The federal government's financial watchdog says its ability to scrutinise spending of taxpayers' money could fall victim to public service budget cuts.
The Australian National Audit Office says it is facing ''challenging'' financial times and may have to scale down its activities during the next several years if more money cannot be found.
The audit office is a major statutory safeguard against waste, mismanagement, incompetence and fraud in the spending of the government's $400 billion annual budget.
In the past financial year the office gave 261 audit opinions to Commonwealth organisations, two regular major audits and 51 reports covering performance audits as well as the first federal government ''follow the money'' audit, examining the administration of Tasmania's Mersey Hospital. It also sent experts to develop public finance capability in developing nations in the region as well as carrying out regular audits on the Defence Department's big spending major projects.
But the office's work may have to be stripped back as it battles shrinking public service spending.
Auditor-General Ian McPhee, writing in his agency's annual report, says the ANAO is facing the same ''tightening fiscal outlook'' as all federal government agencies and departments, most of which need to cut their budgets by 2.5 per cent to satisfy a government-imposed efficiency dividend.
Mr McPhee says that only a shortfall in staff numbers, ''prudent cost management'' and ''efficiency initiatives'' allowed his agency to return a surplus of $3.4 million on its $77 million budget in 2012-2013, but the Auditor-General predicted the budget would come under further pressure in the coming years.
''The tightening fiscal outlook for all government departments is likely to have an impact on the work of the ANAO,'' he wrote.
''While we expect to deliver similar audit coverage through the work program in 2013-14, the outlook over the forward years is very challenging as we seek to maintain the structural integrity of the ANAO budget.
''In the absence of additional funding in forward years we will need to consider reducing the numbers of audits and other activities undertaken.''