At least 20 government entities were using artificial intelligence last year without any policies in place governing its use, an audit has revealed.

The Australian National Audit Office (ANAO) released its report on Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2024 last week, including a focus on AI use in the public service, the tech shortcomings that have been identified, and further analysis of the federal government’s deal with PsiQuantum.

The report reveals that as of mid-last year, 56 government departments and agencies were using artificial intelligence, more than double the number in the previous year.

Most of these entities were using AI for research and development, IT systems administration, and data and reporting.

Of these entities, less than 65 per cent had established internal policies governing the use of AI, and only 27 per cent had established internal policies around assurance over AI use.

“An absence of governance frameworks for managing the use of emerging technologies could increase the risk of unintended consequences,” the ANAO report said.

Among these entities that as of June last year were using AI but didn’t have internal policies in place were the Australian Criminal Intelligence Commission, the Bureau of Meteorology, the Department of Industry, Science and Resources, and Services Australia.

ANAO has launched its first performance audit specifically relating to the use of AI, into the Australian Taxation Office, and is expected to table its report early this year.

The ANAO findings relate to before the federal government released new Australian Public Service guidelines for the responsible use of AI within government, which require agencies to publicly outline the use of AI by March this year, and appoint an accountable official to ensure its safe rollout.

This applies to all government departments and agencies, except for those in Defence and the “national security community”.

A trial of Microsoft’s AI suite Copilot was conducted in the public service in the first half of last year, with the service made available to more than 7,600 staff across dozens of agencies.

A report into this trial found that it faced “adoption challenges”, with some concerns around the impact of AI use on jobs and the environment.

This week a group of more than 120 organisations co-signed an open letter calling on tech leaders to acknowledge the “true environmental costs” of AI, after reports that AI-related infrastructure will soon consume six times the water as Denmark and that one request on ChatGPT uses 10 times the electricity of a Google Search, according to the International Energy Agency.

The Labor government also last week moved quickly to ban the use of Chinese generative AI tool DeepSeek in the public service, with many state and territory governments following suit, as well as NBN Co, ABC and Australia Post.

Recurring tech issues

The ANAO report also found a concerningly recurrence of significant tech issues identified throughout audits conducted by the watchdog.

More than 40 per cent of all audit findings made by the ANAO in 2023-24 related to the IT control environment, particularly in relation to security.

The most common findings revolved around privileged and other user access as well as change management.

“Weaknesses in controls in this area can expose entities to an increased risk of unauthorised access to systems and data, or data leakage,” the ANAO report said.

There are 32 unresolved audit findings in relation to user access management, including one listed as “significant” directed at the Department of Defence.

PsiQuantum legal work approved

The ANAO report also gives a tick to the federal government’s contract for legal oversight of its controversial deal with US tech firm PsiQuantum.

ANAO flagged it would look into the deal with King & Wood Mallesons as part of this report after Liberal Senator Andrew Bragg wrote to request an audit of it last year.

The audit office undertook “enquiries and performed analysis of the contract” and found that the maximum approved value for it was $3.6 million, and that the total amount paid to the law firm was $3.5 million.

ANAO did however raise concerns with the prevalence of direct investments made by the federal government, including the one into PsiQuantum.

It said these kinds of deals can include differing governance mechanisms and reduced transparency.