PART 4
MANAGEMENT AND ACCOUNTABILITY
CORPORATE GOVERNANCE
We support the delivery of our outputs through a structured corporate governance framework that facilitates the effective management of our business initiatives and other corporate activities. Key elements of our corporate governance arrangements are outlined in this section.
Executive Board of Management
The Executive Board of Management leads the ANAO in achieving the objectives and strategies outlined in our Corporate Plan, and assists the Auditor-General to meet his statutory responsibilities under the Auditor-General Act 1997 and the Financial Management and Accountability Act 1997 (FMA Act). The board is responsible for setting and monitoring our strategic directions, oversighting key business opportunities and risks, and managing our budget.
The board meets each month. At 30 June 2011, the board comprised:
- Ian McPhee (Chair), Auditor-General
- Steve Chapman, Deputy Auditor-General
- Matt Cahill, Group Executive Director, Performance Audit Services
- Barbara Cass, Group Executive Director (acting), Performance Audit Services
- Andrew Pope, Group Executive Director, Performance Audit Services
- Warren Cochrane, Group Executive Director, Assurance Audit Services
- Michael Watson, Group Executive Director, Assurance Audit Services
- Ian Goodwin, Group Executive Director, Assurance Audit Services
- Anya Moore, Executive Director, Corporate Management Branch
- Anthony Howatson, Chief Finance Officer.
The board has established subcommittees, details of which are set out below.
Information Strategy Committee
The Information Strategy Committee assists the Executive Board of Management with strategic advice, policy and business proposals on matters relating to information management and information and communications technology. The committee is sponsored by the Deputy Auditor-General and met 11 times in 2010–11. At 30 June 2011, its membership comprised:
- Matt Cahill (Chair), Group Executive Director, Performance Audit Services
- Ian Goodwin, Group Executive Director, Assurance Audit Services
- Keith Allen, Executive Director (acting), Assurance Audit Services
- Tom Clarke, Executive Director, Performance Audit Services
- Anya Moore, Executive Director, Corporate Management Branch
- Gary Pettigrove, Chief Information Officer.
The Information Strategy Committee is required to submit an annual report to the Executive Board of Management. The 2010–11 report, dated June 2011, presented advances in our IT platform and support to clients, staff, systems and operations, and outlined planning for 2011–12.
People and Remuneration Committee
The People and Remuneration Committee is an advisory body to the Executive Board of Management in relation to remuneration policy and human resource management policies and practice, including the ANAO Strategic Workforce Plan and the staff survey. The committee also makes decisions about salary advancement and performance pay recommendations.The committee met six times in 2010–11.
At 30 June 2011, the committee’s membership comprised:
- Steve Chapman (Chair), Deputy Auditor-General
- Ian Goodwin, Group Executive Director, Assurance Audit Services
- Barbara Cass, Group Executive Director (acting), Performance Audit Services
- Anya Moore (Secretariat), Executive Director, Corporate Management Branch.
Other Group Executive Directors attended the annual meeting to determine staff salary advancement and performance pay ratings.
International Programs Committee
The International Programs Committee assists the Executive Board of Management to provide strategic oversight and coordination of our AusAID-funded capacity-building activities relating to Indonesia and PNG. These activities are part of the Australian Government’s broader efforts to strengthen the public sector in these two countries. The committee is sponsored by the Deputy Auditor-General and met five times in 2010–11.
At 30 June 2011, the committee’s membership comprised:
- Andrew Pope (Chair), Group Executive Director, Performance Audit Services
- Anya Moore, Executive Director, Corporate Management Branch
- Anthony Howatson, Chief Finance Officer, Corporate Management Branch
- Ben Sladic, Senior Director, Corporate Management Branch
- Rani Austin (Secretariat), Adviser, Corporate Management Branch.
Audit Committee
Our Audit Committee fulfils the requirements of section 46 of the FMA Act, which provides for each chief executive to establish and maintain an audit committee.
The broad functions of the Audit Committee are to:
- enhance our control framework
- improve the objectivity and reliability of externally published financial and other information
- assist the Auditor-General to comply with all legislative and other organisational objectives.
The Audit Committee met four times in 2010–11. At 30 June 2011, its membership comprised:
- Bruce Jones (Chair), external independent member
- Steve Chapman, Deputy Auditor-General
- Warren Cochrane, Group Executive Director, Assurance Audit Services
- Nathan Williamson, Executive Director, Performance Audit Services.
Observers included Geoff Wilson, independent auditor; Peter Bell, internal auditor from Ernst & Young; Anya Moore, Executive Director, Corporate Management Branch; and Anthony Howatson, Chief Finance Officer.
Specific-purpose committees
In addition to the subcommittees mentioned above, specific-purpose committees are established from time to time. For example, the Website Renewal Project Board provides oversight for the implementation and management of the revised website and reports to the Information Strategy Committee.
Strategic planning framework
Key elements of our strategic planning framework are presented in Figure 9.
Figure 9 Strategic planning framework
Corporate Plan
Our Corporate Plan is a three-year rolling plan that is reviewed annually. The plan is the overarching document for all planning and other strategic and operational activities for the three years from 2010 to 2013. It outlines our vision, role and shared values, and sets out our objectives and strategies in four key result areas:
- our clients
- our products and services
- our people
- our business performance.
Business Plan
The Business Plan is our annual planning document, and is derived from the Corporate Plan. The plan outlines our Portfolio Budget Statement commitments, supplementary business objectives and specific initiatives in support of Corporate Plan strategies for the coming year.
All action items from the 2010–11 Business Plan projects either were completed or are ongoing activities. The enhancement of key business process IT systems was a particular highlight of 2010–11.
Risk management framework
The ANAO risk management framework comprises an overarching ANAO Risk Management Policy and Risk Management Plan and individual risk management plans for each service group and support branch. The Risk Management Plan, reviewed by the Audit Committee, underpins our corporate governance framework. The plan complies with the international standard ISO 31000:2009. All our risk plans are updated annually.
The annual review is designed to take into account any changes in our operating environment, including revised business requirements and changes in our control environment. In essence, our approach to risk management identifies risks associated with our business objectives. The risks are considered at both strategic and operational levels; in particular, we consider how the risks relate to our strategic and business planning processes by addressing the following questions:
- Are our overall vision and direction appropriate?
- Do our products meet client needs and expectations?
- Do we have sufficient resources and capacity to deliver our products?
Our reputation for integrity and ethical behaviour is among our most valued corporate attributes, and all significant business risks identified in the Risk Management Plan are linked to an overarching reputational risk. The Executive Board of Management agenda provides for the review of any serious risk incidents each month, and any risk assessed as ‘high’ or above is monitored as a standard agenda item. Our policy requires that all our business risks be reviewed at least annually. There were no serious risk incidents in 2010–11, and all risks with controls in place were assessed as ‘medium’.
We take part in the annual Comcover Risk Management Benchmarking Survey to independently assess our risk management arrangements. In the 2011 survey our score was 7.9 against a peer group survey average of 5.5. While the score is slightly down on our score of 8.1 in 2010, it is not a directly comparably result as we opted to be compared with a more select group this year (rather than being compared across the board). The status of our risk management regime remains the same, having been assessed as ‘Structured’, and this year we received a 7.3 per cent discount on our Comcover premium based on the quality of our risk management; this compares with a 6.7 per cent discount in 2009–10.
Fraud control framework
The ANAO maintains a comprehensive Fraud Risk Assessment and a Fraud Control Plan in accordance with the requirements of the Commonwealth Fraud Control Guidelines. The Fraud Control Plan is linked to our risk management framework and draws all our fraud prevention and detection initiatives together into one consolidated document.
Having particular regard to the risk to our reputation should fraudulent activity occur, we periodically review the fraud control framework to take into account changes in our operating environment. We also review the Fraud Risk Assessment and the Fraud Control Plan at least every two years.
The 2010–12 Fraud Control Plan and the Fraud Risk Assessment reviews were completed in June 2010. We revised our Fraud Control Plan to take account of changes brought in by two documents released in March 2011: revised Commonwealth Fraud Control Guidelines and an ANAO better practice guide entitled Fraud Control in Australian Government Entities.
There were no known incidents of fraud in 2010–11. All fraud risks were assessed and appropriate controls are in place.
The Auditor-General’s fraud control certification follows.
Information systems and technology strategic plan
The 2009–12 Information and Communications Technology (ICT) Strategic Plan is a three-year plan designed to guide future decisions about the selection and management of information services and technology. It is linked to our Corporate Plan and Business Plan, and facilitates business operations to enable us to achieve our objectives in the four key result areas set out in our Corporate Plan.
Ethical standards
We have a reputation for high professional and ethical standards, and it is essential to the success of our work that we maintain that status.
The ANAO Guide to Conduct, which is part of our induction training, provides information on the conduct expected of all our employees in carrying out their responsibilities, including interacting with clients, fellow employees and other stakeholders. The guide is framed around the central theme of the Australian Public Service (APS) Values and the APS Code of Conduct set out in the Public Service Act 1999. It also refers to APS Values and Code of Conduct in Practice: A Guide to Official Conduct for APS Employees and Agency Heads, a package produced by the Australian Public Service Commission.
The Guide to Conduct reflects our core values and behaviours and is based on the key elements of ‘respect, integrity and excellence’. The guide also recognises the importance of auditing and accounting standards developed by Australian auditing and accounting professional bodies.
Senior Executive Service conferences
Senior Executive Service (SES) conferences provide the executive and senior management with a forum to consider business issues and plan future strategic directions consistent with our key result areas. Two in-house conferences were conducted for our SES officers during 2010–11, in November 2010 and May 2011.
The November conference provided an opportunity for senior staff to meet the Hon. Gary Gray AO, MP, Special Minister of State and Special Minister of State for the Public Service and Integrity, who has administrative responsibility for the ANAO within the Prime Minister’s portfolio. He presented his perspective on a range of matters of relevance to the ANAO. Mr John Lawler APM, Chief Executive Officer of the Australian Crime Commission, also addressed the conference. Mr Lawler discussed corporate crime and its relevance to the work of the ANAO.
The May conference focused on business planning. Presentations on the work of key ANAO committees informed conference discussions on business planning. The ANAO Risk Management Plan was reviewed, with a focus on emerging issues that affect our business and influence our risk management. The draft 2011–12 Business Plan was also reviewed, in the context of our business circumstances, risk environment and the 2010–13 Corporate Plan. The 2011–12 Business Plan was promulgated to all staff in June 2011.
External and internal scrutiny
External audit
Section 41 of the Auditor-General Act 1997 establishes the position and provides for the appointment of an independent auditor who undertakes the audit of our financial statements and carries out selected performance audits. The independent auditor position is a part-time statutory appointment, and holds the same powers as the Auditor-General.
Geoff Wilson was reappointed as our independent auditor in 2009. Mr Wilson is the National Managing Partner, KPMG Audit and Risk Advisory Services.
We received an unqualified audit opinion on our financial statements for the year ended 30 June 2011.
The independent auditor completed a performance audit entitled Planning and Scoping of Performance Audits by the Australian National Audit Office, in June 2011. The objective of the audit was to consider, at the annual performance audit program level and individual performance audit level, the process for planning and scoping performance audits within the ANAO. Mr Wilson reported that our planning and scoping of the annual performance audit program and individual performance audits is being undertaken in an efficient and effective manner. No formal recommendations were raised as part of this review; however, four improvement opportunities were identified at the individual audit planning and scoping level to further enhance the control framework and add to the effectiveness of the planning and scoping of individual performance audits. The four improvement opportunities were accepted by the ANAO, and three have since been implemented. Steps are being taken to ensure that our forward program of support system training addresses the fourth suggestion.
Internal audit
The ANAO has engaged Ernst & Young to perform its internal audit function. This activity is overseen by the ANAO Audit Committee, providing assurance about the integrity of our systems and processes and identifying opportunities for improvement.
In 2010–11, the ANAO’s internal audit program included audits of:
- stakeholder management
- assessment of professional training regimes
- financial data analytical review
- review of management and reporting frameworks
- overtime and time off in lieu processes
- financial controls and compliance
- management and delegations.
The completed audits found that, overall, the audited activities were operating satisfactorily, and made a number of recommendations designed to improve performance in those areas. All recommendations were addressed to the satisfaction of the internal auditor.
Benchmarking
The Australasian Council of Auditors-General (ACAG) Macro Benchmarking Project has been conducted annually since 1994. The overall aim is to provide, to the extent practicable, comparable information to audit offices across Australia on quantitative and qualitative benchmarks of audit office operations and on specific characteristics of each jurisdiction.
In 2009 ACAG finalised a Governance and Audit Framework for Self Assessment and External Review. The framework includes checklists for four areas of management: office governance, audit practice management, financial audit assessment and performance audit assessment.
An initial compliance evaluation of the ANAO quality framework using the ACAG-developed framework was conducted in 2010–11. Our evaluation considered office governance and audit practice management. The remaining two sections are comprehensively dealt with as part of our annual quality assurance program.
For all office governance and audit practice management criteria, the ANAO was assessed as having appropriate policies, procedures and guidance in place, and having systems to assess and monitor their effectiveness and compliance.
Parliamentary committees
The Joint Committee of Public Accounts and Audit (JCPAA) tabled Report 419, Inquiry into the Auditor-General Act 1997, in December 2010. The report presented the findings of an inquiry to review whether the provisions of the Auditor-General Act 1997 remain adequate in the modern public sector environment.
The JCPAA made a number of recommendations to enhance the mandate of the Auditor-General. These include providing the authority for the Auditor-General to audit, in certain circumstances, the performance of the recipients of Commonwealth funding, including agencies of other government jurisdictions and contractors engaged by the Australian Government. The committee also recommended that the Auditor-General have the authority to audit the appropriateness of key performance indicators and of entities’ reporting against them.
A private member’s Bill to amend the Auditor-General Act 1997 to give effect to the majority of the committee’s recommendations was introduced in the Parliament in February 2011 by the Chair of the JCPAA, Mr Robert Oakeshott MP. At 30 June 2011, the Bill had passed the second reading stage in the House of Representatives.
Decisions by courts and tribunals
No decisions by courts or tribunals affected the ANAO during 2010–11.
Commonwealth Ombudsman
The Commonwealth Ombudsman made no reports to the ANAO under sections 15, 16 or 19 of the Ombudsman Act 1976 during 2010–11.