Financial Management

Part five

Financial Management

Introduction

An overview of the Department’s financial performance is provided in Chapter 1 of this report.

FaHCSIA has continued to develop and implement improvements to its financial management framework and deliver real improvements in performance.

On 30 July 2007, the Executive Management Group (EMG) endorsed the recommendations from a report on the performance of the finance function across FaHCSIA. They agreed to create specialist Finance Managers in each group to strengthen financial practices and knowledge across the Department.

The Finance Managers are out-posted specialists reporting to the Branch Manager, Financial Management and Governance Branch. They support the Group Manager, Business and Financial Services and the Chief Financial Officer (CFO) through their assistance to groups in preparing and monitoring the budget, analysing monthly financial performance, providing advice on the financial framework and ensuring staff and executives are aware of their corporate reporting and accountability obligations.

Major financial management achievements during 2007–08 include:

reductions in Australian National Audit Office (ANAO) audit findings, including a reduction in category ‘B’ findings over the year from five to zero (category B findings are matters posing moderate business or financial risks, or lesser matters previously identified by ANAO, but yet to be addressed by management)
implementation and enhancement of the Financial Management Compliance Framework to support the Secretary’s Certificate of Compliance
development of an online internal budgeting and reporting tool to standardise and integrate budgeting, forecasting and internal reporting
approval of the internal budget prior to the commencement of the financial year to facilitate effective business planning, which is subject to biannual review
significantly increasing training on the financial framework to delegates and staff in policy and program areas
the introduction of a detailed March hard close for financial statements reporting. The March hard close provides assurance that key financial processes are in place which can produce materially correct balances for the preparation of the financial statements. Furthermore, the March hard close enables FaHCSIA to produce quality statements within required timeframes.

Management of FaHCSIA’s finances incorporates the effective management of its assets and purchasing arrangements.

Asset management

FaHCSIA significantly increased its level of asset investment over the year as the lead agency supporting the Australian Government’s presence in the NTER. The Department acquired, refurbished and deployed demountable and transportable accommodation in more than sixty communities in the NT.

FaHCSIA completed a review of its asset management framework during 2007–08, which involved the revision of asset accounting policies and management procedures and the completion of a comprehensive asset stocktake. The project included the introduction of barcode scanners to improve the efficiency and completeness of stocktake procedures.

Purchasing

The Department’s purchasing activities are consistent with the FaHCSIA Chief Executive Instructions and internal procurement guidelines, which are in accordance with the Commonwealth Procurement Guidelines—January 2005 (www.finance.gov.au). All activities have ensured the efficient, effective and ethical use of public monies and have delivered value for money. Purchasing decisions have been made in an accountable and transparent manner, complying with Government policies and meeting relevant international obligations.

As lead agency supporting the NTER, a Simplified Departmental Procurement Framework was approved by the Departmental Secretary in July 2007 under clause 8.2 of the Commonwealth Procurement Guidelines to protect human health. The framework provided a process for considering requests to directly source providers in circumstances of extreme urgency. All decisions to support direct sourcing under these simplified arrangements were fully documented and closely monitored by the EMG. The Framework operated until February 2008 when the Secretary determined that support arrangements for the NTER were sufficient to allow the resumption of normal procurement activities.

Summary of consultancy services contracts

During 2007–08, 226 new consultancy contracts were agreed upon, involving total actual expenditure of $17.2 million. In addition, 55 ongoing consultancy contracts were active during the year, involving total actual expenditure of $11.7 million. In total, expenditure on consultancies for 2007–08 was $28.9 million.

Summary information on consultancy services for FaHCSIA and the Social Security Appeals Tribunal (SSAT) is set out below in Tables 5.1–5.3.

Table 5.1 New consultancies let in 2007–08, number and financial year expenditure (GST inclusive)
	Number let	Expenditure in 2007–08 (GST inclusive)
FaHCSIA core	215	$16,767,303
SSAT	11	$449,313
Total	226	$17,216,616

Please note: includes consultancies less than $10,000 in value.

Table 5.2 Ongoing consultancies^a active in 2007–08, number and financial year expenditure (GST inclusive)
	Number ongoing	Expenditure in 2007–08 (GST inclusive)
FaHCSIA core	46	$11,000,002
SSAT	9	$678, 085
Total	55	$11,678,087

Please note: Includes consultancies less than $10,000 in value.

(a) An ongoing consultancy is any consultancy let prior to 1 July 2007 that remained active in the 2007–08 financial year.

Table 5.3 Total expenditure on consultancy contracts (new and ongoing) during the financial years, 2005–06, 2006–07 and 2007–08 (GST inclusive)
2005–06	2006–07	2007–08
$39,670,176	$29,603,036	$28,894,703

Please note: Includes expenditure on consultancy contracts let prior to 2005–06, and consultancies less than $10,000 in value. Includes FaHCSIA core and Social Security Appeals Tribunal.

Legal services expenditure

FaHCSIA is required, under paragraph 11.1 (ba) of the Legal Services Directions 2005, to report on legal services expenditure each financial year.

Figure 5.1 below is a statement of legal services expenditure by the FaHCSIA portfolio for 2007–08. This statement has been published in compliance with paragraph 11.1 (ba) of the Legal Services Directions 2005, incorporating additional reporting requirements where possible.

Figure 5.1 Total legal services expenditure (GST exclusive) at 30 June 2008
	Portfolio (3) $	FaHCSIA (2) (3) $	Aboriginal Hostels Limited $	Indigenous Land Corporation $	SSAT $	Indigenous Business Australia $
Total legal services expenditure	17,030,105	12,426,120	38,684	2,587,384	238,784	1,739,133
Salaries	6,162,001	6,042,138	–	note 1	119,863	note 1
Overheads (includes administrative support and accommodation costs)	1,040,349	997,371	–	note 1	42,978	note 1
Total internal legal services expenditure (GST exclusive)	7,863,381	7,039,509 (3)	Nil	521,417	162,841	139,614
Other disbursements on external legal services	61,608	61,608	Nil	Nil	Nil	note 1
Total external legal services expenditure (GST exclusive)	9,166,724	5,386,612 (3)	38,684	2,065,967	75,943	1,599,519
Number of male counsel briefed	7	7	Nil	Nil	Nil	note 1
Value of briefs to male counsel	116,252	116,252	–	–	–	note 1
Number of female counsel briefed	3	3	Nil	Nil	Nil	note 1
Value of briefs to female counsel	50,340	50,340	–	–	–	note 1

Note 1—Breakdown not provided.
Note 2—Departmental total includes Office of Registrar of Indigenous Corporations and Northern Territory Emergency Response expenditure.
Note 3—External legal spend incurred on legal firm services is not broken down. The additional information relates to briefs to counsel only.

Funding for peak bodies

The National Secretariat Program funds peak bodies to contribute to government policy in areas of interest to the portfolio and acts as an effective conduit for information flow between government and their memberships.

All amounts listed below are GST exclusive

Table 5.4 FaHCSIA support to peak bodies, 2007–08
Peak Body	Funding ($)
All amounts listed below are GST exclusive
National Secretariat (total)	2,127,702
Australian Council of Social Services	497,750
National Disability Services	266,332
Families Australia	266,332
Early Childhood Australia	266,332
Homelessness Australia	266,332
Volunteering Australia	266,332
Deafness Forum Australia	170,452
National Council on Intellectual Disability	127,840
Secretariat Support (total)	1,118,596
Australian Federation of Disability Organisations	266,332
Blind Citizens Australia	170,452
Brain Injury Australia	127,840
National Ethnic Disability Alliance	127,840
Deaf Australia	170,452
Physical Disability Council of Australia	127,840
Women with Disabilities Australia	127,840
Program Support Grants (total)	1,397,942
Family Relationship Services Australia	425,000
Community Housing Federation of Australia	236,692
Lone Fathers Association	57,827
National Council of Single Mothers and their Children	57,827
Secretariat of National Aboriginal and Islander Child Care	252,284
Early Childhood Australia	56,098
Homelessness Australia	56,530
Deafness Forum Australia	21,308
National Council on Intellectual Disability	31,960
Australian Federation of Disability Organisations	31,960
Blind Citizens Australia	21,308
Brain Injury Australia	31,960
National Ethnic Disability Alliance	31,960
Deaf Australia	21,308
Physical Disability Council of Australia	31,960
Women with Disabilities Australia	31,960
Total	4,644,240

Please note: The nature of this program means that some funding is also reported in the individual output groups’ performance reports.

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Financial Management

Part five