The Australian National Audit Office (ANAO) has announced it will commence a follow-up audit into the effectiveness of the controversial Cashless Debit Card (CDC) program.

The CDC, which kicked off in 2016 as a trial, governs how some individuals in receipt of welfare spend their money, with the idea behind the program being to both prevent the sale of alcohol, cigarettes, and some gift cards and block the funds from being used on activities such as gambling.

Participants of the CDC trial have 80% of their funds placed on a card, which is managed by payment services company Indue, with the remaining 20% being paid into a bank account.

The CDC has previously been labelled as "racist" by some senators, as most people part of the CDC trials in Northern Territory and Cape York are Indigenous Australians.

Under the audit, ANAO said it would examine whether the Department of Social Services has effective risk management, contract management and procurement processes in place to support the administration of the Cashless Debit Card program.

It will also look into Social Services' performance measurement and monitoring processes for the CDC program and whether the decision to expand the program was informed by an effective post-implementation review, cost-benefit analysis, and evaluation.

In the 2021-22 Budget, delivered in May, the federal government said it would provide more funding to support the continuation of the CDC, but it did not disclose how much.

As part of the audit, ANAO is also seeking audit evidence and input from members of the public.

In ANAO's first audit into the CDC program, it found that Social Services largely established appropriate arrangements to implement the program's trial. It noted, however, that the approach to monitoring and evaluation the effectiveness of the program was inadequate, which meant it was difficult to conclude whether the program helped reduce social harm and whether the card was a lower cost welfare quarantining approach.

Labor and Greens Senators have repeatedly said there is no evidence that compulsory, broad-based income management, like through the CDC program, actually works.

ANAO's follow-up audit is expected to be tabled in April next year. 

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