Part II: PGPA Act – fundamentals for
officials
Resource Management and Budget Training
September 2015
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Enquiries
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Part II: PGPA Act – use of public resources
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
3
Resource Management Framework
Constitution
PGPA Act
Appropriation
acts
Other
legislation
Policy
Legislative instruments
Entity internal controls
reporting and
evaluation
proper use appropriations
earned autonomy
accountability
planning objectives
and strategies
governance property management transparency
audit
efficiency PUBLIC RESOURCES spending
procurement performance grants management
implementing
and monitoring
risk management cooperation with others
commitments
budgeting and
operational planning
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Managing performance
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
5
Managing performance
Former framework focus on compliance
Each year, accountable authorities were
required to certify that their entity had
complied with:
• legislative requirements
• their internal controls and delegations
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Managing performance
PGPA Act re-focused attention on performance:
• improved public accountability and the quality
of performance information
• information that meets the needs of
different parts of government
• a clear line of sight between performance
documents
• coherent performance planning and reporting
across Commonwealth entities
7
Managing performance
PGPA Act re-focused attention on performance:
Your accountable authorities is required to govern
your entity in a way that promotes:
section
15
• proper use and management of public resources
• the achievement of the purposes of the entity
• the financial sustainability of the entity
8
Purposes and activities
• purposes – includes the objectives,
functions or role of the entity or company
• activities – a distinct effort of an entity
undertaken to achieve a specific result
(fulfill their purposes)
9
Key elements of the performance framework
To improve performance across the Commonwealth
public sector, PGPA Act requires:
• consistent planning – corporate plans
Sections
35-39
• performance measurement
• consistent reporting – annual
performance statements
Key is good performance information
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Developing performance information
UNDERSTAND
IDENTIFY
purposes and
activities
what
performance
information
COLLECT
performance
information
REPORT
to tell the
performance
story
11
Activity – reviewing purposes
12
Improving performance
Performance
Risk management
Governance
Accountability
13
Risk management
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
14
Duty to manage risk and maintain controls
PGPA Act requires accountable authority to establish
and maintain appropriate systems of risk oversight
and management
Section
16
What is risk?
• The effect of uncertainty on objectives
• The consequences of an event occurring could be
positive (opportunity) or negative (threat)
15
Commonwealth Risk Management Policy
Goal – to embed risk management as part of the
culture of Commonwealth entities where
the shared understanding of risk leads to
well informed decision making
By actively engaging with risk, we can develop
smarter and more efficient ways of delivering
Government programmes and services
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Strengthening risk management
practices
1. Establish a risk management policy
2. Establish a risk management framework
3. Define responsibility for managing risk
4. Embed systematic risk management into
business processes
5. Develop a positive risk culture
6. Communicate and consult about risk
7. Understand and manage shared risk
8. Maintain risk management capability
9. Review and continuously improve the management
of risk
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One year on.....improving risk management
70
Number of entities
64
60
50
45
40
32
30
20
13
10
0
1
Fundamental
1
Developed
Systematic
Integrated
Advanced
Optimal
Increasing level of risk maturity
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Good risk management
Identify the risks
Analyse the risks
Evaluate the risks
Treat the risks
Monitor and review
Risk assessment
Communicate and consult
Establish the context
• coordinated activities
to direct and control
an organisation with
regard to risk
• based on sound
judgement and best
information available
• should inform all
financial decisions
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Internal controls
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• PGPA Act
• Rules and policies
• Other relevant legislation
Constitution
Appropriation
acts
• Spending relevant money
PGPA Act
Other
legislation
Policy
Legislative instruments
Entity internal controls
reporting and
evaluation
proper use appropriations
planning objectives
and strategies
accountability
governance property management transparency
audit
PUBLIC RESOURCES
efficiency
spending
procurement performance
grants management
earned autonomy
risk management cooperation with others
implementing
and monitoring
commitments
budgeting and
operational planning
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Core elements of internal controls
PGPA Act requires accountable authorities to establish:
• internal governance structures and arrangements
• clear instructions or directions to officials on what
they must consider to comply with the finance law
(e.g. Accountable Authority Instructions)
• financial delegations
• systems of risk oversight and management
Accountable authorities must also encourage
partnering and cooperation with others
section
16
section
17
21
Accountable Authority Instructions
• Provide clear instructions on the internal
requirements, policies and rules that officials
must consider to:
section
20A
o comply with the finance law
o ensure the proper use of public resources
o use and manage resources to achieve the
purposes of your entity
o ensure the financial sustainability of your entity
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Proper use of public resources
Relevant property
• property owned or held by the Commonwealth
or a corporate Commonwealth entity
• real property, assets and IP
Relevant money
• money held as cash or in a bank account
by the Commonwealth or a corporate
Commonwealth entity
Appropriations
• authority to draw money from the
Consolidated Revenue Fund
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Proper use of public resources
Efficient
Effective
Economical
Ethical
Must balance the 4 Es – one is not more important than the others
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Proper use of public resources
Efficient
• most suitable resources being used
to deliver the best results
Economical
• avoids waste
• focus on level of resources applied to
deliver results
Effective
• produces the desired result,
i.e. entities’ purpose and objectives
Ethical
• consistent with the core beliefs and
values of society
Must balance the 4 Es – one is not more important than the others
25
Accountable Authority Instructions
• Provide clear instructions on the internal
requirements, policies and rules that officials
must consider to:
section
20A
o comply with the finance law
o ensure the proper use of public resources
o use and manage resources to achieve the
purposes of your entity
o ensure the financial sustainability of your entity
• Clarify the risk management framework in your entity
• Align with internal financial delegations
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Exercising the powers in the PGPA Act
PGPA Act gives powers to:
• Finance Minister
• accountable authorities
For administrative purposes, many of
these powers are delegated to officials
27
Delegation of powers
non-corporate
Commonwealth
entities
• Finance Minister has delegated many of
his powers in the PGPA Act to
accountable authorities
• accountable authorities can delegate to
officials:
section
107
section
110
 their powers in the PGPA Act
 powers delegated from the Finance Minister
corporate
Commonwealth
entities
accountable authorities can delegate powers
or authorise officials relying on:
 their enabling legislation and/or
 the separate legal personality of the entity
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Improving performance
Performance
Risk management
Governance
Accountability
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Duties of officials
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
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Responsibilities of officials
Officials of Commonwealth entities have a responsibility
to:
• meet high standards of governance, performance and
accountability
• comply with the finance law
• comply with the internal controls in your entity
Consequences:
• civil sanctions
• criminal penalties
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Uniform duties of officials
PGPA Act requires officials to:
• act with care and diligence of a reasonable
person
Sections
25-29
• act honestly, in good faith and for proper purpose
• not misuse position or information
• disclose material personal interests
32
Consistency with other duties
A large number of officials must also comply with the
code of conduct obligations under the Public Service Act
1999
Duties in the PGPA Act:
• consistent with the duties in the code of conduct – if
you meet the requirements of the PS Act, then you will
ordinarily have met your duties under the PGPA Act
• are necessary to ensure standards of governance,
performance and accountability across all
Commonwealth entities
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Duty of care and diligence
Must act with the same degree of care and diligence
as a reasonable person would exercise
section
25
• exercising care and diligence could be ensuring the
proper use of the public resources you are
responsible for
• not exercising care and diligence could be
undertaking unfamiliar financial task without
checking the legislative requirements or the
internal controls in your entity
34
Duty to act honestly, in good faith and
for proper purpose
Must act in a sincere and honest way
section
26
• are your statements and/or actions consistent
with the aims and operations of your entity
and
• will not reasonably be expected to result in
detriment to your entity, the Commonwealth,
or others
35
Duty not misuse position or information
Must not improperly use the power conferred on
you or information accessed to:
Sections
27-28
• gain, or seek to gain, a benefit or advantage for
yourself or for another person
• cause detriment your employer, the Commonwealth
more broadly or any other person
36
Duty to disclose material personal interests
Must report relevant material personal interests
that relate to the affairs of your entity. These
interests could relate to:
section
29
• your personal role or
• the overall purpose of your entity
37
Activity: Use of credit cards
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Using public resources
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
39
Some frameworks for using or managing
public resources
Relevant property
• Commonwealth Property Management
Framework - real property
Relevant money
• Procurement framework
• Grants framework
Governed by the principle of proper use
40
Managing real property
Commonwealth Property Management Framework
Covers leasing, building, owning and disposing
Combination of legislation, policy
and guidance
Applies to non-corporate entities
Principles:
•
•
•
•
•
value for money
property management planning
efficient and effective design
appropriate accountability measures
cooperative Commonwealth property
management measures
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Using relevant money
Collecting and
banking money
• fines & penalties
• charging
• cost recovery
Committing and spending
relevant money
• procurements
• grants
• other types of spending
42
Procurements and grants
Each year the
Commonwealth spends:
procurements
around $40 billion
grants
around $30 billion
Procurement statistics from AusTender (for 2013-14):
• around 66,047 contracts (over $10k)
• approx 10,776 suppliers
• around 70% of contracts below $80k (but contracts over $80k
over 95% of total value)
• small & medium enterprise (less than 200 employees)
represent 55% by volume and 34% by value
Grants.gov.au is being established to collect similar
information on Commonwealth grants
43
What is a procurement
Procurement:
• enables entities to purchase goods and/or services needed to
deliver the Government’s policies, programs and services
• is a devolved framework where responsibility rests with an
entities accountable authority
Regulated by Commonwealth Procurement Rules
Not a procurement:
•
•
•
•
•
grants
Investments, loans
sales by tender
statutory/ministerial appointments
employee engagements
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Commonwealth Procurement Rules
Core principle is value for money achieved by:
proper use of public resources
encouraging competition and non-discriminatory processes
consideration of financial and non-financial costs and benefits
using the most appropriate procurement method for
the activity given scale and scope of the requirements
• accountable and transparent decision making
• encouraging appropriate engagement with risk
commensurate with the scale and scope of the
business requirement
•
•
•
•
Mandate certain whole-of-government panel
arrangements
45
Commonwealth Procurement Rules
Incorporate Australia's international obligations
Additional rules for procurements above
thresholds
46
Mandated whole-of-government
arrangements
Non-corporate Commonwealth entities must use
whole-of-government procurement arrangements:
• ICT procurement
• motor vehicle leasing and fleet management
• travel and related services
• major office machines, stationery and office supplies
• government advertising
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What is a grant
An arrangement for provision of financial assistance by
the Commonwealth or on behalf of the Commonwealth:
•
•
•
•
relevant money is paid
intended to assist recipient to achieve goals
intended to help address policy objectives
may have terms or conditions for recipient
Regulated by Commonwealth Grants Rules and
Guidelines (CGRGs)
Not a grant:
• procurements, act of grace of payments,
compensation payments, investments,
employee engagements
48
Commonwealth Grants Rules
and Guidelines
Mandatory requirements - Part 1 CGRGs:
• document grant activities
• have regard to the seven key principles for grants
administration
• develop grant guidelines for granting activities
• advise your minister on requirements of the PGPA
Act and CGRGs, particularly if they will exercise the
role of an approver
• record and reports grants
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Commonwealth Grants Rules
and Guidelines
7 principles of grants administration – Part 2 of the CGRGs
Ensure:
• robust planning and design
• collaboration and partnership with stakeholders
• proportionality by balancing:
 the complexity of the grant activity
 requirements of the grant recipient
 risks for beneficiaries and the Commonwealth
•
•
•
•
achieve outcomes for beneficiaries most effective way
value with relevant money
governance and accountability for all parties
probity and transparency
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Activity
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Spending relevant money
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
52
Meeting your duties as an official
When committing relevant money, you must:
• exercise care and diligence
Section
25
• act honestly, in good faith and for proper purpose
when using relevant money
Section
• not use your position or information to
gain an advantage or cause detriment
Sections
• disclose any material personal interests
26
27-28
Section
29
53
Meeting your duties
Consider:
• type of spending
• whether the proposed commitment is consistent with the
purposes of your entity
• the relevant internal controls in your
entity
• is there available appropriation and is
other legislative authority required
• who has authority to commit the money
• what records must be kept
Not necessarily in the order set out above
54
Activity: purchasing new software
Consider 3 options to purchase new software:
• get a licence for officials in your entity to
use the software
• develop whole of government software
• assist non-government organisations to
obtain software that will enable them to
better collaborate with government
55
What type of spending
The type of financial arrangement will
determine which rules or policies apply
For example:
•
purchasing goods and services for the
Commonwealth (procurement)
•
providing financial assistance to non-government individuals or
organisations to achieve government policy objectives (grants)
•
making discretionary payments (e.g. act of grace)
•
making some other form of payment
56
What are the relevant internal controls
To ensure the proper use of money,
what do the internal instructions in your
entity require in relation to:
• approving and committing relevant
money
• entering arrangements
• making payments
57
Key concepts
Commitments include:
• undertaking an activity or entering an
arrangement that results in an obligation
to pay relevant money
Arrangements include:
• contracts, agreements, deeds or
understandings
• MOUs, standing offers and grant
agreements
• commitments with a contingent liability
58
Is there legislative authority to support
the spending
Are there available appropriations
• Do you have the money available or is there
appropriation authority to support the
spending?
• Will the spending involve a forward
commitment beyond the current financial
year?
Is additional legislative authority required to
support the spending
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Who has authority to commit money
Accountable authorities have authority to:
 approve commitments of relevant money
 enter into, vary and administer arrangements
Accountable authorities generally delegate these
powers to officials
Check the financial delegations in your entity
60
What records must you keep
Recording approvals to commit relevant money
• a record of a commitment of relevant money can
be in writing or electronic
PGPA Rule
18
• the particulars of the approval will depend on the
scope of the commitment
• your entity’s internal controls should clarify the
record you are required to keep depending on the
item, costs, parties, timeframes and risk
associated with the proposal
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Wrap up
Part I: Resource
Management Framework
Part II: PGPA Act –
fundamentals for officials
Part III: Budget process
and reporting
• Commonwealth Resource
Management Framework
• Managing performance
• Budget context
• Risk management
• Budget Framework
• Australian system of
government
• Internal controls
• Planning and budgeting
• Commonwealth governance
arrangements
• Duties of officials
• Monitoring and reporting
• Using public resources
• Appropriations
• Spending relevant money
• PGPA Act
• Rules and policies
• Other relevant legislation
62
Feedback and further information
Commonwealth Resource Management
Framework
• finance.gov.au/resource-management
Australian Government Budget
• budget.gov.au
Public Management Reform Agenda
• pmra.finance.gov.au
Feedback to Training.team@finance.gov.au
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