The audit office has again criticised Defence over the transparency of the department's mega budget, warning there's a high risk the department could misreport its financial position.
In an interim report released on Thursday, the audit office ran the ruler over financial controls across the public service, and while most of the findings were positive, Defence, the National Disability Insurance Agency, the Department of Home Affairs and NBN Co were among those singled out.
According to the audit office, Defence continues to carry a higher risk when it comes to the accuracy and valuation of specialist military equipment, a budget line worth $65.8 million.
Last year the audit office identified issues with the way Defence's IT systems tracked transactions related to the specialist military equipment, including at the end of last financial year's report "a residual uncertainty in the [specialist military equipment] balances of $42.8 million".
This year Defence said it had already made a big push to sort out the issues, including substantially clearing transactions relating to sales from the United States Department of Defense to the Australian Department of Defence, as well as moving $250 million of specialist military equipment from "assets under construction" to the fixed assets register.
The report also found Defence had oversight issues when it came to privileged access to the department's human resources IT system, with 16 people having access to five accounts in one instance.
These findings come after four audit reports this financial year have already expressed concern over the transparency of spending within the department.
The report also recognised potential court cases over environmental contamination as a moderate risk to the department's bottom line.
Across the government in 2017-18, almost 5000 thousand incidents of non-compliance with financial law were identified, with the Departments of Defence and Home Affairs making up more than 10 per cent of the breaches.
Defence and Home Affairs ranked highly both in failures to comply with Commonwealth Procurement Rules and also section 23 of the Public Governance, Performance and Accountability Act, which involved lack of approval for entering contracts.
The audit office has been tracking incidents of non-compliance for three years and noted "both divergent practices between entities in identifying and assessing the significance of non-compliance, and a reduction in detailed reporting provided to audit committees and accountable authorities".
Just months after the government declared a $1.6 billion under-spend on the National Disability Insurance Scheme, the audit office used this report to lay out the risks in reliably predicting and tracking spending by the National Disability Insurance Agency, which is responsible for the scheme.
The agency told the audit office that problems identified were on track to be addressed.