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Department of Foreign Affairs and Trade - Annual Report 2000-2001
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 Contents [Tab]  Guide [Tab]  Overviews [Tab]  Performance [Tab]  Corporate [Tab]
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Glossary of terms

Accrual accounting

System of accounting where items are brought to account and included in the financial statements as they are earned or incurred, rather than as they are received or paid.

Accrual budget

A comprehensive budget incorporating assets, liabilities and revenues, as well as cash receipts and expenditures. Thus an accrual budget is an extension of the cash budget, focusing on all the resource implications of the strategic and operational plan.

Activity

What an agency does to convert inputs into outputs.

Administered items

Expenses, revenues, assets or liabilities managed by agencies on behalf of the Commonwealth. Agencies do not control administered items. Administered expenses include grants, subsidies and benefits. In many cases, administered expenses fund the delivery of third party outputs.

Additional estimates

Where amounts appropriated at Budget time are insufficient, Parliament may appropriate more funds to portfolios through the Additional Estimates Acts. This is the Additional Estimates process.

Additional estimates

These are appropriation Bills Nos 3 and 4, and a separate Bill for the Parliamentary Departments (Appropriations (Parliamentary Departments) Bill No 2). These Bills are introduced into Parliament after the Budget Bills. In 2000–01 the Budget was introduced in May 1999, and the Additional Estimates Bills were introduced in November 1999.

Agency

Agencies are departments of state, departments of parliament and ‘prescribed agencies’ for the purposes of the Financial Management and Accountability Act 1997. Where the term is used generally in this document, it is meant to refer to departments, agencies, authorities and non-commercial companies.

Annual report

One of the major accountability documents presented to Parliament. It provides a broad statement of agency or authority capability and performance. It allows chief executives to account to their minister for the efficiency and effectiveness of the administration for which the minister is ultimately responsible.

Appropriation

An authorisation by Parliament to spend moneys from the Consolidated Revenue Fund.

Annual appropriation

Two appropriation Bills are introduced into Parliament in May and comprise the Budget. Further Bills are introduced later in the financial year as part of the additional estimates. Parliamentary departments have their own appropriations.

APS employee

A person engaged under section 22 or a person who is engaged as an APS employee under section 72 of the Public Service Act 1999.

Assets

Future economic benefits controlled by an entity as a result of past transactions or other past events.

Average Staffing Level

The average number of employees receiving salary or wages over the financial year, with adjustments for casual and part-time employees to show the full time equivalent.

Capital-Use Charge

The Capital-Use Charge is a divident requirement levied on Commonwealth General Government Sector agencies and authorities. The Capital-Use Charge payment is based on those agencies and authorities departmental net assets at financial year end. Funding for the Capital-Use Charge is included in agencies and authorities departmental price of outputs appropriation.

Competitive tendering and contracting (CTC)

The process of contracting out the delivery of government activities previously performed by a Commonwealth agency to another organisation. The activity is submitted to competitive tender, and the preferred provider of the activity is selected from the range of bidders by evaluating offers against predetermined selection criteria.

Competitive tendering

The process by which agencies call for offers to perform a service from internal and external bodies, including the private sector and other departments and agencies, in an open and transparent competitive environment.

Consultancy services

Consultancy services are one particular type of service delivered under a contract for services. They are distinguished from other ontracts for services by the nature of the work performed. A consultant is an entity, whether an individual, a partnership or a corporation, engaged to provide professional independent and expert advice or services. Typically, the term consultancy services is used to describe the application of expert professional skills to: investigate or diagnose a defined issue or problem, carry out defined research, reviews or evaluations; or provide independent advice, information or creative solutions to assist the agency in management decision making.

A consultancy contract will typically define the nature and purpose of the task to be performed but not (in any detail) the manner in which the task is to be performed. By contrast, other (non-consultancy) contracts for services will typically be far more restrictive in the degree of latitude afforded to the contractor.

Corporate governance

The process by which agencies are directed and controlled. It is generally understood to encompass authority, accountability, stewardship, leadership, direction and control.

Departmental items

Resources directly controlled by agencies, including salaries and allowances. Such resources are used to produce outputs on behalf of government, including outsourced activities funded and controlled by the agency.

Depreciation

An expense recognised systematically for the purpose of allocating the cost of a non-current asset over its useful life.

Deprival asset valuation

Values non-financial assets according to the current cost of their replacement. That is, non-financial assets are valued at the lowest cost of replacing the gross ‘service potential’ of those assets.

Effectiveness indicators

Indicators to assess the degree of success in achieving outcomes. They are likely to relate to intermediate outcomes below the planned outcomes specified at Budget level.

Effectiveness

The extent to which actual outcomes are achieved, in terms of planned outcomes, via relevant outputs or administered expenses. An intervention’s effectiveness should be distinguished from efficiency, which concerns the adequacy of its administration.

Equity or Net assets

Residual interest in the assets of an entity after deduction of its liabilities.

Expense

Total value of all of the resources consumed in producing goods and services.

Financial results

The results shown in the financial statements of an agency.

Historical cost

The original cost of acquisition of an asset, including any costs associated with acquisition. Under Australian Accounting Standard 10 ‘Acquisition of Non-Current Assets’ assets need to be reported initially at an acquisition (historical) cost. The Commonwealth’s financial reporting requirements issued under the Finance Minister’s Orders require the subsequent revaluation of non-current assets to their deprival value within every three years.

Inputs

Resources in the form of people, materials, energy, facilities and funds that an agency uses in activities to produce outputs.

Internal auditing

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Intervention

Agency and government actions designed to achieve outcomes. In the new framework, ‘intervention’ replaces the previously used term ‘program’. An intervention consists of several elements:

  • planned outcomes
  • resources
  • strategies, activities and processes
  • management and accountability arrangements
  • outputs, relevant administered items and third party outputs
  • performance information.

Liabilities

Future sacrifices of economic benefits that an entity is presently obliged to make to other entities as a result of past transactions or other past events.

Measure

A decision by the Cabinet or Ministers that has been finalised since the 2000–01 Budget and has resulted in a change in expenditure in the years 2001–02 to 2004–05.

Materiality

Takes into account the planned outcome and the relative significance of the resources consumed in contributing to the achievement of that outcome.

Net savings

The net savings achieved from the implementation of CTC. This is the reduction in costs incurred in obtaining the service after CTC implementation compared with the costs incurred in obtaining the service prior to the implementation. The costs incurred after implementation include the costs of managing the contract but not any costs of implementation or transition (that is, the costs of scoping the activity, baseline costing, developing the purchasing strategy, developing the statement of requirement, contract development, tender evaluation methodology, contract negotiations, costs relating to any redundancies or surplus assets and accommodation, profits from asset sales).

Non-ongoing APS employee

An APS employee who is not an ongoing APS employee.

Ongoing APS employee

A person engaged as an ongoing APS employee as mentioned in paragraph 22(2)(a) of the Public Service Act 1999.

Operations

Functions, services and processes performed in pursuing the objectives or discharging the functions of an agency.

Operating result

Equals revenue less expense.

Outcomes

The results, impacts or consequences of actions by the Commonwealth on the Australian community. Planned outcomes are the results or impacts that the Government wishes to achieve. Actual outcomes are the results or impacts actually achieved.

Output groups

The aggregation based on homogeneity, type of product or beneficiary target group, of outputs. Aggregation may also be needed for the provision of adequate information for performance monitoring; or based on a materiality test.

Outputs

The goods and services produced by agencies on behalf of government for external organisations or individuals. Outputs include goods and services produced for other areas of government external to the agency.

Performance information

Evidence about performance that is collected and used systematically. Evidence may relate to appropriateness, effectiveness and efficiency. It may be about outcomes, factors that affect outcomes and what can be done to improve them. Performance information also includes evidence about the extent to which outcomes can be attributed to an intervention. Performance information may be quantitative (numerical) or qualitative (descriptive). It should be verifiable. Its usefulness is enhanced by applying standards and other types of comparison (eg, with past performance, other lines of business, or level of need before the intervention) which allow judgments to be made about the extent to which interventions are achieving desired results.

Performance measures

A more precise measure than indicators. Performance measures relate to outcomes, outputs, third party outputs and administered items. They are used when there is a direct causal link between an intervention and a measurable change in performance.

Price

The amount the government or the community pays for the delivery of agreed outputs.

Purchaser/provider arrangements

Arrangements under which the outputs of one agency are purchased by another agency to contribute to outcomes.

Quality

Relates to the characteristics by which customers or stakeholders judge an organisation, product or service. Assessment of quality involves use of information gathered from interested parties to identify differences between user’s expectations and experiences.

Quantity

Size of an output. Count or volume measures. How many or how much.

Revenue

Total value of resources earned or received to cover the production of goods and services.

Service charters

It is Government policy that departments which provide services directly to the public have service charters in place. A service charter is a public statement about the service that a department will provide and what customers can expect from the department.

Special appropriations

Moneys appropriated by Parliament in an Act separate to an annual Appropriation Act, where the payment is for a specified amount. Special appropriations are not subject to Parliament’s annual budget control, unlike the annual appropriations.

Sub-Outputs

Sub-outputs identify components that together form an output.

Third party outputs

Goods or services delivered to the community by entities outside the Commonwealth General Government Sector. They are outputs wholly or partly funded by administered items and are directed to achieving planned outcomes.

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