Annual Report 2005-2006

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1. Overviews2. Performance3. Corporate4. Appendixes5. Financials6. Glossaries and Compliance Index

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Corporate governance

The department's strong institutional governance framework ensured we achieved the corporate tasks that support our performance outcomes.

Senior Executive

The Secretary and five deputy secretaries comprise the department's Senior Executive. The Senior Executive provided leadership and strategic direction to the department and ensured we met our corporate governance requirements.

The Secretary, Mr Michael L'Estrange, provided close direction on all major foreign and trade policy and corporate management issues. The Secretary provided direct leadership in shaping and communicating the professional values and culture of the department in Australia and abroad. He decided all Senior Executive Service staff placements. The five deputy secretaries supported the Secretary in overseeing the department's divisions (see Figure 2 on page 17 for a breakdown of deputy secretary responsibilities).

Members of the Senior Executive frequently represented the Government at high-level meetings in Australia and overseas. The deputy secretaries also chaired key corporate governance bodies.

Management mechanisms

The department's management mechanisms provided effective decision-making and communication of corporate policies.

Senior Executive meetings

Weekly meetings of the Senior Executive, chaired by the Secretary, considered a range of foreign and trade policy and corporate issues. The heads of Corporate Management Division, Diplomatic Security, Information Management and Services Division and, as appropriate, the Director General of AusAID also attended these meetings. The Senior Executive meetings considered regular reports on the department's staffing, budget, IT performance, property issues, passports developments and divisional performance on ministerial correspondence and security breaches.

The Senior Executive held regular meetings on current policy issues with Mr Downer and Mr Vaile.

Senior management committees

Audit Committee

The Audit Committee helps the Secretary ensure that the department's assurance and control framework is effective and supports departmental objectives. Chaired by a deputy secretary not directly responsible for overseeing the Corporate Management Division, the Audit Committee is charged with: enhancing the department's corporate governance, risk management and control framework, including business continuity planning; improving the objectivity and reliability of externally published financial and other management information; assisting the Secretary comply with all legislative and other obligations; providing strategic guidance for evaluation and performance audit activities; advising the Secretary of issues that require management attention and ensuring the role and scope of the department's internal audit function meet the definition of internal auditing approved by the Institute of Internal Auditors and endorsed by the Australian National Audit Office (ANAO).

In addition to senior departmental officers, the committee includes an independent member. Our Chief Finance Officer, staff from our Evaluation and Audit Section and ANAO officers attend each meeting as observers.

In 2005–06 the Audit Committee met three times. Issues it considered included the department's more risk-based approach to internal audit, the roll-out of the self-assessment audit manual for posts, the introduction of a modified audit ratings system aligned to the department's risk register and professional standards, and the release of a new Fraud Control Plan for the department.

Ethics Committee

The Ethics Committee oversees the development and implementation of policy on conduct and ethics issues and the work of the department's Conduct and Ethics Unit. The committee, chaired by a deputy secretary, comprises ten members representing various levels and departmental experience. It meets regularly to provide guidance on promoting ethical conduct among departmental staff and on our practices in handling ethics-related issues.

Workplace Relations Committee

The Workplace Relations Committee is the primary consultative body for human resource management and conditions of service issues affecting the department's Australia-based employees. It provides a forum for discussion between management and staff representatives about the working environment, conditions of service and matters of concern to staff.

The committee is chaired by the Secretary or his nominee, normally a deputy secretary. Under the terms of the department's Certified Agreement 2003–2006, membership includes representatives from management areas and nine elected staff representatives (two from each of the four employee broadbands and one SES employee). The Association of Foreign Affairs and Trade Employees, the Community and Public Sector Union, the Australian Manufacturing Workers' Union and the Media, Entertainment and Arts Alliance are also represented on the committee, which meets at least four times per year.

During 2005–06 the committee was actively involved in consultations for the department's new Collective Agreement 2006–2009.

Other senior management meetings and mechanisms

The Secretary's weekly meeting with division heads is the central means of communicating corporate and policy priorities throughout the department. Division heads are responsible for disseminating key messages from these meetings to their staff. As required, the Secretary holds policy planning meetings with senior executive staff to discuss priority or emerging issues.

The Secretary communicated with staff through his weekly meetings with division heads, weekly policy reports, administrative circulars, messages delivered via the department's intranet and the staff newsletter DFATNEWS.

Posts were kept informed of and contributed to policy and corporate initiatives through:

Planning and review

A series of departmental planning and review processes—covering all divisions, overseas posts and state and territory offices—takes place throughout the year to evaluate performance and ensure resources are directed effectively to support the Government's foreign and trade policy goals. Performance expectations and planned use of resources are outlined in the department's Portfolio Budget Statements.

Divisional evaluation review

Divisional evaluation reviews take place in August each year, with a mid-term review in February. The purpose is to enable the Senior Executive to evaluate the performance of each division and to determine or refine divisional priorities for the period ahead. In 2005–06 the department created a new process, called the budget allocation review (see below) to assess the department's resources and adjust allocations to meet evolving priorities. Previously, this budget process had been handled as part of the divisional evaluation reviews.

Budget allocation review

The department's Senior Executive decided to create a separate budget allocation review process—de-linked from the divisional evaluation review—to enhance budget planning and expenditure forecasting and better integrate the department's internal processes with the Government's budget timetable. The first budget allocation review meeting took place in May 2006 and they are scheduled to take place in April/May and October of each year. This process is the department's primary vehicle for resource decisions.

Post evaluation reports

The department undertakes an annual evaluation of the performance of our overseas posts over the previous 12 months. The process is a central mechanism for ensuring posts' work is focused on the Government's priorities. We assess posts' contributions to policy outcomes, examine the quality of post management and set priorities for the forthcoming year. Post evaluation also helps inform the Senior Executive's performance appraisal of individual heads of mission and post.

Incorporating the views of other departments and agencies is a key element of our post evaluation. For 2005–06, consistent with a suggestion from the ANAO in its 2004–05 audit on the Management of Bilateral Relations with Selected Countries, we invited comment from 45 departments and agencies, asking them to consult relevant bodies within their portfolios. We seek strategic-level assessments of posts' performance in meeting the Government's policy objectives, although feedback on operational issues is also welcome. Agency comments were very positive overall, demonstrating that posts were meeting whole of government objectives.

Evaluation of performance of state and territory offices

As with posts, state and territory offices are subject to a performance review at the end of each financial year. Office evaluation reporting focuses on key areas including support to ministers, liaison with the local consular corps, business liaison programs and trade advocacy and outreach activities, as well as assistance with major meetings, notarial services and office administration. The 2005–06 evaluation found that state and territory offices were meeting expectations in these areas.

Post liaison visits

In 2005–06, deputy secretaries, the head of Corporate Management Division or the head of Diplomatic Security, Information Management and Services Division led small teams that conducted post liaison visits (PLVs) to 11 posts. The annual program of post liaison visits allows us to assess first-hand post performance against agreed objectives and provides an opportunity for post staff and their families to raise any concerns direct with senior staff from Canberra. As a result of the visits, the department assessed whether posts were appropriately staffed and resourced and, as appropriate, considered adjustments. Each PLV produces a list of recommendations on post operations that are subsequently considered by the department's Senior Executive for implementation.

Internal audit

The Audit Committee has governance responsibility in the department for internal and external audit. It guides and reviews our audit program to ensure we maintain an effective internal control framework and comply with legislative and other obligations.

We completed and presented to the Audit Committee general assurance and compliance audits covering:

The Audit Committee noted that all recommendations arising from these audits were satisfactorily addressed during the year.

A self-assessment tool was introduced that will complete our control self-assessment framework for posts (see box below). Internal control targeted audits for posts were also introduced that will better assess the extent to which our internal controls mitigate risks. We completed field work for a major performance audit of the role of the senior administrative officer at posts. The audit will be finalised in 2006–07.

Department develops self-assessment manual for audit best practice

Ensuring the department's headquarters, overseas posts and state and territory offices operate efficiently, provide reliable financial reporting and comply with relevant laws and regulations is a major task. To strengthen departmental administrative and financial controls, we developed and rolled out a self-assessment manual (SAM) that will allow our posts to conduct self-audits in line with audit best practice. All senior administrative officers will be required to conduct a self-audit of their post's operations during the first 12 months of their posting.

SAM was developed by the department's Evaluation and Audit Section over a number of months. The development phase included trials by a number of different-sized posts, after which the manual was further refined to take account of user experience and suggestions.

An important element of SAM is its utility as a training tool. Both Australia-based and locally engaged staff at posts will be able to use SAM's testing instructions and policy reference manual to increase their audit capabilities and assure themselves of compliance with relevant controls and requirements.

SAM is available to all staff on the department's intranet.

Risk management and business continuity planning

The Audit Committee has governance responsibility for risk management and business continuity planning. In 2005–06 the department: updated the risk register; incorporated into the performance agreements for all managers a measure on adherence to risk management principles; and communicated messages to staff about the importance of effective risk management through an administrative circular signed by the Secretary and a regular management report available to all staff. We provided a submission to the annual Comcover risk management benchmarking survey and entered Comcover's awards for excellence in risk management, for which we were short-listed for an award.

In May 2006 the department conducted a desktop test of our business continuity plan (BCP) (see box below). We monitored and updated posts' and divisions' BCPs and provided generic guidance to posts about how to update and test their plans. We provided briefings to posts on BCP requirements at regional management meetings. The department improved the utility of our offsite IT disaster recovery facility.

'Earthquake rocks R G Casey Building'

On 10 May 2006 members of the department's Business Continuity Task Force assembled to work out how the department would continue to provide core services to government and the public following the devastating earthquake that rendered its headquarters, the R G Casey Building, unusable.

Plans to determine the welfare and whereabouts of staff affected by the crisis, evacuation strategies, damage assessments and options for business resumption were all under the microscope.

At the same time, the task force was managing responses to concurrent crises, including terrorist attacks on overseas missions, events harming Australians overseas and diplomatic incidents in Australia.

If this confluence of events tests credulity, there's a reason—they didn't actually happen. In fact, the exercise was a mock-test of the department's business continuity plan, facilitated by an external consultant as part of our regular cycle of business planning.

The exercise showed a number of strengths in the department's response capabilities, including the ability to focus on key issues, draw on the resources of other organisations where appropriate, and use the experience we have gained from dealing with a number of overseas crises. We will also further strengthen our plan where potential gaps or risks were identified.

Conduct and ethics

The department has instituted a workplace culture that promotes high ethical standards. We continued to develop the existing strong staff awareness of the APS Values and Code of Conduct, including through the department's own Code of Conduct for Overseas Service for Australia-based staff. The code takes account of the significance of the department's representational role outside Australia.

We conducted investigations into both Australia-based and locally engaged staff on an as required basis, again recording low levels of reported fraud and misconduct. We continued extensive outreach activities, including mandatory conduct and ethics training for all staff on pre-posting training and for new staff and graduate and other trainees. Conduct and ethics awareness was an important component of a range of other staff development and management courses, such as management workshops, the Leadership and Development Program for locally engaged staff and regional management conferences involving administrative officers from posts. We provided briefings on post-specific conduct and ethics issues to heads of mission and post, deputy heads of mission and senior administrative officers before their departure on posting.

The department's human resources manual includes a chapter with departmental-specific guidance on conduct and ethics issues, including: procedures for dealing with gifts, benefits and hospitality; SES returns on their private interests; offers of sponsored travel; and diplomatic and consular privileges.

Fraud measures

In accordance with the requirements of the Commonwealth Fraud Control Guidelines, the department has in place fraud risk assessments and a fraud control plan. We reviewed and reissued the department's fraud control plan in 2006. The department has in place appropriate fraud prevention, detection, investigation, reporting, and data collection procedures and processes that meet the specific needs of the department and comply with Commonwealth guidelines.

The department's investigators responsible for fraud and misconduct investigations hold the Advanced Diploma of Government (Fraud Control Management), which is the Commonwealth Attorney-General's Department's recommended qualification for Commonwealth employees primarily engaged in managing fraud prevention, detection and investigation activity.

Whole of government

The department worked with other agencies on issues requiring a whole of government approach. Effective whole of government coordination is an essential part of the department's work on policy and organisational matters, on tasks ranging from the hosting of major international meetings, responses to consular crises, regional counter-terrorism cooperation and coordinating policy approaches to bilateral and multilateral trade negotiations. Whole of government coordination at our overseas posts is increasingly crucial to their operations, particularly with the increasing numbers of attached agency staff at some posts. The department led a process with other agencies to revise the 1985 'Guidelines for the Management of the Australian Government Presence Overseas', to provide a more contemporary guide to coordination and cooperation between agencies at posts. The revised guidelines will be issued in 2006–07. We integrated whole of government issues into departmental training programs and performance management templates.

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