Annual Report 2008-2009

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

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Corporate governance

The department’s achievement of performance outcomes has been underpinned by a robust institutional governance framework.

Senior executive

The department’s senior executive consists of the Secretary and five deputy secretaries. The senior executive delivered strong leadership and strategic direction for the department in its pursuit of policy goals, and enhanced the supporting corporate governance framework.

The Secretary in the 2008–09 reporting period, Mr Michael L’Estrange AO, provided rigorous oversight of all significant foreign and trade policy and corporate management issues, and decided all placements for senior executive staff. The five deputy secretaries supported the Secretary through their management of the department’s 24 work units (see Figure 2 for our organisational structure and the deputy secretaries’ areas of responsibility).

The deputy secretaries represented the Government at high-level meetings in Australia and overseas. They also chaired key corporate governance bodies.

Management mechanisms

The senior executive held weekly meetings, chaired by the Secretary, to consider foreign and trade policy as well as corporate issues. Representatives from key areas also attended as appropriate to ensure effective coordination within the department and the portfolio more broadly. Regular attendees included the heads of Corporate Management Division, Diplomatic Security, Information Management and Services Division, and Executive, Planning and Evaluation Branch; the Chief Finance Officer; and, where appropriate, the Director General of AusAID and the Deputy Chief Executive Officer of Austrade.

The senior executive and individual deputy secretaries met the Minister for Foreign Affairs, the Minister for Trade and the parliamentary secretaries regularly to discuss policy and corporate issues.

The department’s Audit and Risk Committee (ARC) provides independent assurance and assistance to the Secretary and senior executive on the department’s risk, control and compliance framework, and its external accountability responsibilities. The committee is chaired by a deputy secretary not directly responsible for overseeing the Corporate Management Division.

In 2008–09, the ARC met five times and issued a revised Internal Audit Charter. Recurring themes considered by the ARC included: reviewing the department’s risk management processes and business continuity planning; reviewing outcomes from the internal audit program, including ensuring post audit recommendations were implemented; and ensuring the effectiveness of control self-assessment at posts. The ARC also oversaw the implementation of a plan of action endorsed by the senior executive arising from the external quality assurance review of internal audit. In addition, the ARC provided a recommendation to the Secretary in relation to his sign-off of the Certificate of Compliance process.

Our Ethics Committee meets three times a year to oversee and make recommendations on the development and implementation of the department’s conduct and ethics policy. The committee has an important responsibility to promote the highest standards of conduct and ethics within the department. Chaired by the deputy secretary responsible for corporate management issues, the committee comprises 12 members from various staffing levels and areas within the department.

In 2008–09, the Ethics Committee assisted in the biennial update of the department’s fraud control plan, oversaw improvements to ethics-related training and to ethics-related aspects of the new performance management system, and implemented the Government’s Lobbying Code of Conduct in the department.

The Workplace Relations Committee is the primary consultative forum for management and staff representatives to discuss work-related issues. The deputy secretary responsible for corporate management issues chairs the committee. Under the terms of the department’s Collective Agreement, membership includes both representatives from management areas and elected staff representatives. 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.

The committee’s discussions during 2008–09 led to improvements in the postings and placements processes and enhanced staff training and career development opportunities. The committee also contributed to the streamlining of departmental work practices to support the work–life balance of staff.

Other senior management meetings and mechanisms

The Secretary met division heads every week to communicate the department’s foreign and trade policy and corporate priorities. In turn, division heads disseminated the key messages from these meetings to staff. The Secretary also held policy planning meetings with senior executive staff to discuss priority or emerging issues as required.

The Secretary communicated with staff through a monthly message which outlined strategic and corporate priorities and other issues. This message augmented other mechanisms such as weekly meetings with division heads, administrative circulars and the department’s intranet and staff newsletter, DFATNEWS.

Our overseas network remained engaged with, and was kept informed of, policy and corporate initiatives through:

Evaluation and planning

The department’s performance was evaluated throughout the year to ensure resources were directed most effectively to support the Government’s foreign and trade policy goals. All divisions, overseas posts and state and territory offices were involved in a series of departmental planning and review processes. The department’s performance expectations and planned use of resources were outlined in the department’s Portfolio Budget Statements, which are tabled in Parliament as Budget-related papers.

Divisional evaluation reviews are conducted each year in July/August, with a mid-term review in February. These reviews enable the senior executive to evaluate the performance of each division and to determine or refine divisional priorities for the period ahead.

The Budget Allocation Review (BAR) and the Capital Management Plan (CMP) are the primary mechanism through which decisions are made on allocation of funding within the department. Work units both in Australia and overseas have the opportunity to bid for funds through the BAR/CMP and mid-term BAR/CMP each year. Bids are considered by the senior executive. This consolidated process allows for strong budget planning and expenditure forecasting, and ensures the department’s internal processes are aligned with the Government’s Budget timetable. BAR/CMP meetings were held in June 2008, with mid-term BAR/CMP meetings in December 2008.

Each year, we evaluate the performance of overseas posts over the previous 12 months through our post evaluation reports process. This process is the central mechanism for ensuring work at posts is focused on the Government’s priorities. Posts’ contributions to policy outcomes and the quality of post management are assessed. Priorities for each post are set for the forthcoming year. Post evaluation feeds into the senior executive’s appraisal of the performance of individual heads of mission.

A key part of these evaluations is incorporating the views of other departments and agencies. As for previous years and as suggested by the ANAO in its 2004–05 audit on the Management of bilateral relations with selected countries, in 2008–09 we invited comment from 48 departments and agencies, and also requested that they consult relevant bodies within their portfolios. We sought assessments of posts’ performance towards meeting the Government’s policy objectives and feedback on operational issues. All agencies responded to our request and comments were very positive, indicating overall that our overseas network was successful in meeting whole-of-government objectives.

State and territory offices are reviewed at the end of each financial year. This evaluation focuses on key areas including support to ministers, liaison with the local consular corps, business liaison programs and trade advocacy and outreach activities. The assistance each provided for major meetings, notarial services and office administration is also taken into account.

In 2008–09, deputy secretaries led small teams to four posts—Brasilia, Mexico City, Dhaka and Colombo—to conduct post liaison visits (PLVs) to assess at first hand each post’s performance against agreed objectives.

Internal audit

Internal audit forms an important part of the department’s governance framework, providing an integral contribution to governance, risk management and control. Internal audits presented to the Audit and Risk Committee in 2008–09 included:

All recommendations arising from these audits were either satisfactorily addressed during the year or were in the process of being addressed. Refinements were made to the control self-assessment audit tool for post finance managers to ensure it continued to be focused on risk.

Conduct and ethics

The department has a unit dedicated to investigating allegations of fraud and misconduct, promoting the Australian Public Service (APS) Values and APS Code of Conduct and providing conduct and ethics training. The 2008 findings of the annual Australian Public Service Commission employee survey verified that the awareness of our staff of both the APS Values and APS Code of Conduct and suspected breach reporting procedures was higher than the APS average. The survey also found that a higher percentage of respondents in the department compared to other APS agencies regarded the behaviour of their colleagues, supervisors and senior managers as in accordance with APS values.

We implemented a number of new policies aimed at ensuring staff remain informed of best ethical practices and emerging ethical issues in the public sector. The Government’s Lobbying Code of Conduct and understanding the responsibility to report extraterritorial offences by Australians were among issues addressed. We joined the Ethics Contact Officer Network (ECONET) at its inception in May 2009. The network plays a key role in enhancing ethics and accountability in the Commonwealth public sector.

Staff were regularly reminded of their responsibilities through the department’s conduct and ethics awareness program. The program included training, policy circulars and briefings on overseas post-specific conduct and ethics issues for heads of mission, deputy heads of mission and senior administrative officers.

In addition to the APS Values and APS Code of Conduct, the department obliges employees posted overseas to abide by our own Code of Conduct for Overseas Service for Australia-based staff, which aims to address the department’s significant overseas representational role.

Countering fraud

The department’s fraud prevention, detection, investigation, reporting and data collection procedures and processes meet the specific needs of the department and comply with Commonwealth Fraud Control Guidelines.

Our 2008–10 fraud control plan is focused on raising awareness among staff through fraud prevention training, fostering an ethical and professional working environment aligned with the APS Values and APS Code of Conduct and maintaining strong internal control and audit procedures that reduce fraud risks.

Our fraud and misconduct investigators all hold Advanced Diplomas of Government (Fraud Control Management) which is the Attorney-General’s Department’s recommended qualification for Commonwealth employees involved in managing fraud prevention, detection and investigation activity.

In accordance with the Public Service Act 1999, we have appropriate procedures in place to ensure that Australia-based staff who report breaches of the APS Values and APS Code of Conduct or the department’s Code of Conduct for Overseas Service are protected from the threat of reprisal and that allegations are investigated fairly. Procedures are also in place to protect locally engaged staff.

Risk management and business continuity planning

The department introduced new approaches to strategic management of risk that aim to enhance corporate governance and assurance processes and to ensure that current and emerging risks are appropriately identified and addressed. Improved integration of risk management into existing corporate governance mechanisms and the establishment of a critical risk list were among the new measures.

The Audit and Risk Committee has responsibility for risk management and business continuity planning. We also provided a submission to the annual Comcover risk management benchmarking survey.

We began a comprehensive review of the department’s business continuity management and planning. To achieve organisational consistency, we developed and instituted standard business continuity templates for use by our overseas missions, state and territory offices, and Canberra work units. We also established management procedures for the reporting of incidents that identified a single point of contact for all work areas in Australia and overseas in the event of an unplanned interruption to our services (outage). Improved escalation procedures were introduced to ensure the department’s response to a sudden outage is properly coordinated.

Portfolio coordination

As the lead agency in the foreign affairs and trade portfolio, the department worked closely with portfolio agencies to deliver effective coordination and consistency of objectives. In addition to routine consultation at the working level, we held portfolio coordination meetings at deputy secretary-level with the executive director of Austrade (two meetings), and heads of AusAID (five meetings) and ACIAR (two meetings) to discuss strategic and corporate issues.

More frequent meetings with AusAID, including separate meetings on corporate and policy issues, reflected the need for close inter-agency alignment in our aid–foreign/trade policy priorities. The department was also represented at the deputy secretary-level on the Development Effectiveness Steering Committee (DESC) charged with strengthening whole-of-government coordination of the aid program and playing an advisory role to government on overseas development assistance strategy and budget proposals.

Whole-of-government coordination

Effective whole-of-government coordination is essential to the department’s policy and organisational work. We worked closely with a wide range of other agencies to achieve whole-of-government objectives, including in hosting major international meetings, in responding to consular crises, in regional counter-terrorism cooperation, and in coordinating policy approaches to bilateral and multilateral trade negotiations.

Whole-of-government coordination at our overseas posts is crucial to their operations, given the increasing numbers of attached agency staff. We highlighted the importance of the department’s whole-of-government approach by including it as a core professional requirement in performance management templates and in departmental training programs.

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