The report, written by a panel of government and business specialists, also describes a culture of buck-passing in which few staff take responsibility for problems.

The review, overseen by the federal Public Service Commission, found weaknesses in each of the 10 areas it assessed and offered little praise for the leaders of the 10,000-strong Immigration workforce.

It warned that the department remained at risk of ''another high-profile failure'' such as the illegal detention of Australian citizens Cornelia Rau and Vivian Solon, which prompted government inquiries in 2005.

Immigration's long-serving secretary, Andrew Metcalfe, left the post late last year to head the Agriculture Department. His replacement, Martin Bowles, said he accepted the review findings and agreed there was ''significant room for improvement''.

''I am confident [the department] will be a better agency for our staff, for our clients and for the government as a result of this capability review,'' he said.

The review team, led by former public service mandarin Ken Matthews, acknowledged that Immigration's work was complex and highly contentious compared with that of other agencies. However, it found the department failed to plan or innovate effectively because it was focused on reacting to crises.

It also said many senior executives believed ''risks and issues are glossed over to provide good-news stories rather than delivering difficult messages''.

The report revealed a ''heavily risk-averse'' culture in which basic decisions were ''routinely escalated because there has been an excessive reliance on the risk-scanning intuition of a small number of senior people''.

This ''led to a low tolerance for error, with staff believing that their ideas will not be seriously considered by managers''.

While the department's mid-level executives were ''proficient technical managers'', their core management skills were patchy, the report said.

''Managers, particularly [senior executives], do not always understand their financial management responsibilities, which poses serious risks for the department,'' it said.

Managers were often unclear about their responsibilities, saying ''they were not always sure who to go to and 'there are so many fingers in the pie that no one owns the problem.'''

The report said some public servants from other agencies had low regard for Immigration's senior executives, saying they were ''not always present in the forums that matter, are slow to acknowledge risks and impacts on other portfolios, are not always open to ideas when consulting, and do not always represent the department as a whole''.

A 2011 survey found 33 per cent of Immigration staff believed recruitment decisions were routinely not based on merit, a higher proportion than the public service average of 25 per cent. The report said this ''perception is discouraging and indicates mistrust among staff members''.

Among the report's recommendations are greater support for managers and involvement of all staff ''in the risk-scanning process''.

A spokesman for Immigration Minister Chris Bowen said the department had made a number of changes in response to the review.