Managing risk is an important part of the Department of Foreign Affairs and Trade’s management of the Australian aid program, including the ability to meet the Government’s accountability requirements.
Risk management consists of a systematic process of assessing and then dealing with risk. The Department uses a number of public sector-wide tools to manage risk to Commonwealth funds, and risk to the achievement of Departmental and program objectives. Some of these tools include the Financial Management and Accountability Act (FMA Act), the Commonwealth Procurement Rules (CPRs) and the Commonwealth Grant Guidelines (CGGs).
The Department takes an up-front risk management approach to funding Australian NGOs that wish to receive funds under the Australian NGO Cooperation Program. The accreditation framework includes:
- a head agreement that standardises administrative / legal requirements
- an assessment of Australian NGOs’ financial and risk management systems assessment undertaken as part of the accreditation process
- an assessment of Australian NGOs’ capacity to deliver outcomes and meet accountability requirements set out in funding orders that are created under the head agreement
- recognition of ACFID, SPHERE and other Codes of Conduct that bind member NGOs
- overall performance assessment of the Australian NGO Cooperation Program (ANCP) through reporting under the Monitoring Evaluation and Learning Framework, and independent evaluations and reviews
- regular audits and spot checks of NGO management and administrative controls
- regular audits and reviews of NGO programs, including those managed by Australian NGOs under country and regional programs
- a program of monitoring visits by DFAT staff of ANCP projects.
Accreditation reviews are undertaken on a five yearly basis, subject to DFAT receipt of an application for re-accreditation from NGOs. Accredited NGOs receive a yearly allocation under the ANCP and are able to participate in other country and regional programs and humanitarian relief programs, either through competitive processes or where they are identified as the most appropriate delivery partner.
Each year, a sample of NGOs is subject to the Department’s normal risk management processes, including audits, spot-checks and performance reviews. These reports also inform accreditation reviews.