Transparency and accountability for billions of dollars of annual defence spending remains suspect despite recent reforms, the Australian National Audit Office (ANAO) has found.

Key points: The report questions reporting practices around "sustainment" policies which keep Defence equipment in working order

The report questions reporting practices around "sustainment" policies which keep Defence equipment in working order Says sustainment spending accounts are "are neither complete nor reliable"

Says sustainment spending accounts are "are neither complete nor reliable" Policy experts say inconsistencies in reporting processes "absolutely not good enough"

Last year, the Defence Department spent $8.3 billion on keeping its equipment in working order, known as "sustainment" in military jargon.

Yet, the audit office found that despite small recent improvements, information about where that money went and whether it was being spent wisely was often unreliable or not available.

The report is particularly critical of the department's quarterly reporting process which collates and analyses spending on sustainment, saying "its contents are neither complete nor reliable, it takes two months to produce and its contents are sometimes difficult to understand".

"The [ANAO] analysis found that the report may not include additional information available to Defence that is critical to the reader's ability to understand the status of significant military platforms," it read.

The report also questions a claim from Defence that reforms to its sustainment policies had saved $2 billion.

"Defence has not been able to provide the ANAO with adequate evidence to support this claim, nor an account of how $360 million allocated as 'seed funding' for Smart Sustainment initiatives was used," it read.

Reporting processes 'not good enough': stakeholders

Auditors were also critical of inconsistencies between figures given to the Government during the budget process and those provided in the department's annual report.

"It's absolutely not good enough," Andrew Davies, director of defence and strategy at the Australian Strategic Policy Institute, told AM.

He said the troubled Tiger helicopter program, which the report singled out for special mention, was a classic case of the lack of accountability.

"[Defence] spent 100 per cent of its sustainment budget on the helicopters and got 68 per cent of the planned performance and yet didn't report it as under-performing, so clearly there's something wrong there," he said.

And he said the report was a wake-up call for the department as it prepared to oversee the biggest defence project in Australian history.

"I think it's absolutely right to be worried about how we're going to measure performance and how we can tell if we're doing better when we're about spend $90 billion building ships and submarines," Mr Davies said.

"The ability to measure progress and the ability to have targets that are communicated to the public, as well as to the Government, so that we can all tell how Defence is going is, I think, terribly important."