Part 3: Management and Accountability

Management and accountability

Governance of the AOFM

The AOFM’s governance arrangements provide coordinated and systematic mechanisms that support an organisational culture which is risk‑aware, ethical and diligent. Through effective governance practices, the AOFM achieves efficient and effective delivery of its core business objectives. Elements of the governance framework include:

  • strategic, corporate and business planning processes;
  • enterprise‑wide risk management, assurance and compliance activities (including a comprehensive independent audit program), oversighted by an Audit Committee chaired by an independent member;
  • performance frameworks that facilitate on‑going monitoring through the provision of timely and relevant management reporting; and
  • delegations, instructions and internal guidance regarding powers and duties to ensure adherence with relevant legislation, regulations, policies and expectations.

Overview of accountabilities

The AOFM is part of the Treasury portfolio. It is accountable to the Secretary to the Treasury and to the Treasurer, and through the Treasurer to the Parliament. As a listed entity under the PGPA Act the AOFM’s CEO is accountable for the management and performance of the AOFM, namely with respect to the implementation of debt management and investment policies. This also extends to matters such as the maintenance of accounts and records, management of risks and compliance with legislation and policy.

The Secretary to the Treasury is responsible for advising the Treasurer on Government policy relating to debt management and investment activities. In order to undertake the required functions of the AOFM, the CEO is delegated powers and authorisations by the Treasurer and the Secretary to the Treasury for debt creation and issuance, investment, and portfolio management.

The CEO is supported by an Executive Group, and AOFM’s portfolio activities are overseen by an Advisory Board, as well as being the subject of close financial market scrutiny.

The AOFM’s corporate plan, policies and codes of conduct mirror AOFM values and these reflect high standards of integrity and accountability. Activities are designed to meet the requirements of legislative and regulatory frameworks, as well as the codes and practices expected of financial market participants.

Boards and Committees

AOFM Advisory Board

The Advisory Board is responsible for advising the Secretary to the Treasury (as Chair) on matters relevant to debt management parameters, investment policies and the suitability of AOFM’s interactions with financial markets generally. The Board does not possess executive powers or decision‑making authority but offers the Secretary comprehensive guidance based on external perspectives and practices and financial market experience and outlooks.

The Board met three times during 2015‑16, with all meetings being held at the Treasury’s Sydney Office. Members and their attendance at 2015‑16 Board meetings is provided in the following table.

Table 1: Advisory Board meetings

Advisory Board members Eligible meetings Attendance
John Fraser, Secretary to the Treasury, Chair 3 3
Rob Nicholl, Chief Executive AOFM 3 3
Stein Helgeby, Deputy Secretary, Government and Resource Management Group, Department of Finance 3 3
Matthew Flavel, Acting Deputy Secretary, Fiscal Group, the Treasury 1 1
Michael Brennan, Deputy Secretary, Fiscal Group, the Treasury 2 2
Paul Bide, Consultant 3 3
Carol Austin, Consultant 3 3
Peter Warne, Consultant (a) 1 1
Anne Anderson, Consultant (b) 2 2
Stephen Knight (c)

(a) Peter Warne resigned from the Advisory Board December 2015.

(b) Anne Anderson was appointed to the Advisory Board November 2015.

(c) Stephen Knight was appointed to the Advisory Board May 2016.


On appointment to the Board, each external member is required to sign a declaration to maintain confidentiality in relation to the affairs of the Board and the AOFM’s operations.

Executive Group

The role of the AOFM Executive Group is to assist and support the CEO in fulfilling his responsibilities to manage the AOFM (in particular, as the accountable authority under the PGPA Act, and pursuant to other Commonwealth legislation). Its activities include the: setting and tracking of strategic plans and performance targets; review of the AOFM’s risk profile and setting of risk appetite; monitoring financial and compliance performance; and reviewing and advising on workforce planning initiatives. The Executive Group, which is chaired by the CEO and comprises the AOFM’s senior executives, meets monthly.

Audit Committee

The Audit Committee monitors and reviews the AOFM’s governance, risk management, internal control and financial reporting arrangements. It receives periodic briefings from AOFM management on changes to the business and risk contexts and operations. It oversees the assurance program including reports, indicator dashboards and briefings tabled by the AOFM’s Assurance area and auditors. This information assists the Audit Committee to form its view on the AOFM’s performance in relation to its obligations and the on‑going effectiveness of the AOFM’s risk and control frameworks.

Key activities of the Committee during 2015‑16 included:

  • advice on the preparation and review of the AOFM’s financial statements;
  • developments in the AOFM’s risk profile and compliance performance, as reported through the quarterly risk and assurance reports, and the findings and recommendations of internal control reviews undertaken by the internal auditors;
  • fraud control strategies and monitoring activities;
  • monitoring the progress of: major corporate projects to improve business operations; initiatives to achieve the AOFM’s workforce planning outcomes; and the implementation of audit recommendations; and
  • reviewing the AOFM’s preparedness to meet performance reporting obligations, in line with the new annual reporting requirement under the PGPA Act, as well as its approach to monitoring key performance indicators, and how these will be incorporated into the Annual Performance Statement.

The Committee met four times during 2015‑16, with all meetings being held at the AOFM’s office in Canberra. Members and their attendance at 2015‑16 meetings is provided in the following table. The Audit Committee also met with the internal auditors and external auditors in closed sessions during the year.

Table 2: Audit Committee meetings

Audit Committee members Eligible meetings Attendance
Peter Warne, Independent Member, Chair (a) 2 2
Will Laurie, Independent Member, Chair (a) 2 2
David Lawler, Independent Member 4 4
Matthew King, Chief Financial Officer and Head of Financial and Parliamentary Division, Corporate Group, the Treasury 4 4
Samantha Montenegro, Chief Risk and Compliance Officer, AOFM 4 4

(a) Peter Warne resigned from his position as independent member and Chair of the Audit Committee, effective 31 December 2015. Mr Will Laurie was appointed to this position from 1 January 2016, and attended the November 2015 Audit Committee meeting as an observer.


Each member is required to sign a declaration to maintain confidentiality in relation to the affairs of the Committee and the AOFM, and are also required to provide an annual conflict of interest declaration.

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.

Other management committees

Portfolio Strategy Meeting

Portfolio Strategy Meetings (PSM) advise the CEO on operational debt portfolio and financial risk management issues, and review deal execution and general financial market conditions. Membership during 2015‑16 included the CEO, Director of Financial Risk, Head of Treasury Services and Head of Investor Relations, with other senior staff holding relevant functional responsibilities invited as observers and contributors to topical papers. The PSM typically meets on a bi‑monthly basis.

Cash Management Meeting

The Cash Management Meeting is held each week to review the government’s cash portfolio position and short to medium term cash flow projections, including expected funding needs and possible new contingencies emerging. The meeting is chaired by the CEO, and attended by the Head of Treasury Services, Director of Financial Risk, together with other staff from the Treasury Services and Investor Relations Units. The development of plans to implement new maturity establishment (via syndications) is conducted through this forum.

Security Committee

The Security Committee performs an oversight role in respect of security management within the AOFM. Its membership comprises the CEO (as Chair), Chief Risk and Compliance Officer, 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. The Security Committee meets quarterly.

Management of fraud risk

The AOFM has a low risk appetite for fraud, and has taken comprehensive steps to prevent the occurrence of fraud.

A fraud control plan, and systems to ensure the regular identification, assessment and treatment of fraud risk vulnerabilities, is in place. These comply with the PGPA Act and Rule, and the Commonwealth Fraud Control Framework.

The fraud control plan establishes appropriate mechanisms for the prevention and detection of fraud incidents, including the recording and reporting of fraud incidents. Periodic review of the fraud control plan and fraud risk assessments are undertaken during the year.

Annually, the CEO provides a report to the Treasurer on the AOFM’s fraud control activities. For 2015‑16 the AOFM did not identify any instance of fraud or suspected fraud.

Enterprise risk

Risk management is integral to all aspects of the AOFM’s activities and is the responsibility of all staff. The Executive Group, as the leadership and oversight group, have particular responsibilities to champion a positive risk‑aware culture, oversight the considered evaluation of the risk environment, and support staff in the design, implementation and effective operation of appropriate treatments and controls.

The enterprise risk management framework provides for the ongoing, active and transparent management of uncertainty (threats and opportunities). Key reflection points are provided quarterly (at Executive Group meetings), and as part of the annual corporate planning activities. Assessments are used to inform strategy development, execution and operations. The enterprise framework captures information on emerging matters and key risks at both enterprise (‘top‑down’, outward focussed) and business unit (‘bottom‑up’, inward focussed) levels. Staff understand that risks are to be managed to a level that is consistent with the AOFM’s risk appetite and tolerance statements (defined at a category‑level).

The AOFM’s enterprise risk framework is consistent with Commonwealth policy. During 2015‑16, the framework attained an ‘advanced’ rating of maturity under the Comcover Benchmarking Program, consistent with the AOFM’s aspirations.

The AOFM’s enterprise risks are classified into three broad categories.

  • Strategic risks: opportunities and exposures that impact on the AOFM’s medium to long term objectives and strategies. These are owned and reviewed by the Executive Group on a quarterly basis.
  • Portfolio risks: impact on portfolio management, investment and debt issuance activities; these are managed pursuant to the AOFM’s financial risk management framework in consultation with the Advisory Board.
  • Operational risks: relate to business as usual and corporate activities of the AOFM, and generally deal with matters of compliance, or the availability, integrity and/or actions of staff, providers, systems and/or processes.

As a stable and mature agency, the AOFM’s most significant risks typically arise from uncertainty relating to external factors or major changes to business activities. Key entity risks that are under management include the:

  • potential negative impact of market trends or disruptive technologies on the successful issuance of AGS to meet funding requirements;
  • potential for the AOFM to lose AGS investor confidence through its actions or messaging;
  • failure to adequately implement and operate internal systems and controls to ensure the continuity and accuracy of forecasts, tenders, payments and settlements; and
  • failure to plan for the future with regards to our people, infrastructure or business model.

Business continuity arrangements

The AOFM has a comprehensive business continuity plan 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 full back up of IT and related business services that can be implemented when the AOFM’s day‑to‑day business systems or office accommodation are not able to be used, or when AOFM staff are not available to perform key tasks.

In 2015‑16, PricewaterhouseCoopers undertook an internal audit to assess the design and implementation of the AOFM’s business continuity and disaster recovery planning framework. The internal audit rated the frameworks as having effective controls and aligned with better practice principles. Key strengths included:

  • multiple back‑up contingencies for time critical market operations;
  • sound documentation and business impact assessments to determine recovery timeframes, which are comprehensively understood by team members and communicated to relevant parties; and
  • the strong commitment to testing and validating business continuity and disaster recovery arrangements.

Business continuity plans were updated and tested during 2015‑16, to reflect new arrangements for the provision of IT support by the Treasury under a shared services arrangement. Business continuity arrangements are supported by emergency procedures to manage the AOFM’s response to a range of situations.


The AOFM’s enterprise risk framework is complemented by an assurance framework, which seeks to confirm the existence, operation and effectiveness of key controls. The framework is scaled to meet the needs of the AOFM and is modelled on better practice industry standards.

The AOFM’s compliance with external obligations and internal controls and procedures is monitored through a co‑sourced arrangement, with in‑house assurance and compliance activities supplemented by the use of independent internal audit services.

During 2015‑16, assurance and compliance activities provided structured assurance on the effectiveness and efficiency of the AOFM’s governance arrangements, risk management and internal control environment. Key assurance activities undertaken in 2015‑16 included:

  • reviews of key frameworks and arrangements;
  • project assurance for the re‑implementation of the AOFM’s treasury system;
  • maintenance and performance of the AOFM’s Anti‑Money Laundering and Counter‑Terrorism Financing Program under the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006;
  • preparation of an annual report on compliance with the PGPA Act and the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule); and
  • completion of the annual compliance testing program, with monthly reporting provided to the Executive Group and quarterly reporting provided to the Audit Committee.

Information and output derived from the enterprise risk and assurance frameworks support the CEO in meeting the obligation to maintain a sound system of risk management and internal control pursuant to section 16 of the PGPA Act.

Internal audit

The AOFM’s internal audit service provider is currently PricewaterhouseCoopers. 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 to the CEO for approval.

The internal auditor completed six framework and/or compliance reviews during 2015‑16. Internal audit activities undertaken in 2015‑16 included review of:

  • portfolio management of RMBS and the divestment process;
  • financial risk policies;
  • debt issuance, confirmation and settlement;
  • AOFM’s management of a shared services Memorandum of Understanding with the Treasury;
  • human resource operations and payroll control; and
  • business continuity and disaster recovery planning

In its annual report on internal controls, the internal auditor concluded that AOFM continued to have 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. At 30 June 2016, two internal audit recommendations remained outstanding and these were being addressed in accordance with agreed timelines.

Judicial decisions

In 2015‑16, no matters relating to the AOFM were the subject of judicial proceedings, administrative tribunal hearings or consideration by the Commonwealth Ombudsman.

External reports on agency operations

There were no reports in 2015‑16 on the operations of the AOFM by the Auditor‑General (other than the report on financial statements); a Parliamentary committee; or the Commonwealth Ombudsman.

Capability Review

The Australian Public Service Commission (APSC) undertook a Capability Review of the AOFM at the request of the CEO. Dr Michael Vertigan AC was the chair of the review team; other senior members of the team were Ms Akiko Jackson and Ms Jennifer Rawson (DFAT).

For the AOFM review, external stakeholders interviewed included Australian and State Government agencies, domestic and international investors and comparable sovereign debt management organisations in other countries. The review was conducted as part of the AOFM workforce plan.

The review highlighted how the AOFM maintains a strong position amongst external stakeholders in regards to its credibility and competence. Furthermore, the assessed culture and outcome focus of the AOFM leave it very well placed to maintain these strengths. Scope for organisational improvement were identified in how the AOFM manages and motivates staff — while these are reflective of APS challenges generally, the AOFM faces both threats and opportunities specific to a relatively small organisation that offers limited career pathways to highly technically skilled staff.

However, the overall capability assessment was very positive with the AOFM being viewed as either well‑placed or strong for seven of the ten categories of consideration. The report indicates the AOFM has highly capable staff who consistently deliver high quality outcomes in the core business. The review also highlighted opportunities for the AOFM to share its knowledge and expertise more widely within government. The full report of the review has been published on the APSC web site at:‑reviews.

Management of human resources

Workforce planning

The AOFM Workforce Plan 2014‑2018 actions include succession planning, recruitment improvement, increased organisational resilience, and review of the organisational structure. As a result of the plan and outcomes from the Capability Review, AOFM is improving its human resource development systems. Plan actions and outcomes are tracked by AOFM management.

Enterprise Agreement

The AOFM Enterprise Agreement 2015‑2018 was approved by the Fair Work Commission subject to an undertaking concerning staff at APS Level 2 and below. The agreement came into effect on 17 July 2015. No individual flexibility arrangements that vary the effect of the terms of this agreement have been made. The CEO has increased AOFM pay rates via a determination under subsection 24(1) of the Public Service Act 1999.

Training and development

In 2015‑16, 80 per cent of staff participated in some form of internal or external training and $2,566 per full‑time equivalent (FTE) was paid to external providers for the period to cover this training. Of the 3.5 days per FTE invested in skill development, 1.8 days per FTE were external courses, 1.2 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 2015‑16 represented 2.7 per cent of gross salary.

The AOFM workforce

Table 3 shows this workforce by broadband classification as at the beginning and end of 2015‑16.

Table 3: Operative and paid inoperative staff as at 30 June 2016 and 2015

  Ongoing     Non‑ongoing     
  Full‑time  Part‑time  Full‑time    Part‑time   
Classification Male Female Male Female Male Female Male Female Total
AOFM1 2 2
AOFM2 16 8 1 2 1 28
AOFM3 5 1 6
AOFM4 1 1
CEO 1 1
Total 23 11 1 2 1 38
AOFM1 1 1
AOFM2 15 11 2 28
AOFM3 6 1 7
AOFM4 1 1
CEO 1 1
Total 23 13 2 38

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 2015‑16. These positions are arranged under the Strongim Gavman Program and the Solomon Islands Economic and Public Sector Governance Program respectively. Assistance under the Strongim Gavman Program ceased in February 2016 after legislative change by the government of Papua New Guinea.

Eighty‑eight per cent of AOFM staff have degree qualifications, with 25 per cent holding higher degrees and 25 per cent holding double degrees. Forty 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

The Head of Treasury Services retired in September 2015. He was replaced through a merit selection process.

Other staffing changes

Six ongoing and four non‑ongoing employees were recruited during 2015‑16.

There were nine staff departures during the year; six ongoing staff (including the retirement of the Head of Treasury Services noted above) and three non‑ongoing.

Staff departures represented 24.9 per cent of average staffing levels in 2015‑16 (15.1 per cent in 2014‑15).

The retention rate for 2015‑16 was 86.5 per cent, with an average annual retention rate of 89.3 per cent over the last five years.

Employment arrangements

All non‑SES staff had terms and conditions set during 2015‑16 by the AOFM Enterprise Agreement 2015‑2018 and a determination made under subsection 24(1) of the Public Service Act 1999 by the CEO.

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 2016 are shown in Table 4. These rates were set in accordance with the AOFM Enterprise Agreement 2015‑2018 and a determination made under subsection 24(1) of the Public Service Act 1999.

Table 4: AOFM salary ranges

30 June 2016
Band low Band high
Classification $ $
AOFM1 41,115 75,138
AOFM2 73,125 149,047
AOFM3 173,748 217,185
AOFM4 233,683 292,104


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 4 of Part 4: Financial Statements.

Disability reporting mechanism

Since 1994, Commonwealth non‑corporate entities 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 From 2010‑11, entities have no longer been required to report on these functions.

The Commonwealth Disability Strategy has been overtaken by the National Disability Strategy 2010‑2020, which sets out a ten year national policy framework to improve the lives of people with disability, promote participation and create a more inclusive society. A high level two‑yearly report will track progress against each of the six outcome areas of the Strategy and present a picture of how people with disability are faring. The first of these reports will be available in late 2014, and can be found at

Work health and safety

Health, wellbeing and safety services are provided by the Treasury under a Memorandum of Understanding. 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 2015‑16. 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 2015‑16.

There have been no notices or investigations under Part 10 of the Work Health and Safety Act 2011.


During 2015‑16, nine new consultancy contracts were entered into involving total actual expenditure of $211,337. In addition, five ongoing consultancy contracts were active during 2015‑16, involving total actual expenditure of $222,974. This is summarised in Table 5.

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

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.

Table 5: Consultancy contracts

2012‑13 2013‑14 2014‑15 2015‑16
Number of consultancy contracts
New contracts 15 11 8 9
Ongoing contracts 3 4 4 5
Expenditure (including GST)
New contracts $93,060 $162,664 $126,851 $211,337
Ongoing contracts $175,160 $91,287 $583,875 $222,974


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.

ANAO access clauses and exempt contracts

Four 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 $1.25 billion of Australian Government Treasury Indexed Bonds (an August 2040 maturity) in August 2015. The AOFM appointed Deutsche Bank AG, UBS AG (Australia Branch) and Westpac Institutional Bank to act as joint‑lead managers for the issue.

The second contract was for the syndicated issuance of $4 billion of Australian Government Treasury Bonds (a June 2039 maturity) in October 2015. The AOFM appointed Commonwealth Bank of Australia, Deutsche Bank AG, UBS AG (Australia Branch) and Westpac Institutional Bank to act as joint‑lead managers for the issue.

The third contract was for the syndicated issuance of $4.6 billion of Australian Government Treasury Bonds (a November 2027 maturity) in January 2016. The AOFM appointed ANZ, Citi, UBS AG (Australia Branch) and Westpac Institutional Bank to act as joint‑lead managers for the issue.

The forth contract was for the syndicated issuance of $7 billion of Australian Government Treasury Bonds (a May 2028 maturity) in May 2016. The AOFM appointed Citi, Commonwealth Bank of Australia, Deutsche Bank AG and UBS AG (Australia Branch) to act 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 contracted services. Under these contracts, $27.8 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.

Procurement initiatives to support small business

The AOFM supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website.‑on‑commonwealth‑purchasing‑contract/

Consistent with paragraph 5.4 of the CPRs, the AOFM’s procurement practices provide appropriate opportunities for SMEs to compete and ensure that SMEs are not unfairly discriminated against.

The AOFM recognises the importance of ensuring that small businesses are paid on time. 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.

The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website.


Last updated: 28 October 2016