Australia's Auditor-General: Her remit and ANAO's approach

If Dr Caralee McLiesh PSM FCPA needs a reminder of the value of strong and transparent government institutions that act with integrity, she thinks back to her time spent as secretary and chief executive of the New Zealand Treasury.

During the years of the COVID-19 pandemic, McLiesh had more than a front-row seat. She was on the field in a role of consequence as new policies and support mechanisms were developed and launched. She saw the effect on the ultimate stakeholders in good government — individuals.

That experience reshaped the way she thinks about institutions, risk, flexibility and the value and purpose of public money. It led to her becoming the first female Auditor-General for Australia, a role that makes her accountable for ensuring responsible, efficient and high-performing government departments, policies and projects.

Her work during the pandemic, McLiesh says, “was some of the toughest and most meaningful work I’ve done. It reinforced to me that good financial management isn’t always about more rules. It is about fit-for-purpose rules and knowing when to be flexible while still upholding public value.”

In her role as auditor-general, leading the Australian National Audit Office (ANAO), she is now in a position to influence how all Australian government departments, agencies, policies and projects operate from a flexible position of strength.

Better outcomes

McLiesh’s definition of her job is clear. “The Auditor-General is an independent officer of the Parliament of Australia and provides assurance over how public money and government powers are used.” With the ANAO, her remit is broad.

She leads a team of around 400 people to conduct three main types of audits: financial statement audits (typical accounts audits), performance statement audits (non-financial performance of government entities) and performance audits (a deep dive into the performance of a particular activity of an agency).

In each case, McLiesh and her team look into whether government activity is being delivered in an efficient and effective way, and whether it is ethical, economical and for the purposes intended by Parliament.

Performance audits are those in which citizens can see a visible line from audit to outcomes. “They are a deep-dive examination into whether a government activity — a program, a policy or a grant — has been implemented effectively and efficiently,” she says. “So they are about value for money. They are about governance, risk, service delivery or outcomes.”

The resulting reports do not gather dust. Each contains a set of recommendations to address gaps identified in performance. Those recommendations have real impact.

“They are almost always agreed to,” she says. “Change in agencies on the basis of what we recommend leads to better performance and ultimately better outcomes for people in Australia.”

McLiesh, whose department in 2024–25 conducted a total of 353 audits, is aware of the effect of attention from the ANAO on departments, teams and individuals. In fact, she is happy to use this reputation to improve performance, even when audits are not being run.

“We publish a list of potential audits that is about twice the number we can deliver,” she says. “Part of that is just to signal that we are interested in a particular topic, and that alone can sometimes lead to change and improvements.”

That is not to say that the ANAO brandishes fear as a weapon. In fact, McLiesh says that there is a conscious focus on ensuring audit is perceived as a constructive concept inside agencies.

“Audits are not about a ‘gotcha’,” she says. “They are about learning and understanding what works, what doesn’t, and where we can find improvement.”

While independence and candour are non-negotiable — the ANAO team must be objective and politically neutral — it does not mean the role is an adversarial one. In fact, while difficult calls must often be made, McLiesh puts a great deal of thought and effort into decisions around how findings are presented.

“We can do this in a constructive way and with a view to what we are all trying to do, which is to get better government services for Australians,” she says. “We aim to promote transparency, accountability and performance, but there are sometimes finely balanced decisions about, for example, the trade-off between transparency and national security.

“Also, the way in which we present a finding needs to be carefully thought through, in case somebody with a different perspective perceives a finding as the Audit Office entering into the political sphere.” The result is a deliberate style that permeates the entire organisation, from the way McLiesh leads by example and presents herself, to the way reports are written.

“We operate in a very deliberate way — we call it a ‘flat’ way,” she explains. “It is very factual and evidence-based, because the audit function is not about hype, it is about trust and confidence. So we consciously try not to sensationalise or seek limelight.

“We’re very conscious of behaving in a way that demonstrates neutrality, which upholds standards of national security, of commercial confidentiality, of Cabinet confidence and of privacy of individuals. To operate with such integrity, we must always be conscious of tone, timing and language.”

While the ANAO cannot play the role of consultant or adviser — despite the organisation’s breadth of knowledge, experience and insight around best practices in government — it does publish reports that help share knowledge.

Known as Insights, the publications tend to focus on a particular topic such as governance of data, records management or management of corporate credit cards. They draw lessons from various audits on good practice and common pitfalls, then summarise those insights.

“It is not advice or consulting,” McLiesh says. “Instead, it is sharing knowledge and expertise. I think that the really positive, constructive role of audit is critical for us to achieve our purpose. It is something I am emphasising.”

Public vs private

There are numerous similarities between public-sector financial statement audits and corporate audits, as well as several differences in mandate and product.

The ANAO reports to the Parliament, not to a board or to shareholders. McLiesh herself is an independent officer with the Parliament as opposed to a part of the executive government, which she audits.

“Where the public sector diverges the most from the private sector is in the nature of our products, as we also audit performance measures,” says McLiesh, who began her career with Boston Consulting Group before working with the Red Cross in Botswana and Bosnia and Herzegovina, then the World Bank in Washington D.C.

She then returned to Australia and spent 11 years in the New South Wales public sector, mostly in the Treasury, but  admits to being no expert in the corporate audit space. However, she says the same levels of professional scepticism, if not more, are required when auditing in the public sector.

“Professional scepticism is arguably more important in the public sector,” she says. “The risks can be different because of the nature of the activity, but they are no lower. Public money deserves the same rigour as private capital, arguably more so, because citizens do not get to choose where their taxes go. The absence of a profit motive does not remove the need for scepticism.”

People and technology

In the glass house that is the ANAO, an organisation that is very much expected to be at the top of its game as it audits others, it is not terribly difficult to attract excellent staff.

The organisation naturally appeals to people of high integrity, as well as “really strong technical and analytical capability, curiosity, good judgement and the ability to communicate complex ideas clearly,” McLiesh says.

“We do not measure our success in profit or market share, but in trust and impact. Our auditors — and those who come from other backgrounds such as engineering and learn what we do — are motivated by integrity, evidence and real-world outcomes.

For those people, [the ANAO] is an incredibly rewarding place with a huge variety of work, from cybersecurity to climate reporting, health, defence, education and more.”

Just as talented people enable ANAO's work, technology also plays an increasingly important role. Artificial intelligence (AI), for example, helps to empower the audit function and represents an opportunity, if managed well.

“It can enhance our ability to analyse big datasets and detect anomalies or map risks,” she says. “It does not replace humans or the core disciplines of independence, scepticism and evidence-based reasoning, but I can see more of our work being automated.”

McLiesh says guardrails are essential when adopting and employing AI, including strong controls to manage risk, avoid bias and ensure the ability to understand and explain complex models. As it does at the ANAO, an organisation’s AI policy should set clear principles and outline frameworks for use in a disciplined manner.

In terms of her own human decision-making, McLiesh has a clear and unambiguous process, a steady compass and a relentless focus on independence, evidence and impact. The tools are modernising, the risks are shifting and the workloads are intense — but the purpose is constant.

“My responsibility is to provide the Parliament and the public with an unfiltered view, with pure transparency, on how the system is performing and help to do it better. Which, in the end, is really about valuing and respecting people.”