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Part 3: Management and Accountability (continued)

External scrutiny

Audit

The Audit Committee met seven times during 2011-12. Its work included reviewing the Treasury’s financial statements and a range of internal and external audit reports.

The Audit Committee’s Financial Statements Sub-committee met nine times during 2011-12, with three of the meetings being related to the 2010-11 financial statements and six meetings related to the 2011-12 financial statements. The sub-committee comprises members from the Treasury, the Australian National Audit Office (ANAO), the Treasury’s internal audit service provider and an external representative of the Treasury Audit Committee. The sub-committee monitors production of the financial statements and helps resolve issues.

The Treasury engaged KPMG to develop the 2012-13 internal audit program. KPMG works with the Audit Committee to continuously improve audit services by regularly reviewing the audit program and scrutinising internal audit recommendations, as well as relevant ANAO reviews.

Internal audits

The Treasury completed eleven internal audits/reviews during 2011-12.

End User Computing

This review assessed the Treasury’s End User Model (EUM) of control. It assessed a select number of EUMs to determine the adequacy of control mechanisms around their development of maintenance; and followed up on the recommendations from the 2008 End User Computing Internal Audit. Internal Audit and Treasury agreed on actions for two recommendations to strengthen control mechanisms around the development, maintenance and support of EUMs.

Stakeholder Engagement

This review considered the Treasury’s stakeholder engagement practices with the aim of identifying better practices and possible process improvements. Three initiatives/policies were assessed, with Internal Audit considering the approach adopted by the Treasury in identifying and managing external stakeholders in policy development projects. The Treasury agreed on actions for all four of the recommendations to improve management of stakeholder relationships.

Review of Prioritisation of ICT Enabled Projects

This review provided feedback and observations on ways to enhance the prioritisation process for ICT enabled projects within the Treasury. The review assessed Treasury’s current prioritisation processes and, while noting existing good practice, identified opportunities for improvement. Treasury agreed to both recommendations on strengthening prioritisation processes.

Review of the Procurement Process

This review assessed the Treasury’s procurement processes and systems. The report included the objectives and scope of the customer service focus of the Procurement and Contracts Team. The review listed reportable findings and the actions to resolve findings on four items.

Review of Expenditure on Consultancies

This review assessed the Treasury’s capacity to accurately capture, record and report on its expenditure on consultancies. Reporting requirements are found in a number of pieces of legislation and Commonwealth guidelines. The review assessed whether Treasury has adequate business processes in place to meet the legislative requirements, including the identification of a consultant and the reporting of expenditures on consultancy. The Treasury agreed to all three recommendations, including making improvements to documentation processes and roles and responsibilities.

Review of ICT Security Vulnerabilities and Protective Security Policy Framework

This review considered the Treasury’s Information Communications Technology security policy and controls and the Protective Security Policy Framework (PSPF). The review assessed the Treasury’s assurance framework and involved a high-level assessment of the Treasury’s readiness to comply with the PSPF mandatory requirements. The Treasury agreed to all recommendations.

Compilation of Administered Financial Reports

This review assessed the Treasury’s processes and controls concerning the compilation of administered financial statements, focusing on those items where the Treasury is reliant on third parties. The Treasury and Internal Audit agreed on actions in relation to four findings to improve scrutiny of third party information being provided and to improve on certification processes involved in the provision of this information.

Energy Security Council and Clean Energy Finance Corporation

This review provided advice on the Treasury’s project management and planning in relation to these initiatives.

Management of Overseas Deployees

This review provided advice on the management procedures in place for Treasury staff deployed in overseas countries, from a planning, in-country management, and reporting perspective.

Assessment of Payments against Section 83 of the Constitution

This review examined the processes and documentation adopted by the Treasury to assess compliance with Section 83 of the Constitution for the Treasury’s special appropriations and special accounts.

SAP-Aurion Integration Options

This review outlined the options available to the Treasury in relation to the potential integration of the human resources and finance systems.

Australian National Audit Office Reports

In 2011-12, the ANAO conducted two audits that related to the Treasury’s operations.

Audit Report Number 47, Small Business Superannuation Clearing House

In 2011-12, the ANAO undertook a performance audit to assess the effectiveness of the implementation and administration of the Government’s Small Business Superannuation Clearing House (SBSCH). The audit examined the involvement of Treasury, the Department of Human Services and the Australian Taxation Office in the program design, implementation and subsequent operation of the SBSCH.

Between October 2011 and June 2012 Treasury assisted the ANAO in its fieldwork and through the provision of comments on issues papers and on the draft report. The ANAO tabled the report (Audit Report No. 47 2011-12) in Parliament on Friday 22 June 2012. The ANAO found that the SBSCH provides a free superannuation clearing house service that is well administered and well regarded by the businesses that use it and the superannuation funds that receive contributions through it, meeting the primary objective of the program. The Treasury agreed to the two recommendations made by the report.

Audit Report Number 53, Records Management in the Australian Public Service

This review assessed the extent to which agencies create, manage and dispose of records in accordance with key business, legal and policy requirements. The agencies included in the audit were the Australian Customs and Border Protection Service (Customs), the Department of Immigration and Citizenship, and the Treasury.

Three high-level criteria were used to assess the performance of the agencies’ records management arrangements and practices. The criteria examined whether selected agencies had formally analysed their records management needs; developed and implemented frameworks and systems that adequately supported records management; and applied sound records management practices.

The audit also considered the Archives’ response to Recommendation No. 1 from ANAO Audit Report No. 6 2006-07 Recordkeeping including the Management of Electronic Records, including whether they had clarified Australian Government records management requirements for agencies.

The ANAO tabled the report (Audit Report No. 53 2011-12) in Parliament on 27 June 2012. The ANAO found that Australian Government agencies needed to focus effort on compliance with records management requirements across records management and business systems with a particular focus on the digitisation agenda. The audit recognised that the Treasury performed record management at a satisfa
ctory level. The Treasury agreed to the three recommendations made by the report.

Other audit reports

Other ANAO reports relevant to the Treasury in 2011-12 were:
Report No. 2 Confidentiality in Government Contracts: Senate Order for Departmental and Agency Contracts (Calendar Year 2010 Compliance)
Report No. 4 Indigenous Employment in Government Service Delivery
Report No. 5 Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs Framework
Report No. 7 Records Management in the Australian Public Service
Report No. 17 Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2011
Report No. 18 Information and Communications Technology Security: Management of Portable Storage Devices
Report No. 24 Administration of Government Advertising Arrangements: March 2010 to August 2011
Report No. 51 Interim Phase of the Audits of the Financial Statement of Major General Government Sector Agencies for the year ending 30 June 2012

The Audit Committee follows ANAO better practice guidelines by actively reviewing relevant matters raised in audit reports, and overseeing follow-up action. Details of audit reports are available at www.anao.gov.au.

Parliamentary committees

In 2011-12, officials from the Treasury appeared before the following parliamentary committees:

  • 1 August 2011 — Senate Economics References Committee, Finance for the not-for-profit sector.
  • 18 August 2011 — House of Representatives Standing Committee on Economics, Inquiry into the Food Standards Amendment (Truth in Labelling — Palm Oil) Bill 2011.
  • 12 September 2011 — House of Representatives Standing Committee on Economics, Inquiry into the Corporations (Fees) Amendment Bill 2011.
  • 23 September 2011 — Parliamentary Joint Committee on Corporations and Financial Services, Collapse of Trio Capital.
  • 19 and 20 October 2011 — Senate Economics Legislation Committee, Budget Supplementary Estimates.
  • 24 October 2011 — Parliamentary Joint Committee on Corporations and Financial Services, Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011.
  • 27 October 2011 — House of Representatives Standing Committee on Economics, Inquiry into the Tax Laws Amendment (2011 Measures No. 8) Bill 2011 and the Pay As You Go Withholding Non‐Compliance Tax Bill 2011.
  • 8 and 9 November 2011 — House of Representatives Standing Committee on Economics, Inquiry into the Mineral Resource Rent Tax Bills 2011.
  • 16 November 2011 — Senate Rural Affairs and Transport References Committee, Inquiry into Foreign Investment Review Board National Interest Test.
  • 16 November 2011 — Senate Standing Committee on Rural and Regional Affairs and Transport, Inquiry into Examination of the Foreign Investment Review Board National Interest Test.
  • 13 December 2011 — Senate Select Committee on Australia’s Food Processing Sector.
  • 16 December 2011 — House of Representatives Standing Committee on Economics, Tax Laws Amendment (2011 Measures No. 9) Bill 2011.
  • 24 January 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Corporations Amendment (Future of Financial Advice) Bill 2011, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011.
  • 8 February 2012 — House of Representatives Standing Committee on Economics, Insurance Contracts Amendment Bill 2011.
  • 15, 16 and 17 February 2012 — Senate Economics Legislation Committee, Additional Estimates.
  • 17 February 2012 — Senate Standing Committee on Rural and Regional Affairs and Transport, Inquiry into Examination of the Foreign Investment Review Board National Interest Test.
  • 21 and 22 February 2012 — Senate Economics Legislation Committee, Minerals Resource Rent Tax Bill 2011.
  • 23 February 2012 — Senate Economic Legislation Committee, Corporations Amendment (Future of Financial Advice) Bill 2011, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011.
  • 2 March 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011, Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012.
  • 16 March 2012 — House of Representatives Standing Committee on Economics, Tax and Superannuation Laws Amendment (2012 Measures No. 1) Bill 2012.
  • 15 May 2012 — Senate Select Committee on Australia’s Food Processing Sector.
  • 28 May 2012 — House of Representatives Standing Committee on Economics, Clean Energy Finance Corporation Bill 2012.
  • 29, 30 and 31 May 2012 — Senate Economics Legislation Committee, Budget Estimates.
  • 4 June 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Superannuation Supervisory Levy Imposition Amendment Bill 2012, Superannuation Legislation Amendment (Stronger Super) Bill 2012.
  • 4 June 2012 — House of Representatives Standing Committee on Economics, Tax Laws Amendment (2012 Measures No. 2) Bill 2012, Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012, Pay As You Go Withholding Non-compliance Tax Bill 2012, Passenger Movement Charge Amendment Bill 2012.
  • 18 June 2012 — Joint Standing Committee on Treaties, Multilateral Convention on Mutual Administrative Assistance on Tax Matters.

Ombudsman comments, court decisions and administrative tribunal decisions

Judicial and Administrative Appeals Tribunal Decisions

There were no judicial or Administrative Appeals Tribunal decisions that had, or may have, a significant impact on the operations of the Treasury in 2011-12.

Commonwealth Ombudsman

The Commonwealth Ombudsman did not issue any reports on the operations of the Treasury in 2011-12.