The Department of Home Affairs dropped its target of processing 80% of citizenship applications within 80 days after it got through just 15% last financial year, an efficiency review has found.

Of the 15%, nearly all were deemed to be “invalid for processing”, while the rest took up to 337 days.

In one instance a “low” effort case took 422 days to get a decision, of which 413 days was inactivity.

The damning review by Australian National Audit Office determined the department was working in neither a time-efficient nor resource-efficient manner, and showed an “underlying decline in processing performance”.

The ANAO began its review into the department’s processes after concerns were raised by the Office of the Commonwealth Ombudsman, the Refugee Council of Australia, members of parliament and others about the length of time it was taking to process conferral applications.

Conferrals – applications by current permanent residents – made up 92% of last year’s 259,815 citizenship applications, alongside descent, adoption and resumption.

“Processing times have increased and long delays are evident between applications being lodged and decisions being taken on whether or not to confer citizenship,” it said.

“Significant periods of inactivity are evident for both complex and non-complex applications accepted by the department for processing.”

The growing demand for citizenship was driven by the simplest cases, it said, largely “people with good supporting documents who arrived in Australia on a skilled visa”.

In July last year the simplest cases made up 71% of all applications, a jump from 54% in January 2015. Medium and highly complex cases totalled just 5%.

It found increased applicant screening processes were a significant driver of the inefficiencies, and also noted citizenship law changes had prompted a marked increase in applications during the examined time period.

However the department had been slow to implement its “suite” of initiatives to improve efficiency, the report found, had not set key performance indicators to show parliament and other stakeholders how it was doing, and had no quality checks on application decisions.

“The lack of externally reported key performance indicators for processing time efficiency means transparent and meaningful information is not being provided to the parliament and other stakeholders so as to hold home affairs accountable for its performance,” the ANAO said.

The ANAO made three recommendations, only one of which the department fully agreed to: a revision of the funding model for citizenship activities.

The department agreed in principle to establish and monitor performance but disagreed with the recommendation to reintroduce key performance indicators for parliament and other stakeholders and to publish more details about its decisions.

In its response the department said it would “always prioritise [national security and community safety] over speed”.

It disagreed with the finding of inefficiency, citing a doubling of application refusals over three years to 6.8% in the first five months of 2017-18.

It said it had dedicated “significant resources” to addressing the 41 individuals since 2014 whose citizenship was revoked or had ended on national security and community safety grounds.

“Cases with adverse indicators take a disproportionate level of effort and time to resolve, often requiring the assistance of various other agencies and partners,” it said.