An audit of grants by the respected Australia Council has found more efficient processes are needed at the arts funding and advisory body, while new metrics for administration should be created.
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The Australian National Audit Office probe published last week considered more than $173 million in grants programs awarded by the council in 2015-16, representing 88 per cent of its $197.6 million in total expenses.
A federal government entity, the council exists to fund the creation and presentation of new art that is accessible to audiences across Australia and overseas.
Auditor-General Grant Hehir said benchmarking of the council's activities against comparative organisations indicated administration of its grants to Australian artists and arts organisations could be improved.
The report said the council had not established metrics to inform itself, federal Parliament and the public about how efficient its distribution of funding was, had not measured changes in output over time and had not used key data to improve internal review processes.
It found the average cost for the Australia Council to administer the grants program was $0.04 for each $1 of grant funding, and the cost to administer each application received was $1359.
The average cost to administer the grants program was found to be 33 per cent above the average costs for a group of similar organisations.
Results for three of its five programs were lower than the average cost for the eight other programs considered, while the average cost across the five Australia Council programs was 46 per cent higher than the average cost of the other grants programs.
"It is unclear if the Australia Council has become more efficient over time," the report said.
"The Australia Council has not established grant administration metrics to support the measurement and benchmarking of its efficiency in administering grant funding - one of the key mechanisms for delivery of its statutory functions.
"Benchmarking conducted by the ANAO indicates that the efficiency of the Australia Council's administration of the grants program, and its component grants programs, varies across the measures calculated."
In 2015, then arts minister George Brandis said the Australia Council was perceived as a "closed shop" for established artists, with an "iron wall that you're either inside or outside".
He controversially diverted nearly $105 million to a new program controlled by federal bureaucrats, sparking outcry from advocates who protested cuts to funding and possible political interference.
His successor, Mitch Fifield, axed the Catalyst program and returned funding to the council.
The report called for more formal risk assessment processes, greater focus to the efficiency of grants administration, as well as routine benchmarking and evaluation.
The council agreed to the recommendations in principle but disputed the benchmarking against other organisations as an appropriate comparative measure.
"Throughout the design and implementation of the grants program, the Australia Council and its board have worked assiduously to achieve high standards of efficiency and effectiveness in the delivery of arts funding," the council said in response to the report.
"Efficiencies have already been realised through a significant reduction in the number of grants categories, development of streamlined funding criteria and eligibility requirements, and a decrease in staffing levels for the grants program, despite increases in the quantum of grants funds under administration."
