Part 3: Management and Accountability
- 1 Corporate governance
- 2 Audit
- 3 Business continuity arrangements
- 4 Judicial decisions
- 5 Management of human resources
- 6 Consultants
- 7 Purchasing
- 8 ANAO access clauses and exempt contracts
The Secretary to the Treasury holds responsibility for specific authorities over the AOFM’s activities and is responsible for advising the Treasurer on Government policy relating to debt management and investment activities. The Secretary approves detailed debt management and investment policies, sets operational limits and addresses any breaches of those limits. In discharging his responsibilities, the Secretary is advised by the AOFM Advisory Board.
The Chief Executive Officer (CEO) of the AOFM is responsible for the day-to-day management and direction of the AOFM. The CEO exercises powers delegated by the Treasurer and the Secretary for debt creation and issuance, investment, portfolio management and management of the AOFM’s staff. The CEO has final responsibility for all aspects of the financial management of the Office (which is treated separately from the financial management of the Treasury as the AOFM is a prescribed agency under the Financial Management and Accountability Act 1997). The AOFM reports to the Treasurer on issues pertaining to the management and performance of the portfolio, prepares an annual report for presentation to Parliament and provides information about its activities on its website.
AOFM Advisory Board
The AOFM Advisory Board provides advice to the Secretary on debt management policy and the operational strategy and performance of the AOFM. The Board does not possess executive powers or decision making authority. The Advisory Board members as at 30 June 2012 were:
- Dr Martin Parkinson PSM, Secretary to the Treasury, Chair;
- Tony Cole AO, Director of the Northern Territory Treasury Corporation, Chairman of the Melbourne Institute Advisory Board and Trustee Director to Commonwealth Superannuation Corporation;
- Rob Nicholl, CEO, AOFM;
- David Martine, Deputy Secretary, Budget Group, Department of Finance and Deregulation;
- Greg Maughan, Consultant;
- Nigel Ray, Executive Director, Fiscal Group, Treasury; and
- Peter Warne, Chairman of the Australian Leisure and Entertainment Property Group, Deputy Chairman WHK Group Ltd, Non Executive Director of ASX Limited and subsidiary companies and Macquarie Group Limited. He is also Chairman St Andrews Cathedral School Foundation Limited, Deputy Chairman Capital Markets Cooperative Research Centre Limited. He is also a Non-Executive Director of Next Financial Limited and the Securities Industry Research Centre of Asia Pacific and a number of other unlisted companies.
The Advisory Board met on three occasions in 2011-12.
Senior management committees
Several senior management committees operate to assist the CEO in the management of the Office and to facilitate communication, coordination and the assessment of risk and compliance management.
The Executive Group advises the CEO in determining policies and procedures governing the conduct of AOFM operations. Its activities include: the review and assessment of AOFM’s risk exposures; monitoring compliance obligations; determining and monitoring the implementation of HR policies; overseeing and advising the CEO on significant OH&S matters; overseeing the corporate planning process, including internal and aggregate resourcing needs; and advising the CEO on significant corporate matters as they may arise.
Asset and Liability Committee
The Asset and Liability Committee advises the CEO on operational debt policy and financial risk management issues. The committee reviews policy and finance related operational settings, deal execution and market conditions. Its membership comprises of the CEO, the Director of Financial Risk, the Head of Treasury Services, Head of Investor Relations and the Head of Reporting and IT, together with other senior staff with relevant functional responsibilities.
Human Resources Committee
This committee advised on the management of human resources, including employment policies, training and development, recruitment, performance management and remuneration. It consisted of the CEO as Chair, the Head of Treasury Services, the Director of Financial Risk, the Head of Investor Relations, the Head of Reporting and IT, the Chief Finance Officer, the Chief Risk and Compliance Officer and the Human Resource Manager. During 2011-12, the role of this Committee was incorporated into the responsibilities of the Executive Group.
Information Technology Steering Committee
This committee monitors IT service availability and security related incidents and oversees current and planned information technology projects and operations. Its membership comprises of the CEO (Chair), the Head of Reporting and IT, and the IT Manager.
Other elements of the governance framework
Other elements of the AOFM’s governance framework include:
- formal delegations and authorisations from the Treasurer of powers under various Acts that provide the legal authority for the conduct of the AOFM’s debt management and investment activities;
- formal delegations — Financial Management and Accountability (Finance Minister to Chief Executives) Delegation;
- policies, including a Balance Sheet Policy, Credit Policy and Liquidity Policy, and operational limits, approved by the Secretary to the Treasury;
- Chief Executive Instructions and internal financial delegations by the CEO under the Financial Management and Accountability Act 1997;
- a Contract Management Policy, which provides guidelines for managing contractual relationships with suppliers of goods and services based on Australian Government legislative requirements and best practice principles;
- a fraud risk assessment and Fraud Control Plan which complies with the Commonwealth Fraud Control Guidelines and includes appropriate fraud prevention, detection, investigation and reporting procedures; and
- the AOFM AML/CTF Program under the Anti-Money Laundering and Counter-Terrorism and Financing Act 2006.
The AOFM Audit Committee reviews, monitors and recommends improvements to the risk management, internal control and financial reporting processes. It oversees the audit and compliance programs, making its assessments based on the information and reports it receives from the AOFM and auditors, at its quarterly meetings.
Key activities during 2011-12 included:
- reviewing the operation of the AOFM’s risk and internal control environment, including the Certificate of Compliance process;
- approval of the AOFM’s 2011-12 internal audit plan;
- monitoring the action taken by the AOFM on matters raised by auditors;
- advice on the preparation and review of the AOFM’s financial statements;
- monitoring the progress of major agency projects; and
- providing its endorsement for a number of internal policies, procedures and training programs (for instance, the AOFM Conflicts of Interest Policy).
The Audit Committee membership as at 30 June 2012 comprised:
- Peter Warne, independent member of the AOFM Advisory Board (Chair);
- David Lawler, former Group Auditor, Financial Controller of Institutional Banking and Executive General Manager of the Commonwealth Bank of Australia. Audit Committee member of the Defence Materiel Organisation, the Australian Trade Commission, the Australian Agency for International Development, the Australian Sports Anti-Doping Authority and National ICT Australia;
- Brenton Goldsworthy, Manager, Assets, Liabilities and Intergenerational Report Unit, the Treasury;
- Samantha Montenegro, Chief Risk and Compliance Officer, AOFM (from May 2012); and
- Jason Dakin, Manager, Compliance, AOFM.
Invited attendees included the Australian National Audit Office (ANAO), the AOFM internal auditor (Deloitte Touche Tohmatsu) and the AOFM Chief Finance Officer. The AOFM CEO also attends meetings at his discretion.
The Committee met on four occasions during 2011-12.
The AOFM’s internal auditor, Deloitte Touche Tohmatsu undertook the following reviews during 2011-12:
- a review of the AOFM’s securities issuance and lending activities;
- a review of the AOFM’s payroll and finance function; and
- a review of the AOFM’s general IT controls; and a review of the AOFM’s AML/CTF program governance framework.
All audits concluded that the AOFM’s internal controls were operating satisfactorily. Where recommendations were made, these were aimed at enhancing the efficiency and design of the current control environment. At 30 June 2012, recommendations had either been implemented or are in the process of being implemented in accordance with agreed timelines.
Australian National Audit Office reports
During 2011-12, the ANAO did not conduct any cross-agency audits which involved the AOFM.
Business continuity arrangements
The AOFM has business continuity and pandemic plans to ensure that its critical activities can continue in the event of a major disruption or influenza pandemic. These include the provision of back up arrangements that can be implemented when the AOFM’s office accommodation is not able to be used or when AOFM staff are not available to perform key tasks. There is also an information technology (IT) disaster recovery plan which sets out the processes required to restore critical IT-reliant functions in the aftermath of a significant disruption. Business continuity plans were also updated and tested.
In 2011-12, no matters relating to the AOFM were the subject of judicial proceedings, tribunal hearings or consideration by the Ombudsman.
The AOFM actively pursues a number of approaches to meet its workforce needs. In particular, the AOFM seeks to employ recent graduates and develop them through on-the-job experience, mentoring, assistance with further professional training and in-house development programs. This approach is tailored to maintain the core professional strength of the AOFM on a continuing basis. Employees accumulate practical knowledge of financial markets, debt management, public policy and government administration.
This strategy has been successful in attracting and retaining highly qualified professional staff.
Eighty-six per cent of AOFM employees have degree qualifications, with 23 per cent holding higher degrees and 21 per cent double degrees. Thirty-five per cent have professional qualifications.
The retention rate for 2011-12 was 88 per cent, with an average annual retention rate of 88 per cent over the previous five years.
Where specialised skills are needed that are not currently available within AOFM, the agency may recruit for positions that require such specialised skills (with this sometimes being on a fixed-term basis in response to a specific project or tasks that will not be ongoing).
A broad-band classification structure allows staff to advance between work levels within classification grades subject to work availability and performance. This can occur without formal competitive selection processes. Promotions across grades are made via merit selection.
Training and development
Staff are encouraged to participate in training and development activities relevant to their work responsibilities. The performance management system is designed to encourage employees to consider development activities during each performance cycle. Learning is fostered through on-the-job training, external courses, conferences, workshops and seminars.
Over the last five financial years, an average of 82 per cent of staff have participated in training or development supported by the AOFM. During this period, training averaged 4.2 days per full-time equivalent staff member (FTE) per year and the direct costs of training (paid to external parties) averaged $2,306 per FTE per year. In 2011-12, 91 per cent of employees participated in training, 4.4 days per FTE were invested in skill development and $2,078 per FTE was paid to external providers. Investment in training and development activity over the year was 3.9 per cent of gross salary.
The AOFM workforce
As at 30 June 2012, the AOFM employed 38.6 full-time equivalent staff under the Public Service Act 1999. Table 1 shows this workforce by broadband classification.
Note: AOFM broadband classifications are nominally linked to Australian Public Service classifications as follows: AOFM1 corresponds to APS1 to APS4, AOFM2 corresponds to APS5 to EL1, AOFM3 corresponds to EL2 and AOFM4 covers higher level EL2.
Two staff were located overseas during the year to support capacity building in sovereign debt management in Papua New Guinea and the Solomon Islands under the Strongim Gavman Program and the Regional Assistance Mission to the Solomon Islands respectively.
Changes to senior management
Ms Samantha Montenegro joined AOFM as Chief Risk and Compliance Officer at the end of April 2012. This filled a need identified by the Deloitte’s review of AOFM compliance activities. There were no other changes to senior management.
Other staffing changes
In addition to the Chief Risk and Compliance Officer, two ongoing and one non-ongoing employees were recruited during 2011-12. This represents replacement for normal turnover.
There were six staff departures during the year. Three non-ongoing staff completed short-term engagements and three ongoing staff exited. Two of these employees took up positions in the private sector. For ongoing employees, departures represented 7.5 per cent of average staffing levels in 2011-12 (5.5 per cent in 2010-11).
Bargaining for a new three-year enterprise agreement commenced on 13 May 2011 and concluded 11 August 2011. Fair Work Australia approved the AOFM Enterprise Agreement 2011-2014 on 30 August 2011 after a 90 per cent ‘Yes’ vote by affected staff. The new enterprise agreement came into effect on 6 September 2011 and it covers employment terms and conditions for all non-SES staff.
The CEO has his terms and conditions set by the Secretary of the Department of The Treasury through a determination made under subsection 24(1) of the Public Service Act 1999.
Pay rates as at 30 June 2012 are shown in Table 2. These rates were negotiated in the context of the Government’s remuneration policy and take account of relevant market rates. AOFM sets a conservative benchmark against financial services organisations using data provided by the Financial Institutions Remuneration Group. These data cover a wide range of public and private sector financial institutions, including banks, corporate treasuries and State debt management agencies. AON Hewitt provided independent advice in applying the data to the AOFM.
|Classification||30 June 2012|
Remuneration within the range for the classification depends on individual performance ratings. Performance appraisals balance what is achieved (outputs) with how those results are obtained (behaviours). Performance-linked bonuses are not paid.
Non-salary benefits provided to staff principally comprise superannuation and support for professional development through studies assistance, short courses and payment of job-relevant professional society membership fees. A mobile phone, Blackberry, laptop, or other mobile device may be provided where there is a business need. Executive remuneration is reported in Note 12 of Part 4: Financial statements.
Work health and safety
Health, wellbeing and safety services are provided by the Department of The Treasury under a Service Level Agreement. The AOFM has one Health and Safety Representative who assists employees in accord with the Work Health and Safety Act 2011.
In March 2012, AOFM went to the market for specialist expertise in work health and safety as part of due diligence under the Work Health and Safety Act 2011. Providers were asked to conduct a risk assessment of our Canberra operations with a view to having appropriate systems in place to comply with the Work Health and Safety Act 2011. This was to include an assessment of hazards and their associated risks and risk management. David Segrott of Australian Health and Safety Services Pty Ltd conducted a physical inspection of the AOFM premises, reviewed our extant work health and safety policies, and interviewed all senior managers.
The final report was submitted in early June 2012 and it was circulated to all AOFM Executive members. All recommendations have been considered and, where appropriate, action has been taken.
All AOFM Executive members have been briefed on work health and safety due diligence. Work health and safety is a standing item on the Executive Group Agenda.
The AOFM established an online resource for work health and safety concerns that allows all staff to see issues that are raised and actions taken. Material Safety Data Sheets are also posted here.
Consultation with AOFM workers is ongoing for AOFM employees. Cooperation and coordination between AOFM and other Persons Conducting a Business or Undertaking (PCBUs) is in its early phases.
Staff members have access to a number of ongoing health activities, including health-related educational seminars, outdoor fitness programs, and other exercise classes. Flu vaccinations, health assessments, and dietary assistance were also provided in 2011-12. Counselling and other support is available under an Employee Assistance Program provided by PPC Worldwide.
There were no compensable injury claims in 2011-12.
Up to December 2011, the AOFM was not the subject of any directions under section 45 of the Occupational Health and Safety Act 1991 and received no notices under that Act. From 1 January 2012, there have been no notices or investigations under part 10 of the Work Health and Safety Act 2011.
Changes to disability reporting in annual reports
Since 1994, Commonwealth departments and agencies have reported on their performance as policy adviser, purchaser, employer, regulator and provider under the Commonwealth Disability Strategy. In 2007-08, reporting on the employer role was transferred to the Australian Public Service Commission’s State of the Service Report and the APS Statistical Bulletin. These reports are available at www.apsc.gov.au. From 2010-11, departments and agencies are no longer required to report on these functions.
The Commonwealth Disability Strategy has been overtaken by a new National Disability Strategy which sets out a ten year national policy framework for improving life for Australians with disability, their families and carers. A high level report to track progress for people with disability at a national level will be produced by the Standing Council on Community, Housing and Disability Services to the Council of Australian Governments and will be available atwww.fahcsia.gov.au. The Social Inclusion Measurement and Reporting Strategy agreed by the Government in December 2009 will also include some reporting on disability matters in its regular How Australia is Faring report and, if appropriate, in strategic change indicators in agency Annual Reports. More detail on social inclusion matters can be found at www.socialinclusion.gov.au.
During 2011-12, seven new consultancy contracts were entered into involving total actual expenditure of $106,910. In addition, three ongoing consultancy contracts were active during 2011-12 year, involving total actual expenditure of $239,480. This is summarised in Table 3.
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.
The AOFM engages consultants where it lacks specialist expertise or when independent research, review or assessment is required. Consultants are typically engaged to investigate or diagnose a defined issue or problem; carry out defined reviews or evaluations; or provide independent advice of a specific nature.
Prior to engaging consultants, the AOFM takes into account the skills and resources required for the task, the skills available internally, and the cost-effectiveness of engaging external expertise. The decision to engage a consultant is made in accordance with the FMA Act and related regulations including the Commonwealth Procurement Guidelines (CPGs) and relevant internal policies.
|Number of consultancy contracts|
|Expenditure (including GST)|
The AOFM’s purchasing activities are carried out to comply with legislative requirements and Government policy, in particular the Commonwealth Procurement Guidelines (CPGs) (December 2008).
The CPGs are applied to AOFM’s activities through the Chief Executive’s Instructions and supporting internal policy and procedural documentation.
ANAO access clauses and exempt contracts
Two contracts were let during the reporting period in excess of $100,000 that did not provide for the Auditor-General to have access to the contractor’s premises. One contract was for the syndicated issuance of $3.25 billion of Australian Government debt in October 2011. The AOFM appointed Deutsche Bank AG (Sydney Branch), Citigroup Global Markets Australia and UBS AG (Australia Branch) as Joint-Lead Managers for the issue. The AOFM appointed ANZ Banking Group, Commonwealth Bank of Australia and Westpac Banking Corporation as Co-Managers for the issue. The second contract was for the syndicated issuance of $0.90 billion of Australian Government debt in February 2012. The AOFM appointed Deutsche Bank AG, Merrill Lynch International (Australia) Limited, The Royal Bank of Scotland plc Australia Branch and UBS AG (Australia Branch) as Joint-Lead Managers for the issue.
ANAO access clauses were not included in the contracts as the AOFM maintains all relevant information in relation to the issuance. Under these contracts, $6.848 million (including GST) was paid.
No contract or standing offer has been exempted from being published in the Purchasing and Disposals Gazette on the basis that it would disclose exempt matters under the Freedom of Information Act 1982.
Last updated: 5 February 2014