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Part 3: Management and accountability

Corporate governance

The Treasury’s corporate governance practices comply with statutory and other external requirements, and aim to achieve sound administrative and financial management practice. They are designed to ensure efficient, effective and ethical use of the Treasury’s resources.

As part of its ongoing focus on effective governance, the Treasury periodically reviews its:

  • accountability mechanisms;
  • leadership, culture and communications;
  • governance and committee structures;
  • work with stakeholders to assess effectiveness;
  • risk management, compliance and assurance systems; and
  • strategic planning, performance monitoring and evaluation.

The Executive Board is the Treasury’s primary decision-making body. The Audit Committee assists the Executive Board by independently reviewing and considering the department’s operations, its risk management framework and the integrity of its financial accounts.

The Treasury’s management model sets out the role accountabilities of the five levels of management structure. The levels and accountabilities are:

  • the Secretary is accountable for the Treasury’s management and strategic leadership;
  • executive directors are accountable for a group’s management and strategic leadership;
  • general managers are accountable for a division’s management and strategic leadership;
  • managers are accountable for a unit’s management and leadership; and
  • advisors and analysts are accountable for providing technical expertise and team leadership, and contributing to unit outputs.

Senior management committees and their roles

Executive Board

The Treasury’s Executive Board comprises the Secretary, the Executive Directors and the Group General Manager of Corporate Services Group. The Executive Board is responsible for high-level policy issues relating to the Treasury’s strategic leadership and management, including:

  • organisational development – shaping the Treasury’s future;
  • policy development and coordination – involving major and/or new economic policy issues, generally with implications that involve more than one group;
  • corporate governance – ensuring the efficient, effective and ethical use of resources; and
  • planning and allocation of resources – meeting current and future work priorities.

The Executive Board members as at 30 June 2011 were:

  • Dr Martin Parkinson, Secretary;
  • Dr David Gruen, Executive Director, Macroeconomic Group;
  • Mr Mike Callaghan, Executive Director, Macroeconomic Group;
  • Mr Jim Murphy, Executive Director, Markets Group;
  • Mr Nigel Ray, Executive Director, Fiscal Group;
  • Mr Rob Heferen, Executive Director, Revenue Group;
  • Mr Richard Murray, Executive Director, Policy Coordination and Governance; and
  • Mr Steve French, Group General Manager, Corporate Services Group.

The Executive Board is supported by the Secretary to the Board and the Organisational Strategy Unit.

Audit Committee

The Audit Committee reviews audit issues by:

  • supporting and enhancing the control framework;
  • providing assurance on published financial information;
  • monitoring, reviewing and reporting on compliance; and
  • assisting the Chief Executive to comply with all legislative and other obligations.

The Treasury’s Audit Committee follows the recommended best practice guidelines issued by the Australian National Audit Office (ANAO) and reviews internal and external audits relating to the Treasury. The ANAO also attends the Treasury’s Audit Committee meetings as an observer.

The Audit Committee met six times during 2010-11. The membership for the meeting on 3 June 2011 included Mr Richard Murray (Chair), Mr Geoff Miller, Mr David Woods, Mr Steve French, Mr Roger Paul, Mr Tony McDonald and Mr Bruce Jones (the external representative). As at 30 June 2011, the membership of the Audit Committee was being adjusted to further enhance its independence and seniority, including the appointment of an independent Chair.

Staffing committee

The staffing committee is chaired by the Group General Manager of Corporate Services Group and comprises a representative from each group, including the General Manager of Human Resources Division. The aim of the committee is to ensure the Treasury maintains and develops a sufficiently skilled and deployed workforce to deliver the Treasury’s mission.

Activities include guiding and monitoring a workforce planning strategy to meet the Treasury’s organisational needs, based on advice from the Executive Board on departmental priorities, managing the bulk recruitment and transfer rounds, and determining the need for specialist recruitment processes.

Remuneration committees

Remuneration committees are established within the Executive, Corporate Services Group and the four policy groups in the Treasury to recommend to the Secretary the determination of salary rates available under individual arrangements for APS6, EL1 and EL2 employees.

The Executive Board determines each remuneration committee’s membership and the executive director of the relevant group chairs each remuneration committee. The committee comprises the Chair, the General Manager Human Resources Division and all general managers within the group. One general manager from another group is included to promote consistency of outcomes between groups.

Senior management structure

The Treasury’s senior management structure is detailed in Figure 1 on page 15.

Corporate planning and reporting

The Treasury’s corporate planning and reporting framework is an integrated system linked to the financial management, human resource and business management systems.

The Executive Board sets the broad strategic direction for the Treasury through its Strategic Framework. The Strategic Framework sets out the Treasury’s mission, role, policy responsibilities, key priorities, risks, values and capabilities.

The Treasury meets its external reporting responsibilities through its portfolio budget statements and annual report.

Risk management

The Treasury pursues a comprehensive, coordinated and systematic approach to risk management. It supports managers to anticipate uncertain events, exploit opportunities and respond appropriately to potential weaknesses. The approach has five key components.

  • The Treasury’s risk management framework was reviewed in 2010-11 and the department has implemented recommendations to maintain best practice and further embed risk management in the Treasury’s work processes and culture. The updated risk management framework is consistent with the Australian/New Zealand Standard for Risk Management and aims to:
    • establish robust, yet pragmatic, risk management practices that support business needs and provide the methodology and tools to enable effective management of risk across the Treasury;
    • develop a consistent Treasury-wide understanding of risk management;
    • foster an environment where all staff assume responsibility for managing risk and where managers formally consider risks as part of the decision making process; and
    • ensure that significant risks facing the Treasury have been identified, understood, documented and are being actively managed.
  • The Fraud Control Plan complies with Australian Government Fraud Control Guidelines.
  • The Chief Executive Instructions put into effect the Financial Management and Accountability Act 1997 requirements, setting out responsibilities and procedures which provide an overarching framework for transparent and accountable financial management. They also contain topics relating specifically to risk management and internal accountability.
  • The Internal Audit Plan identifies services and functions for auditing. The
    plan incorporates issues raised by the ANAO in its audit of the Treasury’s financial statements, and where appropriate, recent ANAO reports on cross-agency matters, upcoming management issues, policy evaluations, previous internal audits and strategic risk management issues.
  • Risk management and insurable risks are aligned through Comcover and Comcare.

The Treasury uses a range of strategies to identify and manage risks associated with the delivery of IT services. New IT-enabled business solutions are assessed against key IT principles to manage strategically IT investments. A range of plans deliver IT services, including:

  • the IT Disaster Recovery Plan sets out the strategies and processes to restore services if the Treasury’s central computing infrastructure is lost completely or partially;
  • the Business Continuity Plan for the Treasury’s IT application systems sets out alternative methods and processes, so the Treasury can continue to work while the environment is restored;
  • the IT Security Policy addresses the requirements to protect information holdings and secure operation of the Treasury’s IT resources;
  • the Internet and Email Acceptable Use Policy sets out responsibilities for appropriate use of the internet, email facilities and services;
  • the IT Change Control Guidelines (an internal management tool) assist with quality assurance control over proposed changes to the technical environment and facilities; and
  • Project Standards, internal standards based on the structured project management methodology, PRINCE2, ensure correct project governance is applied to IT-enabled business projects.

Training programs and staff notices raise staff awareness of risk management policies and procedures. All policies and procedures are available to staff on the intranet.

Ethical standards and accountability

The Treasury places a strong emphasis on activities which are designed to support an ethical culture. The Treasury Management Model underpins the accountability and governance frameworks and incorporates the department’s mission and values. These values are consistent with, and enhance, the Australian Public Service (APS) values.

The Treasury Workplace Agreement contains a commitment from employees to be aware of, and observe the Treasury’s and APS values. The Treasury Performance Management System, along with the APS Code of Conduct, provides mechanisms for ensuring individual values and behaviors align with these shared corporate values and behaviours.

The Treasury’s Personal Accountability Framework encapsulates departmental policies and guidelines into a single framework covering all aspects of behaviour, conduct and values. The framework provides a guide on how these responsibilities should translate into working relationships and standards of ethical and personal behaviour. The Framework is available on the intranet and is promoted to all staff at training and induction programs.

During the induction process, new staff also receive information on the Australian Public Service Commission’s (APSC) Ethics Advisory Service and undertake an APS and Treasury accountabilities workshop, which provides participants with an understanding of the APS values and code of conduct, Treasury accountabilities and values, and corporate governance frameworks.

Under the Commonwealth Fraud Control Guidelines, the Treasury must conduct ethics and fraud awareness training. This is offered regularly to all staff, and reflects the department’s commitment to maintaining an ethical culture, and promoting fraud awareness. The ethics and fraud awareness training provides attendees with an understanding of ethics, ethical challenges, resolution of ethical problems and prevention of fraud in the Commonwealth.

The Chief Executive Instructions establish the Treasury’s internal policies and rules which apply the principles and requirements of the Financial Management and Accountability (FMA) Act, FMA Regulations and FMA Orders. They provide the basis for the management and effective, efficient, and ethical use of Commonwealth money, property and other resources. The Treasury reviews and updates the instructions regularly.

The Chief Executive Instructions also provide a user-friendly approach to financial management processes and guide staff so they can comply with legislation and ethical standards. Information on Financial Management Delegations is communicated to new staff during their induction, and additional training and regular financial management forums are conducted for divisional support officers. A two-day financial management workshop is delivered twice a year to assist staff in understanding the APS Financial Management Framework.

All corporate governance policies and procedures are available on the intranet.

Senior executive service remuneration

Terms and conditions for all of the Treasury’s senior executive service staff are contained in either Australian Workplace Agreements or individual section 24(1) determinations made by the Secretary.

Senior executive service staff are appraised using the APSC Senior Executive Leadership Capability Framework. That involves making individual rankings against the framework’s five criteria, then arriving at an overall relative ranking for the person, which reflects performance.

An increase in ranking based on longer-term performance can lead to an increase in base salary (see Table 4 on page 132). Additional information on remuneration is set out in Note 12: Executive remuneration in the Financial Statements on pages 202 to 205.