Home Sectors DEST information Minister's website News & media Calendar & dates About this site  Site Map | A-Z Index

Annual Report 1997-98

REPORTS BY THE AUDITOR-GENERAL

The following information summarises those recommendations and comments from the Auditor­General's reports tabled in Parliament in 1997­98 that are of significance to the operation of the Department . The reports are available in full on the internet at http://www.anao.gov.au/. Detailed information on the Department's response is included in the Ministers Biannual Reports to the Minister for Finance and Administration, copies of which are made available to the Australian National Audit Office and the Joint Committee of Public Accounts and Audit.

Details of Reports Tabled in Parliament during 1997-98 that Affect the Department

Audit Report No. 3 1997-98, Programme Evaluation in the Australian Public Service (tabled 30 September 1997)

The objective of the audit was to examine the effectiveness of the management and control of programme evaluation in the Australian Public Service. In addition, it provides a series of better practice principles which have relevance for all agencies.

Action Taken

The Department considered the best practice principles at the Programme Evaluation Committee Meeting on 12 December 1997.

Audit Report No. 7 1997-98, Immigration Compliance Function (tabled 22 October 1997)

This follow-up audit assessed action taken by the Department of Immigration and Ethnic Affairs on the recommendations of an efficiency audit reported in 1993­94, which contained one recommendation that affected DEETYA. The follow up report concluded that the Commonwealth Employment Service and the Department of Immigration and Ethnic Affairs had made significant progress in implementing the recommendation for a stronger stance on entitlement to work. There was evidence that they had, in cooperation with the Australian Taxation Office and employers, established a less favourable environment for people breaching Australian migration law. Continuing vigilance and cooperation between agencies on this issue is advisable.

Action Taken

Under the new Job Network employment assistance will only be provided to those who receive benefits. As part of the registration process with Centrelink, clients must provide proof of identity before being approved for benefits. Job seekers who are unable to provide proof of identity will therefore be unable to receive employment assistance in the new employment services market.

The Department will continue to cooperate with the Department of Immigration and Ethnic Affairs.

Audit Report No. 9 1997-98, Management of Telecommunications Services in the Australian Public Service (tabled 23 October 1997)

The objective of the audit was to report on the efficiency and effectiveness of selected agencies' management of telecommunications services. It dealt with the management of telecommunications services in ten small to medium­sized agencies and the relationships between those agencies and the Office of Government Information Technology. The following are two of the more significant recommendations that affect the Department.

Recommendation No. 2

Agencies are to establish information management systems that:

• allow reporting on their expenditure and patterns of use;
• support procurement, planning and management processes related to telecommunications services across the agency; and
• facilitate comparisons within and across agencies.

Action Taken

Management information systems have been implemented to monitor expenditure and patterns of use of telecommunication services across the Department.

Recommendation No. 5

Agencies are to integrate their telecommunications planning with their business planning and risk management to ensure their telecommunications services effectively support the delivery of programme outcomes.

Action Taken

The Department's data telecommunications strategy is an integral part of the Corporate Information Technology Plan. In addition, a voice communications strategy is being prepared.

Audit Report No. 11 1997-98, Austudy (tabled 30 October 1997)

The objectives of the audit were to:

• review the implementation arrangements in relation to the transfer of delivery of AUSTUDY to Centrelink and its subsequent inclusion as part of the Youth Allowance; and
• form an opinion on the efficiency and effectiveness of the front end processing aspects of AUSTUDY in order to identify any areas for improvement, with a view to providing timely advice to Centrelink in the context of the new service delivery arrangements.

The following are two of the most significant recommendations.

Recommendation No. 1

The Department of Social Security, in consultation with DEETYA and Centrelink, are to implement a sound planning framework as soon as possible to ensure the effective and efficient achievement of the Youth Allowance objectives. This includes the development of business and operational plans that:

• are linked and demonstrate how each level of administration is to contribute to the achievement of the overall objective;
• establish clear links between key result areas, associated strategies and performance measures within each plan; and
• identify resource allocations, critical tasks and associated priorities.

Action Taken

Along with Centrelink, this Department is a member of the Youth Allowance Steering Committee established by the Department of Social Security for this purpose. The Committee has already established a project management framework to guide its work.

Recommendation No. 2

Centrelink, in consultation with this Department and the Department of Social Security, is to evaluate the significant process improvement opportunities in relation to applications processing. These opportunities include:

• reviewing the total time taken to process an application in order to increase the proportion of total time spent on value added activities;
• replacing manual steps in the process with an appropriate level of information technology system support to make applications processing faster and more efficient;
• considering the potential for achieving economies of scale by the separation of the 'front-office' (lodgment) and 'back-office' (processing) functions;
• consolidating processing from the 25 student assistance centres to yield economies of scale;
• building quality into the system to reduce errors and rework and minimise the need for checking, for example by incorporating guided decision­making support in the information technology system;
• implementing the system support necessary for the establishment of call centre operations. This would lead to increased efficiency and effectiveness in dealing with client enquiries;
• improving AUSTUDY form design to:
  • enhance the accuracy and completeness of information submitted by clients,
  • enable more efficient processing of applications, and
  • help client self-selection to reduce the volume of applications; and
• reviewing client access to student assistance centres, with a view to establishing procedures to minimise the number of separate contacts with different areas within the Department or Centrelink.

Action Taken

The Department supports the Australian National Audit Office's conclusion that there are significant opportunities for process improvement and reengineering of student assistance operations, and that these should be exploited as far as possible in the implementation of the Youth Allowance. The Department will work with Centrelink and the Department of Social Security in planning for and implementing the suggested improvements.

Audit Report No. 14 1997-98, Official Travel by Public Sector Employees (tabled 17 November 1997)

Across a number of agencies the audit examined domestic and international travel undertaken by public servants as part of temporary duty away from headquarters. The following are two of the more significant recommendations and the action taken by the Department in regard to them.

Recommendation Paragraph 1.35, dot points 1, 3 and 4

In relation to the payment of travel allowance Commonwealth entities are to:

• undertake a cost-benefit analysis of their existing processes in comparison with a reimbursement system;
• implement new controls, or redesign existing controls, to facilitate removal of the requirement to obtain formal pre-travel approval on a per trip basis; and
• introduce a charge card system for all frequent travellers.

Action Taken

The Department's policies and procedures on official travel were reviewed recently during drafting of the Chief Executive Instructions and Procedural Rules, and again as a result of negotiations on Australian Workplace Agreements and the Certified Agreement.

Recommendation Paragraph 1.36, dot point 2

In relation to the control of other direct travel costs it is recommended that entities review existing contracts with travel service.

Action Taken

The Department's Contracts Management Section manages the travel contract, maintains regular contact with the Department's travel services provider and monitors performance under the contract to ensure that the contractual obligations and service levels are being met. Joint Management Committee meetings are held on a quarterly basis.

Audit Report No. 15 1997-98, Internet Security Management (tabled 17 November 1997)

The objectives of the audit were to:

• assess the effectiveness of internet security measures within the Commonwealth public sector; and
• identify, develop and report current better practice in internet security management for use across the public sector.

The Audit made many recommendations that affected the Department. The following are the most significant.

Recommendation No. 1, dot point 1

It is recommended those Commonwealth agencies considering an internet connection and the provision of internet facilities, and those agencies with a connection who have not already done so, should develop and distribute an internet security policy covering the use of the internet connection. This policy should define the level of protection for the agency's computerised data, computer programmes and internet facilities

Action Taken

An internet security policy has been documented and distributed.

Recommendation No. 1, dot point 2

It is recommended those Commonwealth agencies considering an internet connection and the provision of internet facilities, and those agencies with a connection who have not already done so, should undertake a risk review and analysis and document risks identified in a risk management plan or equivalent document.

Action Taken

New projects are subject to risk analysis for internet use. Internet policy guidelines for stakeholders undertaking internet projects are being developed.

Audit Report No. 16 1997-98, Equity in Employment in the Australian Public Service (tabled 2 December 1997)

The objectives of the audit were to examine the benefits of diversity management in the Australian Public Service and review the progress made towards equity, including the Equal Employment Opportunity programme.

The Australian National Audit Office made eight recommendations to the Public Service Merit Protection Commission regarding monitoring, evaluating and reporting on representation achieved by agencies across all equal employment opportunity groups and progress towards target levels.

Action Taken

The Report was taken into account in the development of the Department's National Workplace Diversity Programme and Yarrangi. Yarrangi is the Department's strategy for ensuring Indigenous Australian staff achieve high levels of skills, flexibility and motivation.

Audit Report No. 18 1997-98, Management of the Implementation of the Commonwealth Services Delivery Arrangements (tabled 4 December 1997)

The objective of the audit was to determine the extent to which the new arrangements are being implemented efficiently and effectively.

Recommendation No. 1

It is recommended that Centrelink and relevant agencies identify the full cost of establishing any new service delivery arrangements in order to better inform decision­making, assist effective project management and improve accountability.

Recommendation No. 3

It is recommended that Centrelink, in consultation with its current purchaser departments, identifies those essential features which would form the core of any future partnership agreements, including:

• explicit links between service objectives and the performance information upon which Centrelink is required to report;
• the process for changing performance information and developing achievable standards that include timeframes, where relevant;
• specification of the mechanism for collecting and reporting performance information that takes account of cost efficiency; and
• the high level of responsibility for Centrelink in how the services are to be delivered.

Recommendation No. 4

It is recommended that Centrelink directly links the performance information required by purchaser departments to that used to assess the performance of individuals or teams in Centrelink, so that all Centrelink staff work towards the targets required by the organisation as a whole.

Action Taken

The Department agreed with these recommendation and will continue to consult with Centrelink on these matters.

Audit Report No. 21 1997-98, Protective Security (tabled 4 December 1997)

The objectives of the audit were to :

• determine whether the management and administration of Commonwealth protective security arrangements complied with Government policy, standards and guidelines; and
• identify, recommend and report better practice in security management.

The following is the most significant recommendation that affected the Department.

Recommendation 3, dot points 2 and 3

It is recommended that agencies:

• establish security competencies for staff and assess the degree of effectiveness of security training and awareness programmes in operation;
• arrange regular formal training in protective security, including induction training for new staff, and specialised training, where appropriate; and promote and communicate security awareness through the use of demonstrations and videos, and publications and electronic means.

Action Taken

The Department has:

• developed a security induction package for new staff which is available on the intranet and issues circulars and electronic mail on a needs basis;
• reminded staff of new building security procedures and their responsibilities for security matters;
• released the revised Protective Security Manual from the Attorney General's Department; and
• prepared a request for tender to undertake a continuity management plan incorporating a security risk review. Results from the review will assist with the further development of relevant material.

Audit Report No. 22 1997-98, Audits of the Financial Statements of Commonwealth Entities (tabled 4 December 1997)

The Australian National Audit Office provided an opinion on whether the financial statement is accurate and complete and meets reporting requirements set down by the Department of Finance and Administration.

The Auditor-General signed the Audit Certificate for the Department on 16 October 1997. There were no qualifications of the financial statements. The Australian National Audit Office identified a number of internal control issues for the Department to consider with reference to information technology and asset management.

Audit Report No. 24 1997-98, Matters Relevant to a Contract with South Pacific Cruise Lines Ltd (tabled 15 December 1997)

The objective of the audit was to review the efficiency, economy and administrative effectiveness of departmental activities leading to the letting of the contract with South Pacific Cruise Lines Ltd and its subsequent administration. This has included, among other things, an examination of action taken to protect the Commonwealth's interests and the adequacy of relevant departmental guidelines and processes.

Recommendation 1

It is recommended that the Department:

• review the Training for Employment Programme and other relevant guidelines and instructions to ensure the material provides adequate guidance on issues to be addressed when assessing a proposal against programme objectives and value for money imperatives; and
• ensure the review has due regard to accepted risk management practices in the Australian Public Service and be tailored to accommodate the diverse nature of potential contracted parties.

Action Taken

The Department will apply the recommendation to new employment market services arrangements. In addition, it has introduced a risk management strategy including a risk management training course developed with assistance from external consultants.

The Department noted the Australian National Audit Office's views about the perceived lack of risk management principles in the guidelines for the Training for Employment Programme and core labour market programmes, but considered that the principles were incorporated in various places in the guidelines.

Recommendation No. 2

The Department is to ensure staff involved in the preparation of contracts and contract management are provided with adequate training and guidance. Advice to officers should indicate circumstances when it would be appropriate to seek professional assistance in these matters.

Action Taken

The Department has developed a training course to be made available to all officers managing contracts, particularly those administering contracts in the new employment services market.

Recommendation No. 3

The Department is to put in place arrangements to ensure major proposals and projects under labour market programmes, or similar programmes, are properly project managed in that:

• the roles and responsibilities of parties involved are clearly defined, including State and National Office roles;
• experienced and appropriately trained officers are nominated (and available) for key roles;
• reporting and accountability arrangements are established, including the requirement to adequately document key decisions and actions; and
• overall management and supervision occur at a sufficiently senior level to ensure effective outcomes.

Action Taken

The Department accepted the conclusion that there was some lack of clarity regarding the roles of individual officers initially responsible for elements of the negotiations with South Pacific Cruise Lines. However, the Department considers the finding that it did not adequately manage the subsequent administration of the contract with South Pacific Cruise Lines undervalued the efforts the Department made. The Department commented:

As soon as concerns arose in June 1997 the Department increased its management of the project. National Office sent a team to Brisbane to review developments, the State Manager appointed a further officer to work on the project, the Project Manager closely monitored arrangements to ensure funds were flowing to the training providers and that clients were being trained. Efforts were increased to establish the viability of South Pacific Cruise Lines and the whereabouts of the ship, and the accredited basis of the training. As a result of this increased management the Department ensured that $1.5m of the $2.2m advanced was paid to the training providers and some 270 clients received training.

Recommendation No. 4

The Department is to review, as part of prudent risk management procedures, the management of current labour market programmes and similar projects across the Department, to ensure effective and efficient management practices are applied.

Action Taken

In accordance with risk management principles, the focus will be on major projects (noting that the new employment services market will replace virtually all labour market programmes).

Recommendation No. 5

The Department is to review processes relevant to the preparation of ministerial briefings to ensure that there is adequate coordination between National and State offices directed to the provision of briefs that are complete, accurate and timely.

Action Taken

All officers of the Senior Executive Service have been reminded of the need to provide the Ministers with timely, reliable advice based on accurate data and high quality analysis.

Audit Report No. 27 1997-98, Managing the Year 2000 Problem (tabled 23 December 1997)

The audit objectives were to:

• assess the adequacy of agencies' planning in relation to achieving Year 2000 compliance;
• review and assess agencies' implementation, management and monitoring of Year 2000 compliance strategies;
• review agencies' strategic risk assessment in relation to the Year 2000 changeover; and
• raise auditees' and other Commonwealth agencies' awareness of the various aspects of the Year 2000 problem.

The following is the most significant recommendation that affected the Department.

Recommendation No.4

Agencies are to review and document their Year 2000 assessment and planning activity to ensure that agency management can make a confident assessment of the appropriateness and sufficiency of their approach from a whole of business perspective.

Action Taken

The Department has established a comprehensive Year 2000 project planning framework which is regularly monitored and reviewed. Strategies for information technology applications and products have been established.

Audit Report No. 28 1997-98, Contracting Arrangements for Agencies' Air Travel (tabled 23 December 1997)

The objectives for the audit were to report on the efficiency and cost effectiveness of selected agencies' procurement of air travel services.

The Australian National Audit Office made six recommendations aimed at increasing cost effectiveness of travel by agencies. The emphasis is on better contract management by agencies to maximise contractual benefits.

Action Taken

The report has been considered by the Department and the recommendations which were relevant to the Department have been implemented.

Audit Report No. 29 1997-98, Management of Accounts Receivable (tabled 18 December 1997)

The objectives of the audit were to assess the cost­effectiveness of the management and administration of the accounts receivable function in the 'general government' sector and to identify, develop and report better practice. The following are two of the more significant of the recommendations.

Recommendation Para 2.17, dot point 1

It is recommended that agencies integrate their sales and billing systems and extend their business systems to decentralised operations that generate significant revenue and debtors.

Action Taken

At present there is a separation of the invoicing and billing processes in the Department. With the implementation of the SAPfihre integrated financial and human resources system in July 1998 the invoicing and recovery function has been integrated in the Accounts Receivable module. However, the majority of the Department's debt base will not be transferred to this system until 1999.

Recommendation Para 2.17, dot point 3

It is recommended that agencies adopt a structured approach to the recovery of debts, including the use of specialist debt collection staff, more timely identification of overdue debts and improved criteria against which write off or waiver of debts can be tested.

Action Taken

The Department has, since 1 July 1997, centralised its debt collection activities for programme and trade debts. At this stage, staff debts are still managed through decentralised personnel units. This will also change with the introduction of SAPfihre.

With the centralisation of debt management a unit of trained, specialised staff has been established for the sole purpose of recovering the Department's outstanding debt. Along with the introduction of the Financial Management and Accountability Act, these staff were provided with training in revised recovery procedures, including guidelines for waiver and write-offs.

Audit Report No. 35 1997-98, DEETYA International Services (tabled 5 March 1998)

The objective of the audit was to examine the operations of DEETYA International Services with a view to identifying the administrative issues and difficulties experienced by the Department in establishing a commercial entity, and its subsequent operation within the framework of the Australian Public Service. Several recommendations were made and the following are two of the more significant.

Recommendation No.1

It is recommended that DEETYA International Services clarifies and seeks approval from the departmental Executive for its overall business purpose, including the identification and funding of community service obligations.

Action Taken

The Department has established new operational framework for DEETYA International Services so that it operates on a cost recovery basis. Appropriate executive level approval has been obtained.

Recommendation No.2

It is recommended that DEETYA International Services:

• clearly specifies objectives, strategies and performance measures for the various elements of its plans to improve the focus on, and assessment of, its achievements;
• separately identifies strategies and performance measures for each objective ensuring that these various elements are clearly linked as part of a cohesive business framework; and
• establishes a comprehensive risk management plan to help guide and effectively manage its business planning and operations.

Action Taken

Following agreement by the departmental executive to the new operational framework, DEETYA International Services revised its current business plan. The revised plan takes into account feedback from the Australian National Audit Office and focusses on continuous improvement linked to output­based budgeting and reporting. In addition, DEETYA International Services will now move to develop a comprehensive risk management plan.

Audit Report No. 41 1997-98, Asset Management (tabled 17 April 1998)

The review involved 25 Commonwealth entities, including this Department. The main objective of the audit was to assess the implementation of the recommendations of a previous audit on asset management, Audit Report No. 27, 1995-96.

It is recommended that organisations:

• develop an appropriate asset strategy for all key assets in the lead up to the use of full accrual accounting for management purposes and for budgeting in accordance with Government policy;
• formalise a systematic approach to the evaluation of key asset acquisition proposals in relation to the outcomes that are to be achieved;
• establish appropriate performance standards for key assets and monitor and report against those standards;
• formulate a disposal plan for all key assets, as part of an overall asset strategy, and review and update the plan as necessary, as part of the strategic planning cycle; and
• incorporate an evaluation of available asset management systems as part of the processes of implementation or renewal of their financial management systems.

Action Taken

The Department will specifically address the above recommendations after completion of the asset disposal processes in the Commonwealth Employment Service network.

Audit Report No. 46 1997-98, Internal Audit (tabled 28 May 1998)

The objectives of this audit were to:

• provide assurance to the Parliament on the effectiveness of internal audit operations; and
• determine whether internal audit generally operates at, or near, recognised better practice.

The following are the more significant recommendations that affect the Department.

Recommendations Para 2.38 and 2.39

It is recommended that all organisations review and confirm the continued relevance and appropriateness of their internal audit charters, and that the chief executive be responsible for formally approving the internal audit charter.

Action Taken

A revised Audit Charter was endorsed by the Audit Committee on 3 June 1998 and was approved by the Secretary on 24 June 1998.

Recommendations Para 2.70 and 2.71

It is recommended that internal audit:

• as a critical part of the planning process, obtain from line management their views of the key business risks facing the organisation, and solicit their concerns and perspective on the operation of key business processes; and
• develop a systematic, formal approach to planning which demonstrates clear linkages between their business risk assessments and their strategic and operational plans.

Action Taken

For development of the 1998-99 Annual Audit Plan and a three year Strategic Audit Plan, internal audit:

• obtained input from division heads and State managers; and
• applied a comprehensive risk methodology to the Department's programmes, corporate support activities and information technology applications.

Audit Report No. 47 1997-98, Management of Commonwealth Guarantees, Indemnities and Letters of Comfort (tabled 23 June 1998)

The objectives of the audit were to assess:

• the adequacy of agencies' management of guarantees, indemnities and letters of comfort in relation to the size and nature of the Commonwealth's exposure;
• the nature of agencies' management, reporting and monitoring of the instruments; and
• review action taken by agencies in regard to the recommendations in a 1996 audit.

The Audit made several recommendations that affected the Department. These recommendations are currently under consideration and will be reported in next year's Annual Report.

Audit Report No. 48 1997-98, Data Management in the Australian Public Service (tabled 22 June 1998)

The objective of the audit was to assess the efficiency, effectiveness and accountability of data management by government agencies. Six of the recommendations specifically affected the Department. The Department agreed with all of them and will report on their implementation in next year's Annual Report.

Details of Reports Tabled in Previous Years for which Remedial Action was Incomplete

Report No. 39 1996-97 - Audit Committees (tabled 25 June 1997)

The report dealt with the roles and responsibilities of audit committees in all Commonwealth public sector entities including departments and similar agencies, and commercial and non­commercial statutory authorities. The Audit made overall recommendations and several specific recommendations, of which the following are two of the more significant.

Recommendation 2

Entities are to confirm that the size and membership of their Committee is appropriate given the size and structure of the entity and the functions assigned to the Committee.

Action Taken

The size of the Committee has been reduced from five to three members - the Department's two Deputy Secretaries and one external member.

Recommendation 3

Entities without a majority of external members on their audit committees, that is members not part of executive management, are to either:

• vary the membership profile to achieve real independence where an independent membership is appropriate to the governance model; or
• examine the membership profile in relation to the powers and functions of the Committee to ensure they are compatible, particularly where largely independent membership is considered inappropriate.

Action Taken

An external member has been appointed.

Return to the Top of the Page

Copyright | Disclaimer | Privacy | Feedback