Part 3: Management and Accountability
- 1 Corporate governance
- 2 Audit
- 3 Business continuity arrangements
- 4 Judicial decisions
- 5 External reports on agency operations
- 6 Management of human resources
- 7 Consultants
- 8 Purchasing
- 9 ANAO access clauses and exempt contracts
The Secretary to the Treasury has 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, approves policy 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 authorised 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 2013 were:
- Dr Martin Parkinson PSM, Secretary to the Treasury, Chair;
- Rob Nicholl, CEO, AOFM;
- Rosemary Huxtable, Deputy Secretary, Budget Group, Department of Finance and Deregulation;
- Greg Maughan, Consultant;
- Paul Bide, Consultant;
- Carol Austin, Consultant;
- Nigel Ray, Executive Director, Fiscal Group, Treasury; and
- Peter Warne, Consultant.
The Advisory Board met on three occasions in 2012‑13.
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.
Portfolio Strategy Meeting
During 2012‑13, the role of the Asset and Liability Committee was incorporated into the Portfolio Strategy Meeting (PSM) which is held on a monthly basis. As was the case with the Asset and Liability Committee, the PSM advises the CEO on operational debt policy and financial risk management issues, as well as reviewing deal execution and general market conditions. Its membership comprises of the CEO, Director of Financial Risk, Head of Treasury Services, Head of Investor Relations and Head of Reporting and IT, together with other senior staff with relevant functional responsibilities.
Information Technology Steering Committee
The Information Technology Steering 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), Head of Reporting and IT, Chief Finance Officer, Financial Risk Practice Leader, IT Security Advisor, and an IT Analyst.
The Security Committee performs an oversight role in respect of security management within the AOFM. Its membership comprises of the CEO (Chair), Agency Security Advisor, and IT Security Advisor. The head of the Treasury Security Team is invited to attend ex officio to assist in security harmonisation.
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 from the Minister for Finance and Deregulation through the Financial Management and Accountability (Finance Minister to Chief Executives) Delegation 2010 and amendments to the original delegation;
- policies including an Annual Remit approved by the Secretary to the Treasury;
- Chief Executive Instructions and internal financial delegations from the CEO;
- annual corporate and business group plans to support delivery of the AOFM’s outcome and program as stated in the 2012‑13 Treasury Portfolio Budget Statement;
- a Conflicts of Interest Policy which provides guidance to the AOFM’s committee members, staff, consultants and contractors on avoiding or managing conflicts in accordance with their obligations;
- a Purchasing and Tendering Manual and Contract Management Guidelines, which provide guidance consistent with Australian Government legislative requirements and information to contract managers for managing contractual relationships with suppliers of goods and services;
- a fraud risk assessment and Fraud Control Plan which complies with the Commonwealth Fraud Control Guidelines and includes appropriate fraud prevention, detection, investigation reporting and data collection procedures and processes;
- the AOFM AML/CTF Program under the Anti‑Money Laundering and Counter‑Terrorism and Financing Act 2006; and
- a risk and compliance framework, including an enterprise risk assessment and Compliance Assurance Plan to support operational risk management and compliance activities.
The AOFM has taken all reasonable measures to eliminate the risk of fraud. The risk of fraud is managed within tolerances established under the Enterprise Risk Management (ERM) framework. This is achieved through the implementation of an effective framework of internal controls and within a culture that embraces a heightened level of mindfulness and awareness of our obligations and commitments, consistent with our governance and legislative frameworks.
Should any occur, incidents of fraud or attempted fraud, will generate a review of relevant operations of the AOFM. The CEO will determine whether civil remedies or a prosecution will result from investigated incidents of fraud. Where a loss has been incurred, the AOFM shall seek to recover the proceeds in accordance with the Chief Executive Instructions.
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 2012‑13 included:
- reviewing the operation of the AOFM’s risk and internal control environment, including enhancement of the ERM framework and the Certificate of Compliance process;
- approval of the AOFM’s 2012‑13 internal audit plan;
- monitoring actions taken by the AOFM in response to matters raised by auditors;
- advice on the preparation and review of the AOFM’s financial statements;
- monitoring progress of major agency projects; and
- reviewing a number of internal policies, procedures and training programs.
The Audit Committee membership as at 30 June 2013 comprised:
- Peter Warne, independent member of the AOFM Advisory Board (Chair);
- David Lawler, independent member;
- David Haigh, Manager, Budget Policy Division, Fiscal Group, the Treasury (from February 2013); and
- Samantha Montenegro, Chief Risk and Compliance Officer, AOFM.
Other representatives from the Treasury included Brenton Goldsworthy (August 2012 meeting) and Louise Butler (November 2012 meeting).
Invited attendees included the Australian National Audit Office (ANAO) and its outsourced provider (KPMG), 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 2012‑13.
The AOFM’s internal auditor, Deloitte Touche Tohmatsu undertook the following audits during 2012‑13:
- treasury systems and interface controls;
- employee entitlements;
- financial risk policies and frameworks;
- taxation liabilities;
- pre‑implementation readiness review of retail trading of Commonwealth Government Securities (Phase One);
- IT backup and recovery procedures; and
- RMBS sales process.
All audits concluded that the AOFM’s internal controls were operating as intended. The internal auditor also found that the AOFM had appropriate processes in place to ensure that audit recommendations were actioned in a timely manner. The recommendations made during 2012‑13 were aimed at enhancing the efficiency and design of the current control environment. At 30 June 2013, recommendations had either been implemented or were in the process of being implemented in accordance with agreed timelines.
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 the outbreak of an influenza pandemic. These arrangements include the provision of back up services 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. Business continuity plans were updated and tested during 2012‑13 (as they will continue to be on an annual basis).
In addition to a BCP, 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; and an Emergency Procedures Manual to provide for the evacuation and/or protection of people from physical harm in the event of an incident, including but not limited to those articulated in the Commonwealth’s Protective Security Policy Framework.
In 2012‑13, no matters relating to the AOFM were the subject of judicial proceedings, administrative tribunal hearings or consideration by the Ombudsman.
External reports on agency operations
There were no reports in 2012‑13 on the operations of the AOFM by: the Auditor‑General (other than the report on financial statements); a Parliamentary committee; or the Commonwealth Ombudsman.
Management of human resources
Meeting workforce needs
AOFM is one of only a handful of financial market related operations with a head office in Canberra. The work of AOFM involves skills in sovereign debt, financial, and risk management along with a variety of supporting specialties. AOFM interfaces with wholesale financial market participants within a public sector policy framework. Most AOFM staff use practical knowledge of financial markets, debt management, public policy and government administration to meet the AOFM’s objectives.
In 2012‑13 the AOFM used open recruitment processes to fill five out of six vacancies. Web‑based advertising has led to a substantial increase in the size of candidate fields, averaging forty‑eight candidates per vacancy. AOFM also attracted a number of candidates who expressed interest in employment with AOFM without reference to a specific vacancy.
AOFM employees are developed through on‑the‑job experience, mentoring, assistance with further professional training and in‑house development programs. This approach aims to maintain the core professional strength of the AOFM.
Eighty‑three per cent of AOFM employees have degree qualifications, with 24 per cent holding higher degrees and 19 per cent double degrees. Forty‑three per cent have professional qualifications.
The retention rate for 2012‑13 was 93 per cent, with an average annual retention rate of 91 per cent over the previous five years.
The State of the Service census results from 2012 sheds some light on AOFM’s high retention rate. The summary results concerning engagement show that AOFM respondents were above the mid‑point on all measures of employee engagement. The AOFM scored above the APS overall score on these measures as well but some differences do not seem significant:
|Engagement Type||AOFM Score||APS Overall Score||Difference|
Census respondents indicated a satisfaction with the AOFM according to the type of work and employment conditions. Respondents were also satisfied with the non‑monetary conditions at AOFM. They are also satisfied with the quality of learning through formal training and education (albeit not always with the access to learning opportunities). Almost 70 per cent feel a strong personal attachment to working at the AOFM.
Training and development
The AOFM performance management system is designed to encourage staff to consider training and development activities during each performance cycle. Over the last five financial years, an average of 85 per cent of staff have participated in training or development supported by the AOFM. During this period, training averaged 4.1 days per full‑time equivalent staff member (FTE) per year and the direct costs of training (paid to external parties) averaged $2,266 per FTE per year. In 2012‑13, 96 per cent of employees participated in training and $2,516 per FTE was paid to external providers. Of the 3.8 days per FTE invested in skill development, 1.8 days per FTE were external courses, and one day each was devoted to study assistance and in‑house training respectively. Including participant time, AOFM’s commitment to training and development activity in 2012‑13 represented 3.1 per cent of gross salary.
The AOFM workforce
As at 30 June 2013, the AOFM employed 40.6 full‑time equivalent staff under the Public Service Act 1999. Table 2 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. These positions are arranged under the Strongim Gavman Program and the Regional Assistance Mission to the Solomon Islands programs respectively.
Changes to senior management
There were no changes to senior management.
Other staffing changes
Three ongoing and one non‑ongoing employees were recruited during 2012‑13. This represents replacement for normal turnover.
There was three staff departures during the year, all were ongoing staff. Two of these employees took up positions elsewhere in the financial sector. Employee departures represented 7.6 per cent of average staffing levels in 2012‑13 (7.5 per cent in 2011‑12).
All non‑SES employees have terms and conditions set by the AOFM Enterprise Agreement 2011‑2014 which was negotiated under the Australian Public Service Bargaining Framework.
During 2012‑13 AOFM conducted a comprehensive review of its Employment Policies and Procedures document which involved a cross‑unit working party. The new document reflects policies that have been updated (to take account of the AOFM Enterprise Agreement 2011‑2014), clarified (where appropriate) and is streamlined.
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 2013 are shown in Table 3. These rates are set in accord with the enterprise agreement and take account of relevant market rates. AOFM sets a one‑third percentile 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 2013|
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 study 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.
Work health and safety is a standing item on the Executive Group Agenda. All staff have completed self‑paced learning modules concerning their responsibilities for work health and safety.
Flu vaccinations, health assessments, and dietary assistance were again provided in 2012‑13. Counselling and related support is available under an Employee Assistance Program provided by PPC Worldwide.
There were no compensable injury claims in 2012‑13.
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 have no longer been required to report on these functions
During 2012‑13, fifteen new consultancy contracts were entered into involving total actual expenditure of $93,060. In addition, three ongoing consultancy contracts were active during 2012‑13 year, involving total actual expenditure of $175,160. This is summarised in Table 4.
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 www.tenders.gov.au.
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 Rules (CPRs) 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 Rules (CPRs) (July 2012).
The CPRs are applied to AOFM’s activities through the Chief Executive Instructions and supporting internal policy and procedural documentation.
ANAO access clauses and exempt contracts
Three 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 2012. The AOFM appointed Citigroup Global Markets Australia Pty Ltd, Royal Bank of Canada and UBS AG (Australia Branch) as Joint‑Lead Managers for the issue. The AOFM appointed Barclays Bank PLC, Deutsche Bank AG (Sydney Branch) and Westpac Banking Corporation as Co‑Managers for the issue.
The second contract was for the syndicated issuance of $4 billion of Australian Government debt in May 2013. The AOFM appointed Citigroup Global Markets Australia Pty Ltd, Deutsche Bank AG (Sydney Branch), UBS AG (Australia Branch) and Westpac Banking Corporation as Joint‑Lead Managers for the issue.
The third contract was for the appointment Carol Austin to the AOFM’s advisory board in March 2013.
ANAO access clauses were not included in the contracts as the AOFM maintains all relevant information in relation to the contracted services. Under these contracts, $11.963 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: 7 November 2013