25 September 2023

Audit accounts for cost recoveries

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A performance audit of the application of the cost recovery requirements by three Agencies in the Australian Public Service has found all three to be lacking.

In his report, Application of Cost Recovery Principles, Auditor-General, Grant Hehir examined the practices of the Department of Agriculture and Water Resources (Agriculture), the Australian Maritime Safety Authority (AMSA) and the Department of Health’s Therapeutic Goods Administration (TGA).

Mr Hehir said the Cost Recovery Guidelines stated that entities must apply three principles across all stages of the cost recovery process: Transparency and accountability; Effectiveness and efficiency; and Stakeholder engagement.

“The Government charges people and businesses (in order) to recover the costs of providing some services,” Mr Hehir said.

“The objective of the audit was to assess whether selected regulatory entities effectively apply the cost recovery principles.”

He said the three Agencies had all been partially effective in implementing the cost recovery principles, but each had scope to improve transparency and accountability.

“Each entity also has scope to improve the effectiveness of its cost recovery arrangements,” Mr Hehir said, noting that AMSA and Health had significantly over-recovered costs in recent years.

“Agriculture has over-recovered costs through levies and under-recovered costs through fees,” he said.

“There is no assurance that entity charges recover the efficient costs of their activities, although Agriculture has benchmarked some of its costs. Health’s approach for the TGA is the most complete.”

Mr Hehir also found that none of the Agencies had documented their cost recovery engagement strategies.

He listed some key messages for all Government entities arising from the audit including that transparency was key to cost recovery, and that cost recovery approaches should clearly apply the Guidelines’ principle of efficiency.

The Auditor-General’s 83-page report can be accessed at this PS News link and the audit team was John McWilliam, Renina Boyd, Nathan Callaway, Lachlan Fraser, Gabrielle Davy, Esther Barnes and Andrew Morris.

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