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
- 10 Procurement initiatives to support small business
The Secretary to the Treasury (Secretary) has responsibility for Government policies that determine specific authorities over the AOFM’s operational activities. The Secretary is responsible for advising the Treasurer on Government policy relating to debt management and investment activities. The Secretary approves the parameters relating to debt management and investment policies and addresses any breaches of those limits. The Secretary is advised on related matters by the Chief Executive Officer (CEO) and the AOFM Advisory Board.
The CEO of the AOFM is responsible for the day‑to‑day management and direction of the AOFM and for the implementation of debt management and investment policies and day‑today management of the Government’s cash portfolio. 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 responsibility for all aspects of the financial management of the AOFM (which is treated separately from the financial management of the Treasury as the AOFM is a listed entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The AOFM reports to the Treasurer on issues pertaining to the management and performance of the portfolio, prepares this annual report for presentation to the 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 2015 were:
- John Fraser, Secretary to the Treasury, Chair;
- Rob Nicholl, CEO, AOFM;
- Stein Helgeby, Deputy Secretary, Government and Resource Management Group, Department of Finance;
- Paul Bide, Consultant;
- Carol Austin, Consultant;
- Nigel Ray, Deputy Secretary, Macroeconomic Group, the Treasury; and
- Peter Warne, Consultant.
Other representatives included Dr Martin Parkinson PSM, the Treasury (November 2014 meeting), Dr David Gruen, the Treasury (as Acting Secretary, August 2014 meeting) and Rosemary Huxtable, Department of Finance (August 2014 meeting). The Advisory Board met on three occasions in 2014‑15.
Senior management committees
Several senior management committees operate to assist the CEO in the management of the AOFM and to facilitate communication, coordination and the assessment of risk and compliance management.
AOFM Executive Group
The AOFM Executive Group advises the CEO on policies and procedures governing the conduct of AOFM operations. Its activities include the review and assessment of the AOFM’s risk exposures; monitoring compliance obligations; determining and monitoring the implementation of HR policies; overseeing and advising the CEO on significant work, health and safety 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 2014‑15, regular Portfolio Strategy Meetings were conducted with the purpose of advising the CEO on operational debt policy and financial risk management issues, as well as reviewing deal execution and general financial market conditions. Its membership included the CEO, Director of Financial Risk, Head of Treasury Services and Head of Investor Relations, together with other senior staff holding relevant functional responsibilities.
Cash management meeting
A meeting was held each week to review the Government’s cash position and short to medium term cash flow projections, including expected funding needs. The meeting was attended by the CEO, Head of Treasury Services, Director of Financial Risk, together with other staff from the Treasury Services and Investor Relations Units.
Information Technology Steering Committee
The Information Technology Steering Committee advises the CEO on overall IT system design, structure and security, and monitors IT service availability and security related incidents. It also oversees current and planned IT projects and operations. Its membership comprised of the CEO, Head of Reporting, Chief Financial Officer, Financial Risk Practice Leader, IT Security Advisor, and IT Technical Specialist. As at 30 June 2015 the AOFM had completed a transfer of the management of its IT business systems to Treasury as part of a shared‑services arrangement; therefore, the composition of this committee will be reviewed in 2015‑16.
The Security Committee performs an oversight role in respect of security management within the AOFM. Its membership is comprised of the CEO, Chief Risk and Compliance Officer, Agency Security Advisor, and IT Security Advisor. The head of the Treasury Security Team was 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, authorisations and directions from the Treasurer of powers under various Acts that provide the legal authority for the conduct of the AOFM’s debt and cash portfolio management and related investment activities;
- formal delegations from the Minister for Finance through the Public Governance, Performance and Accountability (Finance Minister to Accountable Authorities of Non‑Corporate Commonwealth Entities) Delegation 2014;
- formal delegations from the CEO to staff through the Accountable Authority Instructions and internal financial delegations;
- financial risk policies and an Annual (Debt Management) Remit approved by the Secretary of the Treasury;
- annual corporate and business group plans to support delivery of the AOFM’s programme as stated in the 2014 15 Treasury Portfolio Budget Statement;
- human resource policies and procedures to establish the expectations and obligations of staff in relation to values, ethics and performance;
- enterprise risk and assurance frameworks, including an enterprise risk register and compliance assurance plan to support oversight of the management of risks, operation of controls and compliance with obligations; and
- a fraud risk assessment and fraud control plan that comply with the Commonwealth Fraud Control Framework and include appropriate fraud prevention, detection, investigation reporting and data collection procedures and processes.
The AOFM has taken all reasonable measures to optimise the management of risks, including minimising the risk of fraud. Controls are established to manage risk within specific risk appetite and tolerances that are established under the enterprise risk management (ERM) framework. A framework of internal policies (for matters including, but not limited to, procurement, security and conflicts of interest), internal controls, and a heightened level of mindfulness of the AOFM’s obligations and commitments, facilitate the AOFM’s compliance with its governance and legislative frameworks.
The Audit Committee monitors and reviews the AOFM’s risk management, internal control, governance and financial reporting processes. Through quarterly meetings, it oversees the audit and assurance programmes based on the information and reports it receives from AOFM management and internal and external auditors.
Key activities during 2014‑15 included:
- reviewing the operation of the AOFM’s risk and internal control environments, including implementation of an assurance framework;
- endorsement of the AOFM’s 2014 15 internal audit plan;
- advice on the preparation and review of the AOFM’s financial statements;
- monitoring progress of major projects and audit report recommendations; and
- reviewing the AOFM’s readiness for performance reporting pursuant to the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
The operations of the Audit Committee are aligned with the requirements of the PGPA legislation and the revised Australian National Audit Office (ANAO) Better Practice Guide, Public Sector Audit Committees (2015).
Membership as at 30 June 2015 comprised:
- Peter Warne, independent member of the AOFM Advisory Board (Chair);
- David Lawler, independent member;
- Matthew King, Chief Financial Officer and Division Head, Financial and Parliamentary Division, Corporate Strategy and Services Group, the Treasury; and
- Samantha Montenegro, Chief Risk and Compliance Officer, AOFM.
The Audit Committee met on four occasions during 2014‑15, with full attendance from all members.
External observers at audit committee meetings included the ANAO and its outsourced provider (KPMG), and the AOFM’s internal auditor (PricewaterhouseCoopers). The AOFM Chief Financial Officer is an invited attendee. The AOFM CEO regularly attends meetings.
The AOFM has engaged PricewaterhouseCoopers to provide internal audit services. Internal audit coverage is determined using a methodology aligned with professional internal audit standards, with due regard to the AOFM’s operating and risk contexts. The Audit Committee endorses the internal audit strategy for CEO approval.
The internal auditor completed five reviews during 2014‑15:
- framework reviews for :
- enterprise risk management and fraud control;
- workforce planning;
- cash management;
- performance reporting.; and
- project assurance for the AOFM treasury system re‑implementation.
In its annual report on internal controls, the internal auditor concluded that AOFM had a mature control environment (demonstrated by the nature and type of findings reported). Audit recommendations were aimed at enhancing the efficiency of the current control environment. The internal auditor also found that the AOFM had appropriate processes in place to ensure that audit recommendations were actioned in a timely manner. At 30 June 2015, only one internal audit recommendation remained outstanding and this was being implemented in accordance with agreed timelines.
The AOFM has comprehensive business continuity plans to ensure that its critical functions can continue in the event of a major disruption or the outbreak of a pandemic. These arrangements include the provision of back up of full IT and related business 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 2014‑15.
In addition to business continuity plans, there is also an IT disaster recovery plan which sets out the processes required to restore critical functions in the aftermath of a significant disruption; and emergency procedures to manage response to a range of situations.
In 2014‑15, no matters relating to the AOFM were the subject of judicial proceedings, administrative tribunal hearings or consideration by the Commonwealth Ombudsman.
There were no reports in 2014‑15 on the operations of the AOFM by the Auditor‑General (other than the report on financial statements); a Parliamentary committee; or the Commonwealth Ombudsman.
As part of its corporate plan priority projects in 2014‑15 the AOFM developed a workforce plan to cover the next four years. The AOFM Workforce Plan 2014‑2018 covers three topics: workforce risks, current workforce profile and future challenges.
AOFM staff are profiled on the basis of its three main work areas (front, middle and back office). AOFM’s workforce is sufficiently diverse, but there appear to be career path blockages that are a product of AOFM’s size.
The final element of the plan outlines future challenges for the AOFM business and actions to meet those. The main challenges identified relating to the AOFM business context are:
- maintaining sufficient skills and experience to conduct business as usual under a range of circumstances, while driving further efficiencies;
- responding quickly and seamlessly to any new additional mandate given to AOFM; and
- maintaining investor confidence and diversification in the AGS market.
Actions to meet these challenges have been identified and will be addressed over the life of the plan.
A new enterprise agreement was approved by the Fair Work Commission after the end of the 2014‑15 reporting period.
Training and development
In 2014‑15, 91 per cent of staff participated in some form of internal or external training and $2,646 per full‑time equivalent (FTE) was paid to external providers for the period to cover this training. Of the 3.6 days per FTE invested in skill development, 2.8 days per FTE were external courses, 0.6 days were invested in training in‑house and the balance was study. Including participant time, the AOFM’s commitment to training and development activity in 2014‑15 represented 3.1 per cent of gross salary.
The AOFM workforce
At 30 June 2015, the AOFM employed 35.7 FTE staff under the Public Service Act 1999. Table 1 shows this workforce by broadband classification.
Note: AOFM broadband classifications are 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 positions were staffed by AOFM to support knowledge transfer and technical capacity building in sovereign debt management in Papua New Guinea and the Solomon Islands during 2014‑15. These positions are arranged under the Strongim Gavman Program and the Solomon Islands Economic and Public Sector Governance Program respectively. Another staff member was seconded to the Department of The Treasury in 2014 to assist the Secretariat for the Financial System Inquiry.
Ninety two per cent of AOFM staff have degree qualifications, with 26 per cent holding higher degrees and 21 per cent holding double degrees. Forty six per cent have professional qualifications related to their role with the AOFM.
Employees who identify as indigenous
The AOFM does not have any staff who identify as indigenous.
Changes to senior management
There were no changes to senior management.
Other staffing changes
One ongoing and one non‑ongoing employee were recruited during 2014‑15.
There were six staff departures during the year, all of whom were ongoing staff. Two staff moved to Treasury as a result of AOFM restructuring and outsourcing changes. Two went to finance industry roles in the private sector. The last two left to pursue careers in different sectors within the Australian Government. Staff departures represented 15.1 per cent of average staffing levels in 2014‑15 (7 per cent in 2013‑14).
The retention rate for 2014‑15 was 86 per cent, with an average annual retention rate of 90 per cent over the last five years.
All non‑SES staff had terms and conditions set during 2014‑15 by the AOFM Enterprise Agreement 2011‑2014.
The CEO has his terms and conditions set by the Secretary through a determination made under subsection 24(1) of the Public Service Act 1999.
Pay rates as at 30 June 2015 are shown in Table 2. These rates were set in accordance with the AOFM Enterprise Agreement 2011‑2014.
|Classification||30 June 2015|
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, laptop, or other mobile device may be provided where there is a business need. Executive remuneration is reported in Note 11 of Part 4: Financial Statements.
Work health and safety
Health, wellbeing and safety services are provided by the Treasury under a Service Level Agreement. The AOFM has one Health and Safety Representative who assists staff in accordance with the Work Health and Safety Act 2011.
Work health and safety is a standing agenda item at Executive Group meetings.
Flu vaccinations were made available to staff in 2014‑15. Counselling and related support is available under an Employee Assistance Programme provided by Optum. Additional online resources are provided to all staff to assist with safety, health and wellbeing promotion.
There were no compensable injury claims in 2014‑15.
There have been no notices or investigations under Part 10 of the Work Health and Safety Act.
During 2014‑15, eight new consultancy contracts were entered into involving total actual expenditure of $126,851. In addition, four ongoing consultancy contracts were active during 2014‑15, involving total actual expenditure of $583,875. 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 at www.tenders.gov.au.
The AOFM engages consultants where it requires specialist expertise or when independent research, review or assessment is required.
Prior to engaging consultants, the AOFM takes into account the skills, experience 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 PGPA Act and related rules, including the Commonwealth Procurement Rules (CPRs), and relevant internal policies.
|Number of consultancy contracts|
|Expenditure (including GST)|
The AOFM’s purchasing activities comply with legislative requirements and Government policy, in particular the CPRs.
The CPRs are applied to the AOFM’s activities through the Accountable Authority Instructions and supporting internal policies and procedures.
Two contracts in excess of $100,000 were entered into during the reporting period that did not provide for the Auditor‑General to have access to the contractor’s premises.
One contract was for the syndicated issuance of $7.0 billion of Australian Government Treasury Bonds (an April 2037 maturity) in October 2014. The AOFM appointed Australia and New Zealand Banking Group Ltd, Citigroup Global Markets Australia Pty Limited, UBS AG (Australia Branch) and Westpac Banking Corporation.
The second contract was for the syndicated issuance of $4.3 billion of Australian Government Treasury Bonds (on June 2035 maturity) in March 2015. The AOFM appointed Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, Deutsche Bank AG (Sydney Branch) and UBS AG (Australia Branch).
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, $18.6 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.
Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website: www.finance.gov.au/procurement/ statistics‑on‑commonwealth‑purchasing‑contracts.
Consistent with paragraph 5.4 of the Commonwealth Procurement Rules, the AOFM’s procurement practices provide appropriate opportunities for SMEs to compete and ensure that SMEs are not unfairly discriminated against.
Furthermore, the AOFM uses electronic systems to facilitate on‑time payment performance and processes are in place to monitor payment deadlines and to ensure SMEs are properly compensated whenever payments are not made on‑time.
Last updated: 28 January 2016