Fireside chat with Australia’s Auditor-General

Garreth Handley:
This is With Interest, a business, finance, and accounting news podcast brought to you by CPA Australia.

Chris Hatzis:
Welcome to this special episode of With Interest, brought to you by CPA Australia.

On the 5th of August, 2025, CPA Australia CEO Chris Freeland AM brought together senior leaders from across the public sector for a roundtable lunch in our nation’s capital.

The keynote speaker was Australia’s Auditor-General, Dr Caralee McLiesh PSM FCPA, who shared insights on the Commonwealth Performance Framework, regulation, productivity and themes from the upcoming Australian National Audit Office (ANAO) Annual Report.

You can catch up on Dr McLiesh's keynote in part one of this special two-part podcast by clicking the link in the show notes.

In this part two episode, Chris Freeland and Dr McLiesh continue the conversation in a fireside chat as they cover the key issues from her keynote address.

Chris Freeland:
Thanks very much, Caralee. That was fascinating. I really liked what you said about measuring what matters around the myth that audit hampers productivity and the concept of measuring outcomes versus compliance.

I was saying to Bill just a minute ago that I was in Canberra last week for the Small Business Roundtable representing CPA, and talking about how can we improve productivity as input into the government's Economic Reform Summit that'll be held shortly. And we put out some papers on this topic, and we talked about the reduction in red tape and regulation, and we talked about the need for small business to invest in technology.

So maybe if I can pick up a couple of those things which you've touched on. Firstly, let's start at a high level, how does auditing contribute to strategic decision-making and public trust of leadership? And how can leaders better leverage the audit insights to drive innovation and reform across government, in particular?

Caralee McLiesh:
Thanks.

So I think the Commonwealth Performance Framework as a whole and auditing has a role to play in implementing the framework is really aimed at getting more of a strategic focus on performance management in the government sector. And it does that by asking the sector to focus on its purpose and then line up plans, resource allocation and reporting and management with that purpose.

And I think that's the task that we still have further to go on in making sure that alignment between purpose, allocation, reporting is working really smoothly, but the intent is to enable more strategic thinking.

I think also the framework requires four-year corporate plans has a focus more on the medium term. I think one of the challenges working in the public sector is that you often have many urgent things coming at you at once, and so ensuring that there's a mechanism to think ahead and plan for the more medium term is an important aspect of being strategic overall.

I think another strength of the framework and something that we try and reinforce within audit is a consistency across the public sector. So the framework applies to all entities, which creates a foundation for being able to compare across the sector and also ensure that cross-entity initiatives can be more effectively built into performance management.

And all of that means that there's more transparency on performance, and that's the foundation of trust. I think that audit's role is shining a light on performance, providing that sort of independent oversight and supporting transparency.

But your point, it’s also about insights, and I'm very keen to make sure that our work at the ANAO is about identifying good practices as well as gaps and ensuring that we have the right products to communicate those practices across the sector and provide some really practical and useful support for agencies managing their performance.

Chris Freeland:
You touched on AI. Have you seen any particular best practices within government around AI, which could show the way forward as to how AI can be used to improve productivity within the public sector?

Caralee McLiesh:
It's a rapidly developing area, first of all.

Chris Freeland:
It is, for sure.

Caralee McLiesh:
And last week we had the GovAI initiative that the government had launched, and I know that there are some really interesting use cases there from across the sector, which my team are looking at. I still haven't figured out myGov team's ID to be able to enter it myself so I've got some capability building to do myself.

Chris Freeland:
We all do, yeah.

Caralee McLiesh:
But it is a really exciting area and, as I said in my remarks, I think one of the challenges for all of us is to build our capability so we can make really informed choices on how we proceed in applying AI to drive productivity.

IP Australia is one case, which is often cited as a good example of using AI to drive productivity, so help people make patent and trademark applications.

I know there are examples in other jurisdictions, Service New South Wales uses AI to help with some of the analytics to improve customer service.

So there are many cases now and looking forward to hearing more of those in future, and audit being one of them.

Chris Freeland:
You mentioned Service NSW. I'm a big fan of it. For those from Sydney, Service NSW app is just the most cool app to connect information and ease of customer focus. To me, that's technology which really improves productivity, but I'm going off on a tangent there.

So regulation, you talked about the calls as we, as CPA Australia, have done to call for sort of cutting the red tape, but, of course, regulation has a place.

Maybe focusing on in the public sector, sort of how does the current regulatory environment influence productivity within the public sector and how we think about productivity improvements in the public sector?

Caralee McLiesh:
Well, I think one of the points that I really want to make is that we don't know enough about the costs and benefits of regulation, whether that's within the sector or outside, and, hence, the need to start remeasuring performance, measuring benefits, measuring costs of regulations that are in place.

That said, our audits from looking at regulation within the sector do point to a number of common themes, areas for improvement, one of which is having a much more risk-based approach to regulation. It's not one size fits all. We never have enough resources to be able to examine the entire sectors that regulators regulate, and so how to focus on the areas that matter most. We don't see enough of agencies analyzing information to assess risk, and then targeting their regulatory activities towards that risk.

Use of enforcement powers as well. One theme that we see in our audits is that even though enforcement powers exist, they're very rarely enacted in some cases, and so that hampers the efficacy of work.

But then coming back to that theme, really understanding performance and what's driving it, and that's what I want to highlight most today. We don't see enough of that in regulation, and indeed, in other areas of government.

Chris Freeland:
Any lessons from international audit offices that you've seen and you can share, what best practice looks like overseas?

Caralee McLiesh:
For audit offices?

Chris Freeland:
Yeah.

Caralee McLiesh:
Yes. This is something that I've been looking at pretty carefully, and I'm new in my role, nine months, and really keen to make sure that I'm learning from others.

Working in an audit office is a bit different, well, it's different in many ways to working in executive government, but one of which is that there is only one audit office per jurisdiction. So that relationship with peers it's actually really important, and I've spent quite a bit of time trying to get to know some of my counterparts and understand how they approach the role.

I think over recent years, there's more of a focus in audit on the role it has in supporting better performance. And speaking with some of my counterparts there are some really interesting initiatives overseas on how to measure audit offices' impact and how to ensure that we do have more impact making change for the better. So I'm quite interested in borrowing some of the approaches that other auditors have taken.

For example, we're looking at implementing rapid reviews. Our typical performance audit takes around 10 months. I'd like to understand how we can have that potentially more narrow scopes and just go in on the issues that matter, and have a short sharp audit that makes useful recommendations for agencies. So I mean, the process, we're in the process of really surveying and understanding good practices internationally and looking how we can apply them here.

Chris Freeland:
You've got the September report from the ANAO. Risks and opportunities that are going to come out of that that you can foreshadow the sorts of things that you think are going to be in that?

Caralee McLiesh:
Yeah. So I mentioned in my remarks that one of the themes that we'll be covering in our review of performance audits across the last year is on performance management, but there'll be several others as well.

And I think what I'd highlight is that overall, looking at audits over the last year, we have more than half with an audit conclusion of either fully effective or largely effective.

Now this is in an environment where we are selecting audits based on risk. So I mean, what that tells you is that actually the public sector, the Australian public sector, performs really well overall, and I do want to stress that. Our role is to highlight gaps in areas for improvement, but it's on a base where there's a lot of good practice also.

When we look at the main themes across recommendations, so integrity is a big theme, and that is very often about getting the basics right, so lawfulness, one.

Following frameworks. We find too many examples where there are breaches of some pretty well-known frameworks, Commonwealth Procurement Rules, Commonwealth Grant Rules, and it really does raise questions, I think, about capability as well as risk tolerance. So that's a common theme.

We're also drawing out a theme around stewardship. So in an environment where the world is rapidly changing, lot of uncertainty, how do entities know that their frameworks remain fit for purpose? So the advent of AI is a good example, how we make sure that we've got the governance risk management arrangements in place to be able to manage these new risks. That's an area for further improvement.

And then there are themes that have been consistent for many years, improvements that can be made in procurement. Record-keeping is a perennial. It's a finding in pretty much every audit for us.

I would want to say there, though, because we often get a little bit of pushback, well, record-keeping, it can be a burden.

Well, it's the law, first of all. It's a responsibility, but it is a productivity question also. I mean, the amount of time that must be wasted from people reinventing the wheel because nobody kept good records and then they've gone, it's significant. It's one of those basics that it just needs to be done and that will help support better performance, but we'll be pointing all of that out in our report.

Chris Freeland:
Okay, great. Maybe finally, just on your role as a leader. So you and I are both former strategy consultants with BCG, Boston Consulting Group. How has that benefited you in the roles that you've had in your career, and do you still use the BCG matrix and the toolkit?

Caralee McLiesh:
We do have our maturity assessment model as a matrix.

Chris Freeland:
Excellent.

Caralee McLiesh:
So I do do that. Occasionally use bubble diagrams as well.

Chris Freeland:
Good, good.

Caralee McLiesh:
So I was very lucky to have my first role out of university at BCG and as a wide-eyed graduate with a briefcase on my first day, which is totally empty, but-

Chris Freeland:
You got to have one, though.

Caralee McLiesh:
... with lots of optimism in there.

I do feel very fortunate to have my training ground in BCG because it... and I use it to this day. It was about quality analysis and asking the right questions and then designing a programme of analysis to answer those questions. So there are actually some parallels with audit.

I think the teamwork, the emphasis actually on performance management. I remember my very first performance assessment was three pages long, including everything from analytical skills to there was actually... I do remember there was a measure called Charisma and Spark.

Chris Freeland:
Yeah, I remember.

Caralee McLiesh:
I have to be sparky.

But the whole idea of really driving performance is one that is a strong focus in consulting, along with that really strong analytics and the discipline in presentation as well has helped to help me in my career.

Chris Freeland:
I was thinking generally about your career role models. You've worked overseas a lot, outside of Australia lot. Any leader internationally that has had a particular impact on you?

Caralee McLiesh:
No one leader, just so many. Nobody to call out by name. But I always admire people who are strong values, really strong sense of purpose and care about people. For me, those people and purpose are guiding principles in my career, and I've learned from some great leaders who prioritise those two principles.

Chris Freeland:
Great. Well, Caralee, thanks very much for your time.

Chris Hatzis:
We hope you enjoyed listening to Australia’s Auditor-General Dr Caralee McLiesh and CPA Australia CEO Chris Freeland's conversation.

Until next time, thanks for listening.

Garreth Handley:
You've been listening to With Interest, a CPA Australia podcast. If you've enjoyed this episode, help others discover With Interest by leaving us a review and sharing this episode with colleagues, clients, or anyone else interested in the latest finance, business and accounting news.

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