Annual Report 2008-2009
 

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Management of financial resources

The department’s operations in Australia and overseas are underpinned by our sound and prudent financial resource management framework. The framework includes:

In the ANAO’s Interim Phase of the Audit of Financial Statements of General Government Sector Agencies for the Year ending 30 June 2009, tabled in Parliament in June 2009, the department was recognised for having effective internal controls in place to ensure good financial management and a sound financial reporting framework. The ANAO found no audit issues of a significant nature in our financial statements.

In the 2008–09 Budget, the Government provided additional funding for the department to advance the interests of Australia and Australians internationally, including:

The Government also decided to increase application fees for passports.

Through the 2008–09 Additional Estimates Budget the Government provided additional funding as follows:

Through the Updated Economic and Fiscal Outlook, the Government also provided $26.3 million over four years to improve security for staff at the Australian High Commission in Islamabad, Pakistan.

In 2008–09 the department paid to the Consolidated Revenue Fund a dividend of $24.731 million from the Overseas Property Special Account ($25 million in 2007–08).

Review of the department’s resources

Working with the Department of Finance and Deregulation, we undertook a ‘root and branch’ review of the adequacy of the department’s resources. The work of the review fed into the development of the department’s 2009–10 budget.

The budget includes a range of measures which will provide increased resources for the department to enhance its capabilities and strengthen Australia’s overseas diplomatic and consular missions.

There have been no other developments or events since 30 June 2009 that have affected or may significantly affect future operations or financial results of the department.

Financial management information system

A comprehensive business case was prepared to upgrade the financial management information system, SAP. Work on the upgrade will be carried out over the next two financial years. The business case incorporated significant productivity improvements and enhanced functionality.

Asset management

The department manages assets prudently. A rigorous capital funding process has been implemented whereby work units must provide well-argued business cases to seek capital funds. These are assessed twice a year by the senior executive. Concurrently, the senior executive, in addition to receiving monthly reports, reviews the progress of previously approved projects. Managers of high-risk capital projects submit quarterly progress reports to the senior executive. Work areas continually review and update their asset purchasing and disposal needs as part of a five-year asset plan.

In 2005–06, the department moved to a five-year rolling cycle for asset revaluations. Under the rolling plan, asset classes are revalued once every five years. The only exceptions are land and buildings, which are revalued every year. Informal reviews and impairment testing of asset classes covered by the relevant Australian accounting standards are conducted annually to ensure asset values are fairly stated. In 2008–09, the artworks asset class was formally revalued under the rolling cycle.

Competitive tendering and contracting

We collaborated with the Department of Finance and Deregulation on a range of coordinated procurement studies. The department continued to investigate possible procurement synergies with other government agencies. This was undertaken with a view to achieving efficiencies through streamlined procurement processes, leveraging the purchasing scope of combined procurements and taking advantage of volume price discounts.

We strategically reviewed our procurement policies and practices during the year. Our involvement in performance reviews (encompassing the tendering stage and contract management role of procurement processes) provided useful insights into current practice. These reviews delivered recommendations, including refinement of procurement guidelines and templates, which will improve departmental processes.

Personal Profile:

Yushen Cui

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Yushen Cui
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Yushen Cui joined the department in 2006 as a Certified Practising Accountant (CPA) in the Diplomatic Security Information Management and Services Division (DID). During his time in DID, Yushen was responsible for the financial management of significant resources invested by the department to secure our missions and staff overseas, including numerous chancery relocation projects.

In late 2008, Yushen commenced as a trainee under the Administrative Development Program, undertaking rotations across the department to further develop his core administrative and corporate skills in administering Australia’s overseas posts. Yushen is currently undertaking his third rotation with the consular operations team in Canberra.

‘I am excited by the prospect of using the skills and experience I have acquired under the Administrative Development Program in an overseas environment for the first time, when I begin a three-year posting to Kuala Lumpur from late October 2009 as First Secretary and Consul.’

All contracts of $100 000 or more (inclusive of GST) let during the reporting period provide for access for the Auditor-General to contractors’ premises.

Purchasing performance

Our procurement policy provides for the efficient, effective and ethical delivery of the Government’s purchasing and procurement programs. Contractual arrangements entered into by the department are in accordance with the principles of value for money, encouraging competition and non-discrimination. They comply with all relevant Commonwealth procurement policies and legislation, in particular the Commonwealth Procurement Guidelines.

Exempt contracts

There were no contracts in excess of $10 000 or standing offers exempted from being published in the Purchasing and Disposal Gazette (AusTender) on the basis that publication would disclose exempt matters under the Freedom of Information Act 1982.

Consultancy services

The department engages recognised experts on an ad hoc basis both to provide specialist expertise and where independent assessments or input are considered desirable. The selection process for consultancy services both in Australia and at overseas posts is consistent with the department’s broader procurement policies and the Commonwealth Procurement Guidelines.

During 2008–09, 61 new consultancy contracts were entered into involving total actual expenditure of $2 256 976. In addition, 18 ongoing consultancy contracts were active, involving total actual expenditure of $1 063 149.

More information, including a summary of the department’s policy on the selection and engagement of consultants and a list of consultancy contracts let during the year to the value of $10 000 or more, is available at Appendix 12. Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website (www.tenders.gov.au).

Overseas property—leased estate

The overseas property estate comprises Australian government-owned properties, funded from the overseas property Special Account (see Outcome 4), and properties leased from private landlords and funded from our appropriations.

The department’s Overseas Property Office (OPO) manages the overseas owned estate, and also—in consultation with Corporate Management Division—has oversight of the overseas leased estate. We lease approximately 530 properties overseas, including chanceries, head of mission residences, staff accommodation and other facilities.

OPO’s management role in the leased estate includes responsibility for refurbishment projects, relocation of leased chanceries and head of mission residences. Posts are responsible for ensuring that staff accommodation meets appropriate standards, and that tenant maintenance obligations are met and rents paid.

Properties in the overseas estate must meet functional needs and security requirements. Staff welfare is an important aspect of managing the overseas estate. For this reason OPO maintains an audit program of properties in both the overseas owned and leased estates to ensure compliance with health and safety requirements, and to assist posts in meeting compliance obligations.

Overseas leased estate projects under way, or in the planning and development stages in 2008–09, included relocation of the chanceries in Seoul (within the current commercial office building) and Stockholm and new space in the building housing the existing chancery in Abu Dhabi. Relocation of chanceries to new premises in Belgrade and Madrid was completed.

Personal Profile:

Tim O’Hara

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Tim O’Hara joined the department in February 2009 as a corporate and financial management trainee (CFMT). Tim’s first three-month rotation was in the Australian Passport Office, where he gained hands-on experience in passport operations, policy, production and fraud prevention issues. He had the opportunity to assist with passport issues affecting Australian citizens in Australia and all over the world. In his second rotation in the Consular Policy and Training Section, Tim helped to develop consular training programs and worked on consular policy issues in a constantly changing international environment. Tim also assisted in the development of an inter-departmental agreement that will provide an improved service for some disadvantaged Australians.

The CFMT program provides an extensive range of practical experiences and exposure in key areas of the department to develop core corporate, finance and administrative skills. CFMTs undertake further CPA (Certified Practising Accountant) or financial corporate management study to further develop skills and expertise. Tim is enrolled in a Graduate Certificate of Corporate Management which will assist him in the management of Australian missions abroad.

‘The CFMT program is a fantastic opportunity to be able to work in different areas of the department gaining valuable skills and experiences for future roles in DFAT.’

Domestic property

We lease office accommodation for our operations in Canberra, in the state capitals, in Darwin, Newcastle, and on Thursday Island. Tenant maintenance of the properties was undertaken to meet functional, security and occupational health and safety requirements. We increased our office space in the R G Casey Building to alleviate accommodation pressures and to accommodate some passport work units that had been operating in other premises.

The department continued its commitment to incorporating environmentally sustainable measures in its operations. Our Environmental Management System (EMS) for the R G Casey Building underwent review and audit in May 2009 and was re-certified as complying with International Standard ISO 14001.

We completed the rolling program of security-systems upgrades in the R G Casey Building and at state and territory offices. Further upgrades are planned to security systems so that all state and territory offices will be monitored centrally by December 2009.

Outlook

A key corporate management and accountability challenge for 2009–10 will be the close monitoring and review of budget expenditure. The department will focus on the efficient roll-out of new positions overseas and in Canberra to meet increased staffing needs.

The implementation of a new one-year collective agreement will be a priority, including introducing a revised performance management system. Negotiation of a new collective agreement will also be required.

We will undertake a number of initiatives to improve efficiencies, including establishing whole-of-government coordinated procurement contracts for travel services, implementing Visalink automated online visa applications processes, and taking transitional steps toward cash-based budgeting.

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