The frank report, written by a panel of government and business specialists, also describes a culture of buck-passing, in which few staff take responsibility for problems.

The review, overseen by the federal Public Service Commission, found weaknesses in each of the 10 areas it assessed and offered little praise for the leaders of the 10,000-strong workforce.

It warned the department remained at risk of ''another high-profile failure'' such as the illegal detention of Australian citizens Cornelia Rau and Vivian Solon, which prompted government inquiries in 2005.

Immigration's long-serving secretary, Andrew Metcalfe, left the post late last year to head the Agriculture Department.

His replacement, Martin Bowles, said he accepted the findings and agreed there was ''significant room for improvement. I am confident [the department] will be a better agency for our staff, for our clients and for the government as a result of this capability review.''

The review team, led by former mandarin Ken Matthews, acknowledged Immigration's work was complex and highly contentious compared with other agencies.

But it found it failed to plan or innovate effectively because it focused on reacting to crises.

It also said many senior executives believed ''risks and issues are 'glossed over' to provide good news stories rather than delivering difficult messages''.

The report told of a ''heavily risk-averse'' culture, in which basic decisions were ''routinely escalated because there has been an excessive reliance on the risk-scanning intuition of a small number of senior people''.

This ''led to a low tolerance for error, with staff believing that their ideas will not be seriously considered by managers'', it said.

While the department's mid-level executives were ''proficient technical managers'', their core management skills were ''patchy''.

''Managers, particularly [senior executives], do not always understand their financial management responsibilities, which poses serious risks for the department.''

Managers were also often unclear about their responsibilities, saying: ''They were not always sure who to go to and there are so many fingers in the pie that no one owns the problem.''

The review found some public servants from other agencies had low regard for Immigration's senior executives, saying they were ''not always present 'in the forums that matter', are slow to acknowledge risks and impacts on other portfolios, are not always open to ideas when consulting, and do not always represent the department as a whole''.

A 2011 survey found 33 per cent of Immigration staff believed recruitment decisions were routinely not based on merit, a higher proportion than the public service average of 25 per cent.

Among the review's recommendations were greater support for managers and involving all staff, rather than a select few, ''in the risk-scanning process''.

A spokesman for Immigration Minister Chris Bowen said on Monday the department had ''made it very clear it made a number of changes'' in response to the review.

''We're confident it will continue to make those improvements.''