2011-12
Certificate of Compliance
Report to the Parliament
DEPARTMENT OF FINANCE AND DEREGULATION
2011-12
Certificate of Compliance
Report to the Parliament
DEPARTMENT OF FINANCE AND DEREGULATION
DEPARTMENT OF FINANCE AND DEREGULATION
ISSN: 1838-6865 (Print)
ISSN: 1838-6873 (Online)
Creative Commons Licence
With the exception of the Commonwealth Coat of Arms, the Certificate of Compliance
Report to the Parliament 2011-2012 is issued under a Creative Commons BY licence.
The terms of the BY licence can be found here:
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The document must be attributed: “Commonwealth of Australia, Certificate of
Compliance Report to the Parliament 2011-2012”.
Use of the Coat of Arms
The terms under which the Coat of Arms can be used are detailed on the following
website: http://www.itsanhonour.gov.au/coat-arms/
Acknowledgements
Photographs taken by Steve Keough, Steve Keough Photography
Other photographs from the Department of Finance and Deregulation collections.
ii
Foreword
Foreword by the Minister
This is the fourth public report on the
annual Certificate of Compliance
(Certificate) process for agencies under the
Financial Management and Accountability
Act 1997 (FMA Act). It aggregates individual
agency results for the 2011-12
financial year.
The purpose of the Certificate is to improve
compliance with the Australian
Government’s financial management
framework and to ensure that Ministers,
and the Presiding Officers in the case of the
Parliamentary Departments, are kept
informed of compliance issues.
The Chief Executives of all agencies under
the FMA Act are required to provide a
completed Certificate to their portfolio
Minister each year. The Certificate process
is an important means of identifying and disclosing instances of non-compliance
with the financial management framework, as a basis for continuous improvement
within agencies and more broadly.
For the 2011-12 reporting period, agencies reported an overall decrease in noncompliance of about 16 percent, compared to last year. This reflects the
effectiveness of agencies’ activities to improve processes and address compliance
issues, and enhancements to the financial management framework itself.
Overall, agencies have again reported relatively low levels of non-compliance when
compared to the many millions of financial transactions they undertake each year
on behalf of Government. It is important to assess the results in that context.
Penny Wong
Minister for Finance and Deregulation
December 2012
iii
iv
Contents
Foreword
iii
Contents
iv
Introduction
4
Part 1: 2011-12 results by category
23
Part 2: 2011-12 results by portfolio group
37
Appendix: List of portfolio groups for Certificate purposes
51
iv
Introduction
1.
Introduction
This is the fourth annual Report to the Parliament on the Certificate of Compliance
(Certificate) process. The Report provides an aggregate analysis of agency results
for the 2011-12 financial year.
2.
The Certificate
The Certificate process aims to improve officials’ understanding of the financial
management framework, and strengthen agency processes, through the
identification of non-compliance issues and undertaking of action to improve
processes. The Certificate promotes continuous improvement within agencies.
Analysis of Certificate results also provides an opportunity for the Department of
Finance and Deregulation (Finance) to identify issues across agencies, thereby
highlighting elements of the framework that may require improvement.
The Chief Executives of all agencies under the Financial Management and
Accountability Act 1997 (FMA Act) are required to provide a completed Certificate to
their portfolio Minister by 15 October each year. The Certificate is also copied to the
Minister for Finance and Deregulation (Finance Minister).1
The Certificate covers the financial year, 1 July to 30 June. Six rounds of reporting
have been completed to date since 2006-07. This year, 109 FMA Act agencies were
required to prepare Certificates.
The Certificate process is based on a self-assessment by agency Chief Executives. It
provides a comprehensive overview of each agency’s compliance with the financial
management framework. Chief Executives are required to certify their agency’s
compliance during the previous financial year with:
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
the FMA Act;
the Financial Management and Accountability Regulations 1997
(FMA Regulations);
the Finance Minister’s delegations to agency Chief Executives, as amended from
time-to-time; 2
the legal and financial requirements for the management of Special
Accounts; and
selected financial management policies of the Commonwealth.3
1
A separate process applies to entities under the Commonwealth Authorities and Companies Act 1997. For further
information, see Finance Circular 2008/05: Compliance Reporting – CAC Act Bodies and Finance Circular 2011/06: CAC
Act compliance: Departmental responsibilities.
2
See the Financial Management and Accountability (Finance Minister to Chief Executives) Delegation 2010 and the
Financial Management and Accountability (Finance Minister to Finance Secretary) Delegation 2010.
v
All instances of non-compliance must be reported in the Certificate, focusing on
action taken by agencies to improve their processes. The requirements of the FMA
Act and FMA Regulations mean that compliance is not assessed based on materiality.
That is, where instances of non-compliance are identified with no or immaterial
financial consequences, they must still be reported in the Certificate.
However, it is not intended that all actions and transactions of an agency be checked.
It is expected that Chief Executives will ensure that their agency has sufficient
processes and controls in place to provide reasonable confidence that staff members
are complying with the financial management framework. The processes, systems
and controls that Chief Executives put in place to promote compliance with the
financial management framework may vary between agencies, depending on their
size, operations, structure and activities. In most cases, these processes and controls
are an extension of those processes that give confidence to the Chief Executive on
matters such as the use of delegations and budgetary management. Chief Executives
therefore complete the Certificate based on their agency’s internal control
mechanisms, management and audit committee advice.
In 2011-12, 109 FMA Act agencies reported a combined total of 12,798 instances of
non-compliance. This outcome represents a decrease compared to the results
reported in 2010-11 (see “Overall Trends”).
The instances of non-compliance reported in agency Certificates generally arise
from one or more of the following:
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inaction by individuals, such as not seeking the necessary approvals for
particular expenditure;
lack of timely action by individuals, such as not banking public money within the
required timeframe or not meeting the timeframe to report publicly on new
grants;
particular actions taken by individuals, such as relying on an outdated
delegation or drawing right;
lack of awareness of key requirements, due to changes in staffing, structures or
activities; and
system or process issues, either at the agency or sub-agency level.
The Certificate also requires Chief Executives to state whether the agency is
operating within the agreed resources for the current financial year and to certify
that the agency has adopted appropriate management strategies for risks that may
affect its financial sustainability.
3.
Structure of the Report
The Report records the outcomes of the 2011-12 Certificate process at a “portfolio
group” level, drawing on data contained in the individual Certificates prepared by
FMA Act agencies. For the purposes of this report, a portfolio group comprises all
agencies within the relevant portfolio as at 30 June each year. In 2011-12, there
3
For the 2011-12 year, Chief Executives were required to certify compliance with: the competitive neutrality policy, as
outlined in the Australian Government Competitive Neutrality Guidelines for Managers; the cost recovery policy, as
outlined in the Australian Government Cost Recovery Guidelines; the policy on contingent liabilities, as outlined in the
Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort; the policy on foreign
exchange risk management requirements, as outlined in the Australian Government Foreign Exchange Guidelines; and
the policy on the management of property, as outlined in the Commonwealth Property Management Guidelines.
3
were 21 portfolio groups comprised of 109 agencies.4 The agencies comprising each
portfolio group for the 2011-12 financial year are listed in the Appendix.
In their individual Certificates, agencies report instances of non-compliance against
specific sections and subsections of the FMA Act, FMA Regulations, the Finance
Minister’s delegations to agency Chief Executives and selected policies of the
Commonwealth. Since 2008-09, six categories have been used to report on these
results in a meaningful way.5 The categories represent key elements of the financial
management framework:
i.
the commitment of public money by agencies;
ii.
the use of drawing rights by agencies;
iii.
the proper use of financial resources;
iv.
banking and investment by agencies;
v.
the maintenance of agency accounts and records; and
vi.
miscellaneous requirements.
Part 1 reports on instances of non-compliance primarily by type. The combined total
of 12,798 reported instances of non-compliance is presented against the six key
categories.
Part 2 reports on instances of non-compliance primarily by portfolio grouping. The
data is presented as a percentage of each portfolio group’s share of the combined
total of 12,798 reported instances of non-compliance.
4.
Overall Trends
Six rounds of reporting have been completed to date, covering the 2006-07 to 201112 financial years.
As noted in previous reports, considerable work has been undertaken by agencies to
strengthen internal compliance and reporting processes since the introduction of
the Certificate in 2006-07. The maturing of agencies’ internal control mechanisms,
and the more systematic identification and remediation of instances of noncompliance, is reflected in the number of instances of non-compliance reported by
agencies over the six rounds of reporting. The 2011-12 results continue to reflect a
further decrease of reported instances of non-compliance, as agency processes have
improved.
At an aggregate level, agencies reported a relatively low number of instances of noncompliance in the first round of reporting (2006-07), followed by an increase in
reported instances of non-compliance in round two (2007-08) as internal systems
bedded down and matured. Instances of non-compliance halved in 2008-09, to a
level somewhat above the total reported in 2006-07, as agencies sought to address
the issues identified in the first two rounds of reporting. In 2009-10, there was a
relatively small increase in reported instances compared to 2008-09, as agencies
4
For the purposes of this report, the three Departments of the Parliament – the Department of the Senate, the
Department of the House of Representatives and the Department of Parliamentary Services – are treated as a single
portfolio group, as is the Department of Veterans’ Affairs. This represents the current functional structure of the
Government’s Administrative Arrangements.
5
See Finance Circular 2011/07: Certificate of Compliance – FMA Act Agencies, for further information on the reportable
instances against the six categories. Part 4.1 provides a summary of compliance requirements in the FMA Act and
Regulations.
4
worked to implement new public reporting requirements as a result of the
introduction of the Commonwealth Grant Guidelines (CGGs).
The results for 2011-12 continue a decreasing trend in reported non-compliance.
This reflects the continuous improvement, both in agency processes and across the
framework more broadly. The 2011-12 results demonstrate agencies’ continuing
commitment to improve processes and staff members’ understanding, in order to
address non-compliance. For example, some agencies have significantly reduced
non-compliance with the reporting requirements of the CGGs.
Decreases, due to continuous improvement, can be balanced against short-term
increases in reported non-compliance as some agencies undertake reviews of
specific areas to check compliance. This reinforces the positive impact of the
Certificate in encouraging agencies to improve their systems and processes.
Chart A: Instances of non-compliance: trends over six years
5.
Context
The total number of instances of non-compliance reported by agencies can be
contrasted with the substantial number and scope of financial activities undertaken
by agencies. While no accurate estimate is available, agencies as a whole undertake
many millions of financial activities valued at several billion dollars each financial
year.
5
By way of example:
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the Australian Taxation Office, which employed over 21,500 staff, has advised
that in the 2011-12 financial year it processed over 13.8 million disbursements
valued in excess of $92 billion;
the Department of Defence has advised that in the 2011-12 financial year it
undertook approximately 2.3 million financial transactions;
the Department of Families, Housing, Community Services and Indigenous
Affairs, which employed over 3,000 staff located in over 70 office locations in
each state and territory, has advised that in 2011-12 it managed total financial
resources of more than $82 billion and processed 111,446 payments;
the Department of Immigration and Citizenship, which employed over 8,510
staff located in each state and territory and 58 overseas posts, has advised that
in 2011-12 it processed over 198,000 disbursements valued at more than $2
billion and over 1.2 million receipt transactions with a value of around $1.1
billion; and
small agencies are also required to manage large volumes of transactions
relative to their size and often in complex circumstances. For example, the
National Archives of Australia, which employs around 470 staff, has advised that
in 2011-12, it processed over 5,400 supplier payment transactions with a value
of approximately $30.9 million. The Administrative Appeals Tribunal has
advised that in 2011-12 it processed over 12,000 financial transactions.
While the number of reported instances of non-compliance is significant, the level of
reported non-compliance is low when compared to the substantial number of
government financial activities which occur each year.
6.
Results against the Six Categories
Chart B records the combined total of all (12,798) instances of non-compliance
reported in 2011-12 against six categories.
Since the introduction of the Certificate, reported non-compliance has been
concentrated in two key areas of the FMA Act and Regulations:


the commitment of public money; and
banking and investment by agencies.
6
Chart B: Percentage of all non-compliance by category for 2011-12
i. The commitment of public money by agencies
Chart C: Instances of non-compliance: Category 1 - the commitment of
public money by agencies from 2006-07 to 2011-12
This category combines all reported instances of non-compliance with section 44 of
the FMA Act and FMA Regulations 7 to 12.6
6
Changes were made to the Regulations in 2010 to improve their administrative efficiency. The changes reordered and
removed some of the Regulations, such as Regulation 13. The amendments came into effect on 1 July 2010 and are
reflected in the 2010-11 and 2011-12 reporting periods.
7
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
Section 44 of the FMA Act requires an agency Chief Executive to manage the
affairs of the agency in a way that promotes proper use of the Commonwealth
resources for which the Chief Executive is responsible. Proper use means
efficient, effective, economical and ethical use that is not inconsistent with the
policies of the Commonwealth. This section provides authority for a Chief
Executive (and delegates) to enter into contracts on behalf of the
Commonwealth in relation to the affairs of the agency. The majority of instances
of non-compliance reported against this section relate to agency staff not having
the power to enter into contracts.
FMA Regulations 7-12 regulate agency commitments to spend public money.
Regulations 7, 7A and 7B require officials performing duties in relation to
procurement, grants administration or the procurement of cleaning services to
act in accordance with the Commonwealth Procurement Guidelines (the
Commonwealth Procurement Rules (CPRs) since 1 July 2012), CGGs and the
Commonwealth Cleaning Services Guidelines respectively. Regulations 8, 9, 10
and 10A set out approval requirements and processes for entering into spending
proposals, while Regulation 12 sets out the recording requirements for
decisions relating to the approval of spending proposals. FMA Regulation 11 sets
out the approval requirements for loan guarantees.
Category one accounted for 68.0 percent of all non-compliance reported in 2011-12
(75.9 percent in 2010-11). This represented a total of 8,708 instances of
non-compliance compared to 11,585 in 2010-11. The vast number of transactions
involving the expenditure of public money by agencies each year means that the
majority of instances of non-compliance will continue to be reported under this
category.
It is also important to note that the introduction, from time-to-time, of revised
financial management framework requirements may give rise to additional
instances of non-compliance, as agencies work to implement the changed
requirements. The increase of reported instances of non-compliance in 2009-10 was
due to the introduction of the CGGs from 1 July 2009, as many agencies had difficulty
meeting the mandatory reporting timeframe for grants. This requirement still
represents a significant proportion of total non-compliance for this category
(approximately 20.5 percent).
8
ii. The use of drawing rights by agencies
Chart D: Instances of non-compliance: Category 2 - the use of drawing
rights by agencies from 2006-07 to 2011-12
This category combines all reported instances of non-compliance with sections 26
and 27 of the FMA Act.

Drawing rights provide controls around the expenditure of public money and
the use of appropriations. Drawing rights are a statutory control over who may
make payments of public money. They also allow for conditions and limits to be
set by the Finance Minister (or the Finance Minister’s delegates) in relation to
payments. Sections 26 and 27 of the FMA Act govern the issuance of drawing
rights and limit certain activities to those officials or Ministers who have been
issued with drawing rights.
Category two accounted for 6.7 percent of all non-compliance reported in 2011-12.
This represented a total of 857 instances of non-compliance. This is a slight increase
from the 761 instances (5.0 percent) reported in 2010-11 and involved two
portfolios identifying process issues, which have since been corrected.
9
iii. The proper use of financial resources
Chart E: Instances of non-compliance: Category 3 - the proper use of
financial resources from 2006-07 to 2011-12
This category combines all reported instances of non-compliance with sections 14,
15 and 60 of the FMA Act and FMA Regulation 21.
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Section 14 of the FMA Act provides that an official or Minister must not misapply
public money or improperly dispose of, or improperly use, public money.
Section 15 establishes liability for the loss of public money in an official’s or
Minister’s nominal custody at the time of the loss, and the circumstances in
which the Commonwealth may recover such a loss (i.e. where an official or
Minister caused or contributed to the loss by misconduct, or by a deliberate or
serious disregard of reasonable standards of care).
Section 60 of the FMA Act provides that an official or Minister must not use a
Commonwealth credit card, or credit card number, to obtain cash, goods or
services otherwise than for the Commonwealth. This includes misuse of
Cabcharge vouchers. Section 60 also makes provision for the FMA Regulations
(i.e. Regulation 21, see below) to authorise other uses, provided that the
Commonwealth is reimbursed in accordance with the Regulations.
FMA Regulation 21 gives an agency Chief Executive power to authorise the
holder of a Commonwealth credit card to use the card to pay a claim that
includes both official and coincidental private expenditure, and to specify
arrangements for the cardholder to repay the Commonwealth for any
coincidental private expenditure. Regulation 21 also requires the repayment of
any coincidental private expenditure.
Category three accounted for 5.1 percent of all non-compliance reported in 2011-12.
This represented a total of 656 instances of non-compliance. This is a slight increase
from the 608 instances (4.0 percent) reported in 2010-11 and relates to the
accidental misuse of Commonwealth credit cards for personal transactions.
10
iv. Banking and investment by agencies
Chart F: Instances of non-compliance: Category 4 - banking and
investment by agencies from 2006-07 to 2011-12
This category combines all reported instances of non-compliance with sections 8, 9,
10, 11, 13, 16, 34, 38, 39, 40 and 47 of the FMA Act and FMA Regulations 17, 18, 19,
19A and 20.
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Section 8 of the FMA Act permits the Finance Minister to enter into agreements
with banks for the conduct of the Commonwealth’s banking, while section 9
allows the Finance Minister to open and maintain official bank accounts. These
powers have been delegated by the Finance Minister to agency Chief Executives.
Section 10 of the FMA Act requires public money to be promptly banked
(Regulation 17 defines this as the next banking day unless otherwise approved
by a Chief Executive), while section 11 prohibits the deposit of public money in
any account other than an official account. Regulation 18 requires an official
who receives public money in a non-bankable currency to safeguard the money.
Section 13 of the FMA Act prohibits the withdrawal of money from an official
account without proper authority. Regulations 19 and 19A set out requirements
for making cash advances and for other withdrawals from official accounts and
internal transfers between accounts.
Section 16 of the FMA Act permits the Finance Minister to issue special
instruction about the handling of special public money including the investment
of special public money.
Section 34 of the FMA Act permits the Finance Minister to waive, postpone or
defer debts owed to the Commonwealth, and to allow the payment of debts
owed to the Commonwealth by instalments. This power has been delegated by
the Finance Minister to Chief Executives. Where the delegated power is not
complied with, this is reportable against the Delegation.
Section 47 of the FMA Act requires an agency Chief Executive to pursue recovery
of each debt for which the Chief Executive is responsible, unless the debt has
been written off as authorised by an Act, or the Chief Executive is satisfied that
the debt is not legally recoverable or considers that it is not economical to
pursue recovery.
Section 38 of the FMA Act facilitates credit card arrangements by permitting the
Finance Minister to enter into arrangements with banks for the short-term
borrowing of money by way of advances. This power has been delegated by the
Finance Minister to Chief Executives.
11

Section 39 of the FMA Act permits the Finance Minister and Treasurer, or their
delegates, to invest public money in authorised investments and defines such
investments. The effect of this section is that agency Chief Executives may only
invest public money if delegated by the Finance Minister or Treasurer and may
only invest in a conservative class of investments, such as bank deposits and
Commonwealth and State securities, unless otherwise authorised by the FMA
Regulations or an Act. Section 40 of the FMA Act requires officials who receive
securities in the course of their duties to deal with them in accordance with
Regulation 20 (i.e. issue a receipt, maintain a register and take reasonable steps
to safeguard the securities).
Category four accounted for 17.9 percent of all non-compliance reported in 2011-12.
This represented a total of 2,282 instances of non-compliance. This is a significant
increase in instances from the 1,429 (9.4 percent) reported in 2010-11, and is
largely the result of one portfolio identifying a recurring process issue that has since
been rectified.
v. The maintenance of agency accounts and records
Chart G: Instances of non-compliance: Category 5 - the maintenance of
agency accounts and records from 2006-07 to 2011-12
This category combines all reported instances of non-compliance with sections 44A,
48, 49, 50 and 51 of the FMA Act.


Section 44A of the FMA Act requires an agency Chief Executive to give the
responsible Minister such reports, documents and information on agency
operations as the Minister requires. It also requires a Chief Executive to provide
the Finance Minister with information on the financial affairs of the agency.
Under section 50 of the FMA Act, the Finance Minister may also request financial
statements covering a period of less than a financial year.
Section 48 of the FMA Act requires a Chief Executive to ensure that accounts and
records of the agency are kept as required by the Finance Minister’s Orders.
Section 49 of the FMA Act requires the preparation of annual financial
statements for scrutiny by the Auditor-General.
12

Section 51 of the FMA Act clarifies the responsibilities of affected Chief
Executives for the preparation of financial statements where an agency ceases to
exist or following a transfer of agency functions.
Category five accounted for less than 0.1 percent of all non-compliance reported in
2011-12. This involved 1 instance of non-compliance, a decrease from the 9
instances reported in 2010-11.
vi. Miscellaneous requirements
Chart H: Instances of non-compliance: Category 6 - miscellaneous
requirements from 2006-07 to 2011-12
This category combines the remaining instances of non-compliance, relating to
selected government policies,7 the Finance Minister’s delegations to Chief Executives
and the sections of the FMA Act and Regulations listed below:
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


7
section 12 – receipt and spending of public money by persons outside the
Commonwealth (34 instances of non-compliance);
section 33 – the making of act of grace payments by the Finance Minister (0
instances of
non-compliance);
section 41 – the proper use of public property (124 instances of noncompliance);
section 42 – liability for loss etc. of public property (8 instances of noncompliance);
section 43 – making gifts of public property (2 instances of non-compliance);
section 45 – implementing an agency fraud control plan (2 instances of noncompliance);
section 46 and Regulation 22C – establishing and maintaining an audit
committee for the agency (2 instances of non-compliance);
section 53 – Chief Executive may delegate powers (2 instances of noncompliance);
Footnote 3 lists the policies to be reported in the Certificate.
13
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Regulation 16A – the requirement on agency officials to act in accordance with
Fraud Control Guidelines issued by the Minister for Home Affairs (0 instances of
non-compliance);
Regulation 22D – the preparation of budget estimates in the form specified by
the Finance Chief Executive (1 instance of non-compliance);
Regulation 23 – the disposal of property found on Commonwealth premises (0
instances of non-compliance);
Regulation 29 – act of grace payments and waiver of debts that exceed $250,000
must not be authorised before the consideration of a report of an Advisory
Committee (0 instances of non-compliance);
Regulation 30 – approval of payments pending probate (0 instances of
non-compliance);
Regulations 32 and 33 – the transfer of employee entitlements between agencies
(44 instances of non-compliance);
selected government policies (34 instances of non-compliance):
- cost recovery (0 instances of non-compliance);
- indemnities (18 instances of non-compliance);
- management of Special Accounts (16 instances of non-compliance);
- foreign exchange risk management guidelines (0 instances of
non-compliance);
- competitive neutrality (0 instances of non-compliance);
- property management (0 instances of non-compliance); and
Finance Minister's delegations to agency Chief Executives (41 instances of noncompliance).
Category six accounted for 2.3 percent of all non-compliance reported in 2011-12.
This represented a total of 294 instances of non-compliance. This is a significant
decrease from the 870 instances (5.7 percent) reported in 2010-11.
7.
Continuous Improvement by Chief Executives
7.1. Internal controls and agency processes
A key feature of the financial management framework is that Chief Executives are
directly responsible for the management of resources for their agencies. Part 7 of
the FMA Act sets out the specific responsibilities of Chief Executives. In particular,
section 44 places a special responsibility on Chief Executives to manage the affairs of
their agency in a way that promotes the “proper use”8 of the Commonwealth
resources for which they are responsible.
This broad responsibility to manage the affairs of an agency in a way that promotes
proper use of Commonwealth resources is complemented by other requirements in
Part 7 of the FMA Act, such as the requirements relating to audit committees,
financial reporting and fraud control plans.
Agency Chief Executives complete the Certificate based on their agency’s internal
control mechanisms, management and audit committee advice. It is not intended
that all actions and transactions of the agency must be checked. It is, however,
expected that Chief Executives will ensure that the agency has sufficient processes
8
Proper use means efficient, effective, economical and ethical use that is not inconsistent with the policies of the
Commonwealth. In managing the affairs of their agency, Chief Executives must comply with the FMA Act and
Regulations and any other law.
14
and controls in place to provide reasonable confidence that staff members are
complying with the financial management framework.
The Certificate process promotes continuous improvement within agencies. It also
provides an opportunity for Finance to identify issues that are common across
agencies, thereby highlighting elements of the financial management framework
that may require improvement. Significantly, Chief Executives are required to report
on the action they have taken to address reported instances of non-compliance. This
is a key aspect of the Certificate process. Chief Executives should ensure that their
systems are robust and identify non-compliance with a view to process
improvement.
Agencies’ Certificate processes should be proportionate to their size, financial
activities and financial management arrangements. Chief Executives should ensure
that their agencies employ effectively targeted quality assurance activity to support
the self-assessment Certificate process. Risk-based reviews of transactions and
internal controls give greater consistency and confidence in reported Certificate
results.
Chart I: Corrective strategies reported by agencies in 2011-12
Similar to previous years, the 2011-12 Certificate results indicate that agencies have
adopted, or will adopt, a variety of corrective strategies to address non-compliance.
The main strategies reported by agencies are:



communication and education – including reminders to staff, the provision of
additional internal advice, training and counselling (45.1 percent);
reviewing internal controls – including reviewing delegations and undertaking
internal audits and system reviews (25.0 percent);
correcting systems or processes – including reviewing drawing rights, changing
purchase order arrangements, and introducing further approval and
authorisation processes (12.8 percent);
15

formal investigations, which may in some instances lead to sanctions or other
action (0.8 percent); and
a combination of the above strategies (16.3 percent).

7.2. Managing financial risks
Balancing increasing demands against finite financial resources is an important part
of a Chief Executive’s role. The Certificate requires Chief Executives to state whether
the agency is operating within agreed resourcing levels and to certify that their
agency has adopted appropriate management strategies to mitigate key risks that
may affect financial sustainability. Financial sustainability, in this context, is the
ability of the agency to meet existing requirements without the need for
supplementary resourcing. This includes the management of capital and long-term
assets and liabilities. Where known risks may affect the financial sustainability of an
agency and appropriate management strategies have not or cannot be taken, an
explanation must be provided in the Certificate.
The Australian National Audit Office (ANAO) noted in Audit Report No. 38 2010-11,
Management of the Certificate of Compliance Process for FMA Act Agencies, that “the
financial sustainability section of the Certificate has provided agency Chief
Executives with an opportunity to engage their Minister and Finance on matters
concerned with financial sustainability”.
In 2011-12, 36 agencies reported that, although they are operating within agreed
resources, they have identified risks to their financial sustainability. These risks are
being actively managed and include issues such as increasing cost pressures from
the requirement to deliver new programs whilst absorbing the additional costs of
the proposal. Three agencies reported that they were currently operating beyond
agreed resourcing levels, however they stated that they had implemented strategies
to mitigate projected overspends. The main issues reported by agencies include:





not operating within agreed resources (2.7 percent);
increasing cost pressures (e.g. due to new policy initiatives that an agency is
required to deliver) (22.0 percent);
increased cost pressures due to the change in the bond rate (agencies that
anticipated an operating loss for 2011-12 caused solely by the impact of the
decrease in the bond rate on employee entitlements were able to seek the
Finance Minister’s approval for an operating loss) (3.7 percent);
may need to access cash reserves, now or in the future, or seek additional
funding (these agencies have sought, or obtained, approval from the Finance
Minister for an operating loss for the financial year, for reasons such as
differences between revenue and expenses, accounting treatments, one-off
costs, higher net expenditure or other reasons identified by an agency) (4.6
percent); and
the need to seek supplementation for the financial year due to increasing
demand (2.8 percent).
16
Chart J: Financial sustainability issues reported by agencies
8.
Continuous improvement by Finance
While Chief Executives are responsible for preparing Certificates and improving
compliance within their agencies, Finance is responsible for the administration of
the financial management framework and the Certificate process at a
whole-of-government level. It provides support to agencies through its
administration of the Certificate process and the provision of education and
guidance on the budget and financial management frameworks. Finance undertakes
five broad tasks as part of its responsibility to administer the Certificate process.
8.1. Written guidance and day-to-day support to agencies on Certificate
requirements and the financial management framework
Finance issues written guidance to agencies on key aspects of the financial
management framework and financial policies. This guidance includes Finance
Circulars, the Financial Management Guidance Series, policy guidelines and other
material available on the Finance website at http://www.finance.gov.au.
Finance has provided written guidance to agencies for each round of Certificate
reporting. The guidance has been contained in:




Finance Circular 2006/08: Certificate of Compliance – FMA Act Agencies issued
in October 2006 for the 2006-07 financial year;
Finance Circular 2008/04: Certificate of Compliance – FMA Act Agencies issued
in May 2008 for the 2007-08 and 2008-09 financial years;
Finance Circular 2009/06: Certificate of Compliance – FMA Act Agencies issued
in August 2009 for the 2009-10 and 2010-11 financial years; and
Finance Circular 2011/07: Certificate of Compliance – FMA Act Agencies issued in
December 2011 for the 2011-12 financial year.
Finance Circular 2011/07: Certificate of Compliance – FMA Act Agencies
incorporated the key concepts from the ANAO in Audit Report No. 38 2010-11,
Management of the Certificate of Compliance Process in FMA Act Agencies. It provides
additional guidance to agencies on the Certificate process for the 2011-12 and
future financial years, including a table containing all the relevant compliance
17
elements of the FMA Act and Regulations and a section containing frequently asked
questions.
In March 2011, Finance issued Finance Circular 2011/01: Commitments to spend
public money (FMA Regulations 7 to 12) to provide guidance to agencies on the
financial management framework requirements that apply when committing and
spending public money. The Circular contains an overview of the requirements that
apply to committing public money and includes frequently asked questions. It also
includes examples of applying the FMA Regulations and a workbook for using
Regulations 10 and 10A.
Finance also provides day-to-day advice to agencies on the administration of the
Certificate process and the application of the financial management framework
more generally. This represents a significant ongoing commitment from Finance,
and the Finance Secretary has urged all agency Chief Executives to consult with
Finance as necessary on financial management framework issues, as early
consultation can lead to better compliance outcomes.
8.2. Aggregate analysis of Certificates and reporting on outcomes to key
stakeholders
Finance provides advice to the Finance Minister on the Certificate outcomes.
Following previous rounds, the Finance Minister has written to portfolio Ministers
informing them of the results of the Certificate process and suggesting that
Ministers discuss the results with their portfolio Chief Executives, if they had not
already done so. Similarly, in 2013, the Finance Minister will write to the Prime
Minister and portfolio Ministers about the 2011-12 results and the tabling of the
Report to the Parliament.
In addition, at the conclusion of each Certificate reporting round:




the Finance Secretary writes to all agency Chief Executives informing them of
the overall results of the Certificate process and offering Finance’s assistance to
address issues identified in agency Certificates;
Finance convenes a special forum for agency Chief Financial Officers (CFOs) to
discuss the aggregate outcomes of the Certificate process;
Finance meets with agencies that identified significant issues; and
Finance reviews current guidance on the Certificate process, based on feedback
from agencies and the ANAO.
8.3. Follow-up on the 2011-12 Certificate process
In 2011-12, Finance adopted a risk-based approach to follow-up on Certificate
results. This approach incorporated the suggestions from the ANAO in Audit Report
No. 38 2010-11 Management of the Certificate of Compliance Process in FMA Act
Agencies. Finance categorised agencies as either high-risk, medium-risk or low-risk
based on agency size and transactions; trends in non-compliance; unusually high or
low levels of reported non-compliance; and the outcomes of previous follow-up
activity and reports.
Finance will be undertaking a range of follow-up activities in respect to the 2011-12
Certificate process, including:


seeking feedback from portfolio CFOs on results and key trends;
informing agency Chief Executives and CFOs about key trends;
18




reviewing Certificate processes, in light of lessons learned;
reviewing financial management framework guidance, given this year’s results;
providing training and workshops, drawing on lessons learned; and
consulting with agencies based on the risk-rating of the agency which is
assessed by Finance:
- high-risk agencies are requested to meet with Finance to discuss
remediation strategies;
- medium and low-risk agencies are invited to discuss any financial
management framework concerns with Finance; and
- all agencies are invited to information sessions on the Certificate
process which are provided by Finance.
8.4. Improving guidance and education
At the conclusion of each reporting round, Finance has met with a number of agency
CFOs, including those agencies categorised as high-risk, due to their trends in noncompliance. These meetings provide CFOs with an opportunity to discuss how their
internal control mechanisms and mitigation strategies may influence future results.
They also provide CFOs and their staff with an opportunity to raise specific issues
that relate to their agency and clarify their understanding of particular financial
management framework requirements.
In July 2011, Finance issued the Model Chief Executive’s Instructions (CEIs). The
Model CEIs seek to improve the consistency across agencies and help staff members
understand and comply with the key requirements of the financial management
framework. Following amendments to the FMA legislation in the first half of 2012,
Finance undertook a review of the Model CEIs and reissued them in November
2012.
On 1 July 2012, the new CPRs took effect. The CPRs represent the Government policy
framework under which agencies govern and undertake their own procurement.
They combine both Australia's international obligations and good practice.
Together, these enable agencies to design processes that are robust, transparent and
instill confidence in the Australian Government's procurement. The CPRs did not
alter existing procurement policy, but clarify the CPRs as a rule set, ensure
consistent and well-understood use of terminology, redefine the procurement
methods and address the recommendation of the ANAO raised in performance Audit
Report No.11 2010-11, Direct Source Procurement.
Education and guidance are an important part of Finance’s strategy to improve
understanding of, and compliance with, the financial management framework.
Finance provides a suite of advice, training, guidance and tools to support agencies,
ranging from base-level introductory training to technical and agency specific advice
and training. Finance regularly provides workshops and targeted training, focusing
on the key risk areas of the financial management framework that account for the
highest instances of non-compliance.
In February 2012, Finance also established a Community of Practice forum focussed
on financial framework training and skills development. The purpose of establishing
the Community of Practice is to ensure that staff members have access to the right
tools, education products and training to understand their responsibilities under the
financial management framework. This forum is used to share ideas, support and
discuss financial training needs and pilot new or updated training material. It has
also facilitated the development of a number of training partnerships between
Finance and other agencies, including the Australian Public Service Commission.
19
Finance is also piloting new training arrangements with a view to co-designing a
comprehensive suite of base-level financial framework training products that can be
used by all Australian Government entities. The new Financial Management and
Budget (FMB) training program has been developed in collaboration with the
Community of Practice. It comprises three training modules that introduce key
aspects of the financial management and budget frameworks and shows how the
different legislation, policies and processes interact to support decision-making and
ensure the proper use of public resources. The FMB training program’s modular
approach is designed to support a range of flexible delivery options. In November
2012, pilots of the FMB program were delivered to 256 participants from 41
Australian Government entities. Ninety percent of participants rated the overall
program as excellent or very good, and 95 percent reported that other staff from
their organisation would find the program useful. A second round of pilots have
been scheduled for February 2013. Following the co-design and piloting process,
Finance will release the updated FMB materials to all Australian Government
entities.
8.5. Improving and clarifying the financial management framework
Finance’s analysis of Certificate results in 2010-11 again revealed that agencies
encountered issues relating to the correct procedures for the commitment, approval
and expenditure of public money. As part of Finance’s role of continuous
improvement of the financial framework, the legislative requirements were
amended in 2012 through the passage of:




Financial Framework Legislation Amendment Act (No. 1) 2012, which amended
the focus of the operation of drawing rights under sections 26 and 27 of the FMA
Act to payments rather than the debiting, or requesting the debiting of, an
appropriation. The Act also removed the criminal penalty from the role of
drawing rights, given their basic administrative role;
Financial Framework Legislation Amendment Act (No. 2) 2012, which addressed
circumstances where payments are made from special appropriations (including
Special Accounts), across six portfolios, which were at risk of breaching
section 83 of the Australian Constitution. Although breaching the Constitution is
not reportable for the purposes of the Certificate, a breach of section 83 of the
Constitution would consequently be an instance of non-compliance with section
26 of the FMA Act, where a payment was made from an appropriation in a way
that was inconsistent with the purpose of the appropriation.
Financial Framework Legislation Amendment Act (No. 3) 2012, which provided
legislative authority for all Commonwealth spending that did not have clear
legislative authorisation. The Act provided Ministers, Chief Executives and their
delegates with explicit legislative authority to spend public money under any
arrangement, grant or program specified in Schedule 1AA to the FMA
Regulations. The introduction of Division 3B of the FMA Act addressed potential
issues about the validity of some Government payments following the High
Court of Australia’s decision in Williams v Commonwealth [2012] HCA 23.
Section 44 of the FMA Act was also amended to clarify the significance of
subsection 44(1) in relation to one of its most common and practical uses, which
is entering into contracts on behalf of the Commonwealth.
As part of the Australian Government’s Better Government agenda, the Finance
Minister announced on 8 December 2010 a review into the Commonwealth’s
financial framework. The purpose of the Commonwealth Financial
Accountability Review (CFAR) is to analyse the Commonwealth’s financial
20
framework from first principles and consider options to ensure the framework
supports high quality resource management now and into the future. As part of
CFAR, Finance released the Discussion Paper Is Less More? Towards Better
Commonwealth Performance in March 2012. Finance undertook an extensive
consultation process with Government entities, both Federal and State, the
private and not-for-profit sectors and interested individuals and received
around 70 written submissions. This has led to the public release of a Position
Paper Sharpening the Focus in November 2012. This paper provides a further
opportunity for stakeholders to contribute to the redesign and modernisation of
the Commonwealth’s financial framework.
9.
Australian National Audit Office
9.1. Additional ANAO focus
In recent years, the ANAO has increased its focus on legislative compliance as part of
its financial statement audit coverage. The increased coverage involves the ANAO
assessing key aspects of legislative compliance.9 In respect to the 2010-11
Certificate process, the ANAO noted that, generally, agencies continue to maintain
listings of the laws, regulations and associated government policies that are relevant
to their responsibilities. Agencies also now have well-established processes in place
to obtain assurance from line managers regarding compliance with relevant
legislative requirements to enable Chief Executives to provide an annual Certificate
to their Minister.10
9.2. Response to ANAO Audit of the Certificate Process
The ANAO undertook a cross-agency performance audit, commencing in
January 2010, which aimed to assess the effectiveness of the annual Certificate
process for FMA Act agencies. The ANAO released the performance audit titled
Management of the Certificate of Compliance Process in FMA Act Agencies in April
2011. The audit concluded that, overall, the Certificate process for FMA Act agencies
has been effective, notwithstanding the inherent limitations of the self-assessment
process employed.
The audit considered Finance’s administration of the Certificate process at a
whole-of-government level, selected agencies’ annual Certificate processes and the design
and impact of the Certificate. The audit included a review of the support provided by Finance
to agencies in relation to the Certificate and the financial management framework more broadly.
In general, the audit identified that the audited agencies’ Certificate processes were
appropriate, in light of each agency’s size, financial activities and financial
management arrangements. Key aspects of these agencies’ Certificate processes
involved self‐assessments of compliance by responsible officials and/or business
areas; internal audit activity covering compliance with the financial management
framework; audit committee involvement; and targeted remediation activities to
address identified non‐compliance.
9
See ANAO Audit Report No.17 2011-12, Audits of the Financial Statements of Australian Government Entities for the
Period ended 30 June 2011, p. 49.
10
See ANAO Audit Report No. 54 2010-11, Interim Phase of the Audit of Financial Statements of General Government Sector
Agencies for the Year ending 30 June 2011, p 40.
21
The audit found that “Finance has provided appropriate high-level guidance for FMA Act agencies
on the Certificate process.”11 Further, feedback from a survey conducted by the ANAO indicates
that the majority of agency CFOs agree or strongly agree that Finance provided adequate
guidance on the Certificate process and the financial management framework.12
The audit report also provides better practice guidance for agencies to apply in their
Certificate processes based on audit findings and feedback provided by external
members of audit committees. The suggestions cover:








understanding the requirements of the financial management framework, how
they are implemented by the agency and the associated compliance risks;
using a risk-based approach to collect the compliance information, which will
form the basis of Certificate results;
quality assuring compliance information;
integrating internal audit work and the Certificate process;
supporting audit committee oversight;
effective remediation and education practices;
periodically reviewing the effectiveness and efficiencies of the approach
employed to avoid excessive resources being devoted to the assurance provided
by the process; and
adopting a risk-based approach to follow-up with agencies on the Certificate
results.
11
ANAO Audit Report No. 38 2010-11, Management of the Certificate of Compliance Process in FMA Act Agencies, p. 45.
12
See ANAO Audit Report No. 38 2010-11, Management of the Certificate of Compliance Process in FMA Act Agencies, p. 47.
22
Part 1: 2011-12 results by category
Introduction
Table 1 and Chart 1 report on the combined total of all (12,798) instances of noncompliance reported in 2011-12 against six categories, comprising key elements of
the financial management framework for FMA Act agencies:
i.
the commitment of public money by agencies;
ii.
the use of drawing rights by agencies;
iii.
the proper use of financial resources;
iv.
banking and investment by agencies;
v.
the maintenance of agency accounts and records; and
vi.
miscellaneous requirements.
Tables 1.1 to 1.6 and Charts 1.1 to 1.6 report on each portfolio group’s share of
reported instances of non-compliance in 2011-12 against the six categories. For
example, Table 1.1 and Chart 1.1 record that the Finance and Deregulation portfolio
group reported 1.7 percent of all (8,708) instances of non-compliance relating to
Category 1.
23
Table 1: Percentage of all non-compliance by category
2010-11
Category
2011-12
Percentage
Instances
Percentage
Instances
75.9%
11,585
68.0%
8,708
ii. the use of drawing rights by agencies
5.0%
761
6.7%
857
iii. the proper use of financial resources
4.0%
608
5.1%
656
iv. banking and investment by agencies
9.4%
1,429
17.9%
2,282
<0.1%
9
<0.1%
1
vi. miscellaneous requirements
5.7%
870
2.3%
294
Instances of non-compliance
100.0%
15,262
100.0%
12,798
i. the commitment of public money by agencies
v. the maintenance of agency accounts and records
Chart 1: Instances of non-compliance by category from 2010-11 to
2011-12
24
Table 1.1: Category 1 (the commitment of public money by agencies) by
portfolio grouping
68.0 percent (8,708 instances) of all non-compliance related to Category 1 – the
commitment of public money by agencies. Table 1.1 records each portfolio group’s
share of Category 1.
Portfolio group’s share of all non-compliance reported for
Category 1
2010-11
2011-12
Percentage
Instances
Percentage
Instances
Defence
44.2%
5,121
40.0%
3,479
Education, Employment and Workplace Relations
10.3%
1,193
22.9%
1,995
Attorney-General's
6.6%
764
7.2%
625
Health and Ageing
5.4%
620
6.1%
531
11.4%
1,321
4.4%
382
Sustainability, Environment, Water, Population and
Communities
5.3%
617
3.5%
306
Foreign Affairs and Trade
3.4%
392
3.2%
283
Industry, Innovation, Science, Research and Tertiary
Education
2.3%
266
3.0%
260
Treasury
2.9%
338
2.3%
204
Human Services
0.5%
62
1.7%
148
Finance and Deregulation
3.2%
372
1.7%
146
Regional Australia, Local Government, Arts and Sport
0.5%
54
0.7%
58
Climate Change and Energy Efficiency
0.5%
54
0.5%
44
Families, Housing, Community Services and Indigenous Affairs
0.3%
29
0.5%
43
Infrastructure and Transport
0.6%
66
0.5%
42
Agriculture, Fisheries and Forestry
0.8%
96
0.4%
38
Prime Minister and Cabinet
0.5%
59
0.4%
38
Resources, Energy and Tourism
0.9%
110
0.4%
38
Broadband, Communications and the Digital Economy
0.1%
10
0.4%
34
Veterans' Affairs
0.1%
14
0.2%
12
Parliament of Australia
0.2%
27
<0.1%
2
100.0%
11,585
100.0%
8,708
Immigration and Citizenship
Total
25
Chart 1.1: Category 1 (the commitment of public money by agencies) by
portfolio grouping
Chart 1.1 presents the 2011-12 data reported in Table 1.1 in graphical form.
Note: ‘Other’ includes portfolio groups whose share of the total is less than 1.5 percent
26
Table 1.2: Category 2 (the use of drawing rights by agencies) by portfolio
grouping
6.7 percent (857 instances) of all non-compliance related to Category 2 – the use of
drawing rights by agencies. Table 1.2 records each portfolio group’s share of
Category 2.
Portfolio group’s share of all non-compliance
reported for Category 2
2010-11
2011-12
Percentage
Instances
Percentage
Instances
Finance and Deregulation
13.3%
101
30.5%
262
Treasury
17.5%
133
26.8%
230
Defence
3.0%
23
9.0%
77
15.6%
119
8.1%
69
0.3%
2
6.2%
53
-
-
3.6%
31
Parliament of Australia
0.5%
4
3.5%
30
Agriculture, Fisheries and Forestry
2.4%
18
3.3%
28
10.1%
77
2.7%
23
Sustainability, Environment, Water, Population and
Communities
-
-
1.8%
15
Climate Change and Energy Efficiency
-
-
1.6%
14
Families, Housing, Community Services and
Indigenous Affairs
-
-
1.1%
9
1.1%
8
0.7%
6
<0.1%
1
0.7%
6
Attorney-General's
0.4%
3
0.3%
3
Foreign Affairs and Trade
3.3%
25
0.1%
1
Broadband, Communications and the Digital
Economy
9.7%
74
-
-
Infrastructure and Transport
9.2%
70
-
-
12.4%
94
-
-
1.2%
9
-
-
-
-
-
-
Health and Ageing
Prime Minister and Cabinet
Education, Employment and Workplace Relations
Human Services
Immigration and Citizenship
Resources, Energy and Tourism
Regional Australia, Local Government, Arts and
Sport
Industry, Innovation, Science, Research and Tertiary
Education
Veterans' Affairs
27
Total
100.0%
761
100.0%
857
Chart 1.2: Category 2 (the use of drawing rights by agencies) by portfolio
grouping
Chart 1.2 presents the 2011-12 data reported in Table 1.2 in graphical form.
Note: ‘Other’ includes portfolio groups whose share of the total is less than 1.5 percent
28
Table 1.3: Category 3 (the proper use of financial resources) by portfolio
grouping
5.1 percent (656 instances) of all non-compliance related to Category 3 – the proper
use of financial resources. Table 1.3 records each portfolio group’s share of
Category 3.
Portfolio group’s share of all non-compliance reported for
Category 3
2010-11
2011-12
Percentage
Instances
Percentage
Instances
Education, Employment and Workplace Relations
15.5%
94
19.8%
130
Defence
25.5%
155
15.1%
99
Attorney-General's
12.7%
77
12.5%
82
Industry, Innovation, Science, Research and Tertiary Education
8.2%
50
8.2%
54
Treasury
6.4%
39
7.6%
50
Foreign Affairs and Trade
4.6%
28
4.9%
32
Families, Housing, Community Services and Indigenous Affairs
9.2%
56
4.4%
29
Sustainability, Environment, Water, Population and
Communities
0.8%
5
3.7%
24
Human Services
0.6%
4
3.5%
23
Immigration and Citizenship
3.0%
18
3.2%
21
Agriculture, Fisheries and Forestry
1.6%
10
2.4%
16
-
-
2.4%
16
Broadband, Communications and the Digital Economy
2.6%
16
2.1%
14
Parliament of Australia
1.5%
9
2.1%
14
-
-
1.7%
11
Resources, Energy and Tourism
2.3%
14
1.7%
11
Finance and Deregulation
2.3%
14
1.2%
8
Veterans' Affairs
0.5%
3
1.1%
7
Infrastructure and Transport
0.2%
1
1.0%
6
Prime Minister and Cabinet
2.3%
14
0.8%
5
Health and Ageing
0.2%
1
0.6%
4
100.0%
608
100.0%
656
Climate Change and Energy Efficiency
Regional Australia, Local Government, Arts and Sport
Total
29
Chart 1.3: Category 3 (the proper use of financial resources) by portfolio
grouping
Chart 1.3 presents the 2011-12 data reported in Table 1.3 in graphical form.
Note: ‘Other’ includes portfolio groups whose share of the total is less than or equal to 1.5 percent
30
Table 1.4: Category 4 (banking and investment by agencies) by portfolio
grouping
17.9 percent (2,282 instances) of all non-compliance related to Category 4 – banking
and investment by agencies. Table 1.4 records each portfolio group’s share of
Category 4.
Portfolio group’s share of all non-compliance reported for
Category 4
2010-11
2011-12
Percentage
Instances
Percentage
Instances
-
-
43.4%
990
0.1%
1
17.5%
400
Immigration and Citizenship
20.4%
291
9.3%
212
Treasury
21.8%
311
7.2%
163
Prime Minister and Cabinet
3.6%
52
4.7%
108
Attorney-General's
8.3%
118
4.5%
103
26.7%
382
2.9%
65
Health and Ageing
2.2%
31
2.6%
60
Sustainability, Environment, Water, Population and
Communities
1.5%
22
2.6%
59
Agriculture, Fisheries and Forestry
6.9%
98
1.3%
29
Finance and Deregulation
4.3%
62
1.2%
28
Parliament of Australia
1.3%
19
1.0%
22
Foreign Affairs and Trade
1.3%
18
0.9%
21
-
-
0.5%
12
0.1%
2
0.3%
7
-
-
0.1%
2
Climate Change and Energy Efficiency
0.3%
5
<0.1%
1
Broadband, Communications and the Digital Economy
0.8%
11
-
-
Regional Australia, Local Government, Arts and Sport
0.2%
3
-
-
Families, Housing, Community Services and Indigenous Affairs
0.1%
2
-
-
Infrastructure and Transport
0.1%
1
-
-
100.0%
1,429
100.0%
2,282
Human Services
Industry, Innovation, Science, Research and Tertiary Education
Defence
Veterans' Affairs
Education, Employment and Workplace Relations
Resources, Energy and Tourism
Total
31
Chart 1.4: Category 4 (banking and investment by agencies) by portfolio
grouping
Chart 1.4 presents the 2011-12 data reported in Table 1.4 in graphical form.
Note: ‘Other’ includes portfolio groups whose share of the total is less than or equal to 1.5 percent
32
Table 1.5: Category 5 (the maintenance of agency accounts and records)
by portfolio grouping
Less than 0.1 percent (1 instance) of all non-compliance related to Category 5 – the
maintenance of agency accounts and records. Table 1.5 records each portfolio
group’s share of Category 5.
Portfolio group’s share of all non-compliance reported for
Category 5
2010-11
2011-12
Percentage
Instances
Percentage
Instances
-
-
100.0%
1
100.0%
9
-
-
Agriculture, Fisheries and Forestry
-
-
-
-
Broadband, Communications and the Digital Economy
-
-
-
-
Climate Change and Energy Efficiency
-
-
-
-
Defence
-
-
-
-
Education, Employment and Workplace Relations
-
-
-
-
Families, Housing, Community Services and Indigenous Affairs
-
-
-
-
Finance and Deregulation
-
-
-
-
Foreign Affairs and Trade
-
-
-
-
Health and Ageing
-
-
-
-
Human Services
-
-
-
-
Industry, Innovation, Science, Research and Tertiary Education
-
-
-
-
Infrastructure and Transport
-
-
-
-
Parliament of Australia
-
-
-
-
Prime Minister and Cabinet
-
-
-
-
Regional Australia, Local Government, Arts and Sport
-
-
-
-
Resources, Energy and Tourism
-
-
-
-
Sustainability, Environment, Water, Population and
Communities
-
-
-
-
Treasury
-
-
-
-
Veterans' Affairs
-
-
-
-
100.0%
9
100.0%
1
Attorney-General's
Immigration and Citizenship
Total
33
Chart 1.5 is not presented as only one agency reported instances of non compliance against Category 5.
Table 1.6: Category 6 (miscellaneous requirements) by portfolio
grouping
2.3 percent (294 instances) of all non-compliance related to Category 6 –
miscellaneous requirements. Table 1.6 records each portfolio group’s share of
Category 6. See page 11 for further information on this category.
Portfolio group’s share of all non-compliance reported
for Category 6
2010-11
2011-12
Percentage
Instances
Percentage
Instances
30.7%
267
52.4%
154
Industry, Innovation, Science, Research and Tertiary
Education
0.1%
1
10.2%
30
Finance and Deregulation
2.7%
23
8.5%
25
Sustainability, Environment, Water, Population and
Communities
0.1%
1
5.5%
16
Defence
3.5%
30
5.1%
15
Attorney-General's
0.3%
3
4.8%
14
Immigration and Citizenship
2.4%
21
4.1%
12
-
-
3.4%
10
Prime Minister and Cabinet
0.6%
5
1.7%
5
Families, Housing, Community Services and Indigenous
Affairs
2.5%
22
1.4%
4
54.2%
471
1.0%
3
Education, Employment and Workplace Relations
0.1%
1
0.7%
2
Agriculture, Fisheries and Forestry
0.1%
1
0.3%
1
Foreign Affairs and Trade
0.1%
1
0.3%
1
Parliament of Australia
-
-
0.3%
1
Regional Australia, Local Government, Arts and Sport
-
-
0.3%
1
Human Services
2.5%
22
-
-
Resources, Energy and Tourism
0.1%
1
-
-
Climate Change and Energy Efficiency
-
-
-
-
Infrastructure and Transport
-
-
-
-
Veterans' Affairs
-
-
-
-
Treasury
Broadband, Communications and the Digital Economy
Health and Ageing
34
Total
100.0%
870
100.0%
294
35
Chart 1.6: Category 6 (miscellaneous requirements) by portfolio
grouping
Chart 1.6 presents the 2011-12 data reported in Table 1.6 in graphical form.
Note: ‘Other’ includes portfolio groups whose share of the total is less than or equal to 1.5 percent
36
Part 2: 2011-12 results by portfolio
group
Introduction
Table 2 and Chart 2 report on each portfolio group’s share of the combined total of
all (12,798) reported instances of non-compliance in 2011-12. For example, Table 2
and Chart 2 record that the Finance and Deregulation portfolio group reported 3.7
percent of all (12,798) instances of non-compliance.
Charts 2.1 to 2.21 report on the types of non-compliance reported by each portfolio
group, against six categories, comprising key elements of the financial management
framework for FMA Act agencies:
i.
the commitment of public money by agencies;
ii.
the use of drawing rights by agencies;
iii.
the proper use of financial resources;
iv.
banking and investment by agencies;
v.
the maintenance of agency accounts and records; and
vi.
miscellaneous requirements.
For example, Chart 2.8 records that the types of non-compliance reported by the
Finance and Deregulation portfolio group related to Category 1 (the commitment of
public money by agencies), Category 2 (the use of drawing rights by agencies),
Category 3 (the proper use of financial resources), Category 4 (banking and
investment by agencies) and Category 6 (miscellaneous requirements). Chart 2.8
also records the proportion of instances of non-compliance relating to the above
categories.
37
Table 2: Percentage of all non-compliance by portfolio grouping
2010-11
Portfolio group’s share of all non-compliance reported
2011-12
Percentage
Instances
Percentage
Instances
37.4%
5,711
29.2%
3,735
Education, Employment and Workplace Relations
8.5%
1,290
16.9%
2,165
Human Services
1.1%
165
9.3%
1,184
Attorney-General's
6.3%
965
6.5%
828
Treasury
7.1%
1,088
6.3%
801
Industry, Innovation, Science, Research and Tertiary Education
2.2%
327
5.8%
744
Health and Ageing
8.1%
1,242
5.2%
667
10.9%
1,668
4.9%
633
Finance and Deregulation
3.8%
572
3.7%
469
Sustainability, Environment, Water, Population and
Communities
4.2%
645
3.3%
420
Foreign Affairs and Trade
3.0%
464
2.6%
338
Prime Minister and Cabinet
0.9%
132
1.6%
209
Agriculture, Fisheries and Forestry
1.5%
223
0.9%
112
Families, Housing, Community Services and Indigenous Affairs
0.7%
109
0.7%
85
Climate Change and Energy Efficiency
0.4%
59
0.6%
75
Regional Australia, Local Government, Arts and Sport
1.0%
151
0.5%
70
Parliament of Australia
0.4%
59
0.5%
69
Broadband, Communications and the Digital Economy
0.7%
111
0.5%
58
Resources, Energy and Tourism
0.8%
126
0.4%
57
Infrastructure and Transport
0.9%
138
0.4%
48
Veterans' Affairs
0.1%
17
0.2%
31
100.0%
15,262
100.0%
12,798
Defence
Immigration and Citizenship
Total
38
Chart 2: Percentage of all non-compliance by portfolio grouping for
2011-12
Chart 2 presents the 2011-12 data reported in Table 2 in graphical form.
Note: ‘Other’ includes portfolio groups whose share of the total is less than or equal to 1.5 percent
39
Chart 2.1: Agriculture, Fisheries and Forestry portfolio group
Chart 2.2: Attorney-General's portfolio group
40
Chart 2.3: Broadband, Communications and the Digital Economy
portfolio group
Chart 2.4: Climate Change and Energy Efficiency portfolio group
41
Chart 2.5: Defence portfolio group
Chart 2.6: Education, Employment and Workplace Relations
portfolio group
42
Chart 2.7: Families, Housing, Community Services and Indigenous
Affairs portfolio group
Chart 2.8: Finance and Deregulation portfolio group
43
Chart 2.9: Foreign Affairs and Trade portfolio group
Chart 2.10: Health and Ageing portfolio group
44
Chart 2.11: Human Services portfolio group
Chart 2.12: Immigration and Citizenship portfolio group
45
Chart 2.13: Infrastructure and Transport portfolio group
Chart 2.14: Industry, Innovation, Science, Research and Tertiary
Education portfolio group
46
Chart 2.15: Parliament of Australia portfolio group
Chart 2.16: Prime Minister and Cabinet portfolio group
47
Chart 2.17: Regional Australia, Local Government, Arts and Sport
portfolio group
Chart 2.18: Resources, Energy and Tourism portfolio group
48
Chart 2.19: Sustainability, Environment, Water, Population and
Communities portfolio group
Chart 2.20: Treasury portfolio group
49
Chart 2.21: Veterans' Affairs portfolio group
50
Appendix: List of portfolio groups for
Certificate purposes
Appendix
Composition of Portfolio Groups as at 30 June 2012
Agriculture, Fisheries and Forestry portfolio group:
Australian Fisheries Management Authority
Australian Pesticides and Veterinary Medicines Authority
Department of Agriculture, Fisheries and Forestry
Wheat Exports Australia
Attorney-General’s portfolio group:
Administrative Appeals Tribunal
Attorney-General’s Department
Australian Commission for Law Enforcement Integrity
Australian Crime Commission
Australian Customs and Border Protection Service
Australian Federal Police
Australian Human Rights Commission
Australian Institute of Criminology
Australian Law Reform Commission
Australian Security Intelligence Organisation
Australian Transaction Reports and Analysis Centre
CrimTrac Agency
Family Court of Australia
Federal Court of Australia
Federal Magistrates Court of Australia
Insolvency and Trustee Service Australia
National Native Title Tribunal
Office of the Australian Information Commissioner
51
Office of Parliamentary Counsel
Office of the Director of Public Prosecutions
Broadband, Communications and the Digital Economy portfolio group:
Australian Communications and Media Authority
Department of Broadband, Communications and the Digital Economy
Climate Change and Energy Efficiency portfolio group:
Department of Climate Change and Energy Efficiency
Clean Energy Regulator
Defence portfolio group:
Defence Materiel Organisation
Department of Defence
Education, Employment and Workplace Relations portfolio group:
Department of Education, Employment and Workplace Relations
Fair Work Australia
Office of the Fair Work Building Industry Inspectorate
Office of the Fair Work Ombudsman
Safe Work Australia
Seafarers Safety, Rehabilitation and Compensation Authority (Seacare Authority)
Families, Housing, Community Services and Indigenous Affairs portfolio group:
Australian Institute of Family Studies
Department of Families, Housing, Community Services and Indigenous Affairs
Equal Opportunity for Women in the Workplace Agency
52
Finance and Deregulation portfolio group:
Australian Electoral Commission
ComSuper
Department of Finance and Deregulation
Future Fund Management Agency
Foreign Affairs and Trade portfolio group:
AusAID
Australian Centre for International Agricultural Research
Australian Secret Intelligence Service
Australian Trade Commission
Department of Foreign Affairs and Trade
Health and Ageing portfolio group:
Australian National Preventive Health Agency
Australian Organ and Tissue Donation and Transplantation Authority
Australian Radiation Protection and Nuclear Safety Agency
Cancer Australia
Department of Health and Ageing
Independent Hospital Pricing Authority
National Blood Authority
National Health and Medical Research Council
National Health Performance Authority
Private Health Insurance Ombudsman
Professional Services Review Scheme
Human Services portfolio group:
Department of Human Services
Immigration and Citizenship portfolio group:
Department of Immigration and Citizenship
53
Migration Review Tribunal and Refugee Review Tribunal
Industry, Innovation, Science, Research and Tertiary Education portfolio group:
Australian Research Council
Australian Skills Quality Authority
Department of Industry, Innovation, Science, Research and Tertiary Education
IP Australia
Tertiary Education Quality and Standards Agency
Infrastructure and Transport portfolio group:
Australian Transport Safety Bureau
Department of Infrastructure and Transport
Parliament of Australia portfolio group:
Department of Parliamentary Services
Department of the House of Representatives
Department of the Senate
Prime Minister and Cabinet portfolio group:
Australian National Audit Office
Australian Public Service Commission
Department of the Prime Minister and Cabinet
National Mental Health Commission
Office of National Assessments
Office of the Commonwealth Ombudsman
Office of the Inspector-General of Intelligence and Security
Office of the Official Secretary to the Governor-General
Regional Australia, Local Government, Arts and Sport portfolio group
Australian Sports Anti-Doping Authority
Department of Regional Australia, Local Government, Arts and Sport
National Archives of Australia
National Capital Authority
54
Old Parliament House
Resources, Energy and Tourism portfolio group:
Department of Resources, Energy and Tourism
Geoscience Australia
National Offshore Petroleum Safety Authority
Sustainability, Environment, Water, Population and Communities portfolio
group:
Bureau of Meteorology
Department of Sustainability, Environment, Water, Population and Communities
Great Barrier Reef Marine Park Authority
Murray-Darling Basin Authority
National Water Commission
Treasury portfolio group:
Australian Bureau of Statistics
Australian Competition and Consumer Commission
Australian Office of Financial Management
Australian Prudential Regulation Authority
Australian Securities and Investments Commission
Australian Taxation Office
Commonwealth Grants Commission
Corporations and Markets Advisory Committee
Department of the Treasury
Inspector-General of Taxation
National Competition Council
Office of the Auditing and Assurance Standards Board
Office of the Australian Accounting Standards Board
Productivity Commission
Royal Australian Mint
Veterans’ Affairs portfolio group:
Department of Veterans’ Affairs
55