From my reading of the 2011 ANAO report (which DOIRD say their report is based on), I don't see where ANAO said that 'face to face verification of applicants' was required, it wasn't mentioned in any of their 3 recommendations.
I was more struck by the ANAO finding that "AusCheck processed 97 per cent of its background checking activity within one day and 99 per cent was completed in five business days or less", which only confirms my long held belief that the ASIC is pure 'security theatrics' because it is difficult to do a proper 'security' job in 5 business days, and impossible in 1 day.