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Part 3: Management and Accountability (continued)

External scrutiny

Audit

The Audit Committee met seven times during 2012-13. Its work included reviewing the Treasury’s financial statements and a range of internal and external audit reports.

The Audit Committee’s Financial Statements Subcommittee met five times during 2012-13, with three of the meetings being related to the 2011-12 financial statements and two meetings related to the 2012-13 financial statements. The subcommittee 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 subcommittee monitors production of the financial statements and helps resolve issues.

The Treasury currently engages KPMG to provide internal audit services. This involves development of internal audit programs, conducting various internal audit reviews, and working with the audit committee to ensure internal audit recommendations are being implemented effectively.

Internal Audits

The Treasury completed seven internal audits/reviews during 2012-13.

Review of the Management of Sensitive Information

Using a cross-section of various Treasury divisions, this review assessed the processes and practices applied by the Treasury in managing access to commercially sensitive information, and whether the controls in place to prevent and detect any intentional or inadvertent release of information were suitably designed. The report made three recommendations around investigating the root-causes of security breaches, reviewing accesses to network drives and ensuring that all staff are well-informed of security procedures for classified and sensitive material.

Implementation of the Clean Energy Finance Corporation

This review assisted the Treasury to manage the establishment of the Clean Energy Finance Corporation. The review was conducted in three phases; the first ensured that the Treasury had the appropriate processes, reporting and procedures in place in relation to interim support to the CEFC; the second identified the broad organisational and governance frameworks, processes and protocols that the CEFC needed to have in place to effectively manage its operational and investment funds; and the third assessed the operational readiness of the CEFC before the actual transfer of the funds.

Post-Implementation Review of Odysseus

The Treasury has developed a custom data analytics system that provides Treasury staff with analytical and reporting tools designed to increase efficiency and timeliness of economic analysis. The review assessed whether the system, named ‘Odysseus’, had achieved an outcome consistent with stakeholders’ expectations and business requirements. Through understanding the services and capability of the system and undertaking consultations with a targeted sample of business areas, Internal Audit considered how Odysseus, or other tailored data analytic solutions in the market, could add value more broadly across the Treasury.

Review of Credit and Travel Cards

This review considered how the Treasury could implement travel and related card services as part of the broader Whole of Australian Government (WoAG) Travel Services initiative to ensure better value-for-money outcomes and increased efficiency. The review included an analysis of purchasing data involving credit card and travel activity, an analysis of which types of transactions could benefit from the implementation of credit cards, and an analysis of the risks associated with the implementation of credit cards, including a review of preventative and detective controls. The Treasury agreed to five recommendations to realise the intended benefits of the WoAG initiative and to ensure that the necessary systems and processes were in place.

Internal Reporting

This review assessed the Treasury’s internal management reporting arrangements to ensure that reports are suitable for decision-making and compliance-reporting purposes. The review found that the various stakeholders involved were generally comfortable with the level of detail being provided in the management reports, and made five recommendations for improvement, including around the inclusion of forecast information, and steps to improve the timeliness of monthly reporting.

Review of Shared Services Cost-Recovery Arrangements

The Treasury provides shared services to six agencies within the Treasury portfolio. These services include financial management, information management, people and organisational management and marketing and communication services. This review examined the approaches that determine the price of shared services and investigated potential improvements to these approaches. The review provided recommendations around changes to the pricing methodology, particularly changes to primary cost allocation statistics and potential longer-term pricing improvements.

Post-Implementation Review of the Federal Payments Management System

The Federal Payments Management System (FPMS) was introduced to streamline the certification and collation of information for payments to the States. FPMS is used by agencies to submit and certify payment information, and is used within Treasury to review and approve the submitted information and to export the information for payment. The engagement assessed whether the end-user system controls are operating as intended and that the level of evidence maintained is appropriate and sufficient. The Treasury agreed to the four recommendations made in the audit report, including ongoing training for external agency users, and the investigation of further possible system enhancements.

Australian National Audit Office reports

In 2012-13, the ANAO completed the following audit related to the Treasury’s operations.

Audit Report Number 34: Preparation of the Tax Expenditures Statement

This audit assessed the extent to which the Treasury and the ATO had improved the management of tax expenditure estimates by implementing the six recommendations in a 2008 ANAO audit report in this area and the three recommendations made by the Joint Committee of Public Accounts and Audit (JCPAA) following its inquiry.

The ANAO tabled the report (Audit Report No. 34 2012-13) in Parliament on 9 May 2013. The ANAO found that two of the previous ANAO recommendations had been fully implemented, with the remaining recommendations having been partially addressed. The Treasury will continue to pursue improvements in the TES through progressing recommendations made by the ANAO and JCPAA, with regard to departmental and Government priorities. The 2012-13 report made one recommendation on the review and standardisation of internal methodologies for allocating reliability ratings to tax expenditure items, in order to improve the consistency of the reliability ratings disclosed in the Tax Expenditures Statement. The Treasury and the ATO have each agreed to the recommendation.

Other audit reports

Other ANAO reports relevant to the Treasury in 2012-13 were:
Report No. 4 Confidentiality in Government Contracts: Senate Order for Departmental and Agency Contracts (Calendar Year 2011 Compliance) (tabled 20 September 2012)
Report No. 16 Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2012 (tabled 20 December 2012)
Report No. 28 The Australian Government Performance Measurement and Reporting Framework — Pilot Project to Audit Key Performance Indicators (tabled 23 April 2013)
Report&
nbsp;No. 33
The Regulation of Tax Practitioners by the Tax Practitioners Board (tabled 8 May 2013)
Report No. 35 Control of Credit Card Use (tabled 16 May 2013)
Report No. 44 Management and Reporting of Goods and Services Tax and Fringe Benefits Tax Information (tabled 13 June 2013)
Report No. 49 Interim Phase of the Audits of the Financial Statements of Major General Government Sector Agencies for the Year Ending 30 June 2013 (tabled 20 June 2013)
Report No. 51 Management of the Australian Taxation Office’s Property Portfolio (tabled 24 June 2013)
Report No. 52 Management of Debt Relief Arrangements (tabled 25 June 2013)
Report No. 53 Agencies’ Implementation of Performance Audit Recommendations (tabled 25 June 2013)
Report No. 54 Administration of Government Advertising Arrangements: August 2011 to March 2013 (tabled 26 June 2013)

Details of audit reports are available at www.anao.gov.au.

Parliamentary committees

Treasury’s annual report will be scrutinised by the Senate Economics Committee.

In 2012-13, officials from the Treasury appeared before the following parliamentary committees:

  • 26 July 2012 — House of Representatives Standing Committee on Economics, Review of the Tax Laws Amendment (2012 Measures No. 4) Bill 2012.
  • 26 July 2012 — Senate Economics Legislation Committee, Inquiry into the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012.
  • 26 and 27 July 2012 — House of Representatives Standing Committee on Economics, Inquiry into the Australian Charities and Not-for-profits Commission Exposure Draft Bills.
  • 8 August 2012 — Senate Economics References Committee, Inquiry into the post-GFC banking sector.
  • 16 August 2012 — Senate Standing Committees on Rural and Regional Affairs and Transport, Inquiry into the Foreign Investment Review Board National Interest Test.
  • 22 August 2012 — House of Representatives Standing Committee on Regional Australia Inquiry into the use of ‘fly-in, fly-out’ (FIFO) workforce practices in regional Australia.
  • 3 September 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Australian Charities and Not for Profits Commission Bill 2012, the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill & the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012.
  • 27 September 2012 — House of Representatives Standing Committee on Economics, Clean Energy Amendment Bills 2012.
  • 5 October 2012 — Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the Corporations Legislation Amendment (Derivative Transactions) Bill 2012.
  • 5 October 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Superannuation Amendment (Further MySuper and Transparency Measures) Bill 2012.
  • 11 October 2012 — Senate Standing Committees on Rural and Regional Affairs and Transport, Inquiry into the Foreign Investment Review Board National Interest Test.
  • 18 October 2012 — Senate Economics Legislation Committee, Budget Supplementary Estimates.
  • 19 October 2012 — Senate Economics Legislation Committee, Inquiry into the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related bills.
  • 22 October 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Personal Liability for Corporate Fault Reform Bill 2012.
  • 12 November 2012 — Senate Economics Legislation Committee, Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012.
  • 13 November 2012 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Family Business in Australia.
  • 26 November 2012 — Joint Standing Committee on Treaties, Report 132: Review into Treaties tabled on 18 September and 30 October 2012.
  • 22 January 2013 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2012.
  • 30 January 2013 — House of Representatives Standing Committee on Economics, Tax Laws Amendment (2012 Measures No. 6) Bill 2012.
  • 7 February 2013 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Family Business in Australia.
  • 14 February 2013 — Senate Economics Legislation Committee, Additional Estimates.
  • 21 March 2013 — Senate Standing Committees on Rural and Regional Affairs and Transport, Inquiry into the Foreign Investment Review Board National Interest Test.
  • 3 April 2013 — Senate Economics References Committee, Development and Operation of the Minerals Resource Rent Tax.
  • 18 April 2013 — House of Representatives Standing Committee on Economics, Inquiry into the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013.
  • 22 April 2013 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013.
  • 22 April 2013 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Corporations and Financial Sector Legislation Amendment Bill 2013.
  • 30 April 2013 — Senate Economics Legislation Committee, Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013.
  • 9 May 2013 — Senate Standing Committees on Rural and Regional Affairs and Transport, Inquiry into the Foreign Investment Review Board National Interest Test.
  • 12 June 2013 — Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into a regulatory framework for tax (financial) advice services (previously Tax Laws Amendment [2013 Measures No. 2] Bill 2013, Schedules 3 and 4).
  • 5 and 6 June 2013 — Senate Economics Legislation Committee, Budget Estimates.

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 2012-13.

Commonwealth Ombudsman

The Commonwealth Ombudsman did not issue any reports on the operations of the Treasury in 2012-13.