Relevant Experience with Regulatory Agencies
RCS has completed a wide range of projects for government regulators over the past six years. The
following table provides a summary of the projects completed. More detailed summaries of each
project and referees are available on our web site (http://www.resolutionconsulting.com.au/).
Client
Therapeutic Goods Administration (TGA)
Year
2012-14
Office of Manufacturing Quality (TGA)
2014
Office of the Gene Technology Regulator
2014
Australian Skills Quality Authority (ASQA)
2013-14
National Heavy Vehicle Regulator (NHVR)
2014
Vehicle Safety Standards (Infrastructure)
2012-13
Customs and Border Protection
2010-12
Australian Transaction Reports &
Analysis Centre (AUSTRAC)
2010-12
Intellectual Property Australia (IPA)
2008-09
Australian Pesticides and Veterinary
Medicines Authority (APVMA)
Projects
Regulator business model
Cost recovery framework
Reengineering of licensing approval processes
Cost all services
Price review
New policy initiatives (RISs)
CRISs
Design of business model (contemporary regulator)
Design of business system
Reengineering of licensing approval processes
Scheduling tool
Right sizing resources
Regulatory risk framework
Restructure
Review of regulatory processes
Cost recovery
Preparation of RIS
Industry consultation
Costs of compliance
Cost all services
Cost recovery framework
Price review
Right sizing resources
Strategic review
Performance improvement strategy
Review of financial position and funding arrangements
Remediation strategy to become financial sustainable
Cost all services
Price review
Process review
CRIS
Revenue management process
Regulatory review of Import Processing Charges and
GST Administration
CRIS
Cost all services
Price review
Analysis of regulatory policy options
Review of financial management framework
Cost all services
Review of cost recovery framework
Process analysis/mapping
Cost all services
Price review
CRIS
Review of cost recovery framework
Price review
CRIS
Review of cost recovery framework
Client
Therapeutic Goods Administrator (TGA) - Cost Recovery
Contact Person
Nicole McLay CFO, p: 02 6232 8216, email: nicole.mclay@tga.gov.au
Problems Faced
The cost recovery framework for TGA had not been reviewed for some time and there
were concerns that it was no longer effective. There was a low level of understanding of
the pricing structure and costs and prices for services at all levels of management, and
the business rules were not well defined and out of date. There was a significant
discrepancy between the fees and charges and the cost of services. The CFO required a
full review of the cost recovery framework and implementation of a better practice
solution that was fully compliant with the cost recovery guidelines.
The Australian and New Zealand Governments agreed to merge TGA and Medsafe (NZ
regulator) and create a joint agency (ANZ Therapeutic Products Administration). A key
component of the design of the new agency was developing a business model based on
best practice for a regulator, cost recovery framework and financial strategy to ensure a
self sustaining solution. This project also included a pilot project to adopt a risk based
evaluation process and streamline the pre market authorisation process and charging
arrangements for Over the Counter (OTC) medicines.
These two projects were fully integrated.
The international practices for the regulation of therapeutic goods were undergoing
significant change with a view to streamlining regulatory processes and reducing the
cost of compliance. One of the key initiatives was to introduce a single assessment
process for medical devices using external inspectors as opposed to each regulator
completing a formal assessment process to include the medical devices on the register
of approved products.
The Australian Government was contemplating introducing more stringent pre market
approval (application audits) and post market monitoring (clinical quality registers to
track the use of the breast and cardiac devices) of high risk implantable and other high
risk medical devices.
These projects required cost recovery options to be defined and evaluated.
Description of
Services
Results Achieved
Detailed analysis of the business model for the regulation of therapeutic goods
including defining best practice
Review of the existing cost recovery arrangements and cost model
Design of a best practice cost recovery model that is consistent with the Cost Recovery
Guidelines
Develop cost recovery options for new initiatives (includes cost estimates)
Process improvement – OTC pre market evaluation
Design of the new cost model
Develop a cost recovery policy
Detailed process and cost analysis based on extensive consultation with all business
units to determine a depth of understanding of the business activities and ensure that
the business rules underpinning the ABC model were robust and supported
Develop new ABC model for 2012-13 actual expenditure with full documentation of all
business rules and established repeatable process for updating the model
Develop suite of management reports with supporting analysis for each regulatory
office and for the TGA
Review of the pricing structure and all fees and charges with a view to streamline,
simplify and standardise arrangements
Input as required for RISs and CRISs
Advice on the procurement of a repeatable solution to replace the spreadsheet model
Advice (based on the depth of knowledge developed on the project) to the regulatory
reform team to assist with developing solutions as part of the reform agenda
The proposed cost recovery model has been accepted as the future state model for
TGA. A number of changes have been made to the pricing structure and individual fees
and charges.
The cost model has been handed over to internal staff to maintain and is currently
being converted into a long term solution. The Executive are evaluating the proposed
further changes to fees and charges and the pricing structure. It is expected that the
changes will be phased in over a number of years to minimise the impact on industry.
The ANZTPA project has been put on hold for the moment.
The cost recovery options for the new policy initiatives have progressed through the
TGA Executive to the Minister for decision and inclusion in a RIS and/or CRIS.
Client
Therapeutic Goods Administrator (TGA) – Office of Manufacturing Quality (OMQ) –
Review of Regulatory Processes
Contact Person
Harry Rothenfluh, Head of Office, p: 02 6221 6852, email: harry.rothenfluh@tga.gov.au
Problems Faced
OMQ had not had an adequate level of investment in the internal capability in recent
years and the level of performance had fallen. The Head of Office wanted to make a step
improvement and re-position OMQ as a better practice regulator. The ANAO had just
completed a performance audit which identified a number of significant issues
including:







Description of
Services
inadequate record keeping of the evidence underpinning regulatory decisions
operating environment (i.e. processes, standard operating procedures and work
instructions) is not well defined and there is a low level of compliance with standard
processes and target timeframes
low level of integration between administrative and technical functions
under utilised capacity for conducting inspections due to the current management
arrangements and workload constraints placed on inspectors
scheduling of inspections is manual, time consuming, and resource intensive, and
there is a backlog of inspections
regulatory risk framework is not well defined, and risk intelligence is under utilised
in operational decision making
available system functionality is under utilised, data integrity is low and data is
incomplete, and there is a high level of reliance on shadow systems
Analysis of the current state environment, identify opportunities for improvement, and
where possible to address key issues identified in the recent ANAO performance audit
Identify best practice for a regulator of manufacturers of therapeutic goods
Develop a business transformation strategy
Design a number of alternative organisational structures and propose a preferred option
Map all business processes, identify opportunities for improvement, and redesign
processes
Design a regulatory risk framework and compliance plan
Design an improved scheduling process for inspections and build a fully functional tool
Develop a workload/throughput model for the clearance process
Develop a high level IT strategy, recommend changes to the core business system, and
document the functional requirements
Design a performance measurement framework
Develop a high level change management strategy
Develop an operational risk management plan
Prepare a final report
Prepare a detailed project plan to implement the recommended changes
Results Achieved
The proposed changes have been accepted and are currently being implemented. The
new structure has been approved and staff appointed to the new positions, SOPs are
being documented, system enhancements are being scoped, and the regulatory risk
framework and the new processes for scheduling and clearance are being
implemented.
Client
Department of Health – Deregulation Branch – Cost recovery options for the Office of
the Gene Technology Regulator (OGTR)
Contact Person
Catherine Winter, Director, p: 02 6289 1676, email: catherine.winter@health.gov.au
Problems Faced
The OGTR had been operating since 2000 as a fully budget funded agency. The
Government requested that a Regulation Impact Statement (RIS) be prepared to
consider the impact of the potential introduction of cost recovery for regulated services,
provided to the gene technology sector. This issue has not been reviewed for the past
ten years.
Description of
Services
Develop a depth of understanding of the regulatory framework and processes
Detailed review of the process/service costs
Develop cost recovery options
Evaluate the capability (i.e. people, process, and systems) required to support the
introduction of cost recovery arrangements
Prepare draft RIS for consultation
Conduct stakeholder consultation
Survey business on the costs of compliance
Prepare final RIS
Results Achieved
This project is still in progress.
Client
Australian Skills Quality Authority (ASQA) – Cost Recovery Framework
Contact Person
Justin Napier, National Manager - Corporate, p: 03 8613 3914, email:
justin.napier@asqa.gov.au
Problems Faced
ASQA is the national regulator for Australia’s Vocational Education and Training (VET)
Sector which includes all VET courses and training providers. The Government was
considering how best to implement the cost recovery arrangements for ASQA. ASQA
was required to finalise the proposed fees and charges for 2013-14 in the Cost Recovery
Impact Statement (CRIS) and needed to develop a more robust set of unit cost data to
inform the price setting process.
Description of
Services
Reviewed the current cost recovery arrangements
Detailed financial and cost analysis
Reviewed the financial management framework including the general ledger and budget
process
Reviewed operational volume data to determine appropriate cost drivers
Refined and validated the activity structure and classification of direct and indirect
regulatory activities
Review the pricing structure
Collected updated staff effort and other cost driver data
Developed a pricing model to:




calculate the cost of activities performed by each team
attribute these costs to the individual fees and charges
calculate the average unit costs based on the available volume data
conduct a three way comparison of the current fees in 2012-13,
proposed fees in the CRIS for 2013-14, and the full cost of services
Updated the pricing model for 2014-15 to account for changes in Government policy on
the level of cost recovery, and an organisational restructure
Prepared a full suite of management reports and provided analysis of the results
Provided advice on the capability required to support the cost recovery arrangements
Results Achieved
ASQA was able to meet all external compliance requirements and implement an
effective cost recovery framework. The pricing structure has been revised, process and
service costs have been refined, and management has a much improved understanding
of the cost of services and alignment with fees.
ASQA has made a step improvement to a number of financial structures and processes
to better support the cost recovery arrangements, and now has an effective cost
recovery framework in place.
Client
National Heavy Vehicle Regulator – Review of Financial Position
Contact Person
Melinda Bailey, CFO, p: 07 33098511, email: Melinda.bailey@nhvr.gov.au
Problems Faced
The NHVR is an independent regulator responsible for administering the national law
and standards for the use of heavy vehicles, market authorisation for permission and
credentials for transport and logistics companies, and truck drivers, and monitoring and
compliance processes.
The NHVR commenced operations with an initial grant provided by the Commonwealth
Government for establishment costs for capital items and grants and loans provided by
State and Territory Governments for operational funding. The State and Territory
Governments also provide separate funding for reform projects.
A full cost recovery funding model is expected to be introduced in 2014-15.
The NHVR Board was concerned that the NHVR was facing an immediate cash deficit
and will be unable to meet its commitments for year end. RCS was engaged to provide
an independent review.
Description of
Services







Detailed review of the available financial data
Review of the funding arrangements
Review of underlying business issues that resulted in financial difficulties
including procurement and systems implementation
Review of cost recovery arrangements
Assessment of the proposed remediation strategies and the underlying
assumptions and feasibility of the proposed approach
Identify additional actions that could be undertaken to support the long term
financial sustainability
Prepared a strategic report and presented it to the Board
Results Achieved
The NHVR received additional funding for 2013-14. It has implemented a number of the
remediation strategies and is well on the way to achieving a sustainable financial
position.
Client
Department of Infrastructure – Vehicle Safety Standards (VSS) – Review of Cost
Recovery Framework
Contact Person
Matthew Rendle, Project Manager, p: 02 6274 7723, email:
matthew.rendle@infrastructure.gov.au
Problems Faced
VSS is budget appropriation funded but has an externally driven workload which has
increased significantly over time. Resources levels have been constrained due to the
impact of budget cuts and growth in workload (i.e. imported vehicles now make up 8090% of the Australian market compared to 20 years ago where local manufacturers
accounted for over 80%). VSS has inadequate capacity and capability to maintain the
regulatory framework, perform all of the mandated functions and meet the
expectations of key stakeholders (i.e. best practice regulator). VSS capability (i.e.
processes, people and systems) requires a significant investment to improve
performance. VSS is under recovering the full costs of providing the regulatory services.
CRIS has been overdue since 2007.
Description of
Services
Conduct financial analysis of VSS revenue and expenses and functional analysis of each
section
Prepare an activity structure and define business rules for the cost attribution process
Complete a baseline costing process to determine the cost of outputs
Compare the full cost of outputs to the revenue generated to determine the financial
results
Undertake a fee review to assess the appropriateness of the current fee structure and
individual fees
Propose a revised fee structure
Prepare a draft CRIS
Review the revenue management process to ensure the completeness of revenue
collection
Results Achieved
VSS now has a fully functioning cost model with a revised pricing structure and activity
structure, and updated cost of services. Stakeholder consultation with the Department,
DoF and industry was conducted to support the proposed changes.
Client
Customs and Border Protection Services – Budget and Resource Management and
Cost Recovery
Contact Person
Steven Groves CFO, p: 02 6275 6846, email: steven.groves@customs.gov.au
Problems Faced
The CEO required more effective management information to support informed
resource allocation decisions to achieve the best use of the available $1b of funding for
border controls to mitigate border risk exposures. The CFO had lost confidence in the
existing ABC model (it had become out dated and unsupported over the past several
years) and the ANAO had indicated that the level of evidence supporting the cost
recovery programs was inadequate. The COO required more effective management
information to support analysis of business and corporate support costs to identify
opportunities for improving operational efficiency.
Description of
Services
Review of the existing ABC model
Design of the new ABC model
Detailed process and cost analysis
Developed new ABC model for 2009-10 actual expenditure
Developed suite of management reports with supporting analysis
Extensive consultation with all business units to determine a depth of understanding of
the business activities and ensure that the business rules underpinning the ABC model
were robust and supported
Redeveloped the business rules and recalculated the costs for the cost recovery
programs (import processing charges and GST administration) and prepared detailed
reports for industry, ATO, and ANAO
Prepared CRIS for import processing charges
Implemented a repeatable solution including technology, business rules, training and
documentation
Preliminary analysis on evaluating alternative control strategies to determine the most
effective use of resources (e.g. environmental policy is that energy efficient light bulbs
only to be imported – low cost option is to increase the level of awareness of the main
importers and the high cost option to examine each container of imported goods)
Results Achieved
The ABC model is generating multi-dimensional management information at all levels of
the organisation (major business functions, border risks, cost recovery, programs, and
processes – pre/at/post border). The ANAO has reviewed the cost recovery programs
and is now satisfied with the level of evidence underpinning the numbers charged to
industry (import processing charges) and the ATO (GST administration).
Client
Australian Transaction Reports & Analysis Centre (AUSTRAC) – Financial Management
Framework
Contact Person
Alf Mazatelli, CFO, p: 02 9950 0073, email: alf.mazatelli@austrac.gov.au
Problems Faced
AUSTRAC is Australia’s anti-money laundering and counter-terrorism financing
(AML/CTF) regulator and specialist financial intelligence unit (FIU). AUSTRAC has
experienced significant growth in the past few years as government continues to invest
in the fight against money laundering and counter terrorism financing. The corporate
and support functions including finance (i.e. ‘back office’) were originally developed to
support the requirements of a relatively small agency. The finance function does not
appear to have had the level of investment required to support the transition to a
higher level of capability.
The ANAO has rated AUSTRAC’s financial management framework as a HIGH risk
environment and is unable to place the expected level of reliance on the management
control environment. The ANAO had consistently identified a number of control
weaknesses over the past several years but these were initially considered to be ‘below
the radar’ and were not formally reported in audit reports. Over time, it became
apparent to the ANAO that these issues were not being addressed and the risk exposure
had increased due to the growth in operations and complexity (e.g. introduction of a
cost recovery regime in 2011-12). As a result, the ANAO decided it was time to increase
the strength of its findings to provide an external change driver for management to refocus attention on correcting the identified control weaknesses.
Description of
Services
Detailed review of all financial processes and functions, and the FMIS
Review of the internal control framework and compliance with the regulatory
framework
Review of the cost recovery arrangements
Review of the procurement arrangements
Clearly define the business rules and roles and responsibilities for all staff involved in
finance processes
Developed financial policies and procedures
Detailed review of the preparation of the audited financial statements
Ensure that the right people are in the right positions and recruit the most suitable
people (included recruitment process of key personnel and restructure of Finance
Branch)
Reengineer core financial processes including revenue and expenditure management,
budgeting, reporting, and costing
Developed a fully functioning cost model and reviewed the pricing structure
Developed a systems strategy to address all FMIS issues identified
Results Achieved
AUSTRAC has implemented the key recommendations is now regarded by the ANAO as
having an effective financial management framework that fully supports all regulatory
requirements.
Client
Department of Immigration – Translator Interpreter Service – Review of Cost
Recovery Framework
Contact Person
Warren Orlandi, Director – CFO Group in Infrastructure (former Director – CFO Group in
Immigration), p: 02 6274 7111, email: warren.orlandi@infrastructure.gov.au
Problems Faced
The Translating and Interpreting Service (TIS National) is a cost recovery business unit
operating within the Department. Approximately 55 to 60 per cent of the revenue is
from charging the Department. There are a number of other related service providers
in the market, including Centrelink which has recently developed their own internal
capability, other call centre functions within the Department, and private sector
providers.
The financial performance of TIS National is a source of concern for the Chief Financial
Officer (CFO) as the bottom line may be cross subsidised by the Department’s budget
appropriations (i.e. the department may be overcharged for services) and the financial
risk is that an incorrect surplus may be returned to consolidated revenue. Note - TIS
National’s financial performance has not been separately reported to date. It is also
unclear how TIS complies with government policy on cost recovery and competitive
neutrality, and the business does not appear to be sufficiently commercially focused.
Description of
Services
The key objective of the review is to evaluate the current arrangements and
performance of TIS National, and determine the most appropriate business model going
forward that will ensure both continuity of services and the most cost effective
outcome for the Department. A key issue is to transition the service to a more business
like approach.
Review the business model: operational and process analysis to develop a depth of
understanding of the TIS National business
Detailed financial analysis: expenditure and revenue, and operating result
Detailed review of costs and pricing: calculate the unit cost of products and compare to
the prices charged
Prepared strategic report recommending changes to TIS National
Results Achieved
The Department implemented the recommended changes to systems, processes, the
cost/pricing model, and funding arrangements. The recommended changes to the
business model are being considered by the Executive including moving TIS out of the
Department as a separate business.
Client
IP Australia – Cost Recovery
Contact Person
Yvonne Laird (former CFO of IPA – now CFO for Australian Crime Commission), p: 02
6243 6821, email: yvonne.laird@crimecommission.gov.au
Problems Faced
The management information generated from the ABC system was not well regarded
by internal management and the cost data was not seen to be useful in evaluating
pricing strategies for fees and charges. IP Australia had last completed a Fee Review in
2003 and the DoFD indicated that it needed to commence preparations. IP Australia
was consistently generating significant operating surpluses due to fees and charges
being set at a level higher than costs.
Description of
Services
Strategic review of the SAS ABM implementation of the ABC solution
Detailed financial and cost analysis
Detailed review of fees and charges
Process mapping of all primary activities for Patents and Trademarks and operational
support functions and design of an activity structure
Refine and validate the fees and charges for IP Rights
Develop business rules for all ABC attribution processes
Re-implement the SAS ABM model
Pilot project to refine the business rules and fine tune the ABC solution
Management reporting and analysis of ABC costs and formal endorsement of the
revised ABC costs
Comparison of ABC costs to fees and charges and formulation of pricing strategies
Development of a fee review/funding model
Scenario modelling of alternative pricing strategies
Preparation of draft Cost Recovery Impact Statement (note – Fee Review process put on
hold for 12 months due to the Global Financial Crisis)
Results Achieved
The ABC model has been functioning effectively for the past two years and IP Australia
is well positioned to complete the next Fee Review.
Client
Australian Pesticides and Veterinary Medicines Authority (APVMA) – Fee Review
Contact Person
Dan Webb, Manager Finance and Administration, APVMA,
p: 02 6210 4850, email :dan.webb@apvma.gov.au
Problems Faced
The APVMA was due to undertake a Fee Review for 2009-10. The current fees and
charges were not keeping pace with cost pressures which resulted in operating deficits.
Industry had raised a number of concerns with the equity of the current fee structures.
Description of
Services
Results Achieved
Review of the ABC costs
Detailed financial and cost analysis
Detailed review of fees and charges
Comparison of ABC costs to fees and charges and formulation of pricing strategies
Development of a fee review/funding model
Scenario modelling of alternative pricing strategies
Consultation with internal and external stakeholders
Preparation of Cost Recovery Impact Statement
The revised fees and charges were formally endorsed by the Minister.