Page 770 - Week 04 - Tuesday, 1 May 2007
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In 2003 the government introduced the requirement for agencies to prepare a management discussion and analysis to accompany their annual financial statements. The purpose of the MD&A is to enhance financial reporting by providing a high-level overview of the financial results and health of an agency. The MD&A explains the main trends and factors underlying the development, performance and position of the entity’s business during the period covered by the financial statements.
Significant reforms to the ACT’s performance measurement framework were implemented in the ACT government’s 2006-07 budget. In that budget the performance measurement framework moved away from the presentation of quantity, quality, timeliness and cost measures, many of which provided little value when measuring the performance of an agency. The revised performance measurement framework provides more meaningful and useful measures for the Legislative Assembly and the ACT community.
An internal audit framework was developed to assist departments and territory authorities to develop their own frameworks. The framework provides guidance to departments and territory authorities on matters such as establishing internal audit committees, appropriate reporting structures for audit findings and what types of issues and audit plans should be covered. It is a framework for establishing and maintaining an effective internal audit function in territory agencies. The framework was developed partly in response to Report No 4 of the Auditor-General—Frameworks for internal auditing in territory agencies. That report found that internal audit frameworks in agencies were not adequate to effectively contribute to good governance.
Model chief executive financial instructions have been developed to support departments’ and territory authorities’ internal financial management frameworks. Chief executives’ financial instructions are an integral control mechanism for the chief executives to ensure compliance with their responsibilities under the FMA for the efficient and effective financial management of ACT government entities. The instructions are regularly updated, as required, to ensure that they reflect best practice. The instructions were updated recently to further strengthen credit card practices in the territory.
As announced in the 2006-07 budget, the government implemented cash reforms to ensure cash balances are used effectively and cash management is performed in a transparent and accountable manner. Features of the cash management reform program include minimisation of agencies’ cash balances, with appropriation provided on a “just in time” basis; establishment of appropriate cash buffers for each department to suit operational circumstances and working capital needs and cessation of departments earning interest revenue except where specific conditions apply.
Credit card use has attracted some attention, and we heard much of that today. It is important to remember that the Auditor-General reported that all audit agencies have issued adequate policies and procedures for the use of credit cards. Furthermore, the Auditor-General found that generally agencies have satisfactory controls in place to ensure that credit card transactions are conducted in accordance with their policies and procedures.
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