Findings on the National Disability Insurance Scheme by the Australian National Audit Office | External submission

Joint Committee of Public Accounts and Audit Inquiry into the National Disability Insurance Scheme

Opening Statement

23 April 2026

Good morning Chair and Committee members.
Thank you for the opportunity to appear before the Committee today as part of the inquiry into

the National Disability Insurance Scheme.

The NDIS is one of the most significant public policy reforms in Australia’s history. It represents a

considerable commitment by governments to improving the lives of people with disability.

It is important to recognise that the NDIS operates in a dynamic environment. Demand has grown

more rapidly than initially anticipated, and administrative systems and oversight mechanisms

have had to develop to address this. In such circumstances, gaps in control frameworks and

implementation can arise, increasing exposure to inefficiency, fraud, and poor outcomes. Strong

governance, transparent administration, and effective stewardship are not only desirable, but

essential.

Across our recent audits, we have identified areas of progress, alongside persistent and emerging

risks. ANAO’s recent performance audits found evidence of progress as well as areas to

strengthen—for example, the NDIA Board’s governance was assessed as largely effective, and the

NDIA’s ‘Crack Down on Fraud’ program was noted as having the potential to improve the

Scheme’s financial sustainability if embedded into business-as-usual.

The primary risks identified by the ANAO for the NDIS have been that the scale and growth of the

Scheme, combined with a substantial ongoing reform agenda, outpace the maturity of

arrangements to manage sustainability, integrity and delivery performance. These risks arise in a

context of shared responsibilities across governments, heavy reliance on third-party service

delivery providers, and increasing dependence on complex digital systems to support decision-

making, payments and assurance. A key challenge for the NDIA relates to its ability to maintain

scheme integrity and financial sustainability. The Government announced yesterday a

commitment to moderate the scheme’s growth over the next four years including through

itightening eligibility criteria and broadening regulatory oversight of the market. Robust

governance and risk management practices are required as the NDIA implements

recommendations from the Royal Commission into Violence, Abuse, Neglect and Exploitation of

People with Disability, the Independent Review into the NDIS and the specific reforms announced

by the Government yesterday.

The ANAO conducts a large body of audit work focussing on the National Disability Insurance

Scheme, including performance audits and financial statements audits of the National Disability

Insurance Agency (NDIA) and the NDIS Quality and Safeguards Commission (NDIS Commission),

and performance statements audits of the NDIA. We have made a number of recommendations

and opportunities for improvement through this work.

Themes emerging from financial statements audits

The NDIA financial statements audit has been classified by the ANAO as a higher risk engagement.

The risk rating represents our assessment of inherent risk, reflecting the complexity of the NDIA

operations and significant judgements involved in the preparation of the financial statements.

The NDIA is one of nine financial statements audits assessed as high risk and has the third largest

number of findings reported at the completion of the 2024–25 audit cycle. The ANAO’s audit

procedures are focused on the following key risks identified for 2025–26:

Accuracy and occurrence of participant plan expenses. The ANAO audit procedures focus on

the operating effectiveness of system controls and the effectiveness of the agency’s business

assurance programs, relating to eligibility assessments, plan approvals and payment

accuracy.

Valuation of participant plan provisions. Participant expenses are accounted for consistent

with the approach for social welfare payments with a provision recorded for any participant

claims incurred but not paid as at 30 June. The audit procedures review work performed by

the NDIA’s Scheme Actuary including the appropriateness of key assumptions.

Completeness, occurrence and accuracy of contributions of in-kind services from State and

Territory governments. The recognition of in-kind contributions is reliant on data from the

States and Territories around agreed services provided to people with a disability.

Contributions are accounted for as revenue received free of charge at the date the services

are provided. The use of these services is also recognised as an equivalent expense. Terms

and conditions for determining the cash and in-kind contributions for the funding of the

Scheme are set out in the bilateral agreements between each State and Territory and the

Commonwealth.

Completeness and accuracy of data transitioned from the SAP customer relationship

management system to the NDIA’s new customer relationship management system, PACE. At

the commencement of rollout in October 2023, it was anticipated that implementation would

be finalised within 18 months. As at 22 September 2025, there were 391,397 out of 748,730

participants with a PACE plan (approximately 52 per cent). Participants transition as new

plans are approved. Operating and maintaining two systems concurrently increases

complexity and cost.

At the conclusion of the 2024–25 interim audit phase, there were three moderate findings that

relate to IT general controls, in particular the monitoring of users with authority to perform

security-related functions and system access cancellation for users who no longer work for the

organisation. There are also six low risk findings open from the 2024–25 final audit phase.

The NDIS Quality and Safeguards Commission’s financial statements is assessed as a low risk

engagement. There were no open audit findings reported at the completion of the 2024–25

financial statements audit.

Themes emerging from performance statements audits

Similar to the financial statements audit, we have classified the NDIA’s performance statements

audit as a high risk engagement. The high risk rating for the performance statements audit also

incorporates risks identified risks through the prior year audit. NDIA is one of three performance

statements audits assessed as high risk and one of six entities which received a qualified audit

opinion in 2024–25. It is the third year that the performance statements have been included in

our program and the following key risks were identified for 2025–26:

Completeness of the performance statements. In 2024–25, the NDIA’s performance

statements did not include reporting on: the management of fraud and non-compliance

which is a statutory function established under section 118 of the NDIS Act; and the

effectiveness of the early childhood intervention program.

Appropriateness and effectiveness of performance measures. There is a risk that the suite of

performance measures selected by the NDIA do not meet the requirements of the

Commonwealth Performance Framework and provide a basis for the reader to assess the

NDIA’s performance in delivering the scheme. To assist the reader, the narrative

accompanying performance measure results should explain why the result happened, what

it means, and planned next steps. The analysis could also describe what the entity could have

influenced, what was outside its control, and analyse trends over time.

Appropriateness of the NDIA’s data governance and management processes to support

performance reporting. The NDIA has been developing processes to obtain complete and

accurate data to underpin the reporting of the Participant Service Guarantee (PSG)

performance measure. The NDIA was only able to report on ten out of twenty PSGs in

2024–25. It is expected that the NDIA will be able to report on 18 PSGs in 2025–26.

There are two unresolved high risk and two low risk findings from 2024–25. The two high risk

findings directly relate to our areas of focus. Weaknesses identified include material omissions

within the performance statements and the appropriateness of the performance measures which

highlights limitations in the design of the performance measures and analysis reducing the ability

of readers to understand NDIA’s performance and the drivers for the final results.

Recent ANAO performance audit reports

The ANAO has completed three performance audits focussed on the NDIS in 2024–25 and

2025–26 to date.

Auditor-General Report No. 41 2024–25 Effectiveness of the Board of the National Disability

Insurance Agency concluded that the NDIA Board’s governance was largely effective. The Board

could strengthen its overall governance of the NDIA and the NDIS by setting clear requirements

for additional strategic reporting to it on the progress of the implementation of financial

sustainability initiatives. The Board’s practice of seeking further information and assurance from

management where results are below targets, or other issues or risks are reported, was maturing

but not consistent across the Board’s and its committees’ meetings. There were three

recommendations included in the report and the NDIA agreed with each of them.

Auditor-General Report No. 48 2024–25 National Disability Insurance Agency’s Management of

Claimant Compliance with National Disability Insurance Scheme Claim Requirements concluded

that the NDIA’s management of claimant compliance with NDIS claim requirements was partly

effective. Prior to 2024, the NDIS lacked basic prevention controls for fraud and non-compliance.

At the time of the audit (late 2024 to early 2025), the NDIA was undertaking work to ‘crack down

on fraud and non-compliant payments’ through its Crack Down on Fraud program. We concluded

that, if delivered as planned and embedded into business-as-usual activities, this work had the

potential to improve the financial sustainability of the NDIS. There were four recommendations

included in the report and the NDIA agreed with each of them.

Auditor-General Report No. 2 2025–26 Effectiveness of the NDIS Quality and Safeguards

Commission’s Regulatory Functions was the first performance audit of the NDIS Commission

undertaken by the ANAO. While the NDIS Commission is maturing as a regulator, the audit

concluded the NDIS Commission is partly effective in exercising its regulatory functions. The

Commission does not have full visibility of the market it regulates. As at the end of 2024-25,

unregistered providers represented approximately 94 percent of all providers in the program. In

regulating a market that is expected to see continued growth in the number of participants and

providers, the Commission’s effectiveness as a regulator would be improved by taking a risk-

based approach to regulating the NDIS that is underpinned by quality data, and targets available

resources to areas of greatest risk. There were 10 recommendations included in the report. The

NDIS Commission agreed to nine recommendations and agreed ‘in principle’ to the tenth

recommendation.

The ANAO is currently conducting three performance audits covering the NDIS:

Market stewardship in the care and support economy, due to table in November 2026;
Design and implementation of the Participants, Platforms and Processes program, due to

table in November 2026; and

Effectiveness of the Fraud Fusion Taskforce, due to table in March 2027.

In summary, findings from our audits identify opportunities to improve NDIA systems and

processes required to deliver the NDIS effectively. Strengthening these systems will be critical to

ensuring the Scheme’s long-term integrity and sustainability. Our recommendations are aimed at

improving governance arrangements, enhancing transparency, and supporting better decision-

making.

I would note that sustained improvement in delivering current and future reforms will require

not only technical and administrative changes, but also clear accountability across all parts of the

system, strong leadership, and a continued focus on outcomes for participants.

We would be happy to answer any questions the Committee may have.