱ 4.51 Therefore,ȱ whileȱ someȱ risksȱ mayȱ beȱ identified,ȱ thoseȱ relatingȱ toȱ theȱ mostȱnonȬcompliantȱmayȱnotȱbeȱidentified.ȱInȱthisȱcircumstance,ȱifȱcomplianceȱ activityȱisȱtargetedȱonȱtheȱbasisȱofȱrisksȱidentifiedȱthroughȱtheȱRSS,ȱthereȱisȱalsoȱ aȱriskȱthatȱcomplianceȱactivityȱwillȱnotȱbeȱdirectedȱtoȱtheȱmostȱnonȬcompliantȱ customers,ȱandȱtherefore,ȱmayȱnotȱbeȱtheȱmostȱcostȱeffective.ȱ Recommendation No.4 4.52 Theȱ ANAOȱ recommendsȱ thatȱ Centrelink,ȱ FaCSIA,ȱ DEWRȱ andȱ DEST,ȱ whenȱ usingȱ theȱ resultsȱ ofȱ theȱ RSSȱ toȱ measureȱ theȱ effectivenessȱ ofȱ theȱ control/complianceȱ frameworkȱ andȱ toȱ identifyȱ anyȱ emergingȱ risks,ȱ takeȱ intoȱ accountȱ theȱ possibleȱ skewingȱ ofȱ dataȱ dueȱ toȱ unidentifiedȱ nonȬdisclosureȱ byȱ customersȱofȱallȱtheirȱcircumstancesȱorȱrelevantȱchangesȱinȱtheirȱcircumstances.ȱ FaCSIA’s response 4.53 Agreed.ȱItȱisȱsuggestedȱthatȱthisȱrecommendationȱshouldȱalsoȱapplyȱtoȱ theȱDepartmentȱofȱHumanȱServicesȱwhenȱusingȱtheȱresultsȱofȱtheȱRSS.ȱ DEWR’s response 4.54 Agreed.ȱ DEST’s response 4.55 Agreed.ȱ Centrelink’s response 4.56 Agreed.ȱ However,ȱ Centrelinkȱ believesȱ thatȱ thisȱ recommendationȱ isȱ coveredȱinȱrecommendationsȱ1ȱandȱ2.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 96 Meeting the Other Objectives of the Programme Conclusion 4.57 RSSȱdataȱneedȱtoȱbeȱusedȱwithȱcautionȱasȱaȱmeasureȱofȱtheȱeffectivenessȱ ofȱ theȱ compliance/controlȱ frameworkȱ andȱ toȱ identifyȱ emergingȱ risksȱ toȱ theȱ complianceȱ strategy.ȱ Inȱ bothȱ cases,ȱ customerȱ nonȬdisclosureȱ mayȱ produceȱ aȱ skewedȱresult.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 97 5. Operation of the Random Sample Survey Thisȱ chapterȱ coversȱ theȱ operationalȱ aspectsȱ ofȱ theȱ Randomȱ Sampleȱ Surveyȱ (RSS)ȱ includingȱ theȱ governanceȱ ofȱ theȱ RSSȱ operations,ȱ operationalȱ issuesȱ relatingȱ toȱ customerȱ nonȬdisclosure,ȱ theȱ RSSȱ questionnaire,ȱ timingȱ andȱ resourceȱ issuesȱ inȱ conductingȱ RSSȱ interviews,ȱ theȱ qualityȱ ofȱ RSSȱ interviews,ȱ andȱ qualityȱ assuranceȱ issues.ȱ Governance 5.1 Asȱdiscussedȱinȱearlierȱchapters,ȱCentrelinkȱconductsȱtheȱRSSȱonȱbehalfȱ ofȱ theȱ threeȱ agenciesȱ (FaCSIA,ȱ DEWRȱ andȱ DEST),ȱ eachȱ ofȱ whichȱ purchaseȱ servicesȱ fromȱ Centrelinkȱ toȱ provideȱ variousȱ programmeȱ paymentsȱ toȱ customers.ȱTheȱRSSȱisȱprimarilyȱaȱtoolȱtoȱassureȱtheȱaccuracyȱofȱsocialȱsecurityȱ outlays.ȱ 5.2 Theȱ threeȱ purchaserȱ departmentsȱ areȱ responsibleȱ forȱ theȱ RSSȱ methodology,ȱ approvalȱ ofȱ theȱ sampleȱ andȱ exclusions,ȱ providingȱ adviceȱ toȱ Centrelinkȱ onȱ issuesȱ ofȱ policyȱ andȱ undertakingȱ theȱ finalȱ levelȱ ofȱ qualityȱ assuranceȱofȱtheȱRSSȱresults.ȱȱ 5.3 WithinȱCentrelink,ȱNationalȱSupportȱOfficeȱ(NSO)ȱisȱresponsibleȱforȱtheȱ liaisonȱwithȱtheȱ purchaserȱdepartments,ȱdrawingȱtheȱsample,ȱ developmentȱ ofȱ operationalȱproceduresȱandȱguidanceȱmaterial,ȱandȱforȱanotherȱlevelȱofȱqualityȱ assurance.ȱ Staffȱ inȱ theȱ 15ȱ Centrelinkȱ Areasȱ actuallyȱ conductȱ theȱ RSS.ȱ Theȱ fundingȱ forȱ theȱ conductȱ ofȱ theȱ RSSȱ isȱ providedȱ toȱ NSOȱ fromȱ theȱ purchaserȱ departments,ȱandȱthenȱallocatedȱtoȱeachȱAreaȱasȱpartȱofȱtheȱoverallȱfundingȱofȱ theirȱoperations.ȱȱ 5.4 Theȱ Areaȱ Supportȱ Officesȱ (ASOs)ȱ areȱ responsibleȱ forȱ allocationȱ ofȱ fundingȱ toȱ theȱ RSSȱ Programmeȱ operationsȱ inȱ theirȱ ownȱ Area.ȱ ASOsȱ areȱ alsoȱ responsibleȱ forȱ recruiting,ȱ trainingȱ andȱ performanceȱ managementȱ ofȱ RSSȱ Coordinatorsȱ andȱ Reviewers.ȱ Theȱ RSSȱ Coordinatorsȱ andȱ Reviewersȱ contactȱ customers,ȱ conductȱ theȱ interviewsȱ andȱ followȬupȱ procedures,ȱ attributeȱ error,ȱ makeȱ theȱ necessaryȱ paymentȱ variationsȱ andȱ raiseȱ debts.160ȱ Theȱ RSSȱ Coordinatorsȱalsoȱundertakeȱtheȱfirstȱlevelȱofȱqualityȱassuranceȱonȱtheȱconductȱ 160 Some of the RSS reviews are not conducted by RSS Reviewers, but by other Centrelink staff. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 98 Operation of the Random Sample Survey ofȱ theȱ RSS.ȱ Qualityȱ assuranceȱ proceduresȱ areȱ examinedȱ inȱ moreȱ detailȱ inȱ paragraphsȱ5.79ȱtoȱ5.89.ȱ Purchaser Departments’ accountability for operation of the RSS 5.5 Theȱ RSSȱ isȱ importantȱ forȱ theȱ purchaserȱ departmentsȱ inȱ providingȱ assuranceȱ onȱ theȱ accuracyȱ ofȱ outlaysȱ (notwithstandingȱ itsȱ limitations,ȱ asȱ examinedȱinȱChaptersȱ3ȱandȱ4),ȱandȱcostsȱsomeȱ$4.5ȱmillionȱaȱyearȱtoȱconduct.ȱ Theȱ RSSȱ isȱ alsoȱ usedȱ toȱ provideȱ theȱ measureȱ ofȱ Centrelink’sȱ performanceȱ inȱ relationȱ toȱ theȱ targetȱ forȱ paymentȱ correctnessȱ containedȱ inȱ theȱ individualȱ agencies’ȱBusinessȱPartnershipȱAgreementsȱ(BPAs).ȱȱ 5.6 Therefore,ȱ theȱ purchaserȱ departmentsȱ shouldȱ beȱ assuredȱ thatȱ goodȱ governanceȱ proceduresȱ areȱ inȱ placeȱ toȱ allowȱ confidenceȱ thatȱ theȱ RSSȱ isȱ conductedȱ appropriatelyȱ andȱ impartiallyȱ byȱ Centrelink,ȱ asȱ wellȱ asȱ toȱ provideȱ assuranceȱtoȱtheȱpurchaserȱdepartmentsȱwithȱregardȱtoȱtheȱvalueȱforȱmoneyȱofȱ theȱprogramme.ȱ 5.7 Previously,ȱ Centrelinkȱ conductedȱ theȱ RSSȱ onȱ behalfȱ ofȱ FaCSȱ toȱ guidelinesȱthatȱwereȱoutlinedȱinȱaȱServiceȱLevelȱAgreementȱ(SLA).ȱAtȱtheȱtimeȱ ofȱ auditȱ fieldwork,ȱ newȱ SLAsȱ wereȱ beingȱ negotiatedȱ betweenȱ Centrelinkȱ andȱ theȱthreeȱpurchaserȱdepartments.ȱ 5.8 However,ȱ FaCSIA,ȱ DEWR161ȱ andȱ Centrelink,ȱ informedȱ theȱ ANAOȱ duringȱ fieldworkȱ interviewsȱ thatȱ theȱ operationalȱ aspectsȱ ofȱ theȱ RSSȱ wereȱ Centrelink’sȱ‘business’.ȱAllȱaspectsȱofȱtheȱRSSȱupȱtoȱtheȱdeliveryȱofȱtheȱdataȱtoȱ theȱ purchaserȱ departments,ȱ isȱ Centrelink’sȱ responsibility.ȱ Theȱ purchaserȱ departmentsȱadvisedȱtheyȱhadȱnoȱroleȱinȱtheȱoperationȱofȱtheȱRSS,ȱincludingȱinȱ relationȱtoȱmonitoringȱtheȱallocationȱofȱresourcesȱtoȱAreas,ȱtheȱtrainingȱofȱstaffȱ orȱtheȱconductȱofȱtheȱRSSȱreviews.ȱȱ 5.9 Whileȱ theȱ purchaserȱ departmentsȱ undertakeȱ qualityȱ assuranceȱ proceduresȱonȱaroundȱ10ȱperȱcentȱofȱtheȱreviewsȱundertakenȱeachȱquarter,ȱthisȱ isȱaȱpaperȬbasedȱprocess.ȱGivenȱtheȱqualityȱassuranceȱprocessȱisȱpredominantlyȱ paperȬbased,ȱitȱcannotȱprovideȱassuranceȱregardingȱtheȱperformanceȱofȱtheȱRSSȱ Reviewers,ȱ particularlyȱ theirȱ interviewȱ performance.ȱ Yetȱ theȱ qualityȱ ofȱ theȱ reviewsȱimpactsȱonȱtheȱoverallȱqualityȱofȱtheȱRSSȱdata.ȱ 5.10 Theȱqualityȱofȱtheȱreviewsȱisȱdependentȱonȱaȱnumberȱofȱfactors.ȱTheseȱ includeȱ thatȱ sufficientȱ resourcesȱ areȱ allocatedȱ toȱ theȱ conductȱ ofȱ theȱ RSS,ȱ thatȱ 161 DEST had not assumed an active role in the RSS at the time of audit fieldwork which was undertaken between May 2005 and October 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 99 Reviewersȱ areȱ appropriatelyȱ trainedȱ andȱ thatȱ theirȱ performanceȱ isȱ effectivelyȱ monitored,ȱasȱwellȱasȱassurancesȱthatȱinterviewsȱareȱconductedȱproperly.ȱȱ 5.11 TheȱRSSȱisȱalsoȱunusualȱbecauseȱtheȱpurchasingȱdepartmentsȱareȱaskingȱ Centrelinkȱtoȱcollectȱandȱprocessȱtheȱdataȱusedȱbyȱthoseȱpurchasingȱitsȱservicesȱ toȱ assessȱ bothȱ theȱ accuracyȱ ofȱ outlaysȱ andȱ itsȱ ownȱ performanceȱ underȱ theȱ individualȱagencies’ȱBPAs.ȱInȱtheseȱcircumstances,ȱtheȱpurchaserȱdepartmentsȱ needȱ assuranceȱ thatȱ theȱ RSSȱ Programmeȱ isȱ beingȱ conductedȱ independentlyȱ withinȱCentrelink.ȱȱ 5.12 Thatȱ is,ȱ first,ȱ thatȱ theȱ RSSȱ teamsȱ areȱ notȱ inȱ theȱ positionȱ ofȱ reviewingȱ decisionsȱ theyȱ mayȱ haveȱ themselvesȱ made.ȱ Secondly,ȱ thatȱ RSSȱ teamsȱ areȱ independentȱofȱCentrelinkȱstaffȱwhoȱmakeȱpaymentȱdecisions,ȱgivenȱthatȱRSSȱ Reviewersȱ conductȱ interviewsȱ withȱ customersȱ inȱ CSCsȱ amongȱ Centrelinkȱ Officersȱwhoȱmadeȱtheȱdecisionsȱbeingȱreviewed.ȱThirdly,ȱthatȱtheȱRSSȱteamsȱ areȱ independentȱ ofȱ theȱ Areaȱ Management,ȱ givenȱ thatȱ Areaȱ Managementȱ areȱ responsibleȱ forȱ theȱ qualityȱ ofȱ workȱ inȱ theirȱ Areaȱ andȱ theȱ qualityȱ ofȱ Areaȱ performanceȱisȱmonitored.ȱȱ 5.13 Givenȱ theȱ threeȱ purchaserȱ departmentsȱ areȱ theȱ ownersȱ ofȱ theȱ RSSȱ Programme,ȱthatȱitȱisȱanȱimportantȱassuranceȱtool,ȱandȱitȱcostsȱsomeȱ$4.5mȱperȱ annumȱ toȱ conduct,ȱ thenȱ theȱ ANAOȱ wouldȱ expectȱ thatȱ theȱ purchaserȱ departmentsȱ wouldȱ ensureȱ thatȱ goodȱ governanceȱ proceduresȱ areȱ inȱ placeȱ toȱ assureȱ themselvesȱ thatȱ theȱ operationȱ ofȱ theȱ programmeȱ isȱ effective,ȱ efficientȱ andȱindependent.ȱHowever,ȱthisȱisȱnotȱcurrentlyȱtheȱcase.ȱ 5.14 Accordingȱ toȱ DEWR,ȱ inȱ commentsȱ providedȱ toȱ theȱ ANAOȱ onȱȱ 9ȱDecemberȱ2005:ȱ DEWRȱ agreesȱ thatȱ goodȱ governanceȱ proceduresȱ areȱ requiredȱ toȱ assureȱ ourselvesȱthatȱtheȱprogrammeȱisȱeffective,ȱefficientȱandȱindependent.ȱDEWRȱisȱ enhancingȱproceduresȱaccordingly.ȱ Recommendation No.5 5.15 Theȱ ANAOȱ recommendsȱ thatȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ putȱ inȱ placeȱ proceduresȱ toȱ assureȱ themselvesȱ thatȱ Centrelink’sȱ operationȱ ofȱ theȱ RSSȱ isȱ efficient,ȱeffectiveȱandȱconductedȱindependentlyȱwithinȱCentrelink.ȱ FaCSIA’s response 5.16 Agreed.ȱTheȱissuesȱraisedȱbyȱthisȱrecommendationȱwillȱbeȱaddressedȱinȱ aȱnewȱBusinessȱPartnershipȱAgreementȱbetweenȱFaCSIAȱandȱCentrelink.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 100 Operation of the Random Sample Survey DEWR’s response 5.17 Agreed.ȱ DEST’s response 5.18 Agreed.ȱ Issuesȱ raisedȱ inȱ theȱ reportȱ relatedȱ toȱ thisȱ andȱ relatedȱ recommendationsȱwillȱbeȱaddressedȱthroughȱtheȱServiceȱLevelȱAgreementȱforȱ theȱnewȱRandomȱSampleȱSurveyȱbudgetȱmeasureȱcommencingȱinȱ2006–07.ȱ Operational issues affecting identification of nondisclosure 5.19 AsȱanalysedȱinȱChapterȱ3,ȱtheȱRSSȱprocessȱallowsȱforȱtheȱpossibilityȱofȱ nonȬdisclosureȱofȱallȱand/orȱchangesȱinȱcircumstances.ȱThereȱisȱalsoȱaȱrangeȱofȱ operationalȱissuesȱwhichȱmayȱimpactȱonȱtheȱidentificationȱofȱnonȬdisclosure.ȱ Probing 5.20 TheȱANAOȱfoundȱduringȱfieldworkȱthatȱRSSȱReviewersȱhadȱdifferencesȱ inȱtheirȱapproachȱtoȱaskingȱadditionalȱquestionsȱtoȱthoseȱsetȱoutȱinȱtheȱvariousȱ RSSȱquestionnairesȱandȱmodulesȱinȱorderȱtoȱprobeȱforȱpotentialȱnonȬdisclosureȱ byȱcustomers.ȱThisȱwasȱso,ȱevenȱwhereȱaȱcustomer’sȱresponseȱtoȱsomeȱaspectȱofȱ theȱquestionnaireȱraisedȱdoubtsȱinȱtheȱReviewer’sȱmindȱthatȱtheȱcustomerȱwasȱ disclosingȱ relevantȱ informationȱ regardingȱ his/herȱ circumstances.ȱ Thereȱ wereȱ alsoȱ differencesȱ inȱ whetherȱ Reviewersȱ wouldȱ followȬupȱ onȱ theseȱ doubtsȱ ofȱ customerȱnonȬdisclosureȱafterȱtheȱinterview.ȱ 5.21 DuringȱfieldworkȱinȱtheȱCentrelinkȱAreas162,ȱsomeȱRSSȱReviewersȱstatedȱ thatȱtheyȱdidȱprobeȱifȱtheyȱfeltȱitȱnecessary,ȱandȱthatȱtheyȱwouldȱactȱonȱdoubtsȱ aboutȱ whetherȱ theȱ customerȱ hadȱ fullyȱ disclosedȱ relevantȱ informationȱ inȱ theȱ followȬupȱprocedures.ȱHowever,ȱotherȱRSSȱReviewersȱtheȱANAOȱinterviewedȱ saidȱtheyȱwouldȱnotȱactȱonȱsuchȱdoubts.ȱ 5.22 Figureȱ5.1ȱprovidesȱaȱsampleȱofȱtheȱrangeȱofȱRSSȱReviewerȱattitudesȱtoȱ probingȱandȱactingȱonȱconcerns,ȱencounteredȱbyȱtheȱANAOȱduringȱfieldwork.ȱ 162 To obtain audit evidence, the audit team interviewed RSS teams in four of the 15 Centrelink Areas. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 101 Figure 5.1 RSS Reviewer attitudes to probing and acting on doubts x Youȱcanȱaskȱextraȱquestions;ȱyouȱdoȱtheȱgutȱinstinctȱthing,ȱandȱmakeȱaȱnoteȱtoȱ checkȱlater.ȱGivenȱmyȱexperienceȱIȱwouldȱrecogniseȱnonȬdisclosure.ȱ x IfȱIȱthoughtȱIȱneededȱtoȱpursueȱanȱissueȱIȱwould.ȱ x IfȱIȱsuspectȱsomethingȱthenȱIȱprobe,ȱespeciallyȱifȱIȱthinkȱtheyȱareȱinȱanȱMLR.ȱIfȱ I’mȱsuspiciousȱI’llȱcomeȱbackȱandȱinvestigate.ȱ x Iȱhaveȱtoȱlookȱatȱtheȱfactsȱinȱfrontȱofȱme.ȱ x Iȱdon’tȱaskȱquestionsȱnotȱinȱtheȱquestionnaire.ȱIȱmayȱtranslateȱtheȱquestion,ȱorȱ simplify,ȱbutȱIȱdon’tȱaskȱquestionsȱnotȱinȱtheȱpackage.ȱ Source: ANAO Fieldwork 5.23 InȱanotherȱArea,ȱanȱRSSȱCoordinatorȱinformedȱtheȱANAOȱthatȱtheȱRSSȱ questionnaire’sȱeffectivenessȱinȱdetectingȱMLRsȱorȱundeclaredȱincomeȱdependsȱ largelyȱ onȱ theȱ interviewȱ skillsȱ ofȱ theȱ RSSȱ interviewer.ȱ Thatȱ is,ȱ staffȱ haveȱ toȱ decideȱ whetherȱ theyȱ willȱ drillȱ downȱ toȱ theȱ nextȱ levelȱ onȱ theȱ basisȱ ofȱ theȱ availableȱ‘triggers’,ȱorȱdoubtsȱtheyȱhaveȱaboutȱtheȱcustomer’sȱresponses.ȱIfȱtheȱ interviewerȱ isȱ notȱ suspicious,ȱ orȱ doesȱ notȱ identifyȱ aȱ trigger,ȱ theyȱ willȱ notȱ followȬupȱ anȱ issueȱ withȱ furtherȱ investigationȱ asȱ thisȱ isȱ seenȱ asȱ anȱ invasionȱ ofȱ theȱcustomer’sȱprivacy.ȱȱ 5.24 Duringȱ fieldwork,ȱ aȱ numberȱ ofȱ theȱ RSSȱ Reviewersȱ theȱ ANAOȱ interviewedȱ saidȱ theyȱ didȱ probeȱ forȱ moreȱ informationȱ duringȱ theȱ interviewȱ basedȱ onȱ theirȱ doubtsȱthatȱtheȱcustomerȱisȱ disclosingȱ allȱ relevantȱinformationȱ regardingȱhis/herȱcircumstances.ȱOtherȱReviewersȱonlyȱprobedȱifȱevidenceȱwasȱ available,ȱ whileȱ othersȱ forwardedȱ casesȱ toȱ specialistsȱ withinȱ Centrelinkȱ forȱ furtherȱ investigationȱ suchȱ asȱ theȱ Cashȱ Economyȱ Teamȱ orȱ theȱ Tipȱ Offȱ Team.ȱ Althoughȱ theȱ ANAOȱ acknowledgesȱ thatȱ judgmentsȱ madeȱ inȱ eachȱ caseȱ willȱ varyȱ accordingȱ toȱ circumstances,ȱ theȱ ANAOȱ observedȱ duringȱ fieldworkȱ thatȱ theȱprobingȱinȱtheȱinterviewsȱvariedȱalsoȱbecauseȱofȱtheȱdifferentȱskillȱlevelsȱofȱ theȱ RSSȱ Reviewers,ȱ andȱ lackȱ ofȱ clearȱ guidanceȱ fromȱ Centrelink’sȱ NSOȱ forȱ Reviewers.ȱȱ 5.25 Thisȱ differenceȱ inȱ behaviourȱ amongstȱ RSSȱ Reviewersȱ impactsȱ onȱ theȱ qualityȱofȱtheȱinformationȱcollected,ȱandȱunderminesȱtheȱqualityȱofȱtheȱnationalȱ data.ȱ Theȱ ANAOȱ suggestsȱ thatȱ thisȱ inconsistentȱ approachȱ isȱ anȱ issueȱ whichȱ couldȱbeȱaddressedȱbyȱappropriateȱtraining.ȱȱ 5.26 DEWRȱinformedȱtheȱANAOȱonȱ9ȱDecemberȱ2005ȱthat:ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 102 Operation of the Random Sample Survey DEWRȱisȱlookingȱtoȱmakeȱenhancementsȱinȱthisȱarea.ȱForȱexample,ȱDEWRȱplanȱ toȱinterrogateȱcasesȱwhichȱmayȱnotȱhaveȱhadȱaȱchangeȱofȱcircumstancesȱatȱtheȱ timeȱofȱreviewȱbutȱwhichȱsubsequentlyȱdidȱhaveȱaȱchange.ȱInterrogatingȱtheseȱ casesȱmayȱassistȱinȱidentifyingȱtriggersȱwhichȱmayȱassistȱinȱtheȱreviewȱprocess.ȱ 5.27 Asȱwell,ȱFaCSIAȱadvisedȱtheȱANAOȱonȱ12ȱMayȱ2006ȱthatȱitȱhasȱdirectedȱ Centrelinkȱ toȱ implementȱ soundȱ interactiveȱ interviewȱ techniquesȱ forȱ allȱ RSSȱ interviews.ȱ Compliance focus 5.28 ThatȱsomeȱRSSȱReviewersȱprobeȱandȱactȱonȱdoubtsȱthatȱtheȱcustomerȱisȱ disclosingȱallȱrelevantȱinformationȱregardingȱhis/herȱcircumstancesȱalsoȱreflectsȱ theȱfactȱthatȱmostȱRSSȱReviewersȱinterviewedȱbyȱtheȱANAOȱhadȱaȱcomplianceȱ background.ȱ Additionally,ȱ mostȱ RSSȱ Reviewersȱ theȱ ANAOȱ interviewedȱ indicatedȱ thatȱ theyȱ considerȱ theȱ RSSȱ aȱ complianceȱ activity,ȱ ratherȱ thanȱ aȱ nationalȱsurvey.ȱHowever,ȱofficersȱfromȱNSOȱstatedȱtoȱtheȱANAOȱthat:ȱ‘Weȱtellȱ staffȱthatȱtheyȱareȱnotȱcomplianceȱofficers’.ȱThisȱisȱanȱissueȱbecauseȱitȱaffectsȱtheȱ uniformȱ executionȱ ofȱ theȱ RSS,ȱ whichȱ isȱ anȱ importantȱ requirementȱ forȱ theȱ conductȱofȱanyȱsurveyȱinȱorderȱtoȱcollectȱdataȱinȱaȱconsistentȱway.ȱ 5.29 Mostȱ RSSȱ Reviewersȱ interviewedȱ byȱ theȱ ANAOȱ duringȱ fieldworkȱ statedȱthatȱtheyȱdoȱnotȱseeȱtheȱfinalȱoutcomeȱofȱtheirȱwork.ȱThatȱis,ȱtheȱnationalȱ resultsȱofȱtheȱRSSȱandȱtheȱaccuracyȱofȱoutlaysȱfigure.ȱTheyȱreceiveȱinformationȱ onȱ theirȱ Area’sȱ performanceȱ inȱ meetingȱ theȱ SLAȱ reviewȱ completionȱ standardȱ thatȱ98ȱperȱcentȱofȱallȱcasesȱareȱcompletedȱwithinȱtheȱscheduledȱquarter163,ȱandȱ onȱtheirȱindividualȱqualityȱassuranceȱresults.ȱGivenȱmanyȱRSSȱReviewersȱhaveȱ aȱ complianceȱ background,ȱ andȱ lackȱ aȱ broaderȱ understandingȱ ofȱ theȱ RSS,ȱ itȱ isȱ notȱ surprisingȱ thatȱ theyȱ doȱ notȱ viewȱtheȱRSSȱ asȱ aȱ ‘survey’ȱ whichȱneedsȱ toȱbeȱ conductedȱuniformly.ȱȱ 5.30 Theȱ ANAOȱ doesȱ notȱ suggestȱ thatȱ staffȱ withȱaȱcomplianceȱbackgroundȱ beȱ excludedȱ fromȱ selectionȱ inȱ anȱ RSSȱ team,ȱ givenȱ thatȱ theseȱ staffȱ willȱ oftenȱ haveȱ valuableȱ skillsȱ andȱ experienceȱ toȱ bringȱ toȱ theȱ conductȱ ofȱ theȱ RSS.ȱ However,ȱstaffȱworkingȱinȱRSSȱteamsȱcouldȱbeȱbetterȱinformedȱofȱtheȱpurposeȱ ofȱ theȱ RSSȱ inȱ orderȱ toȱ improveȱ theirȱ performanceȱ inȱ theȱ role.ȱ Trainingȱ issuesȱ areȱfurtherȱexaminedȱlaterȱinȱparagraphsȱ5.97ȱtoȱ5.108.ȱ 163 Department of Family and Community Services, The Rolling Program of Random Sample Surveys Service Level Agreement, p.15. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 103 Recommendation 6 5.31 Theȱ ANAOȱ recommendsȱ thatȱ Centrelinkȱ includeȱ informationȱ onȱ theȱ purposeȱ ofȱ theȱ RSSȱ inȱ recruitmentȱ andȱ trainingȱ materialsȱ forȱ RSSȱ Reviewers,ȱ andȱthatȱAreaȱRSSȱstaffȱareȱprovidedȱwithȱinformationȱonȱtheȱoutcomesȱofȱtheȱ RSS,ȱgivenȱthatȱitȱisȱtheȱfinalȱproductȱofȱtheirȱwork.ȱ Centrelink’s response 5.32 Agreed.ȱ Centrelinkȱ providesȱ Areaȱ RSSȱ staffȱ withȱ informationȱ onȱ theȱ outcomesȱ ofȱ theȱ RSSȱ viaȱ reportsȱ postedȱ onȱ theȱ teamȱ room.ȱ Centrelinkȱ hasȱ commencedȱ workȱ toȱ includeȱ informationȱ onȱ theȱ purposeȱ ofȱ theȱ RSSȱ inȱ recruitmentȱandȱtrainingȱmaterial.ȱ Conduct of the interviews 5.33 Duringȱfieldwork,ȱtheȱANAOȱnotedȱanotherȱvariationȱinȱtheȱconductȱofȱ theȱ RSS,ȱ inȱ relationȱ toȱ whoȱ conductsȱ theȱ RSSȱ interviews.ȱ Inȱ oneȱ Areaȱ theȱ ANAOȱ visited,ȱ theȱ RSSȱ interviewsȱ wereȱ conductedȱ byȱ Centrelinkȱ staffȱ whoȱ wereȱnotȱRSSȱReviewers.ȱHowever,ȱtheȱRSSȱReviewersȱinȱthatȱAreaȱconductedȱ allȱtheȱotherȱRSSȱprocesses.ȱTheȱANAOȱwasȱadvisedȱthatȱtheȱuseȱofȱstaffȱotherȱ thanȱ RSSȱ Reviewersȱ toȱ conductȱ RSSȱ interviewsȱ occurredȱ becauseȱ ofȱ theȱ pressureȱtoȱmeetȱtheȱ98ȱperȱcentȱreviewȱcompletionȱstandard.ȱ 5.34 Asȱ notedȱ previously,ȱ theȱ interviewȱ isȱ aȱ criticalȱ partȱ ofȱ theȱ processȱ inȱ regardsȱtoȱidentifyingȱnonȬdisclosure,ȱandȱinȱinformingȱfollowȬupȱprocedures.ȱ InȱthisȱArea,ȱoneȱRSSȱReviewerȱcommentedȱthatȱthereȱwereȱqualityȱissuesȱwithȱ theȱ interviewȱ beingȱ conductedȱ byȱ someoneȱ else,ȱ andȱ thisȱ alsoȱ introducedȱ aȱ levelȱ ofȱ reworkȱ dueȱ toȱ insufficientȱ informationȱ beingȱ collectedȱ atȱ interview.ȱ Theȱ splitȱ betweenȱ theȱ interviewerȱ andȱ theȱ processorȱ alsoȱ impactedȱ uponȱ theȱ qualityȱofȱtheȱfollowȬupȱproceduresȱafterȱtheȱinterview.ȱ Attribution of error 5.35 Asȱ shownȱ inȱ Chaptersȱ 3ȱ andȱ 4,ȱ partȱ ofȱ theȱ purposeȱ ofȱ theȱ RSSȱ isȱ toȱ identifyȱ errorsȱ whichȱ mayȱ leadȱ toȱ paymentȱ incorrectness.ȱ Theȱ errorsȱ areȱ ascribedȱtoȱcustomerȱerrorȱ(thatȱis,ȱcustomerȱactionȱorȱinaction),ȱorȱCentrelinkȱ administrativeȱerrorȱ(predominatelyȱincompleteȱprocessing).ȱ 5.36 Theȱ mostȱ commonȱ customerȱ errorȱ recordedȱ isȱ theȱ ‘failureȱ toȱ updateȱ Centrelinkȱofȱchangesȱinȱcircumstances’.ȱHowever,ȱinȱdiscussingȱtheȱattributionȱ ofȱ errorȱ withȱ RSSȱ Reviewers,ȱ theȱ ANAOȱ foundȱ thatȱ thereȱ isȱ theȱ potentialȱ forȱ Centrelinkȱ administrativeȱ errorȱ toȱ beȱ incorrectlyȱ attributedȱ toȱ customerȱ error.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 104 Operation of the Random Sample Survey ThisȱcanȱoccurȱbecauseȱCentrelinkȱhasȱnotȱrecordedȱtheȱcustomer’sȱpreviouslyȱ updatedȱinformation.ȱ 5.37 Customersȱ haveȱ aȱ rangeȱ ofȱ optionsȱ forȱ updatingȱ theirȱ circumstances.ȱ Forȱ example,ȱ theyȱ canȱ callȱ aȱ Centrelinkȱ callȱ centre,ȱ orȱ provideȱ someȱ informationȱonȬline,ȱorȱprovideȱinformationȱtoȱaȱCustomerȱServiceȱOfficerȱatȱaȱ CSC.ȱȱ WhenȱRSSȱReviewersȱattributeȱerror,ȱthisȱoccursȱafterȱtheȱinterview.ȱInȱ 5.38 someȱcases,ȱcustomersȱwillȱhaveȱtheȱopportunityȱtoȱsayȱatȱinterviewȱthatȱtheyȱ hadȱalreadyȱprovidedȱinformation,ȱorȱafterȱtheȱinterview,ȱperhapsȱwhenȱaȱdebtȱ isȱraised.ȱInȱtheseȱcasesȱtheȱRSSȱReviewerȱcanȱcheckȱtheȱcustomers’ȱrecordsȱtoȱ seeȱifȱthereȱisȱevidenceȱthatȱtheyȱhadȱcontactedȱCentrelink.ȱInȱotherȱcases,ȱtheȱ customersȱ willȱ notȱ haveȱ theȱ opportunityȱ toȱ informȱ Centrelinkȱ thatȱ theyȱ haveȱ previouslyȱprovidedȱinformation.ȱ 5.39 Theȱdifficultyȱwithȱattributionȱoccursȱ whereȱ Reviewersȱcheckȱonȱcasesȱ whereȱ theȱ customerȱ claimsȱ theyȱ haveȱ updatedȱ informationȱ atȱ theȱ CSC.ȱ Aȱ customerȱ mayȱ reportȱ changesȱ atȱ theȱ CSC,ȱ and/orȱ leaveȱ documents,ȱ andȱ theseȱ mayȱ notȱ beȱ recorded.ȱ Hence,ȱ aȱ customerȱ mayȱ stateȱ thatȱ theyȱ haveȱ updatedȱ theirȱ circumstances,ȱ butȱ thereȱ mayȱ beȱ noȱ Centrelinkȱ recordȱ ofȱ thisȱ havingȱ occurred.ȱ 5.40 Duringȱ ANAOȱ fieldwork,ȱ RSSȱ Reviewersȱ statedȱ thatȱ theyȱ haveȱ hadȱ manyȱ casesȱ whereȱ customersȱ haveȱ claimedȱ toȱ haveȱ updatedȱ theirȱ circumstances.ȱSomeȱRSSȱReviewersȱadvisedȱtheȱANAOȱthatȱtheyȱsawȱthisȱasȱ unlikely.ȱForȱexample,ȱoneȱRSSȱReviewerȱstatedȱthatȱ‘Customersȱoftenȱsayȱthatȱ ‘Iȱ toldȱ youȱ that’,ȱ butȱ oftenȱ theyȱ haven’t’.ȱ Anotherȱ statedȱ ‘Ifȱ it’sȱ notȱ onȱ theȱ system,ȱthenȱ99ȱperȱcentȱofȱtheȱtimeȱtheyȱdidn’tȱprovideȱit’.ȱ 5.41 Otherȱ RSSȱ Reviewersȱ theȱ ANAOȱ interviewedȱ sawȱ thisȱ asȱ beingȱ aȱ legitimateȱ claimȱ byȱ customers.ȱ Forȱ example,ȱ oneȱ RSSȱ Reviewerȱ stated:ȱ ‘Thereȱ areȱ definitelyȱ casesȱ whereȱ thingsȱ aren’tȱ DOC’d.164ȱ Thisȱ isȱ becauseȱ ofȱ theȱ timeȱ constraintsȱinȱtheȱCSCs,ȱit’sȱnotȱdeliberate’.ȱ 5.42 Asȱ anotherȱ RSSȱ Reviewerȱ stated:ȱ ‘Receptionȱ [atȱ theȱ CSC]ȱ isȱ aȱ hardȱ place.ȱThereȱareȱlongȱqueuesȱandȱCSOsȱgetȱabused,ȱetc’.ȱ 5.43 Withȱinformationȱprovidedȱtoȱaȱcallȱcentre,ȱthereȱisȱaȱlogȱofȱtheȱcallȱandȱ someȱevidenceȱthatȱtheȱcustomerȱmadeȱcontact.ȱWithȱinformationȱprovidedȱtoȱ 164 DOCs are on-line documentation. This is a free text part of each customer’s computer record that a Centrelink officer can use to record information on a range of issues related to the customer. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 105 theȱ CSC,ȱ whichȱ mayȱ notȱ haveȱ beenȱ recorded,ȱ thereȱ isȱ noȱ recourseȱ forȱ theȱ customerȱtoȱproveȱthatȱtheyȱhadȱprovidedȱtheȱinformation.ȱ 5.44 Inȱ theȱ absenceȱ ofȱ evidenceȱ regardingȱ theȱ previousȱ provisionȱ ofȱ information,ȱ theȱ ANAOȱ wasȱ advisedȱ thatȱ anȱ errorȱ identifiedȱ duringȱ theȱ RSSȱ processȱwillȱbeȱattributedȱtoȱtheȱcustomer.ȱThisȱmayȱleadȱtoȱdebtsȱbeingȱraisedȱ incorrectly,ȱandȱanȱunderestimateȱofȱCentrelinkȱadministrativeȱerror.ȱThisȱisȱanȱ issueȱ identifiedȱ inȱ Centrelink’sȱ ownȱ researchȱ intoȱ overpayments:ȱ ‘Duringȱ theȱ analysisȱ itȱ wasȱ identifiedȱ thatȱ someȱ debtsȱ wereȱ attributedȱ toȱ Customerȱ Errorȱ butȱuponȱfurtherȱinvestigationȱwereȱfoundȱtoȱbeȱAdministrativeȱError’.165ȱ 5.45 Issuesȱwithȱtheȱattributionȱofȱerrorȱhaveȱbeenȱraisedȱpreviouslyȱbyȱtheȱ ANAO.ȱ Inȱ Auditȱ Reportȱ No.ȱ 17ȱ 2002–03ȱ Ageȱ Pensionȱ Entitlementsȱ theȱ ANAOȱ recommendedȱthat:ȱ Inȱorderȱtoȱensureȱtheȱreliabilityȱofȱperformanceȱinformationȱobtainedȱthroughȱ theȱ Randomȱ Sampleȱ Survey,ȱ theȱ ANAOȱ recommendsȱ thatȱ bothȱ FaCSȱ andȱ Centrelinkȱ strengthenȱ theirȱ qualityȱ assuranceȱ checksȱ onȱ theȱ attributionȱ ofȱ errorsȱidentifiedȱthroughȱtheȱSurveys.166ȱ 5.46 Asȱ shownȱ inȱ Chapterȱ 3,ȱ errorȱ representsȱ aȱ costȱ toȱ Centrelink.ȱ Informationȱ onȱ errorȱ providesȱ anȱ opportunityȱ toȱ identifyȱ problemsȱ andȱ developȱsolutions,ȱparticularlyȱinȱrelationȱtoȱadministrativeȱerror.ȱ 5.47 Accordingȱ toȱ Centrelink,ȱ inȱ commentsȱ providedȱ toȱ theȱ ANAOȱ onȱ 9ȱDecemberȱ2005:ȱ Centrelinkȱwillȱbeȱimplementingȱaȱnationwideȱreceiptingȱprocedureȱtoȱreceiptȱ andȱ recordȱ adviceȱ fromȱ customersȱ everyȱ timeȱ contactȱ isȱ made.ȱ Thisȱ willȱ provideȱevidenceȱofȱtheȱtransactionȱtoȱcustomersȱandȱCentrelinkȱalike.ȱ Timing and resources issues 5.48 Competingȱ qualityȱ andȱ timelinessȱ goalsȱ isȱ anȱ issueȱ whichȱ hasȱ beenȱ identifiedȱgenerallyȱinȱCentrelinkȱoperationsȱatȱtheȱfrontȱline:ȱ Whileȱ aȱ numberȱ ofȱ findingsȱ haveȱ beenȱ uncovered,ȱ aȱ numberȱ ofȱ themȱ canȱ beȱ summarisedȱbyȱsayingȱthatȱstaffȱactionsȱareȱsometimesȱfocusedȱonȱKPIsȱ[Keyȱ PerformanceȱIndicators]ȱatȱtheȱexpenseȱofȱfullȱcorrectness.ȱThereȱisȱanȱissueȱofȱ qualityȱvsȱtimelinessȱandȱmeetingȱofȱindividualȱKPIs.ȱTheseȱmeasuresȱdrivingȱ 165 Centrelink, Overpayments Analysis: Random Sample Survey, Financial Year 2003–04, p. 3. 166 ANAO Audit Report No. 17 2002–03, op. cit., p. 48. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 106 Operation of the Random Sample Survey staffȱ behaviourȱ whichȱ can,ȱ atȱ times,ȱ negativelyȱ impactȱ onȱ paymentȱ correctness.167ȱ 5.49 StaffȱinȱtheȱCentrelinkȱRSSȱteamsȱareȱguidedȱbyȱtheȱreviewȱcompletionȱ standardȱofȱ98ȱperȱcentȱofȱRSSȱcasesȱperȱquarter.ȱDuringȱfieldwork,ȱCentrelinkȱ staffȱ raisedȱ withȱ theȱ ANAOȱ theȱ issueȱ ofȱ timingȱ andȱ resourceȱ pressures,ȱ indicatingȱitȱaffectedȱtheȱabilityȱofȱstaffȱtoȱmeetȱdeadlinesȱforȱtheȱRSS,ȱtoȱaȱhighȱ standard.ȱ Timing 5.50 Theȱ Centrelinkȱ staffȱ fromȱ NSOȱ andȱ theȱ Areasȱ theȱ ANAOȱ interviewedȱ duringȱ fieldworkȱ consistentlyȱ raisedȱ theȱ impactȱ ofȱ timeȱ constraintsȱ onȱ Centrelink’sȱ abilityȱ toȱ completeȱ theȱ RSS.ȱ Manyȱ ofȱ theȱ RSSȱ staffȱ interviewedȱ wereȱofȱtheȱopinionȱthatȱifȱtheyȱhadȱmoreȱtime,ȱtheyȱwouldȱbeȱableȱtoȱachieveȱaȱ higherȱ levelȱ ofȱ qualityȱ inȱ theirȱ work,ȱ includingȱ aȱ moreȱ detailedȱ levelȱ ofȱ investigationȱ intoȱ customerȱ circumstances.ȱ Thisȱ inȱ turnȱ couldȱ leadȱ toȱ theȱ identificationȱofȱfurtherȱerrorsȱinȱcustomerȱpayments.ȱȱ 5.51 Timingȱ issuesȱ alsoȱ impactedȱ onȱ theȱ decisionsȱ RSSȱ staffȱ madeȱ onȱ customerȱpayments.ȱGivenȱtheȱtimeȱpressures,ȱaȱfewȱstaffȱinformedȱtheȱANAOȱ thatȱtheyȱwereȱforcedȱtoȱsuspendȱsomeȱcustomers’ȱpaymentsȱinȱorderȱtoȱgetȱtheȱ customerȱ toȱ comeȱ inȱ forȱ theȱ RSSȱ interviewȱ andȱ allowȱ theȱ RSSȱ Reviewerȱ toȱ completeȱ his/herȱ workload.ȱ Mostȱ ofȱ theȱ RSSȱ Reviewersȱ interviewedȱ byȱ theȱ ANAOȱ advisedȱ thatȱ theyȱ wouldȱ takeȱ timeȱ toȱ explainȱ theȱ RSSȱ processȱ toȱ difficultȱcustomersȱwhoȱinitiallyȱrefusedȱtoȱattendȱtheȱRSSȱinterview.ȱButȱotherȱ RSSȱReviewersȱadvisedȱthatȱtheyȱwouldȱbeȱquickerȱtoȱsuspendȱcustomersȱwhoȱ refusedȱ toȱ participateȱ inȱ theȱ RSSȱ interview,ȱ inȱ orderȱ toȱ ensureȱ theȱ customer’sȱ complianceȱandȱachievementȱofȱtheȱrequiredȱtimelinessȱofȱtheȱprocess.ȱȱ 5.52 Aȱ fewȱ ofȱ theȱ RSSȱ teamsȱ interviewedȱ advisedȱ theȱ ANAOȱ thatȱ theyȱ occasionallyȱ useȱ otherȱ Centrelinkȱ staffȱ toȱ conductȱ RSSȱ interviews,ȱ inȱ orderȱ toȱ meetȱ theȱ reviewȱ completionȱ standardȱ ofȱ 98ȱ perȱ centȱ ofȱ RSSȱ interviewsȱ eachȱ quarter.ȱ However,ȱ asȱ identifiedȱ byȱ someȱ ofȱ theȱ RSSȱ staffȱ duringȱ fieldwork,ȱ nonȬRSSȱ staffȱ interviewingȱ customersȱ impactsȱ onȱ theȱ qualityȱ ofȱ theȱ RSSȱ process.ȱ Splittingȱ theȱ interviewingȱ andȱ theȱ processingȱ ofȱ theȱ casesȱ betweenȱ differentȱstaffȱincreasesȱtheȱpossibilityȱthatȱfewerȱtriggersȱwillȱbeȱidentifiedȱandȱ investigatedȱduringȱtheȱfollowȬupȱprocessesȱafterȱtheȱcustomerȱinterview.ȱ 167 Centrelink, “Charlotte” – The Web Unfurls: Analysis Report, op. cit., p. 29. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 107 Resourcing 5.53 Severalȱ RSSȱ Coordinatorsȱ theȱ ANAOȱ interviewedȱ raisedȱ theȱ issueȱ ofȱ theȱ limitedȱ staffȱ resourcesȱ availableȱ toȱ undertakeȱ theȱ RSSȱ reviews,ȱ andȱ commentedȱ thatȱ theȱ lackȱ ofȱ availableȱ staffȱ ledȱ toȱ difficultiesȱ inȱ meetingȱ theȱȱ 98ȱperȱcentȱcompletionȱrateȱeachȱquarter.ȱȱ 5.54 Forȱ example,ȱ inȱ oneȱ Centrelinkȱ Area,ȱ fundingȱ hadȱ beenȱ suppliedȱ byȱ NSOȱ forȱ twoȱ fullȬtimeȱ staffȱ inȱ theȱ RSSȱ team.ȱ Theȱ Areaȱ itselfȱ hadȱ fundedȱ anȱ additionalȱ twoȱ fullȬtimeȱ roles,ȱ inȱ orderȱ toȱ meetȱ RSSȱ deadlines.ȱ Despiteȱ theȱ additionalȱstaff,ȱtheȱAreaȱwasȱstillȱhavingȱdifficultyȱinȱcompletingȱitsȱcaseloadȱ inȱ theȱ requiredȱ timeȱ period.ȱ Otherȱ RSSȱ Coordinatorsȱ andȱ theirȱ staffȱ alsoȱ commentedȱ thatȱ timeȱ pressuresȱ dueȱ toȱ limitedȱ staffȱ resourcesȱ impactedȱ onȱ theirȱabilityȱtoȱmeetȱtheȱ98ȱperȱcentȱreviewȱcompletionȱstandard.ȱȱ 5.55 Inȱaddition,ȱtheȱrequirementȱtoȱverifyȱdetailsȱwithȱthirdȱparties,ȱsuchȱasȱ banksȱ andȱ employers,ȱ intrinsicallyȱ involvedȱ unavoidableȱ delaysȱ andȱ madeȱ itȱ difficultȱtoȱmeetȱtheȱ98ȱperȱcentȱcompletionȱstandardȱeachȱquarter.ȱȱ Questionnaire 5.56 Inȱ orderȱ toȱ collectȱ dataȱ forȱ theȱ RSSȱ process,ȱ Centrelinkȱ andȱ FaCSIAȱ jointlyȱdevelopedȱaȱseriesȱofȱRSSȱpackages,ȱoneȱforȱeachȱpaymentȱtype.ȱȱ 5.57 Theȱ packageȱ consistsȱ ofȱ aȱ questionnaireȱ toȱ beȱ completedȱ duringȱ theȱ interviewȱ withȱ theȱ customer,ȱ andȱ aȱ validationȱ packageȱ toȱ beȱ completedȱ afterȱ theȱinterviewȱprocess.ȱTheȱvalidationȱpackageȱinvolvesȱconfirmingȱdetailsȱwithȱ thirdȱpartiesȱwhichȱmayȱincludeȱemployers,ȱbanks,ȱonlineȱcreditȱchecksȱand/orȱ theȱAustralianȱValuationȱOffice.ȱ 5.58 Theȱ questionnairesȱ areȱ developedȱ withinȱ theȱ Complianceȱ andȱ Reviewȱ branchȱofȱCentrelinkȱinȱconsultationȱwithȱtheȱrelevantȱprogrammeȱbranchesȱinȱ bothȱ Centrelinkȱ andȱ policyȱ departments.168ȱ Questionnairesȱ areȱ alsoȱ reviewedȱ andȱ updatedȱ asȱ aȱ resultȱ ofȱ newȱ orȱ amendedȱ legislation,ȱ orȱ followingȱ aȱ stakeholderȱ request.169ȱ Theȱ packagesȱ forȱ majorȱ paymentsȱ areȱ reviewedȱ sixȱ monthsȱ afterȱ phasedȱ implementation.ȱ Theȱ RSSȱ Programmeȱ Managersȱ forȱ FaCSIAȱandȱCentrelinkȱareȱrequiredȱtoȱsignȱoffȱonȱallȱrequestedȱchangesȱtoȱtheȱ questionnaireȱbeforeȱproductionȱrelease.170ȱ 168 Centrelink; comments provided to the ANAO on 9 December 2005. 169 ibid. 170 ibid. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 108 Operation of the Random Sample Survey 5.59 TheȱRSSȱquestionnaireȱimpactsȱuponȱtheȱabilityȱofȱtheȱRSSȱReviewersȱtoȱ collectȱappropriateȱandȱrobustȱdataȱfromȱCentrelinkȱcustomersȱduringȱtheȱRSSȱ interview.ȱ Therefore,ȱ aȱ wellȬdesignedȱ questionnaireȱ isȱ criticalȱ toȱ theȱ RSSȱ process.ȱȱ 5.60 Reviewersȱareȱrequiredȱtoȱcompleteȱtheȱquestionnaireȱatȱtheȱinterview,ȱ andȱ followȱ theȱ prompts.ȱ Certainȱ questionsȱ withinȱ theȱ questionnaireȱ areȱ designedȱtoȱtriggerȱ‘modules’.ȱModulesȱinvolveȱaȱseriesȱofȱfurtherȱquestionsȱonȱ aȱ specificȱ topicȱ thatȱ mayȱ notȱ applyȱ toȱ allȱ customers,ȱ forȱ exampleȱ aȱ seriesȱ ofȱ questionsȱ onȱ aȱ customer’sȱ assets.ȱ Whereȱ theȱ questionnaireȱ indicatesȱ thatȱ aȱ moduleȱ shouldȱ beȱ issued,ȱ theȱ interviewerȱ isȱ requiredȱ toȱ askȱ theȱ customerȱ allȱ questionsȱonȱthatȱmodule.ȱȱ 5.61 RSSȱstaffȱinterviewedȱbyȱtheȱANAOȱadvisedȱthatȱtheyȱconsideredȱthatȱ theȱ questionnairesȱ wereȱ comprehensive.ȱ However,ȱ manyȱ alsoȱ indicatedȱ thatȱ theyȱ consideredȱ thereȱ couldȱ beȱ someȱ improvementsȱ toȱ theȱ questionnairesȱ inȱ termsȱ ofȱ design,ȱ andȱ thatȱ theȱ questionnairesȱ didȱ notȱ uncoverȱ allȱ instancesȱ ofȱ customerȱnonȬdisclosure.ȱ Questionnaire design 5.62 ManyȱofȱtheȱstaffȱinterviewedȱbyȱtheȱANAOȱraisedȱrepetition,ȱandȱtheȱ sequenceȱ ofȱ questions,ȱ asȱ issuesȱ withȱ theȱ questionnaireȱ design.ȱ Theȱ differentȱ modulesȱ inȱ theȱ questionnaireȱ oftenȱ leadȱ toȱ duplication.ȱ Inȱ manyȱ instancesȱ addingȱoneȱquestionȱtoȱtheȱquestionnaireȱwouldȱeliminateȱtheȱneedȱtoȱrunȱtheȱ customerȱ throughȱ anotherȱ entireȱ module.ȱ Staffȱ alsoȱ suggestedȱ thatȱ reducingȱ theȱnumberȱofȱmodulesȱinȱtheȱquestionnaireȱwouldȱimproveȱitsȱusability.ȱSomeȱ ofȱ theȱ staffȱ interviewedȱ alsoȱ suggestedȱ thatȱ changingȱ theȱ sequencingȱ ofȱ theȱ questionsȱwouldȱalsoȱimproveȱtheȱquestionnaireȱdesign,ȱasȱitȱwouldȱeliminateȱ theȱneedȱtoȱaskȱcertainȱquestionsȱwhichȱareȱnotȱapplicableȱtoȱtheȱcustomer.ȱ 5.63 Asȱaȱresultȱofȱitsȱdesign,ȱsomeȱstaffȱbelievedȱthatȱtheȱquestionnaireȱhadȱ aȱhighȱlevelȱofȱcomplexity,ȱwhichȱcouldȱbeȱconfusingȱforȱnewȱReviewers.ȱThisȱ mayȱbeȱanȱissueȱforȱinexperiencedȱstaffȱwithȱlimitedȱtraining,ȱorȱnonȬRSSȱstaffȱ whoȱareȱemployedȱtoȱdoȱtheȱinterviewingȱwhenȱthereȱareȱtimingȱorȱresourcingȱ issues.ȱ Thisȱ inȱ turnȱ mayȱ effectȱ theȱ accuracyȱ ofȱ theȱ dataȱ collectionȱ forȱ theȱ RSSȱ process.ȱ 5.64 Aȱ numberȱ ofȱ RSSȱ Reviewersȱ andȱ Coordinatorsȱ interviewedȱ byȱ theȱ ANAOȱsuggestedȱtheȱideaȱofȱaȱgenericȱquestionnaireȱforȱallȱpaymentȱtypes,ȱorȱ aȱ questionnaireȱ withȱ twoȱ parts,ȱ oneȱ withȱ genericȱ questionsȱ applicableȱ toȱ allȱ customers,ȱ andȱ anotherȱ withȱ paymentȱ specificȱ questions.ȱ Theȱ RSSȱ staffȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 109 consideredȱ thatȱ theseȱ changesȱ wouldȱ reduceȱ theȱ complexityȱ ofȱ theȱ questionnaire.ȱȱ 5.65 Althoughȱ manyȱ ofȱ theȱ RSSȱ staffȱ theȱ ANAOȱ interviewedȱ advisedȱ thatȱ theyȱ hadȱ providedȱ feedbackȱ toȱ Centrelinkȱ NSOȱ onȱ theȱ designȱ ofȱ theȱ questionnaireȱandȱhowȱtoȱimproveȱit,ȱtheyȱobservedȱthatȱlittleȱhasȱbeenȱdoneȱtoȱ implementȱtheseȱsuggestions.ȱ Recommendation 7 5.66 Theȱ ANAOȱ recommendsȱ thatȱ Centrelink,ȱ DEWR,ȱ DESTȱ andȱ FaCSIAȱ reviewȱtheȱdesignȱofȱtheȱRSSȱquestionnaireȱinȱorderȱto:ȱ (a) reduceȱtheȱcomplexityȱofȱtheȱquestionnaire;ȱ (b) improveȱsequencingȱthroughȱtheȱquestionnaire;ȱandȱ (c) limitȱquestionȱrepetitionȱwhenȱusingȱadditionalȱspecialisedȱmodules.ȱȱ FaCSIA’s response 5.67 Agreed.ȱ Centrelink,ȱ FaCSIA,ȱ DEWRȱ andȱ DESTȱ areȱ developingȱ aȱ newȱ genericȱ questionnaireȱ andȱ paymentȱ specificȱ componentsȱ andȱ modulesȱ forȱ theȱ RSS.ȱ Centrelinkȱ isȱ currentlyȱ compilingȱ andȱ testingȱ theȱ genericȱ questionnaire,ȱ componentsȱ andȱ modulesȱ withȱ aȱ viewȱ toȱ implementationȱ forȱ allȱ RSSȱ reviewsȱ fromȱ1ȱJulyȱ2006.ȱ DEWR’s response 5.68 Agreed.ȱ DEST’s response 5.69 Agreed.ȱ DESTȱ isȱ workingȱ towardȱ addressingȱ theȱ issuesȱ [theȱ recommendation]ȱ raises.ȱ Toȱ thisȱ end,ȱ DESTȱ isȱ workingȱ withȱ Centrelinkȱ toȱ streamlineȱ theȱ questionnairesȱ andȱ toȱ eliminateȱ duplicationȱ ofȱ questionsȱ betweenȱtheȱquestionnairesȱandȱmodulesȱusedȱforȱtheȱRSS.ȱ Centrelink’s response 5.70 Agreed.ȱ Centrelinkȱ hasȱ commencedȱ workingȱ withȱ allȱ policyȱ departmentsȱ toȱ addressȱ theȱ issuesȱ raisedȱ byȱ theȱ ANAO.ȱ Aȱ newȱ genericȱ questionnaireȱ withȱ paymentȱ specificȱ attachmentsȱ willȱ beȱ utilisedȱ fromȱ theȱ 2006/07ȱfinancialȱyear.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 110 Operation of the Random Sample Survey Sound practice 5.71 Theȱ followingȱ sectionsȱ provideȱ aȱ briefȱ overviewȱ ofȱ theȱ betterȱ practiceȱ mechanismsȱavailableȱtoȱtheȱRSSȱteams.ȱ RSS Team Room 5.72 Theȱ RSSȱ ‘Teamȱ Room’ȱ isȱ anȱ electronicȱ databaseȱ usedȱ toȱ provideȱ RSSȱ Coordinatorsȱ andȱ theirȱ staffȱ withȱ informationȱ onȱ IRSȱ updates,ȱ NSOȱ contacts,ȱ generalȱissuesȱandȱotherȱreferenceȱmaterial.171ȱAlsoȱavailableȱisȱinformationȱonȱ paymentȱspecificȱissues,ȱcompletionȱreports,ȱprogressȱreports,ȱandȱAreaȱreportsȱ containingȱ theȱ resultsȱ ofȱ theȱ previousȱ RSSȱ quarter.172ȱ Someȱ ofȱ theȱ RSSȱ staff,ȱ interviewedȱ byȱ theȱ ANAO,ȱ foundȱ theȱ Teamȱ Roomȱ toȱ beȱ aȱ usefulȱ sourceȱ ofȱ informationȱ aboutȱ theȱ RSS,ȱ includingȱ updatesȱ fromȱ Centrelink’sȱ NSOȱ onȱ theȱ process.ȱȱ 5.73 However,ȱ aȱ greaterȱ numberȱ ofȱ RSSȱ Coordinatorsȱ andȱ theirȱ staffȱ informedȱ theȱ ANAOȱ thatȱ theȱ RSSȱ Teamȱ Roomȱ hasȱ limitations,ȱ includingȱ aȱ cumbersomeȱ design.ȱ Thatȱ is,ȱ theȱ databaseȱ hasȱ noȱ particularȱ orderingȱ orȱ anȱ indexȱ whichȱ isȱ notȱ logicalȱ orȱ userȬfriendly,ȱ makingȱ itȱ difficultȱ toȱ navigate.ȱ Inȱ addition,ȱ theȱ informationȱ inȱ theȱ databaseȱ isȱ notȱ routinelyȱ revisedȱ andȱ asȱ aȱ resultȱ containsȱ anȱ overȬabundanceȱ ofȱ information,ȱ includingȱ olderȱ andȱ irrelevantȱ information.ȱ Dueȱ toȱ theseȱ limitations,ȱmanyȱofȱtheȱRSSȱstaffȱ doȱ notȱ useȱtheȱRSSȱTeamȱRoomȱonȱaȱregularȱbasis,ȱwithȱsomeȱstaffȱnotȱusingȱtheȱTeamȱ Roomȱatȱall.ȱ Recommendation 8 5.74 Theȱ ANAOȱ recommendsȱ thatȱ Centrelinkȱ reviewȱ theȱ RSSȱ Teamȱ Roomȱ database,ȱ withȱ aȱ viewȱ toȱ improvingȱ itsȱ useability,ȱ andȱ thatȱ theȱ informationȱ itȱ containsȱisȱbothȱcurrentȱandȱrelevantȱtoȱRSSȱstaff.ȱȱ Centrelink’s response 5.75 Agreed.ȱ Other better practice mechanisms 5.76 Thereȱ isȱ alsoȱ anȱ annualȱ conferenceȱ forȱ theȱ RSSȱ Coordinators.ȱ Inȱ someȱ Areasȱ RSSȱ teamsȱ holdȱ weeklyȱ teamȱ meetingsȱ toȱ discussȱ progressȱ andȱ shareȱ ideasȱamongstȱteamȱmembers.ȱ 171 Centrelink, Rolling Random Sample Survey: Guidelines, op. cit., p. 24. 172 ibid. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 111 5.77 However,ȱaȱmajorityȱofȱtheȱRSSȱstaffȱtheȱANAOȱinterviewedȱwereȱnotȱ awareȱofȱhowȱotherȱAreasȱcompleteȱtheȱRSSȱprocess.ȱȱ 5.78 Centrelinkȱ informedȱ theȱ ANAOȱ onȱ 9ȱ Decemberȱ 2005ȱ thatȱ ‘thisȱ issueȱ willȱ beȱ addressedȱ throughȱ implementationȱ ofȱ businessȱ lines173,ȱ whichȱ willȱ ensureȱconsistentȱprocess’.ȱ Quality assurance 5.79 Asȱ shownȱ above,ȱ thereȱ areȱ threeȱ separateȱ qualityȱ assuranceȱ processesȱ conductedȱ onȱ theȱ dataȱ collectedȱ fromȱ theȱ RSS.ȱ Theȱ firstȱ processȱ isȱ theȱ Areaȱ check,ȱgenerallyȱconductedȱbyȱtheȱAreaȱRSSȱCoordinator.ȱThisȱisȱtoȱensureȱthatȱ allȱ appropriateȱ informationȱ hasȱ beenȱ collected,ȱ andȱ thatȱ theȱ RSSȱ Reviewer’sȱ analysisȱandȱdecisionsȱareȱcorrect.ȱ 5.80 Theȱ secondȱ processȱ isȱ conductedȱ byȱ NSO.ȱ Previously,ȱ allȱ casesȱ whereȱ thereȱwasȱaȱvariationȱorȱdebtȱtoȱtheȱcustomer’sȱ(orȱpartner’s)ȱpaymentȱhadȱtoȱ beȱphotocopiedȱandȱsentȱtoȱNSOȱforȱqualityȱcontrol.ȱThisȱqualityȱcontrolȱisȱnowȱ conductedȱinsteadȱonȱaȱ10ȱperȱcentȱsampleȱofȱallȱcases.ȱȱ 5.81 Theȱthirdȱprocessȱisȱaȱcheckȱbyȱtheȱpurchaserȱdepartmentȱofȱtheȱqualityȱ andȱconsistencyȱofȱreviews,ȱandȱisȱcalledȱExternalȱValidation.ȱCentrelinkȱsendsȱ aȱ sampleȱ ofȱ 10ȱ perȱ centȱ ofȱ casesȱ toȱ theȱ appropriateȱ agencyȱ forȱ checking.ȱ Asȱ examinedȱ previously,ȱ theseȱ checksȱ areȱ allȱ mostlyȱ paperȬbasedȱ apartȱ fromȱ DEWR’sȱonlineȱcheck,ȱandȱthereȱisȱnoȱcheckȱonȱtheȱactualȱinterviewȱprocess.ȱ 5.82 Theȱ ANAOȱ acceptsȱ thatȱ anyȱ processȱ conductedȱ byȱ staffȱ willȱ haveȱ aȱ degreeȱ ofȱ humanȱ error,ȱ andȱthatȱthereȱisȱ aȱ needȱforȱ qualityȱ controlȱ processes.ȱ However,ȱ theȱ costȱ effectivenessȱ ofȱ threeȱ separateȱ processesȱ checkingȱ theȱ qualityȱ ofȱ theȱ completedȱ questionnairesȱ isȱ doubted,ȱ particularlyȱ ifȱ theȱ interviewȱhasȱfailedȱtoȱelicitȱallȱrelevantȱinformation.ȱTheȱcostȱofȱthisȱamountȱofȱ qualityȱassuranceȱshouldȱbeȱweighedȱagainstȱtheȱlimitationsȱofȱtheȱRSSȱdataȱinȱ itsȱabilityȱtoȱmeetȱitsȱprimaryȱpurposeȱ(ReferȱtoȱChapterȱ3).ȱ 5.83 Inȱ commentsȱ providedȱ toȱ theȱ ANAOȱ onȱ 9ȱ Decemberȱ 2005,ȱ Centrelinkȱ statedȱthat:ȱ Inȱ Augustȱ 2005,ȱ Centrelinkȱ introducedȱ aȱ streamlinedȱ checkingȱ processȱ supportedȱ byȱ toolsȱ andȱ checklistsȱ toȱ ensureȱ qualityȱ isȱ maintained.ȱ Qualityȱ guidelinesȱwillȱcontinueȱtoȱbeȱstressedȱandȱenforced.ȱȱ 173 Business lines are groupings of agency programmes based on the result which they are primarily intended to achieve. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 112 Operation of the Random Sample Survey 5.84 Duringȱ fieldworkȱ theȱ ANAOȱ requestedȱ dataȱ onȱ theȱ resultsȱ ofȱ Centrelink’sȱAreaȱqualityȱassuranceȱchecks.ȱHowever,ȱofȱtheȱfourȱAreasȱvisited,ȱ noneȱ collectedȱ statisticsȱ onȱ theȱ numberȱ orȱ typeȱ ofȱ Reviewerȱ errorsȱ foundȱ inȱ qualityȱ assuranceȱ checks.ȱ Theȱ ANAOȱ wasȱ providedȱ withȱ aȱ qualityȱ assuranceȱ spreadsheetȱ fromȱ oneȱ Area,ȱ andȱ theȱ checkingȱ sheetsȱ fromȱ another,ȱ whichȱ identifiedȱreviewerȱerrorȱforȱaȱquarter,ȱbutȱdidȱnotȱaggregateȱtheȱinformation.ȱȱ 5.85 Asȱ shownȱ previously,ȱ errorȱ representsȱ aȱ costȱ toȱ Centrelink.ȱ Duringȱ ANAOȱ fieldwork,ȱ theȱ auditȱ teamȱ observedȱ theȱ conductȱ ofȱ Areaȱ qualityȱ assuranceȱproceduresȱandȱsawȱaȱlevelȱofȱbasicȱerrorȱinȱtheȱconductȱofȱtheȱRSSȱ reviews.ȱ Theȱ dataȱ collectedȱ byȱ theȱANAOȱ fromȱ twoȱ Areasȱ showedȱ thatȱ thereȱ wasȱaȱhighȱlevelȱofȱReviewerȱerrorȱinȱtheȱprocessingȱofȱRSSȱreviews.ȱ 5.86 Inȱ observingȱ Areaȱ qualityȱ assuranceȱ processes,ȱ theȱ auditȱ teamȱ sawȱ examplesȱ ofȱ errorȱ inȱ theȱ collectionȱ ofȱ informationȱ duringȱ theȱ RSSȱ interview,ȱ includingȱ poorȱ photocopyingȱ ofȱ documentsȱ (forȱ exampleȱ notȱ includingȱ theȱ photoȱ onȱ aȱ copyȱ ofȱ aȱ passport)ȱ andȱ insufficientȱ proofȱ ofȱ identityȱ documentation.ȱ Theseȱ typesȱ ofȱ errorsȱ requireȱ theȱ customerȱ toȱ beȱ contactedȱ toȱ provideȱ theȱ informationȱ againȱ ifȱ theȱ RSSȱ reviewȱ isȱ toȱ beȱ successfullyȱ completed.ȱThisȱisȱaȱcostȱtoȱbothȱtheȱcustomerȱandȱCentrelink,ȱandȱmayȱimpactȱ onȱ theȱ qualityȱ ofȱ dataȱ fromȱ theȱ RSSȱ ifȱ Reviewerȱ errorsȱ areȱ notȱ identifiedȱ andȱ rectified.ȱ 5.87 Theseȱ observationsȱ ofȱ theȱ qualityȱ ofȱ collectionȱ ofȱ proofȱ ofȱ identityȱ informationȱ usedȱ inȱ theȱ RSSȱ reinforcesȱ findingsȱ fromȱ ANAOȱ Auditȱ Reportȱ No.29ȱ2005–06,ȱIntegrityȱofȱElectronicȱCustomerȱRecords,ȱwhichȱfoundȱthatȱupȱtoȱ 30ȱ perȱ centȱ ofȱ proofȱ ofȱ identityȱ informationȱ onȱ ISIS174ȱ wasȱ insufficientȱ orȱ unreliableȱ inȱ termsȱ ofȱ uniquelyȱ identifyingȱ orȱ substantiatingȱ theȱ identityȱ ofȱ customers.175ȱȱ 5.88 Theȱ ANAO’sȱ analysisȱ ofȱ informationȱ providedȱ onȱ oneȱ Area’sȱ qualityȱ assuranceȱprocess,ȱ showedȱ thatȱ84ȱ perȱ centȱ ofȱRSSȱ reviewsȱ wereȱ identifiedȱ asȱ havingȱ someȱ kindȱ ofȱ Reviewerȱ error.ȱ Theseȱ rangedȱ fromȱ incorrectȱ contactȱ informationȱbeingȱrecorded,ȱtoȱinformationȱnotȱbeingȱverified.ȱInȱanotherȱArea,ȱ whileȱ theȱ percentageȱ ofȱ Reviewerȱ errorȱ couldȱ notȱ beȱ calculatedȱ fromȱ dataȱ providedȱ toȱ theȱ ANAO,ȱ theȱ typesȱ ofȱ errorȱ recordedȱ rangedȱ fromȱ incorrectȱ recordingȱofȱinformationȱthroughȱtoȱpoorȱanalysisȱofȱdataȱcollected.ȱ 174 The Income Security Integrated System (ISIS) is Centrelink’s main customer database. 175 ANAO Audit Report No. 29 2005–06, Integrity of Electronic Customer Records, p. 15. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 113 5.89 InȱANAOȱdiscussionsȱwithȱstaffȱfromȱCentrelinkȱNSO,ȱtheȱrecruitmentȱ andȱ trainingȱ ofȱ RSSȱ Reviewersȱ wasȱ canvassed,ȱ andȱ theseȱ staffȱ statedȱ thatȱ theȱ RSSȱattractsȱaȱuniqueȱpersonȱwhoȱneedsȱaȱbroadȱskillȱset.ȱNSOȱDocumentationȱ relatingȱ toȱ theȱ skillsȱ requiredȱ forȱ RSSȱ Reviewers,ȱ reinforcedȱ thisȱ view.176ȱ However,ȱ ANAOȱ fieldworkȱ andȱ interviewsȱ withȱ RSSȱ Reviewersȱ identifiedȱ aȱ wideȱ variationȱ inȱ skillsȱ andȱ experience,ȱ andȱ aȱ levelȱ ofȱ basicȱ errorȱ thatȱ wouldȱ notȱ beȱ expectedȱ ofȱ experiencedȱ staffȱ (recruitmentȱ andȱ trainingȱ ofȱ RSSȱ staffȱ isȱ examinedȱbelowȱinȱparagraphsȱ5.91ȱtoȱ5.96).ȱȱ RSS Reviewers 5.90 Theȱ ANAOȱ interviewedȱ RSSȱ Coordinatorsȱ andȱ theirȱ teamsȱ inȱ fourȱ differentȱ Areasȱ ofȱ Centrelink.ȱ Aȱ numberȱ ofȱ issuesȱ specificȱ toȱ RSSȱ Reviewersȱ wereȱidentifiedȱbyȱtheȱANAOȱduringȱtheȱfieldworkȱforȱtheȱaudit,ȱparticularlyȱ inȱ relationȱ toȱ recruitmentȱ andȱ retention,ȱ trainingȱ andȱ support,ȱ andȱ performanceȱ assessments.ȱ Theȱ followingȱ sectionsȱ provideȱ furtherȱ detailȱ onȱ theseȱissues.ȱ Recruitment and retention 5.91 Duringȱ fieldwork,ȱ theȱ RSSȱ Coordinatorsȱ interviewedȱ informedȱ theȱ ANAOȱ thatȱ RSSȱ teamȱ rolesȱ wereȱ notȱ advertisedȱ andȱ insteadȱ peopleȱ wereȱ ‘approached’,ȱorȱmovedȱthereȱdueȱ toȱ operationalȱ issues.ȱ Thereȱareȱ noȱ specificȱ selectionȱcriteriaȱforȱRSSȱReviewers.ȱHowever,ȱRSSȱCoordinatorsȱinformedȱtheȱ ANAOȱthatȱtheyȱ‘knowȱwhoȱweȱneed’.ȱSimilarly,ȱmanyȱRSSȱReviewersȱadvisedȱ thatȱ theyȱ hadȱ notȱ appliedȱ throughȱ addressingȱ selectionȱ criteria,ȱ andȱ wereȱ unawareȱ ofȱ anyȱ specificȱ criteriaȱ forȱ theȱ role.ȱ Someȱ hadȱ acquiredȱ theȱ roleȱ asȱ aȱ resultȱ ofȱ expressingȱ anȱ interestȱ inȱ theȱ positionȱ andȱ requestingȱ aȱ transfer,ȱ orȱ wereȱapproachedȱbyȱtheȱunitȱmanager.ȱOthersȱsaidȱtheyȱhadȱ‘endedȱup’ȱinȱtheȱ role.ȱ 5.92 ManyȱstaffȱadvisedȱtheȱANAOȱtheyȱconsideredȱthatȱtheyȱwereȱselectedȱ forȱtheȱRSSȱroleȱbecauseȱofȱtheirȱbackgroundȱinȱcompliance,ȱandȱconsequentlyȱ viewedȱtheȱRSSȱasȱaȱcomplianceȱactivity.ȱ 5.93 Despiteȱ thisȱ approachȱ toȱ recruitingȱ staff,ȱ someȱ RSSȱ staffȱ advisedȱ theȱ ANAOȱthatȱtheyȱwereȱofȱtheȱopinionȱthatȱaȱformalisedȱselectionȱprocessȱwouldȱ improveȱtheȱqualityȱofȱrecruitsȱforȱtheȱRSSȱroles.ȱThisȱwasȱbecauseȱofȱtheȱkeyȱ skillsȱwhichȱareȱrequiredȱforȱtheȱrole,ȱincludingȱattentionȱtoȱdetail,ȱknowledgeȱ ofȱpayments,ȱlogicalȱthinkingȱandȱtheȱabilityȱtoȱcalculateȱdebts.ȱInȱaddition,ȱoneȱ 176 Centrelink, Certification for Random Sample Staff, January 2005. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 114 Operation of the Random Sample Survey RSSȱ Coordinatorȱ informedȱ theȱ ANAOȱ thatȱ ‘itȱ isȱ importantȱ toȱ haveȱ theȱ rightȱ peopleȱwithȱtheȱrightȱskillsȱforȱtheȱRSSȱrole,ȱasȱtheȱRSSȱisȱintegralȱtoȱcomplianceȱ andȱtheȱintegrityȱofȱoutlays’.ȱItȱisȱalsoȱcrucialȱtoȱretainȱstaffȱasȱitȱtakesȱaȱwhileȱtoȱ buildȱ upȱ experienceȱ overȱ theȱ sixȱ paymentsȱ coveredȱ byȱ theȱ RSS.ȱ Therefore,ȱ aȱ formalisedȱ selectionȱ processȱ wouldȱ aidȱ inȱ theȱ recruitmentȱ ofȱ staffȱ withȱ theȱ appropriateȱskills.ȱ 5.94 Theȱ ANAO’sȱ fieldworkȱ identifiedȱ thatȱ retentionȱ appearedȱ toȱ beȱ anȱ issueȱwithȱRSSȱteams.ȱRSSȱReviewersȱandȱCoordinatorsȱadvisedȱthatȱthisȱwasȱ dueȱ toȱ theȱ pressuresȱ ofȱ theȱ role.ȱ Thisȱ isȱ confirmedȱ inȱ Centrelinkȱ documentation:ȱ Theȱ levelȱ ofȱ staffȱ rotationȱ withinȱ theȱ teamsȱ isȱ certainlyȱ high,ȱ impactingȱ uponȱ theirȱongoingȱskillsȱbaseȱandȱhistorically,ȱthereȱdoesȱappearȱtoȱbeȱaȱhighȱlevelȱ ofȱ volatilityȱ regardingȱ theȱ establishmentȱ andȱ locationȱ ofȱ Randomȱ Sampleȱ Teams.177ȱ 5.95 Severalȱ RSSȱ Coordinatorsȱ informedȱ theȱ ANAOȱ thatȱ resourcingȱ wasȱ aȱ constantȱ issueȱ thatȱ impactedȱ onȱ theirȱ teams’ȱ abilityȱ toȱ meetȱ theȱ reviewȱ completionȱstandardȱspecifiedȱbyȱtheȱpurchaserȱdepartments.ȱThisȱstandardȱisȱ thatȱ98ȱperȱcentȱofȱallȱRSSȱreviewsȱwillȱbeȱcompletedȱbyȱtheȱendȱofȱtheȱrelevantȱ quarter.ȱ Manyȱ ofȱ theȱ RSSȱ teamȱ membersȱ interviewedȱ duringȱ fieldworkȱ hadȱ beenȱinȱtheirȱroleȱforȱlessȱthanȱ 12ȱmonths.ȱ SeveralȱofȱtheȱRSSȱstaffȱ alsoȱ raisedȱ theȱissueȱofȱtimeȱpressuresȱasȱoneȱofȱtheȱmajorȱdifficultiesȱofȱtheirȱrole.ȱ 5.96 Theȱissueȱofȱlowȱretentionȱofȱstaffȱisȱanotherȱfactorȱthatȱimpactsȱonȱtheȱ abilityȱ ofȱ theȱ RSSȱ teamsȱ toȱ meetȱ deadlines.ȱ Highȱ turnoverȱ ofȱ staffȱ meantȱ thatȱ someȱ staffȱ hadȱ limitedȱ knowledgeȱ ofȱ theȱ RSSȱ processȱ and,ȱ asȱ aȱ result,ȱ lowerȱ skillȱ levels.ȱ Thisȱ inȱ turnȱ placesȱ greaterȱ pressureȱ onȱ staffȱ whoȱ wereȱ moreȱ experiencedȱandȱskilledȱinȱtheirȱroles,ȱandȱimpactedȱonȱtheȱabilityȱofȱtheȱteamȱ toȱmeetȱtheȱmajorȱstandardȱcontainedȱinȱtheȱSLA.ȱȱ Training and support 5.97 Centrelinkȱ hasȱ recognisedȱ thatȱ trainingȱ forȱ staffȱ inȱ theȱ RSSȱ roleȱ isȱ crucialȱtoȱtheȱsuccessȱofȱtheȱRSSȱprocess:ȱ Essentially,ȱtheȱjobȱcombinesȱelementsȱofȱinterviewȱandȱinvestigation,ȱtechnicalȱ expertiseȱtoȱconfirmȱandȱupdateȱcustomerȱrecordsȱandȱqualityȱchecking.ȱSkillȱ levelsȱinȱtheseȱareasȱneedȱtoȱbeȱconsistentlyȱhigh.178ȱ 177 ibid. 178 ibid. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 115 5.98 Duringȱ fieldwork,ȱ theȱ ANAOȱ foundȱ aȱ greatȱ dealȱ ofȱ variationȱ inȱ theȱ trainingȱ providedȱ toȱ Reviewersȱ amongstȱ theȱ variousȱ RSSȱ teams.ȱ Thoseȱ Centrelinkȱ RSSȱ staffȱ theȱ ANAOȱ interviewedȱ advisedȱ thatȱ theȱ RSSȱ Reviewersȱ wereȱnotȱrequiredȱtoȱundertakeȱmandatoryȱtrainingȱforȱtheirȱrole.ȱInȱaddition,ȱ theyȱadvisedȱthatȱnoȱregularȱtrainingȱisȱprovidedȱtoȱtheȱRSSȱteamsȱbyȱNSO.ȱȱ 5.99 Acrossȱ theȱ fourȱ Centrelinkȱ Areasȱ theȱ ANAOȱ visited,ȱ itȱ wasȱ generallyȱ assumedȱthatȱstaffȱalreadyȱhadȱtheȱskillsȱtoȱperformȱtheȱrole,ȱandȱthereforeȱthatȱ theyȱonlyȱneededȱtoȱreceiveȱinformalȱonȬtheȬjobȱtrainingȱofȱtheȱRSSȱprocessȱinȱ orderȱ toȱ performȱ theȱ role.ȱ However,ȱ theȱ ANAOȱ observedȱ aȱ wideȱ rangeȱ ofȱ experienceȱandȱskillȱlevelsȱinȱtheȱRSSȱstaffȱinterviewed.ȱ 5.100 InȱAreasȱwhereȱstaffȱdidȱreceiveȱtraining,ȱthisȱtookȱtheȱformȱofȱoneȬonȬ oneȱ trainingȱ andȱ onȬtheȬjobȱ training,ȱ assistedȱ throughȱ manuals,ȱ andȱ onlineȱ Actsȱ andȱ procedures.ȱ Weeklyȱ meetingsȱ alsoȱ providedȱ guidanceȱ toȱ someȱ staffȱ onȱ theirȱ role.ȱ Inȱ aȱ fewȱ Areas,ȱ RSSȱ staffȱ undertookȱ debtȱ andȱ otherȱ technicalȱ training,ȱ butȱ thisȱ wasȱ notȱ mandatory.ȱ Forȱ example,ȱ inȱ oneȱ particularȱ Area,ȱ itȱ wasȱaȱrequirementȱforȱRSSȱstaffȱtoȱcompleteȱaȱCertificateȱIVȱinȱFraud,ȱhoweverȱ inȱotherȱareasȱitȱwasȱonlyȱencouragedȱbutȱnotȱenforced.ȱ 5.101 GuidelinesȱareȱprovidedȱtoȱRSSȱstaffȱwhenȱtheyȱfirstȱstartȱtheirȱposition.ȱ However,ȱmanyȱstaffȱadvisedȱthatȱtheyȱhadȱnotȱreferredȱtoȱtheȱguidelinesȱonȱanȱ ongoingȱbasisȱtoȱperformȱtheirȱrole.ȱInȱaddition,ȱsomeȱofȱtheȱinitialȱonȬtheȬjobȱ trainingȱ providedȱ onlyȱ tookȱ theȱ formȱ ofȱ aȱ briefȱ andȱ informalȱ overviewȱ ofȱ theȱ role.ȱ 5.102 AȱnumberȱofȱRSSȱstaffȱinterviewedȱbyȱtheȱANAOȱwereȱofȱtheȱopinionȱ thatȱ theȱ RSSȱ Teamȱ Roomȱ databaseȱ isȱ aȱ goodȱ sourceȱ ofȱ trainingȱ information.ȱ However,ȱ asȱ previouslyȱ mentionedȱ inȱ paragraphsȱ 5.72ȱ toȱ 5.73,ȱ theȱ RSSȱ Teamȱ Roomȱ isȱ notȱ utilisedȱ byȱ allȱ RSSȱ staff.ȱ Someȱ RSSȱ staffȱ advisedȱ theȱ ANAOȱ thatȱ theȱTeamȱRoomȱwasȱdifficultȱtoȱnavigateȱandȱthatȱitȱcontainedȱaȱgreatȱdealȱofȱ redundantȱinformation.ȱ 5.103 TheȱRSSȱstaffȱinterviewedȱbyȱtheȱANAOȱwereȱsatisfiedȱwithȱtheȱlevelȱofȱ supportȱprovidedȱbyȱCentrelinkȱNSOȱtoȱperformȱtheirȱroles,ȱinȱparticularȱtheyȱ feltȱthatȱresponsesȱtoȱquestionsȱwereȱansweredȱinȱaȱtimelyȱmanner.ȱHowever,ȱ manyȱ ofȱ theȱ RSSȱ staffȱ interviewedȱ byȱ theȱ ANAOȱ feltȱ theyȱ wouldȱ appreciateȱ moreȱinformationȱaboutȱtheȱresultsȱandȱtheȱoutcomeȱofȱtheȱRSS.ȱ 5.104 Also,ȱ manyȱ ofȱ theȱ RSSȱ staffȱ consideredȱ itȱ wouldȱ beȱ beneficialȱ toȱ theirȱ roleȱ toȱ haveȱ moreȱ trainingȱ providedȱ onȱ technicalȱ issues,ȱ forȱ example,ȱ toȱ increaseȱtheirȱknowledgeȱofȱpaymentȱtypes.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 116 Operation of the Random Sample Survey 5.105 ThisȱisȱanȱissueȱthatȱhasȱbeenȱrecognisedȱbyȱCentrelink:ȱ Theȱ singularȱ roleȱ ofȱ theȱ Randomȱ Sampleȱ Teams,ȱ whenȱ combinedȱ withȱ theirȱ growingȱ importanceȱasȱ aȱcomponentȱ ofȱ theȱ BAF,ȱ indicatesȱaȱ discreteȱ trainingȱ andȱ accreditationȱ packageȱ wouldȱ beȱ appropriateȱ toȱ enhanceȱ andȱ maintainȱ necessaryȱ skillȱ levelsȱ withinȱ theȱ teams.ȱ Theȱ packageȱ needsȱ toȱ addressȱ theȱ specificȱrequirementsȱandȱnatureȱofȱRandomȱSamples.179ȱ 5.106 InȱJanuaryȱ2005,ȱCentrelinkȱproposedȱthatȱRSSȱstaffȱbeȱrequiredȱtoȱgainȱ technicalȱ proficiencyȱ toȱ theȱ standardȱ ofȱ aȱ QOLȱ checker180ȱ inȱ atȱ leastȱ oneȱ programmeȱ area,ȱ andȱ completeȱ upȱ toȱ fourȱ modulesȱ addressingȱ investigationȱ competencies,ȱdrawnȱfromȱtheȱCertificateȱIVȱinȱFraudȱmaterial.181ȱȱ 5.107 However,ȱ inȱ commentsȱ providedȱ toȱ theȱ ANAOȱ onȱ 9ȱDecemberȱ 2005,ȱ Centrelinkȱadvised:ȱ CentrelinkȱdoesȱnotȱagreeȱthatȱCertificateȱIVȱinȱFraudȱMaterialȱisȱappropriateȱ forȱRandomȱSampleȱstaff.ȱAȱtailoredȱaccreditationȱpackageȱisȱbeingȱdeveloped.ȱ 5.108 DEWRȱalsoȱplansȱtoȱaddressȱtheȱissueȱofȱtrainingȱforȱRSSȱstaff.ȱDEWRȱ advisedȱtheȱANAOȱonȱ9ȱDecemberȱ2005ȱthat:ȱ DEWRȱ plansȱ toȱ provideȱ Centrelinkȱ withȱ fundingȱ toȱ undertakeȱ trainingȱ includingȱdevelopmentȱofȱanȱaccreditedȱtrainingȱprogramme.ȱDEWRȱwillȱtakeȱ anȱactiveȱroleȱinȱtheȱdevelopmentȱofȱthisȱtraining.ȱDEWRȱagreeȱthatȱtheȱreviewȱ staffȱshouldȱhaveȱanȱunderstandingȱofȱtheȱRSS.ȱ Performance assessment 5.109 Duringȱ theȱ fieldworkȱ forȱ thisȱ audit,ȱ theȱ ANAOȱ observedȱ aȱ wideȱ variationȱinȱtheȱfourȱAreasȱvisitedȱinȱtermsȱofȱPerformanceȱAssessmentsȱ(PAs)ȱ forȱtheȱRSSȱteamȱmembers.ȱ 5.110 TheȱsoleȱcommonȱKPIȱincludedȱinȱtheȱPAsȱacrossȱtheȱAreasȱisȱthatȱRSSȱ Reviewersȱ willȱ striveȱ toȱ meetȱ aȱ 98ȱ perȱ centȱ completionȱ standardȱ ofȱ theȱ RSSȱ casesȱ allocatedȱ toȱ themȱ perȱ quarter,ȱ withȱ 100ȱ perȱ centȱ accuracy.ȱ Thisȱ KPIȱ isȱ consistentȱ withȱ theȱ overallȱ standardȱ specifiedȱ forȱ Centrelink’sȱ conductȱ ofȱ theȱ RSSȱbyȱtheȱpurchaserȱdepartments.ȱHowever,ȱsomeȱofȱtheȱRSSȱteamȱmembersȱ interviewedȱfeltȱthatȱtheȱ98ȱperȱcentȱcompletionȱtargetȱwasȱtooȱdifficultȱtoȱmeet,ȱ andȱshouldȱbeȱchangedȱtoȱaȱmoreȱrealisticȱfigureȱofȱaroundȱ95ȱperȱcent.ȱ 179 ibid. 180 Quality On-Line (QOL) is Centrelink’s on-line quality assurance tool, where either five per cent or 100 per cent of a CSO’s work, depending on their experience, is referred to a qualified officer (QOL checker), who checks for completeness and correctness. 181 Centrelink, Certification for Random Sample Staff, op. cit. ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 117 5.111 Theȱ RSSȱ Coordinatorsȱ inȱ theseȱ Areasȱ informedȱ theȱ ANAOȱ thatȱ PAȱ reportsȱ wereȱ conductedȱ roughlyȱ everyȱ fourȱ months.ȱ However,ȱ theȱ ANAOȱ foundȱ variationȱ acrossȱ theȱ Areasȱ inȱ theȱ frequencyȱ ofȱ PAsȱ undertakenȱ withȱ individualȱRSSȱstaff.ȱSomeȱofȱtheȱmoreȱexperiencedȱRSSȱstaff,ȱwhenȱaskedȱbyȱ theȱANAO,ȱcouldȱnotȱrecallȱwhenȱtheirȱlastȱPAȱhadȱtakenȱplace.ȱȱ 5.112 Inȱ someȱ ofȱ theȱ Areas,ȱ theȱ RSSȱ Coordinatorȱ attendsȱ theȱ initialȱ fewȱ interviewsȱ ofȱ newȱ RSSȱ Reviewers,ȱ howeverȱ thisȱ wasȱ notȱ consistentȱ acrossȱ Areas.ȱTheȱRSSȱinterviewȱisȱanȱintegralȱpartȱofȱtheȱRSSȱprocessȱasȱitȱisȱcentralȱtoȱ goodȱ dataȱ collectionȱ inȱ theȱ process.ȱ Despiteȱ this,ȱ noneȱ ofȱ theȱ Areasȱ visitedȱ duringȱ fieldworkȱ hadȱ aȱ processȱ inȱ placeȱ toȱ monitorȱ theȱ qualityȱ ofȱ RSSȱ interviewsȱ onȱ aȱ regularȱ basis,ȱ orȱ observeȱ theȱ performanceȱ ofȱ RSSȱ Reviewersȱ duringȱtheȱinterview.ȱȱ Recommendation 9 5.113 TheȱANAOȱrecommendsȱthatȱCentrelink:ȱ (a) developȱandȱimplementȱnationalȱselectionȱcriteriaȱforȱRSSȱReviewers;ȱ (b) developȱ andȱ implementȱ aȱ nationalȱ trainingȱ packageȱ forȱ allȱ RSSȱ staff;ȱ andȱ (c) ensureȱ appropriateȱ Performanceȱ Assessmentȱ proceduresȱ areȱ inȱ placeȱ forȱallȱRSSȱReviewers.ȱ Centrelink’s response 5.114 Agreed.ȱCentrelinkȱhasȱalreadyȱcommencedȱdevelopmentȱofȱaȱrangeȱofȱ measuresȱtoȱaddressȱtheseȱthreeȱelements.ȱ Conclusion 5.115 Theȱ ANAOȱ examinedȱ theȱ operationȱ ofȱ theȱ RSSȱ Programmeȱ andȱ concludedȱ thatȱ thereȱ wereȱ aȱ rangeȱ ofȱ issuesȱ withȱ theȱ operationȱ ofȱ theȱ RSSȱ Programme.ȱ Theseȱ issuesȱ ultimatelyȱ affectȱ theȱ qualityȱ ofȱ dataȱ producedȱ fromȱ theȱRSS.ȱAccordingly,ȱaddressingȱtheȱopportunitiesȱtoȱimproveȱtheȱoperationȱofȱ theȱRSSȱprogrammeȱwillȱimproveȱtheȱqualityȱofȱtheȱdataȱproduced.ȱHowever,ȱ theseȱ improvementsȱ willȱ notȱ addressȱ theȱ inherentȱ problemȱ ofȱ customerȱ nonȬ disclosure.ȱ 5.116 Theȱ ANAOȱ considersȱ thatȱ purchaserȱ departmentȱ shouldȱ implementȱ improvementsȱtoȱtheȱgovernanceȱofȱtheȱRSSȱprogrammeȱtoȱgainȱaȱgreaterȱlevelȱ ofȱassuranceȱregardingȱtheȱoperationȱofȱtheȱprogrammeȱandȱtoȱallowȱthemȱtoȱ betterȱ assessȱ theȱ efficiency,ȱ effectivenessȱ andȱ independenceȱ ofȱ Centrelink’sȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 118 Operation of the Random Sample Survey operationȱofȱtheȱRSSȱProgramme.ȱThereȱareȱalsoȱaȱrangeȱofȱoperationalȱissuesȱ whichȱ affectȱ theȱ identificationȱ ofȱ nonȬdisclosureȱ byȱ customersȱ ofȱ changesȱ inȱ theirȱ circumstances,ȱ includingȱ differencesȱ amongstȱ RSSȱ Reviewersȱ inȱ approachesȱtoȱprobingȱandȱfollowingȱup.ȱȱ 5.117 Inȱ examiningȱ theȱ qualityȱ assuranceȱ processesȱ forȱ theȱ RSSȱ Programme,ȱ theȱ ANAOȱ observedȱ aȱ numberȱ ofȱ simpleȱ errorsȱ inȱ theȱ conductȱ ofȱ theȱ RSSȱ reviews.ȱ Theȱ ANAOȱ requestedȱ dataȱ onȱ theȱ resultsȱ ofȱ theȱ Areaȱ qualityȱ assuranceȱchecksȱfromȱtheȱfourȱAreasȱvisitedȱduringȱfieldwork,ȱhowever,ȱnoneȱ collectedȱ statisticsȱ onȱ theȱ numberȱ orȱ typeȱ ofȱ Reviewerȱ errorsȱ found.ȱ Theȱ ANAO’sȱ analysisȱ ofȱ informationȱ providedȱ onȱ oneȱ Area’sȱ qualityȱ assuranceȱ process,ȱ showedȱ thatȱ 84ȱ perȱ centȱ ofȱ RSSȱ reviewsȱ wereȱ identifiedȱ asȱ havingȱ someȱkindȱofȱReviewerȱerror.ȱTheseȱerrorsȱrepresentȱaȱcostȱtoȱCentrelinkȱandȱifȱ notȱcorrectedȱaffectȱtheȱqualityȱofȱtheȱdataȱcollected.ȱ 5.118 TheȱANAOȱfoundȱthatȱtheȱqualityȱofȱtheȱdataȱcollectionȱforȱtheȱRSSȱwasȱ alsoȱaffectedȱbyȱissuesȱwith:ȱ x recruitment,ȱtrainingȱandȱperformanceȱmanagementȱofȱRSSȱstaff;ȱ x questionnaireȱdesign;ȱ x CentrelinkȱstaffȱotherȱthanȱRSSȱReviewersȱconductingȱtheȱinterview;ȱandȱ x theȱattributionȱofȱerrorȱbetweenȱCentrelinkȱandȱitsȱcustomers.ȱ Ian McPhee Auditor-General Canberra ACT 31 May 2006 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 119 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 120 Appendix ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 121 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 122 Appendix 1: Centrelink’s Prevention and Review Activities Service Profiling Reviews Serviceȱ profilingȱ isȱ aȱ methodȱ ofȱ selectivelyȱ targetingȱ Centrelinkȱ servicesȱ andȱ assistanceȱ toȱ itsȱ customers.ȱ Profilingȱ isȱ supportedȱ byȱ anȱ informationȱ technologyȱ toolȱ thatȱ checksȱ aȱ customerȇsȱ recordȱ forȱ theȱ predictorsȱ orȱ characteristicsȱ whichȱ areȱ relevantȱ toȱ theȱ serviceȱ beingȱ provided.ȱ Itȱ thenȱ determinesȱ theȱ mostȱ appropriateȱ patternȱ ofȱ actions,ȱ recognisingȱ thatȱ notȱ allȱ customersȱrequireȱtheȱsameȱlevelȱofȱservice.ȱ Data Matching Dataȱ matchingȱ isȱ conductedȱ byȱ Centrelinkȱ inȱ associationȱ withȱ aȱ numberȱ ofȱ AustralianȱGovernmentȱandȱStateȱGovernmentȱbodies,ȱsuchȱasȱtheȱAustralianȱ TaxationȱOffice.ȱ Child Care Service Operator Reviews Theseȱreviewsȱareȱconductedȱonȱchildȱcareȱcentresȱthatȱareȱnoȱlongerȱapprovedȱ toȱ passȱ theȱ childȱ careȱ benefitȱ onȱ toȱ familiesȱ asȱ aȱ reductionȱ inȱ theirȱ fees;ȱ haveȱ ceasedȱ operations;ȱ asȱ aȱ resultȱ ofȱ aȱ tipȬoffȱ fromȱ theȱ public,ȱ orȱ asȱ partȱ ofȱ anȱ outreachȱvisit.ȱ Accelerated Claimant Matching Theȱ acceleratedȱ claimantȱ matchingȱ isȱ anȱ automatedȱ weeklyȱ checkingȱ systemȱ thatȱ comparesȱ informationȱ providedȱ byȱ customersȱ againstȱ recordsȱ heldȱ byȱ Centrelink.ȱ Pensioner Entitlement Reviews Theseȱreviewsȱprovideȱcustomersȱwithȱanȱopportunityȱtoȱupdateȱtheirȱincomeȱ andȱ assetȱ detailsȱ heldȱ byȱ Centrelinkȱ toȱ ensureȱ thatȱ theyȱ areȱ receivingȱ theirȱ correctȱentitlements.ȱ International Project Reviews Theseȱ reviews,ȱ conductedȱ inȱ Australia,ȱ areȱ ofȱ customersȱ livingȱ overseasȱ andȱ beingȱpaidȱbyȱeitherȱtheȱportabilityȱprovisions,ȱorȱunderȱreciprocalȱagreementȱ withȱanotherȱcountry.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 123 Duration Reviews Durationȱ reviewsȱ areȱ conductedȱ atȱ regularȱ intervalsȱ toȱ ensureȱ aȱ customer’sȱ ongoingȱentitlementȱtoȱpayment.ȱ Other Risk Reviews Centrelinkȱ alsoȱ conductsȱ otherȱ riskȱ reviewsȱ toȱ confirmȱ aȱ customer’sȱ ongoingȱ entitlementȱtoȱpayment.ȱThisȱincludesȱreviewsȱresultingȱfromȱtipȬoffsȱreceivedȱ fromȱtheȱpublic.ȱ Other Prevention, Detection and Deterrence Mechanisms Centrelink’sȱ otherȱ Prevention,ȱ Detectionȱ andȱ Deterrenceȱ programsȱ includeȱ oneȬoffȱ mediaȱ campaignsȱ suchȱ asȱ theȱ currentȱ ‘Supportȱ theȱ Systemȱ thatȱ SupportsȱYou’ȱmediaȱcampaign,ȱandȱdebtȱandȱfraudȱpreventionȱstrategiesȱandȱ initiatives.ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 124 Series Titles Audit Report No.42 Performance Audit Administration of the 30 Per Cent Private Health Insurance Rebate Follow-up Audit Australian Taxation Office Department of Health and Ageing Medicare Australia Audit Report No.41 Performance Audit Administration of Primary Care Funding Agreements Department of Health and Ageing Audit Report No.40 Performance Audit Procurement of Explosive Ordnance for the Australian Defence Force (Army) Department of Defence Defence Materiel Organisation Audit Report No.39 Performance Audit Artbank, Department of Communications, Information Technology and the Arts Audit Report No.38 Performance Audit The Australian Research Council’s Management of Research Grants Audit Report No.37 Performance Audit The Management of Infrastructure, Plant and Equipment Audit Report No.36 Performance Audit Management of the Tiger Armed Reconnaissance Helicopter Project–Air 87 Department of Defence Defence Materiel Organisation Audit Report No.35 Performance Audit The Australian Taxation Office’s Administration of Activity Statement High Risk Refunds Australian Taxation Office Audit Report No.34 Performance Audit Advance Passenger Processing Department of Immigration and Multicultural Affairs Audit Report No.33 Performance Audit Administration of Petroleum and Tobacco Excise Collections: Follow-up Audit Australian Taxation Office Audit Report No.32 Performance Audit Management of the Tender Process for the Detention Services Contract Department of Immigration and Multicultural Affairs Audit Report No.31 Performance Audit Roads to Recovery Department of Transport and Regional Services Audit Report No.30 Performance Audit The ATO’s Strategies to Address the Cash Economy Australian Taxation Office ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 125 Audit Report No.29 Performance Audit Integrity of Electronic Customer Records Centrelink Audit Report No.28 Performance Audit Management of Net Appropriations Audit Report No.27 Performance Audit Reporting of Expenditure on Consultants Audit Report No.26 Performance Audit Forms for Individual Service Delivery Australian Bureau of Statistics Centrelink Child Support Agency Medicare Australia Audit Report No.25 Performance Audit ASIC’s Implementation of Financial Services Licences Audit Report No.24 Performance Audit Acceptance, Maintenance and Support Management of the JORN System Department of Defence Defence Materiel Organisation Audit Report No.23 Protective Security Audit IT Security Management Audit Report No.22 Performance Audit Cross Portfolio Audit of Green Office Procurement Audit Report No.21 Financial Statement Audit Audit of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2005 Audit Report No.20 Performance Audit Regulation of Private Health Insurance by the Private Health Insurance Administration Council Private Health Insurance Administration Council Audit Report No.19 Performance Audit Managing for Quarantine Effectiveness–Follow-up Department of Agriculture, Fisheries and Forestry Biosecurity Australia Audit Report No.18 Performance Audit Customs Compliance Assurance Strategy for International Cargo Australian Customs Service Audit Report No.17 Performance Audit Administration of the Superannuation Lost Members Register Australian Taxation Office Audit Report No.16 Performance Audit The Management and Processing of Leave ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 126 Series Titles Audit Report No.15 Performance Audit Administration of the R&D Start Program Department of Industry, Tourism and Resources Industry Research and Development Board Audit Report No.14 Performance Audit Administration of the Commonwealth State Territory Disability Agreement Department of Family and Community Services Audit Report No.13 Performance Audit Administration of Goods and Services Tax Compliance in the Large Business Market Segment Australian Taxation Office Audit Report No.12 Performance Audit Review of the Evaluation Methods and Continuous Improvement Processes for Australia's National Counter-Terrorism Coordination Arrangements Attorney-General’s Department The Department of the Prime Minister and Cabinet Audit Report No.11 Business Support Process Audit The Senate Order for Departmental and Agency Contracts (Calendar Year 2004 Compliance) Audit Report No.10 Performance Audit Upgrade of the Orion Maritime Patrol Aircraft Fleet Department of Defence Defence Materiel Organisation Audit Report No.9 Performance Audit Provision of Export Assistance to Rural and Regional Australia through the TradeStart Program Australian Trade Commission (Austrade) Audit Report No.8 Performance Audit Management of the Personnel Management Key Solution (PMKeyS) Implementation Project Department of Defence Audit Report No.7 Performance Audit Regulation by the Office of the Gene Technology Regulator Office of the Gene Technology Regulator Department of Health and Ageing Audit Report No.6 Performance Audit Implementation of Job Network Employment Services Contract 3 Department of Employment and Workplace Relations Audit Report No.5 Performance Audit A Financial Management Framework to support Managers in the Department of Health and Ageing Audit Report No.4 Performance Audit Post Sale Management of Privatised Rail Business Contractual Rights and Obligations ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 127 Audit Report No.3 Performance Audit Management of the M113 Armoured Personnel Carrier Upgrade Project Department of Defence Audit Report No.2 Performance Audit Bank Prudential Supervision Follow-up Audit Australian Prudential Regulation Authority Audit Report No.1 Performance Audit Management of Detention Centre Contracts—Part B Department of Immigration and Multicultural and Indigenous Affairs ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 128 Better Practice Guides Preparation of Financial Statements by Public Sector Entities Apr 2006 Administration of Fringe Benefits Tax Feb 2006 User–Friendly Forms Key Principles and Practices to Effectively Design and Communicate Australian Government Forms Jan 2006 Public Sector Audit Committees Feb 2005 Fraud Control in Australian Government Agencies Aug 2004 Security and Control Update for SAP R/3 June 2004 AMODEL Illustrative Financial Statements 2004 May 2004 Better Practice in Annual Performance Reporting Apr 2004 Management of Scientific Research and Development Projects in Commonwealth Agencies Dec 2003 Public Sector Governance July 2003 Goods and Services Tax (GST) Administration May 2003 Managing Parliamentary Workflow Apr 2003 Building Capability—A framework for managing learning and development in the APS Apr 2003 Internal Budgeting Feb 2003 Administration of Grants May 2002 Performance Information in Portfolio Budget Statements May 2002 Life-Cycle Costing Dec 2001 Some Better Practice Principles for Developing Policy Advice Nov 2001 Rehabilitation: Managing Return to Work June 2001 Internet Delivery Decisions Apr 2001 Planning for the Workforce of the Future Mar 2001 Contract Management Feb 2001 Business Continuity Management Jan 2000 Building a Better Financial Management Framework Nov 1999 ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 129 Building Better Financial Management Support Nov 1999 Managing APS Staff Reductions (in Audit Report No.49 1998–99) June 1999 Commonwealth Agency Energy Management June 1999 Cash Management Mar 1999 Security and Control for SAP R/3 Oct 1998 Selecting Suppliers: Managing the Risk Oct 1998 New Directions in Internal Audit July 1998 Controlling Performance and Outcomes Dec 1997 Management of Accounts Receivable Dec 1997 Protective Security Principles (in Audit Report No.21 1997–98) Dec 1997 Public Sector Travel Dec 1997 Audit Committees July 1997 Management of Corporate Sponsorship Apr 1997 Telephone Call Centres Handbook Dec 1996 Paying Accounts Nov 1996 Asset Management Handbook June 1996 ȱ ANAO Audit Report No.43 2005–06 Assuring Centrelink Payments – The Role of the Random Sample Survey Programme 130
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