Ausaid Annual Report
2012–13

australian agency for international development
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Corporate governance

Strategic planning framework

AusAID's strategic planning framework is grounded in the Australian Government's aid policy and underpinned by the Comprehensive Aid Policy Framework, which was released by the government on 8 May 2012.

A rapid assessment of the strategic planning framework was commissioned by AusAID's executive in November 2012 to assess the agency's progress with its implementation. The task was to identify any necessary improvements to policy, process and systems to ensure that implementation of the architecture was efficient, effective and fully supportive of the aid policy and the framework.

The assessment found that the intent and structure of the strategic planning framework was sound. It also recommended a number of strengthening measures that will:

  • drive further consolidation of the aid program, leading to fewer, larger investments
  • ensure greater coherence and strategic alignment between program strategies, thematic priorities and individual investments
  • provide a stronger platform for tracking and reporting on development results.

These changes are aimed at ensuring the alignment of aid delivery plans with aid policy and the framework. Implementation of these strengthening measures began in March 2013.

Corporate reform

The government's release of its aid policy marked the beginning of a period of unprecedented organisational growth and change for the agency. In 2011–12 structures, policies and systems that provided the foundations for a more effective and efficient aid program were put in place. In 2012–13 the agency built on this foundation, extending corporate reforms and embedding new approaches into agency operations.

In 2012–13 a new AusAID Governance and Accountability Policy and accompanying governance structure and accountability framework were implemented. The new policy and AusAID committee structure (see figure 17) provides strengthened governance arrangements and clear lines of accountability to deliver a larger and more effective aid program.

The Strategic Reform Committee is leading long-term agency reform and driving its business improvement agenda. This includes a continued focus on business process improvements to improve the efficiency and effectiveness of the agency's operations. A key corporate reform and business improvement priority is to develop an integrated and automated finance, human resources and procurement system by 2017–18. In early 2013 the agency undertook a comprehensive business process mapping exercise that identified a number of ways to streamline the way we do business between now and when this new system is expected to be in place. Working towards this end, in 2013 AusAID established a Business Improvement Taskforce to coordinate and manage the agency's business improvement agenda.

Other business improvements in 2012–13 have included:

  • establishing a human resources help desk to provide staff with a single point of entry for human resource queries
  • simplifying processes for low value and low risk investments so that development assistance can be delivered quickly and efficiently
  • implementing an online booking tool for travel to save staff time
  • implementing eRecruit to automate and streamline recruitment processes to enable candidates to apply online for vacancies and track the progress of their applications.

Agency governance

The AusAID Governance and Accountability Policy was launched on 1 October 2012. It was adopted in response to the substantial growth of the agency, and provides the strengthened governance arrangements and clear lines of accountability that are required to deliver a larger and more effective aid program. The accountability framework delineates the responsibilities of the agency's senior executive service officers, including the specific roles of Deputy Directors General, Canberra-based First Assistant Directors General, Post-based Ministers, and the sectoral and corporate divisions of AusAID.

The AusAID Governance and Accountability Policy also established a new governance committee structure for the agency.

The Executive Committee is AusAID's primary governance committee and is chaired by the Director General. The AusAID Executive Committee is now supported by four executive sub-committees, each chaired by a Deputy Director General:

  • Strategic Reform Committee, which is focused on business improvement and change management
  • Strategic Programming Committee, which is focused on major investment decisions and program planning
  • People and Leadership Committee, which is focused on human resource issues including learning and development
  • Development Policy Committee, which is focused on debate and consideration of development policy issues.

Each of these committees has been delegated decision-making authority from the executive in the area of their responsibility. The chair of each executive sub-committee is responsible for decisions made on the advice of committee members.

A third tier of governance includes seven committees that report to the executive sub-committees when required. These committees include the:

  • Divisional Leadership Group (to support the agency in meeting operational human resource management challenges)
  • Security Committee (to monitor and facilitate security arrangements within AusAID)
  • ICT Steering Committee (to provide a strategic direction for information communications technology systems, services and investments)
  • Postings Committee (to recommend staff placements for overseas postings).

The Audit Committee is independently chaired and assists the Director General and the Executive Committee with legislative, corporate governance, risk management and financial responsibilities.

Figure 17: AusAID committee structure at 30 June 2013

A chart showing how the committees in AusAID are structured. The Director General is at the top in the centre. Reporting lines show which committees report back to which other committees, back up to the Director General.

Executive Committee

The Executive Committee is AusAID's senior governance and decision-making body. It acts as a board of management for the agency, providing strategic direction and leadership and supporting the Director General in his role as chief executive. The Executive Committee focuses primarily on key strategic policy issues, major programming decisions and managing the agency.

Its permanent members include the Director General, three Deputy Directors General and the Chief Financial Officer. These permanent members are joined by a First Assistant Director General and an Assistant Director General, who hold rotational memberships on the Executive Committee on a six-monthly basis.

The independent chair of AusAID's Audit Committee occasionally attends meetings of the Executive Committee as an observer.

Membership of the AusAID Executive Committee at 30 June 2013

A portrait head shot of AusAID Director General Peter Baxter, with a view of Canberra in the window background.

Peter Baxter, Director General

Peter Baxter was appointed Director General of AusAID in May 2010 and is the chief executive of the agency. The areas of audit, economic analysis and the Office of Development Effectiveness report directly to him.

A portrait head shot of AusAID Deputy Director General James Batley, with a view of Canberra in the window background.

James Batley PSM, Deputy Director General—Country Programs Group

As Deputy Director General of the Country Programs Group, James Batley's responsibilities include the agency's Pacific, East Asia, Africa and community programs.

A portrait head shot of AusAID Deputy Director General Ewen McDonald, with a view of Canberra in the window background.

Ewen McDonald, Deputy Director General—Humanitarian and International Group

As Deputy Director General of the Humanitarian and International Group, Ewen McDonald's responsibilities include programs in South and West Asia, humanitarian and disaster response and international programs and partnerships.

A portrait head shot of AusAID Deputy Director General and Chief Operating Officer Gary Dunn, with a view of Canberra in the window background.

Gary Dunn, Deputy Director General—Chief Operating Officer

Gary Dunn is the Chief Operating Officer and is responsible for the agency's corporate management, including the functions of program effectiveness and performance, corporate enabling, and finance and information services.

A portrait head shot of First Assistant Director General and Chief Finance Officer Paul Wood, with a view of Canberra in the window background.

Paul Wood, First Assistant Director General—Chief Financial Officer

Paul Wood is AusAID's Chief Financial Officer with responsibility for the Government Finance and Information Services Division and the financial management of the aid program.

A portrait head shot of First Assistant Director General Margaret McKinnon, with a view of Canberra in the window background.

Margaret McKinnon, First Assistant Director General—Africa and Community Programs Division

Margaret McKinnon is the First Assistant Director General of the Africa and Community Programs Division, with responsibility for the Africa program, Australia Awards Office, civil society engagement and programs, and business engagement. Margaret holds a rotating position on the Executive Committee (term February to July 2013).

A portrait head shot of Assistant Director General Angela Corcoran, with a view of Canberra in the window background.

Angela Corcoran, Assistant Director General—Indonesia and Timor-Leste Branch

As Assistant Director General of the Indonesia and Timor-Leste Branch, Angela Corcoran is responsible for managing two of the agency's largest bilateral programs. Angela holds a rotating position on the Executive Committee (term February to July 2013).


Development Effectiveness Steering Committee

The Development Effectiveness Steering Committee is responsible for providing high level, strategic advice to the Australian Government on the aid program, including in relation to official development assistance (ODA) strategy and budget proposals. Chaired by AusAID's Director General, the committee comprises deputy secretaries of the Department of the Prime Minister and Cabinet, the Treasury, the Department of Finance and Deregulation, the Department of Foreign Affairs and Trade, and AusAID's Chief Operating Officer.

The committee has taken on the role of strengthening and supporting whole-of-government coordination of the aid program. It focuses on three themes:

  • whole-of-government coordination and coherence in all ODA eligible activities
  • the Comprehensive Aid Policy Framework, including oversight of its implementation
  • aid effectiveness.

In 2012–13 the committee continued to play a key role in overseeing Australia's growing aid program. In particular, it oversaw delivery of the first Annual Review of Aid Effectiveness and agreed to the first suite of whole-of-government uniform standards for planning, delivering, monitoring and reporting on aid. The committee provided high level strategic advice on the 2013–14 ODA budget, guided the development of country strategies and endorsed strategies and reports that supported whole-of-government implementation of the aid program. In 2012–13, the Development Effectiveness Steering Committee met six times. The committee's working group, the Development Effectiveness Working Group has similar cross agency representation and met eight times during the year.

Independent Evaluation Committee

The Independent Evaluation Committee oversees the work program of the Office of Development Effectiveness (ODE) in planning, commissioning, managing and disseminating a high quality independent evaluation program that evaluates the effectiveness and quality of the Australian aid program. It also provides independent expert evaluation advice to the Development Effectiveness Steering Committee.

The committee is chaired by Jim Adams, a former Vice President of the World Bank. Other members include Dr Wendy Jarvie (University of NSW), Professor Patricia Rogers (RMIT University) and senior AusAID representative Gary Dunn (Deputy Director General, Chief Operating Officer). Given the committee's whole-of-government mandate, a representative from the Department of Finance and Deregulation attends meetings as an observer.

In 2012–13, the committee endorsed ODE's 2013–2016 rolling work plan, and provided valuable feedback and guidance on the design and conduct of all major evaluations which commenced in the period. The committee also provided oversight of the first Lessons from Australian aid report which will contribute to the 2012–13 Annual Review of Aid Effectiveness. ODE provides the secretariat that supports the work of the committee. In 2012–13 the committee met four times, with meeting communiqu├ęs published on the ODE website after each meeting.

Aid coordination and advisory mechanisms

Internal audit

AusAID's internal audit function focuses on improving the quality, accountability, efficiency and effectiveness of the functions and processes used to deliver the Australian aid program.

The agency develops and manages an internal audit program that gives assurance that critical policies and procedures are complied with and identifies areas for improvement in AusAID's administrative and program functions and processes. The internal audit program is delivered using a combination of internal resources and external providers.

To build greater transparency and accountability in the aid program, AusAID internal audit reports have been published on the AusAID website since 2011–12.

Audit Committee

Section 46 of the Financial Management and Accountability Act 1997 requires the Director General to establish and maintain an Audit Committee with functions that include:

  • assisting AusAID to comply with obligations under the Financial Management and Accountability legislation
  • providing a forum for communication between the Director General, senior managers and AusAID's internal and external auditors.

At 30 June 2013 the Audit Committee membership comprised:

  • Oliver Winder PSM, Chair and independent external member
  • Ewen McDonald, Deputy Chair and AusAID Deputy Director General, Humanitarian and International Group
  • Len Early PSM, independent external member
  • David Lawler, independent external member
  • Jenny Morison, independent external member
  • Rob Tranter, AusAID First Assistant Director General, Pacific Division
  • Lisa Rauter, AusAID Assistant Director General, Africa Branch.

AusAID's Chief Auditor, Chief Financial Officer, Assistant Director General of Risk Management and Fraud Control Branch, Assistant Director General of the Office of Development Effectiveness, and representatives of the Australian National Audit Office attended committee meetings as observers. During the year the committee met six times, including a special financial statement meeting in August 2012.

In 2012–13, the committee ensured AusAID complied with its obligations under the legislation by reviewing and recommending improvements to management systems and key business processes, the corporate governance framework and financial reporting processes.

The committee also provided a forum for both formal and informal communication between key stakeholders, including the Director General, the executive, senior managers, the Audit Branch, other areas of AusAID with governance responsibilities and the Australian National Audit Office.

In addition to performing these two key functions, the committee also provided independent assurance to the Director General on AusAID's risk management arrangements, including fraud control, controls framework, public accountability responsibilities and internal and external audit activities.

In performing these roles and responsibilities, the committee contributed to strong audit and governance arrangements for AusAID.

Risk management in AusAID

AusAID continues to strengthen risk management in the aid program. The Risk Management Framework and Policy released in 2011–12 is being implemented throughout the agency and risk management is being integrated into to all key program management processes and policies.

The risk management team continues to conduct workshops and risk management training to reach all areas of the agency. This continued focus is part of the broader communication and training strategy of the Risk Management and Fraud Control Branch. Risk management training is a core component of the suite of mandatory training for all new staff to AusAID.

AusAID further strengthened its risk management approach through the following key activities in 2012–13:

  • developing and releasing the AusAID risk management handbook, a new tool in risk management guidance for staff
  • developing an agency-wide due diligence framework that will be progressively applied to all delivery partners from July 2013
  • facilitating and leading 125 interactive risk management workshops at 16 Posts
  • conducting 23 risk management training sessions in Canberra, which were attended by about 250 staff
  • updating the Risk Management Framework in line with best practice principles
  • engaging with the international donor community to ensure coherence with thinking and risk management policy with international partners
  • creating a risk network between dedicated risk and fraud staff at Posts and the risk team in Canberra
  • incorporating business continuity responsibilities into the risk section.

Risk in the aid program

The aid program is delivered in many different environments, each with its own set of risks and challenges. Program choices require careful consideration of the risks and opportunities that each investment presents. All investment proposals are accompanied by robust risk analysis as a core part of the design process so that AusAID is able to consider and manage all relevant risks. Program risks are required to be regularly monitored, reviewed and documented in line with AusAID's Risk Management Framework. Australia is continuing to strengthen its risk management systems both internally and in collaboration with partners.

Residual risk in the aid program

AusAID has a varied range of policies, controls and treatments in place to manage our program risk profile at both the operational and strategic levels. The agency carries an appropriate level of residual risk proportionate to the objectives that the program is attempting to achieve. Residual risk is accepted or further managed on a case by case basis. These decisions are documented and monitored in accordance with AusAID's Risk Management Framework. There is an established process and culture of regular review and monitoring of high risk investments, including regular executive oversight.

Comcover risk management benchmarking and awards

AusAID continues to make major improvements in its overall approach to integrated risk management in support of delivering an effective aid program. AusAID's improvements have been recognised with a substantial increase in its Comcover benchmarking score this year acknowledging the agency now has a structured approach to managing risk.

The work of the Risk Management Section and the efforts of the agency more broadly have also been recognised in the annual Comcover Awards for Excellence in Risk Management with a high commendation for enterprise risk in the large agency category, a major achievement for a risk program that has only been operating for two years. The award combined with the benchmarking score have led to an overall reduction in AusAID's Comcover insurance premium of more than 10 per cent.

Fraud control

A range of activities were conducted in 2012–13 to improve the way AusAID identifies, monitors and manages fraud within the aid program, including the development of a comprehensive fraud control plan for 2012 to 2015. The plan emphasises Australia's zero tolerance of fraud and the requirement that all cases of alleged, attempted, suspected and detected fraud be reported to the Director of the Fraud Control Section. This responsibility extends to Australian Government partners, commercial contractors, non-government organisations, other implementing partners and recipient governments.

Where fraud is alleged, attempted, suspected or detected, AusAID ensures that:

  • the matter is investigated
  • offenders are prosecuted wherever possible and appropriate
  • the recovery of misappropriated funds or assets is pursued, as is the application of appropriate penalties whenever possible.

Standardising and integrating fraud control management practice across the agency is being achieved by:

  • quarterly reporting of fraud control data to the AusAID Executive and Audit Committee
  • annual reporting of fraud control information to the Australian Institute of Criminology
  • the inclusion of fraud in risk registers as part of Post risk and fraud management plans
  • ongoing refinement of Post risk and fraud management plans.

Fraud control awareness training is compulsory for all AusAID staff, both in Australia and overseas. Fraud control training is included in AusAID induction training for new staff and refresher training for staff before an overseas posting. In 2012–13, 17 fraud control training sessions were conducted for staff in Canberra and 36 sessions and workshops were conducted for staff overseas. AusAID also conducted 28 training sessions for delivery partners, such as local non-government organisations and contractors. AusAID enhanced its training by conducting 25 sessions for employees of recipient government agencies. In total, AusAID trained 1701 staff and partners in 2012–13. This is a large increase on the 879 trained in 2011–12.

Preventing fraud

AusAID manages thousands of aid activities across more than 70 countries. Some of these countries, such as Afghanistan, are amongst the most corrupt in the world. Key challenges include operating in environments where:

  • governance arrangements are often weak
  • local law enforcement is under-resourced
  • attitudes towards accountability and transparency are not as developed as those in Australia. The top 10 recipients of Australia's aid are all ranked in the bottom half of countries on Transparency International's Corruption Perception Index.

In such operating environments, there is a higher risk of fraud. For this reason AusAID has implemented robust systems and procedures to manage the delivery of Australian aid and works to reduce the risk of fraud by:

  • having a comprehensive fraud control framework and fraud control plan in place, together with related guidelines and guidance material which are regularly reviewed and updated
  • having risk and fraud management plans at each overseas Post which are updated annually
  • designing aid programs to minimise the risks from fraud
  • delivering mandatory fraud control training for AusAID staff, both in Australia and overseas
  • training contractors and other government and non-government organisations funded under the Australian aid program on fraud control, as an additional risk mitigation strategy
  • implementing a robust due diligence framework which applies to contractors, non-government organisations and others organisations involved in the aid program
  • ensuring non-government organisations, commercial contractors and tertiary institutions comply with AusAID's financial, contractual and activity management requirements, including fraud reporting and risk management.

In October 2012, AusAID and the newly elected Papua New Guinea Government signed the joint statement on zero tolerance to fraud in Australia's aid program to Papua New Guinea, reaffirming the commitment of both parties to preventing fraud and to investigating and prosecuting fraud cases. In May 2013, AusAID and the Solomon Islands Government signed a joint statement on zero tolerance to fraud in Solomon Islands, cementing the commitment of both parties to preventing fraud and to investigating and prosecuting fraud cases.

Reporting fraud

In line with the Commonwealth Fraud Control Guidelines, AusAID includes all active fraud cases, including cases of physical theft, in its published fraud figures. AusAID also releases an estimate of potential loss for these cases. This estimated potential loss is calculated by totalling the known value of cases of active fraud after recoveries and loss prevention have been taken into account (for example, recoveries and preventions are deducted from the funds at risk). AusAID fraud figures do not include an estimate of undetected fraud.

In 2012–13, 143 cases of alleged, suspected or detected fraud were reported to AusAID. AusAID estimates that the amount of potential loss involved in the 2012–13 cases is approximately $1 238 936. Of this amount, $532 646 has been recovered or prevented, leaving an estimated potential net loss to AusAID of $706 290. Potential losses in 2012–13 equate to 0.014 per cent of Australia's total official development assistance (ODA) for 2012–13. In dollar terms this is potential losses of $706 290 out of total Australian ODA of $5148.6 million.

At the end of 2011–12, AusAID reported estimated potential fraud losses of $583 071 from 124 cases of alleged, suspected or detected fraud that were reported during the year. Following ongoing action these figures have been updated and as at 30 June 2013 there were 119 active cases with a potential loss of $988 198. These revised figures represent a reduction of five cases in total and an increase of $405 127. Potential losses in 2011–12 equate to 0.02 per cent of Australia's total ODA for 2011–12. In dollar terms this is potential losses of $988 198 out of total Australian ODA of $4825.2 million.

Economics Advisory Group

AusAID's Economics Advisory Group was established in January 2012 under the leadership of Chief Economist, Michael Carnahan. The group works to improve the effectiveness and value for money of AusAID's programs by ensuring that programming decisions are consistent with sound economic principles and underpinned by high quality and rigorous analysis. It serves as a hub for AusAID's economic knowledge and works to improve the analytical skills of economic policy officers across AusAID more broadly. Over the last 12 months, the group has grown in capacity, recruiting more than 10 new economists and investing in the professional development of AusAID's economic cadre. It has also taken on new responsibilities for the Strategic Programming Committee secretariat and a number of AusAID's most important international research partnerships.