Management of financial resources

Overview

The department’s operations in Australia and overseas are supported by a sound financial resource management framework, which includes robust internal controls and regular budgeting performance reporting.

The 2014–15 Budget included additional funding to continue Australia’s diplomatic presence in Afghanistan and Iraq, support the prevention and disruption of maritime people smuggling, and transfer responsibility for accrediting tourism products from government to industry. The Government agreed to re-prioritise Australia’s official development assistance (ODA) budget to focus on economic growth and poverty reduction in the Indo–Pacific region. As a result of the integration of the former AusAID, the department was able to identify considerable efficiencies, delivering $400 million in savings to the Government in 2014–15.

At the 2014–15 Additional Estimates, we received additional funding to support Australia’s presence in Iraq; to assist with the consular response to the downing of MH17 in Ukraine, including to set up an interim mission in Kyiv; and to establish a national support service for intercountry adoption. The Government discontinued funding for the International Cultural Council.

In its report, Interim Phase of the Audit of Financial Statements of Major General Government Sector Agencies for the year ending 30 June 2015, the ANAO acknowledge that the department had effective internal controls to ensure good financial management and a sound financial reporting framework.

Financial management information system

The department is nearing completion of a financial systems enhancement program that has delivered an internal audit controls module, electronic travel and credit card system and a position-based SAP security and delegations model. Post-based pilots of the new cash management, business intelligence reporting and budgeting tools have commenced and will be further rolled out in 2015–16. Improvements, including electronic purchase-to-pay functionality for Australia and overseas, are under development and will also be implemented during the next financial year.

Assets management

The department’s internal capital funding process is based upon sound business cases being developed for allocation of funds to work units. The executive reviewed the progress of capital investment throughout the year, including specific reviews on large projects such as the international communications network and Passport Redevelopment Program.

Further strategic capital planning is underway with development of a Capital Management Plan that will enable long-term planning of the department’s investment needs.

We operate a rolling cycle for asset revaluations whereby each asset class is revalued every three years. The exceptions are land and buildings, which are revalued annually. Informal reviews and impairment testing of asset classes are conducted annually to ensure asset values are fairly stated in the end-of-year accounts.

Purchasing performance

The department ensured compliance with all relevant Commonwealth procurement policies and legislation, particularly the Commonwealth Procurement Rules.

Competitive tendering and contracting

In 2014–15, use of open and competitive methods of procurement was 88 per cent of gazetted contracts by value.

A low proportion of tenders were exempted from open tendering. Exemptions were granted in circumstances where additional deliveries of services by the original supplier were required to ensure continuity; where, in response to an approach to market, no submissions that represented value for money were received; or where specialist in-country capability was required to ensure appropriate service delivery.

In 2014–15, 81 per cent of relevant contracts with a value above $10,000 were reported within 42 days on AusTender.

The department introduced a streamlined Partner Performance Assessment Framework to strengthen the department’s management of its aid program commercial partners and ensure that past performance is closely linked to future contract award decisions.

We continued to promote streamlining and innovation in procurement, piloting broad, outcomes-based scopes of services, flexible approaches to pricing to encourage innovative proposals and performance base contracts.

Exempt contracts

There were no contracts or standing offers in excess of $10,000 (including GST) exempted from publication 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

During 2014–15, the department entered into 30 new consultancy contracts, involving total actual expenditure of $1,630,555. In addition, 10 on-going consultancy contracts were active, involving total actual expenditure of $1,495,549.

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 tenders.gov.au.

Procurement initiatives to support small business

The department supports small business participation in the Commonwealth Government procurement market. Small and medium enterprise (SME) and small enterprise participation statistics are available on the Department of Finance’s website:finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/

We recognise the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website: treasury.gov.au/

The department uses non-discriminatory procurement practices that support SMEs and are consistent with the Commonwealth Procurement Rules. Additional initiatives include use of procurement templates that are based on the Commonwealth Contracting Suite to reduce tendering costs and red-tape, electronic systems including the ability to pay by credit card for agreements up to $10,000, maximising the number of Indigenous SME contracts through broad application of the mandatory set-aside requirements in the Indigenous Procurement Policy, use of SMEs as independent evaluation committee members, and conducting ‘Doing Business with DFAT’ seminars and other industry engagement workshops.

Whole-of-Australian-Government stationery and office supplies

The Department of Finance exercised the first of two ‘one-year’ extensions to the Whole-of-Australian-Government Arrangements for Stationery and Office Supplies. Consequently, OfficeMax continued to be our stationery provider for the Whole-of-Australian-Government Arrangements for Stationery and Office Supplies during 2014–15.

Whole-of-Australian-Government travel management services

The department continued to work under phase two of the Whole-of-Australian-Government Arrangements (for Travel and Related Card Services) throughout the financial year. Under phase two, the AOT Group provide accommodation services for the department and Thrifty and Europcar provide our car rental suppliers within Australia. We commenced using Diners Club in August 2014 as the payment method for domestic and international airfares as well as accommodation and car rental services within Australia.

In December 2014, the Department of Finance appointed QBT Pty Ltd as the new whole-of-government travel management services provider. The department commenced with QBT Pty Ltd on 29 June 2015.