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External scrutiny

Audit

The Audit Committee met six times during 2013-14. 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 2013-14, with three of the meetings being related to the 2012-13 financial statements and two meetings related to the 2013-14 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 programmes, 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 2013-14.

Loans for Future Vintage Carbon Units (LFVU) Program

This review assessed the FMA implications of issuing loans as part of the LFVU Program and engaging a third party to perform the assessment of applications, as well as ongoing management of the loan and reviewing the adequacy of the proposed Treasury governance arrangements for the initial set up and ongoing management of the LFVU Program. The report identified four recommendations that will assist the Treasury to strengthen its governance arrangements and management of the LFVU Program to satisfy the Financial Management and Accountability Act 1997 (FMA Act) requirements.

Post Implementation Review of the Stand-up of the Clean Energy Finance Corporation (CEFC)

The Post Implementation Review assisted Treasury to develop its framework and approach to the establishment of entities. This review of Treasury’s process will make the standing up any future projects, similar to the CEFC, more efficient. The report identified four recommendations to ensure the CEFC had adequate internal controls and governance processes in place to manage its operational and investment funds. These recommendations related to the time and effort required to complete administrative tasks, assisting the CEFC to understand Government obligations, internal relationship management and the wind-down process.

G20 Operations governance arrangements

This review assessed the operations stream of the G20 Finance Track, including discussions with key stakeholders and review of documentation relating to: the broad organisational and governance frameworks, project management practices and plans, scenario planning and contingency planning. The report identified 10 recommendations, which included enhanced integration between the G20 policy and operations streams, details regarding the master schedule and separate Project Definition Documents, documentation of a clear risk escalation process as part of the Risk Management Plan, and development of policies and guidelines that promote the management of stress and fatigue risks.

Review of legal and legal support services

This review considered the efficiency with which the Parliamentary and Legal Services Unit manage requests for legal advice and whether the implementation of standard operating procedures is contributing to a reduction in unnecessary requests for legal advice. The report identified three recommendations related to the investigation of potential software and application solutions to implement a user-friendly central repository for legal advice, central maintenance of all records of legal advice received, and a campaign undertaken to promote compliance with the standard operating procedures.

Statutory appointments to advisory boards and committees

This review assessed the consistency of statutory appointment practices across Treasury and the potential for efficiency improvements. The report identified three recommendations related to establishing a reporting process for upcoming expiring appointments, improving documentation management practices and implementing a standardised appointments model to increase engagement throughout Treasury.

GST, long service leave (LSL) and remuneration tribunal payments

This review assessed the appropriateness of Treasury’s section 83 risk assessment which addresses compliance with payment conditions, the control framework and internal processes in relation to usage of the Treasury’s special appropriations and special accounts. The report identified one recommendation regarding a section 83 risk assessment template to implement additional controls. This is when assessing the risk of section 83 breaches in making long service leave payments, GST payments and payments under the Remuneration Tribunal for the remainder of the financial year.

Review of resource allocation, planning and performance management framework.

This review differed from other internal audit reports, in that it documented analysis from the internal auditor regarding:

  • recommendation of better practice principles and/or frameworks to guide consideration of resourcing models that might be considered by the Treasury;
  • provision of advice on alternate resourcing models relevant to the Treasury, how they have operated elsewhere (including New Zealand and UK), and how they could be implemented within the Treasury;
  • consideration of the linkages to planning, budget allocation and performance evaluation;
  • identification of the relative advantages and disadvantages of each model, including with reference to the experience of others, and the relative costs and changes required to implement each model in terms of the impact on people, processes, systems and administration;
  • ways to identify and advise on alternate incentive structures to support the flexible allocation of resources;
  • provision of advice on bottom-up resource allocation approaches linked to organisational planning; and
  • identification of evaluation mechanisms for reviewing the effectiveness of the recommended resource allocation models.

Australian National Audit Office reports

In 2013-14, the ANAO completed the following audit related to the Treasury’s operations.

Audit Report Number 9: Determination and Collection of Financial Industry Levies

This audit assessed:

  • Treasury’s consultation practices, and APRA’s support, in relation to the formulation of levies, and the extent to which they were appropriate and effective;
  • APRA’s policies, procedures and resources in place to effectively support the implementation of the financial levies legislation, consistent with the Australian Government Cost Recovery Guidelines; and
  • APRA’s processes for calculating and collecting levies, including minimising the risk of cross-subsidisation between industry sectors and entities.

The ANAO tabled the report (Audit Report No. 9 2013-14) in Parliament on 7 November 2013. The ANAO has made two recommendations to improve the administration of the APRA financial industry levies. The first recommendation is aimed at the Treasury and APRA improving consultation with stakeholders about the levy methodology and its application. The second recommendation involves the two agencies’ further considering aspects of the levy methodology as part of their current review.

Other audit reports

Other ANAO reports relevant to the Treasury in 2013-14 were:

Report No. 4 – Confidentiality in Government Contracts: Senate Order for Departmental and Agency Contracts (Calendar Year 2012 Compliance) (Tabled 26 September 2013)

Report No. 5 – Administration of the Taxation of Personal Services Income (tabled 15 October 2013)

Report No. 8 – The Australian Government Reconstruction Inspectorate’s Conduct of Value for Money Reviews
of Flood Reconstruction Projects in Queensland (tabled 6 November 2013)

Report No. 13 – Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2013 (tabled 18 December 2013)

Report No. 21 – Pilot Project to Audit Key Performance Indicators (tabled 27 February 2014)

Report No. 33 – Indigenous Employment in Australian Government Agencies (tabled 29 May 2014)

Report No. 34 – Implementation of ANAO Performance Audit Recommendations (tabled 29 May 2014)

Report No. 35 – Managing Compliance of High Wealth Individuals (tabled 4 June 2014)

Report No. 44 – Interim Phase of the Audits of the Financial Statements of Major General Government Sector Agencies for the year ending 30 June 2014 (tabled 19 June 2014)

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 2013-14, officials from the Treasury appeared before the following parliamentary committees:

  • 16 July 2013 — Senate Rural and Regional Affairs and Transport Reference Committee, Inquiry into Ownership Arrangements of Grain Handling.
  • 20-21 November 2013 — Senate Economics Legislation Committee, Budget Supplementary Estimates.
  • 26 November 2013 — Senate Environment and Communications Legislation Committee: Inquiry into the Clean Energy Legislation (Carbon Tax Repeal) Bill 2013 and related bills.
  • 27 November 2013 — Senate Economics Legislation Committee Public Hearing, (Inquiry into the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013).
  • 5 February 2014 — Senate Select Committee into the Abbott Government’s Commission of Audit.
  • 10 February 2014 — Public Hearing on our Tax Treaty with Switzerland and Tax Information Exchange Agreement with Uraguay.
  • 21 February 2014 — Senate Economic Reference Committee, Inquiry into the Performance of the Australian Securities and Investments Commission.
  • 21 February 2014 — Senate Foreign Affairs, Defence and Trade References Committee, Inquiry into Australia’s Overseas Aid and Development Assistance Program.
  • 21 February 2014 — Senate Standing Committee on Economics, Tax Laws Amendment (Research and Development) Bill 2013.
  • 26-27 February 2014 — Senate Economics Legislation Committee, Additional Estimates.
  • 17 March 2014 — Public Hearing on our Tax Information Exchange Agreements with Brunei and Guatemala.
  • 21 March 2014 — Joint Select Committee on Northern Australia.
  • 15 April 2014 — Senate Select Committee into the Abbott Government’s Commission of Audit.
  • 8 May 2014 — House Standing Committee on Agriculture and Industry.
  • 22 May 2014 — Senate Economics Legislation Committee, Inquiry into Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014.
  • 30 May 2014 — House of Representatives Standing Committee on Economics, Inquiry into Foreign Investment in Residential Real Estate.
  • 4-6 June 2014 — Senate Economics Legislation Committee, Budget Estimates.
  • 16 June 2014 – Public Hearing on our Treaty with the US to implement the US Foreign Account Tax Compliance Act.

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 2013-14.

Commonwealth Ombudsman

The Commonwealth Ombudsman did not issue any reports on the operations of the Treasury in 2013-14.