Whole of government
compliance framework
Explanatory framework document
Updated January 2011
The Secretary
Department of Treasury and Finance
1 Treasury Place
Melbourne Victoria 3002
Australia
Telephone: +61 3 9651 5111
Facsimile: +61 3 9651 5298
www.dtf.vic.gov.au
Authorised by the Victorian Government
1 Treasury Place, Melbourne, 3002
© Copyright State of Victoria 2011
This book is copyright. No part may be reproduced by any process except in accordance with
the provisions of the Copyright Act 1968.
If you would like to receive this publication in an accessible format please telephone
9651 0909 or email mailto:information@dtf.vic.gov.au
This document is also available in PDF format at www.dtf.vic.gov.au
Contents
1.
Introduction .................................................................................................... 1
Scope ....................................................................................................................................................1
Key messages .......................................................................................................................................1
Elements of the Framework .................................................................................................................2
Basis of the Framework........................................................................................................................2
Objectives of the Framework ...............................................................................................................3
Key principles of the Framework .........................................................................................................3
Benefits ................................................................................................................................................4
Project – Financial Management Compliance Framework ..................................................................4
Role of the Auditor-General .................................................................................................................6
Role of Internal Audit ...........................................................................................................................6
Role of the Audit Committee ...............................................................................................................6
Scope of the Framework ......................................................................................................................6
2.
Standing Directions of the Minister for Finance .............................................. 7
Purpose of the Directions ....................................................................................................................7
Review of Directions ............................................................................................................................7
Structure and contents of Directions ...................................................................................................8
3.
Reporting structure ......................................................................................... 9
4.
Process map .................................................................................................. 10
5.
Roles and responsibilities for each tier of government ................................. 12
Reporting (including certification) .....................................................................................................12
Systems and procedures ....................................................................................................................12
Maintenance ......................................................................................................................................14
Resourcing and responsibilities .........................................................................................................14
Culture and commitment ...................................................................................................................15
6.
Web-based technology ................................................................................. 16
Background ........................................................................................................................................16
Compliance Monitoring System .........................................................................................................16
7.
Monitoring and certification arrangements .................................................. 17
Whole of government compliance framework
Explanatory framework document, Updated January 2011
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1.
Introduction
The Financial Management Compliance Framework (the Framework) has been developed to
assist Victorian Public Service (VPS) agencies attain the most effective financial management
to achieve organisational goals, whilst simultaneously meeting Government requirements
for the purposes of accountability. It will also provide a mechanism through which the
Government can effectively monitor and review compliance with the Standing Directions of
the Minister for Finance (Directions), as part of the Financial Management Package.
The Framework was implemented from 1 July 2003 with subsequent amendments been
made in July 2005 to integrate financial management, taxation, purchasing card and thefts
and losses.
The Framework provides assurance that VPS agencies have implemented the appropriate
systems to ensure compliance with the Directions to provide for effective, efficient and
responsible financial management of public resources.
The Framework also assists in discharging the Minister for Finance’s accountability to the
Parliament, by ensuring that public resources are being managed in a financially responsible
manner.
Under this Framework, Ministers, Portfolio Departments and agencies work together to
manage risks and obligations. The primary accountability for compliance rests with
individual agencies. Departments have a portfolio assurance and coordinating role and the
Department of Treasury and Finance has a whole-of-government assurance and support.
Please become familiar with the Financial Management Compliance Framework and the
requirements of the Directions. It is important that the Department of Treasury and Finance
(DTF), portfolio departments and VPS agencies work together to ensure that the Victorian
Government meets its financial management obligations.
Scope
The Framework applies to all VPS agencies which meet the “‘public body”’ definition
contained within section 3 of the FMA and which “feed” into the whole of Government
consolidated “Annual Financial Report for the State of Victoria”. Consequently, the
Framework applies to 300+ agencies across the State. These agencies are identified in the
notes to the Annual Financial Report of the State of Victoria.
Key messages
 This Framework will assist VPS entities in attaining the most effective financial management to
achieve the goals of the organisation whilst meeting the requirements of Government for the
purposes of accountability.
 Accountability for compliance and reporting exists at an entity level. Departments will not be held
accountable for individual entities. Departments are however responsible for reporting obligations
on a portfolio basis.
 Financial compliance needs to be embedded in work practices.
 Compliance awareness is promoted through this Framework.
Whole of government compliance framework
Explanatory framework document, Updated January 2011
1
Elements of the Framework
The Financial Management Compliance Framework is made up of five key elements, each
discussed in the following sections of this document.
Financial Management
Compliance Framework
AS3806 ‘Compliance Programs’
Rules – Standing Directions of the
Minister for Finance
3 tier reporting structure
Web-based Technology (Knowledge
Centre and Monitoring System)
Checklist for Certification
Basis of the Framework
The Framework is being developed on the basis of Australian Standard AS3806 ‘Compliance
Programs’, which takes into consideration benchmarking against global ‘best practice’.
AS3806 has proven to operate effectively over a broad range of environments (both within
the public sector and large corporates). In addition, the Standard is widely accepted by a
range of regulatory bodies including the ACCC, ASIC, various Essential Services Commissions
and the Privacy Commission.
The FMCF, consistent with AS3806, is based on the following five elements:
 Culture and commitment:
– Visible and tangible commitment; and
– Continuous improvement.
 Systems and procedures:
– Identification of obligations;
– Integration into day to day operating procedures for compliance; and
– Record keeping, breach identification and rectification processes.
 Resourcing and Responsibilities:
– Clear roles and responsibilities in relation to financial management compliance;
– Management responsibilities and supervision; and
– Resources and tools.
 Reporting:
– Effective, timely internal and external reporting.
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Whole of government compliance framework
Explanatory framework document, Updated January 2011
 Maintenance:
– Education and Training;
– Communication;
– Ongoing monitoring and assessment
– Periodic review; and
– Liaison between tiers.
The Financial Management Package (FMP) underpins the Framework. The FMP consists of
the Financial Management Act 1994 (FMA), Audit Act 1994, Financial Management
Regulations, Standing Directions of the Minister for Finance (Directions) and Financial
Reporting Directions.
The purpose of the FMA is to improve financial administration and accountability and
provide for annual reporting to the Parliament by all VPS entities. This Framework is integral
to that purpose.
Implementation of the Framework throughout Government is a significant proposition and it
is important to emphasise that it is a reporting framework, not an accountability framework.
Consequently, Departmental Secretaries will only be held accountable for ensuring a
portfolio summary report is prepared and signed on behalf of the Portfolio Minister and
forwarded to the Minister for Finance. Overall compliance responsibility still rests with each
entity’s Responsible Body and Accountable Officer.
Objectives of the Framework
The Framework will:
 Assist VPS entities in attaining most effective financial management to achieve the goals
of the organisation whilst meeting Government's accountability requirements;
 Provide Ministers with assurance that VPS entities have implemented the appropriate
systems to ensure compliance with the FMP and the effective, efficient and responsible
financial management of public resources;
 Discharge the accountability of the Minister for Finance to the Parliament by ensuring
that public resources are being managed in a financially responsible manner; and
 Sharpen reporting responsibilities of portfolio departments and entities.
Key principles of the Framework
 Entities and Departments are accountable for meeting their reporting obligations;
 Departments have key portfolio roles on behalf of their Ministers to report, provide
guidance on systemic issues and assist with corrective actions;
 Departments and entities will no longer rely on the Auditor-General's Office to identify
compliance issues;
 Use of best available web-based technology to improve and promote sound financial
management;
 Where necessary, strengthen internal controls and mechanisms already in place within
entities and thus lead to a reduction in the potential for unexpected 'surprises'; and
 Assist in ensuring that the Government (in particular, the Minister for Finance), is
provided with relevant, up-to-date and accurate information on key financial
management issues.
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Explanatory framework document, Updated January 2011
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Benefits
Overall, this Framework will assist entities at all levels of Government attain the most
effective financial management to achieve organisational objectives and also meet
Government’s financial reporting obligations under the FMA.
The Framework provides a number of benefits to all three tiers of Government (entity,
portfolio and whole-of-government). The benefits for each tier include the following:
Entities
 Entities will have systems and procedures in place which will be consistent across the
VPS, to assist them in complying with a formalised framework;
 Entities will be able to identify and rectify compliance issues on a timely basis;
 Knowledge gained by one entity can be captured and disseminated to all relevant
entities, improving the efficiency and effectiveness of financial management practices;
and
 Directions can be efficiently updated 'on-line' with potential for feedback on areas of
uncertainty.
Portfolios
 Portfolios will have a mechanism in place which will allow them to identify and assist in
rectifying compliance issues within their portfolio and enable them to report this to their
Minister; and
 The Framework will ensure all portfolio entities can report any issues to the portfolio
entity and provides a mechanism for rectification.
Whole of government
 Systemic issues at whole-of-government can be addressed through education programs
and information sessions;
 A centralised mechanism to provide the Government with systemic and documented
assurance that sound and responsible financial management occurs throughout the VPS
and issues are identified and rectified on a timely and whole-of-government basis, as
required;
 Enables Government and portfolios to identify leading financial management practices
and to exchange information amongst entities; and
 Appropriate best practice use of technology for reporting to the Minister for Finance on
adherence to the Framework across the VPS.
Project – Financial Management Compliance Framework
Phase 1 – Development of the Framework
Consultation was considered paramount to the success of the project. In order to achieve
this an Inter-Departmental Steering Committee was established to set the strategic direction
to develop a Framework. This was Phase 1 of the project and was completed in July 2002.
A report was developed which identified a leading practice FMCF. At the request of the
Steering Committee (with the Auditor-General’s Office as an observer), the Framework was
piloted to provide testing and validation of the key elements.
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The pilot identified a strong compliance culture amongst VPS entities however, some
entities required assistance in meeting their obligations.
A key role for DTF will be to support all entities in achieving compliance through the
following mechanisms:
 A review and update of the rules (Directions);
 The development of a web-based tool, which will integrate all compliance functions;
 The development of detailed guidance material; and
 Information and education programs.
Phase 2 – Implementation and communication
In July 2002, the Minister for Finance and Cabinet approved the Framework. The Steering
Committee also endorsed the establishment of an Inter-Departmental Working Group to
drive the implementation and communication of the Framework.
The development of a web-based tool was the focus of Phase 2 and involved the integration
of financial management compliance, taxation compliance, credit card compliance and yearend certification. The web-based tool will provide a mechanism by which Departments and
entities can fulfil their monitoring and reporting obligations.
This tool will provide VPS entities with an easily accessible integrated system which will
contain updated rules, best practice procedures and a reporting facility. All entities will be
required to complete a checklist, which will form part of the web-based tool and require
certification on an annual basis by each Accountable Officer. The checklist will consist of
several questions to gauge adherence with the Directions. The checklist can be found on the
Financial Management Compliance Framework section of the DTF website
(www.dtf.vic.gov.au). The Checklist is to be used as a reference guide only. In completing
the checklist entities need to refer to the detailed requirements contained in the Directions
and mandatory procedures therein.
To assist entities with the effective roll out of the Framework and to ensure that the
principles and practices espoused by the Framework are being adhered to, on behalf of the
Minister for Finance, DTF will conduct annual assurance reviews of each portfolio’s
assurance activities across sample entities. Preliminary assurance reviews will occur in the
last six months of 2003-04 to gauge how the Framework is being implemented. The primary
purpose of these reviews is for DTF to flag any potential issues and assist entities as
required.
Another major focus of Phase 2 has been the development of more detailed guidance
materials and templates to assist ‘smaller’ entities to discharge their obligations consistent
with the requirements of the Framework.
A detailed Communication Strategy (including a communication plan) has been developed
which identifies the key stakeholders, key themes and messages and a detailed
communication plan including specific forums and dates for presentation of the Framework.
In particular a launch, by the Minister for Finance, will take place in July 2003, aimed at
senior executives (CEOs/CFOs).
A strategy for implementing both the Directions and the Framework itself is currently being
developed. Implementation will have a number of facets including communication,
education programs and information sessions. Requirements at the operational level will be
addressed via rigorous and focused sessions, commencing July to September 2003, with the
possibility of further workshops or refresher programs later in the year subject to
requirements. These sessions will be conducted both in Melbourne and rural areas.
Whole of government compliance framework
Explanatory framework document, Updated January 2011
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The schedule and content of the sessions is also currently being developed. The focus is on
targeted and tailored sessions to address the practical implications of implementation of
both the Framework and the Directions, particularly for smaller entities, and how DTF can
assist them in this regard.
Role of the Auditor-General
Under the Audit Act 1994, the Auditor-General is responsible, on behalf of Parliament, for
the external audit of the financial operations and resource management of the VPS.
Accordingly, the primary role of the Auditor-General is to provide information/audit
assurance to the Parliament – independently of Public Sector Agencies and the Government.
The establishment of an effective environment and Framework which establishes
compliance with legislation, regulations, guidelines, policies and other requirements, is the
responsibility of the Responsible Body and Accountable Officer working with management.
Within the public sector, the responsibility rests with the relevant agencies and ultimately
with Cabinet, on behalf of Parliament.
It is envisaged that the Auditor-General may review and report on the adequacy of the
Framework as a risk management approach and, where deemed appropriate, may
review/monitor compliance of individual VPS entities.
Role of Internal Audit
Entities will benefit from active involvement of their Internal Auditors, or other appropriate
resources, in establishing an up front understanding of the level of compliance with the
Directions and the actions to be taken to achieve compliance in accordance with the
required timeframes.
Role of the Audit Committee
The Audit Committee (or Responsible Body in its absence) should assume a leading role in
the governance and oversight matters of the entity. The Audit Committee should become
actively involved in the monitoring financial management compliance issues and in
particular the monitoring of rectification action plans in order to achieve compliance in the
future. The Audit Committee should work closely with Internal Audit to achieve this.
Scope of the Framework
The FMCF will be rolled-out to all VPS entities across the State which ‘feed’ into the wholeof-government consolidated ‘Annual Financial Report for the State of Victoria’.
Consequently, the Framework will apply to 300+ entities across the State. These entities are
identified in the notes to the Annual Financial Report.
These 300+ entities are required to apply the Financial Management Package, in particular
the Directions of the Minister for Finance, which form the basis of the checklist against
which entities will have to certify.
The scope of the Framework excludes those entities that are incorporated under the State
Owned Enterprises (SoE) Act 1992. However, these entities can apply Part 7 of the FMA
‘Accountability and Reporting’, on a voluntary basis and are encouraged to do so.
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Whole of government compliance framework
Explanatory framework document, Updated January 2011
2.
Standing Directions of the Minister for Finance
The Department of Treasury and Finance developed and issued a Financial Management
Package in 1994, comprising a Financial Management Act 1994 (FMA), Audit Act 1994,
Financial Management Regulations, Standing Directions of the Minister for Finance
(Directions) and Financial Reporting Directions.
The Directions form the basis of sound financial management for the State and had not been
comprehensively reviewed since 1994. To ensure that the VPS continues to practice leading
edge financial management, DTF reviewed and updated the Directions of the Minister and
issued this to over 300 entities across the VPS in the form of an Exposure Draft. The
Exposure Draft was issued to all allow entities which would need to apply the new Directions
to make comments and raise issues regarding implementation. The consultation process
was considered paramount to the successful implementation of the revised Directions.
Consultation extended to a number of focus groups and meetings being held to allow
entities to express their concerns and comment verbally on any issues they could foresee.
It was also an opportune time to revise the rules (Directions), which form part of the
Framework, given that DTF is in the process of implementing the FMFC.
Purpose of the Directions
The Directions are designed to supplement the FMA by prescribing mandatory elements
(procedures) that must be complied with by Public Sector Agencies (all VPS entities that
apply the FMP) to:
 Implement and maintain appropriate financial management practices; and
 Achieve a consistent standard of accountability and financial reporting.
 The Directions prescribe best practice, high-level requirements for financial
management. This allows Public Sector Agencies to develop organisation specific
systems, procedures and practices, which must be tailored to their own business,
approved and monitored within their own organisation requirements.
Review of Directions
External consultants were engaged to undertake an independent review of the Directions in
line with sound financial management principles. The Directions have been redrafted in
consideration of leading practice financial management principles. They set the broad
financial management policies and procedures and have taken into account the principles
espoused in ASX Corporate Governance Council, Principles of Good Corporate Governance
and Best Practice Recommendations, March 2003. They include requirements on issues such
as the existence and role of Audit Committees, internal transactional procedures and
controls (such as revenue and expenditure management), Information Technology (IT),
contract management etc and are based on three key components of leading edge financial
management.
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Explanatory framework document, Updated January 2011
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Structure and contents of Directions
Directions of the Minister for Finance
Three key components of leading edge financial management
Financial management
structure, systems, policies
and procedures
Financial management
governance and oversight

Financial code of practice

Financial governance

Financial risk
management

Delegations of authority

Internal audit

External audit
Financial management
reporting

Financial Management
Structure

Internal Financial
Management Reporting

Information Technology
Systems


Education and Training
Reporting Requirements
in terms of Part 7 of the
FMA

Policies and Procedures

Other External Reporting

Financial Performance
Management and
Evaluation
The Directions have adopted a less prescriptive approach and are now based on three highlevel principles.
Each Direction contains the following:
 A description of the Direction, which is mandatory;
 A Procedure, which is mandatory in order to achieve compliance with the Direction;
 Where relevant, Guidelines which are not mandatory but will assist in applying the
procedure; and
 Where relevant, additional Guidance Material which is not mandatory but will assist in
the practical implementation of the Direction (denoted by the following symbol
)
Comments on the Directions, both specific and general, were sought over a period of three
months. A number of focus groups were held across various sectors of the VPS to draw out
specific issues that entities may have with the implementation of the new Directions. These
focus groups also formed the basis of identifying areas where further detailed guidance
would be required for ‘smaller’ entities to assist them in complying with the requirements of
the Directions.
The revised Directions (rules) will be applicable from 1 July 2003.
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Whole of government compliance framework
Explanatory framework document, Updated January 2011
3.
Reporting structure
In July 2001, the Taxation Compliance Framework was endorsed by Government, which set
out a three-tier responsibility structure. The structure has also been adopted for the FMCF,
and is identified below:
Tier
Responsibility
Whole of government
Minister for Finance is responsible to the Parliament that appropriate
controls are in place across the VPS.
Responsible for reporting portfolio entity non-compliance to the
Minister for Finance via DTF.
Responsible for compliance with the Financial Management Package
and reporting to the Portfolio Minister (via the Department)
Portfolio
Entity
Whole of
government level
Issue rectification,
certification and
reporting
DTF
Minister for Finance
Portfolio
level
Entity
level
Departmetns
Portfolio Ministers
VPS entities
Support and
monitoring
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Explanatory framework document, Updated January 2011
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4.
Process map
The process map following outlines the roles and responsibilities of each of the three tiers of
government against each element of the Framework. The inter-relationships are explained
further in Section 5 ‘Roles and Responsibilities for each tier of government’.
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Whole of government compliance framework
Explanatory framework document, Updated January 2011
Process
Reporting
Entity level
Annual certification
(consider inclusion of
financial statements and
annual report certification
Portfolio level
(departments)
Whole of
government (DTF)
Portfolio summary report to
portfolio Minister
Whole of government summary
report to MFF
Collate annual
certifications
 Collate portfolio reports
 Summarise rise management
reviews
Regular and ongoing
oversight of entities
DTF review findings and monitor
action
Monitoring
 Review portfolio oversight
 Review risk management reviews
Entity review of
compliance
Issues
management
 Simple issues refer to
legal/accounting/audit
advice
 Complex issues refer to
portfolio department
 Breach register
 Resolve portfolio issues
 Refer complex whole of
government issues to DTF
 Breach monitoring of
portfolio
Whole of government issues
management and breach
resolution
Document compliance
policies, procedures in
manuals, registers, job
descriptions etc.
Document compliance
policies, procedures in
manuals, registers, job
descriptions etc.
Document compliance policies,
procedures in manuals, registers,
job descriptions etc.
Ensure whole of government
level manuals are prepared
Maintenance
 Entity level FMCF training
upon induction
 Ensure effective
communication and liaison
with portfolio departments
 Department level FMCF
training upon induction
 Ensure effective
communication and liaison
with entities and DTF
 Share issues knowledge
 Deliver FMP whole of
government staff training
 Ensure effective communication
and liaison with portfolio
departments and entities
 Provide information via internet
or other databases
Resourcing and
responsibilities
 Inculcate culture and
commitment across entity
 Clearly define and allocate
roles and responsibilities
 Inculcate culture and
commitment across
portfolio
 Clearly define and allocate
roles and responsibilities
 Ensure entities have
adequate support and
facilities
 Inculcate culture and
commitment across whole of
government
 Clearly define and allocate roles
and responsibilities
 Establish role of Chief
Compliance Officer
 Ensure entities have adequate
support, facilities and tools
available

Systems and procedures
Reviews
Policies and
procedures
Culture and commitment
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Explanatory framework document, Updated January 2011
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5.
Roles and responsibilities for each tier of
government
Reporting (including certification)
Entity
Portfolio
Whole of
government
(DTF)
Complete a certification checklist on an annual basis and provide a certified letter
to their portfolio Department.
Collate entity statements and provide a portfolio summary to the Portfolio
Minister.
Exception based reporting to be prepared as portfolio summary:
Entities not providing certification (and why);
Summary of key portfolio risks/issues identified and action taken (details to be
included as Appendix); and
Summary of training/knowledge management activity undertaken and planned.
DTF is to collate and summarise portfolio summary reports and provide a
consolidated report to the Minister for Finance.
Summary results of DTF assurance reviews are to be included in the report to the
Minister for Finance.
A summary of DTF and portfolio training and other knowledge management
activities undertaken.
Systems and procedures
Monitoring
Portfolio and
whole of
government
(DTF)
Use of certification statements and portfolio summary reports to build risk profiles
of entities to assist in monitoring risks.
Exception reporting would enable identification of entities where some form of
risk-based review may be warranted.
Information in entity certification letters and portfolio summary reports with
regard to issues/queries referred by entities will provide insight into entities
potentially requiring education and training support.
Reviews
12
Entity
Undertake an internal review of compliance to ensure that the checklist for
certification can be completed.
Boards/CEOs may choose to include an annual financial management review as an
adjunct to their internal audit programs.
Portfolio
Appropriate form of assurance reviews will be developed in conjunction with
individual portfolio Departments and DTF in assessing strategic risks and reviewing
compliance of all VPS entities.
Whole of government compliance framework
Explanatory framework document, Updated January 2011
Whole of
government
(DTF)
DTF (on behalf of the Minister for Finance) will conduct an annual review of each
portfolio’s financial management compliance assurance activities (which may
include portfolio entities), with the aim of identifying problem areas and assisting
entities to rectify issues.
Reviews will be focussed on ensuring appropriate risk management and
knowledge management mechanisms are in place, not to review the actual
operational financial compliance of individual entities.
The entity level review will be focussed on assessing the quality of controls and
review mechanisms in place.
Issues management
Entity
Portfolio
Whole of
government
(DTF)
Entities should undertake their own efforts to resolve operational issues in
meeting their financial management compliance obligations.
If an issue has relevance to other VPS entities, it should be logged on the Financial
Management Knowledge Centre - Issues Management System, via the Portfolio
Department.
Portfolios should become actively involved in the resolution of issues which are
common to a number of portfolio entities, ensuring that the identification and
resolution of the issue is communicated to all affected entities.
Any issue which has whole-of-government implications (i.e. affects entities across
portfolio boundaries) should be referred to DTF.
DTF is responsible for the resolution of whole-of-government issues and for
ensuring communication of such issues to all potentially affected entities.
DTF will provide whole-of-government assistance in the form of:
Training, education and communications sessions and/or information bulletins on
major issues; and
Promotion of a shared approach to resolution of common issues (such as the
Issues Management System).
Policies and procedures
Entity and
Portfolio
Whole of
government
(DTF)
Need to ensure a fully documented policy and procedures framework to enable
compliance with the Directions.
Need to provide staff with the information tools to be able to identify the
obligations under the Directions that need to be complied with.
Gaps in an entity’s policy and procedures framework are addressed.
DTF to provide detailed guidance material to ‘smaller’ entities to assist them in
complying with the requirements of the Directions.
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Explanatory framework document, Updated January 2011
13
Maintenance
Entity
Portfolio
Whole-ofGovernment
(DTF)
In conjunction with portfolio Departments, incorporate compliance training into
induction training for new staff.
In conjunction with portfolio Departments, offer refresher courses to staff
annually.
Communicate any changes to the FMCF to staff members.
Ensure adequate knowledge management practices are adopted at the local level.
Follow up issues raised by entities to ensure that the FMCF and issues pertinent to
the Directions are clarified and understood.
Portfolios have a role in providing assistance with industry specific knowledge
management, by the adoption of appropriate practices for industry specific
knowledge management. This could include training programs focussed on
industry specific issues and/or briefings, guides or other prepared material on
relevant industry specific issues.
DTF will only be actively involved in whole-of-government systemic/strategic
knowledge management practices. DTF will actively promote knowledge
management through the services it is currently delivering including whole-ofgovernment information and education sessions, guides and bulletins/updates. In
addition, the Financial Management Knowledge Centre will be widely promoted.
Resourcing and responsibilities
Entity
Portfolio
Whole-ofGovernment
(DTF)
14
Senior management are to provide adequate resources to meet compliance
objectives, train staff in FMCF requirements and implement a monitoring and
assessment program of compliance procedures.
Management is to assist staff to understand their roles and responsibilities in
financial management compliance.
All managers are to understand, promote and be responsible for the FMCF
obligations for which they are responsible.
Portfolios have the responsibility for collating, maintaining and monitoring
compliance activities within entities.
A coordinating officer should be provided with sufficient resources, support, work
tools and facilities to properly discharge his/her duties.
DTF is to devote sufficient resourcing to FMCF activities.
The responsibility for the maintenance of the FMCF and the website to provide
‘on-line’ assistance (Financial Management Knowledge Centre and Financial
Management Compliance Monitoring System) remains with DTF.
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Explanatory framework document, Updated January 2011
Culture and commitment
Entity
Portfolio
Whole-ofGovernment
(DTF)
The Responsible Body (Board) and senior management ensure that an appropriate
compliance culture is established within the entity at all levels by regularly
communicating their commitment to financial management compliance, providing
adequate resources to meet compliance objectives, training staff in the
requirements of the Directions, the FMCF and implementing a monitoring and
assessment program of compliance procedures.
There is a requirement on the part of the CEO and senior management for
ensuring corrective action is taken by the entity to address its own compliance
issues and breaches.
The FMCF is to be made available to all staff members with a clear message from
the Responsible Body and the CEO that compliance with the Directions is required
and expected of all staff members working in financial management areas.
The portfolio should be properly resourced to enable the FMCF to be maintained
and monitored and to assist in the resolution of systemic breaches across entities
within the portfolio.
Senior management must ensure the appropriate compliance culture is
established within the portfolio at all levels regularly communicating their
commitment to effective and efficient financial management by providing
adequate resources to meet compliance objectives and training staff, with the
assistance of DTF, in the requirements of the framework.
DTF will encourage an appropriate financial management compliance culture be
established across all VPS portfolios.
DTF will assist in encouraging that corrective action is taken on systemic issues.
DTF will provide adequate administrative support and resources to ensure
appropriate reporting and issues management procedures are in place. A webbased Issues Management System is one way DTF will address this commitment.
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Explanatory framework document, Updated January 2011
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6.
Web-based technology
Background
As part of the development of the FMCF, it was recommended that web-based technology
should be utilised to assist in the dissemination of the FMCF, collection and reporting of
compliance information and more specifically:
The ‘Financial Management Compliance Framework should have as is back-bone, a
web-based tool. The web-based tool should act as a reporting mechanism, reporting
medium and should have the capability to manage issue, risks and compliance breaches.
Leading practice guidance should be embedded within the tool and it should have direct
links to (or soft copies of) the Financial Management Package. The tool should also be
structured to facilitate the collation of systemic issues and reporting requirements by
Portfolio Coordinators.’
This recommendation was derived from interviews with a cross-section of VPS entities, in
particular smaller entities, which preferred the use of web-based technology to discharge
their financial management obligations. This approach was supported by DTF’s InterDepartmental Steering Committee.
Compliance Monitoring System
The FMCF is predicated on entities submitting annually, a financial management certification
letter to their Portfolio Minister (via portfolio Departments). Portfolio Departments are then
required to provide a portfolio summary report to the Minister for Finance (via DTF).
To support the annual certification process, DTF has developed a Compliance Monitoring
System (CMS), incorporating tax and financial management, to facilitate and automate the
annual certification process for both tax and financial management. This system will also
contain contact details for every entity.
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Whole of government compliance framework
Explanatory framework document, Updated January 2011
7.
Monitoring and certification arrangements
The FMCF will incorporate an annual certification by VPS entities that they are complying
with the provisions of the Framework.
The process for certification will follow a hierarchical approach. This approach is based on
the fact that the relevant Portfolio Ministers will require information regarding the financial
management compliance obligations of relevant VPS entities. Portfolio Ministers will rely on
their Department to support the compliance monitoring role.
Individual VPS entities will address their annual certification letter to the relevant Portfolio
Minister (to be supported by the relevant Department). Each Department would then
forward a portfolio summary report to the Minister for Finance (through DTF).
The entity certification will be a statement that Directions have been observed and that
each VPS entity has certified against the checklist. The certification should highlight areas
where the VPS entity has not complied with an element of the Directions. Departments will
then need to exercise judgment, as to which areas of non-compliance are raised in the
portfolio summary report to DTF. There may be certain non-compliance matters which are
of particular relevance to a portfolio, on which the Department may need to take action.
DTF will work with Departments to resolve systemic whole-of-government non-compliance
issues.
The certification letter must be signed by the Secretary/Chief Executive Officer (Accountable
Officer) of each VPS entity (including Departments), or his delegate. Certification letters are
to be completed using the Compliance Monitoring System. A pro-forma letter will be
developed by the system and provide guidance as to what information entities need to
include.
The certification letters must be completed by all entities under the FMCF. Portfolio
summary reports should be completed and submitted to DTF by 30 September each year.
The VPS entity certification letters should be forwarded to the portfolio Department by
31 August each year, to enable portfolios to meet the 30 September deadline.
Following is a graphical depiction of the certification and reporting arrangements.
Minister for
Finance
DTF
Whole of government summary report
Portfolio
Minister
Portfolio
Portfolio summary report
Entity *
Certification letter signed by Secretary/
CEO (accountable officer)
* Entity includes department
and agency
Whole of government compliance framework
Explanatory framework document, Updated January 2011
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www.dtf.vic.gov.au
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Whole of government compliance framework
Explanatory framework document, Updated January 2011