Management of financial resources

The department's operations in Australia and overseas are underpinned by a sound and prudent financial resource management framework, which includes effective internal controls and regular budgeting performance reports.

In its Interim Phase of the Audit of Financial Statements of Major General Government Sector Agencies for the year ending 30 June 2013, the ANAO acknowledged that the department has effective internal controls to ensure good financial management and a sound financial reporting framework. The ANAO found no audit issues of a significant nature in our financial statements.

In the 2012–13 Budget, the government provided additional funding to establish new posts in Chengdu (China) and in Dakar (Senegal) and to support the department's involvement in the ANZAC Centenary events in 2014 and 2015. We also received a continuation of funding to sustain our diplomatic presence in Afghanistan and to provide security at Australia's diplomatic mission in Baghdad. The department absorbed costs associated with supporting the extension of the Seasonal Worker Program. Passport funding was increased to cover a projected increase in passport demand and measures to mitigate the growing risk of identity fraud and child abduction.

At the 2012–13 Additional Estimates, additional funding was provided to support Australia's non-permanent membership of the UNSC for the two calendar year 2013–2014 term and to establish a Jakarta-based Ambassador to ASEAN. The department received administered funding to make a contribution to the Auschwitz–Birkenau Foundation to assist with the preservation of the Auschwitz–Birkenau Memorial site in Poland. Passport funding was decreased due to lower than expected passport issues.

The department was required to find additional savings consistent with those applying to all other Commonwealth agencies.

Financial management information system

The department finalised the contract for its two-year program to improve its financial management processes. The program will deliver enhanced functionality to all staff, regardless of their location, in relation to procurement processes, travel management, cash management, financial reporting and budget planning.

Assets management

A rigorous capital funding process ensured work units provided well-argued business cases to seek capital funds. The executive, in addition to receiving monthly budget reports, reviewed the progress of previously approved projects. Work areas reviewed and updated their asset purchasing and disposal needs as part of a five-year asset plan.

The department operates a rolling cycle for asset revaluations whereby each asset class is revalued every five years. The only exceptions are land and buildings, which are revalued annually. Informal reviews and impairment testing of asset classes are conducted annually to ensure asset values are fairly stated in the end-of-year accounts.

In 2012–13, the furniture and fittings and leasehold improvements asset classes were formally revalued under the rolling cycle.

Competitive tendering and contracting

The department implemented continuous improvement of procurement and contract policies and procedures.

Purchasing performance

We have undertaken considerable work to ensure that the department complied with all relevant Commonwealth procurement policies and legislation during 2012–13, in particular the Commonwealth Procurement Rules.

Competitive tendering and contracts of $100 000 or more (inclusive of GST) let during 2012–13 provide access for the Auditor-General to the contractors' premises.

Whole-of-Australian-government travel management services

The Department of Finance and Deregulation has exercised the first option to extend its Whole-of-Australian-Government Head Agreement with Agency Travel Management Companies for 12 months to April 2014. Consequently Carlson Wagonlit Travel will continue to be the department's travel provider until 30 April 2014.

The department prepared for transition to Phase Two of the Whole-of-Australian-Government Arrangements (for Travel and Related Card Services) on 1 July 2013. Under Phase Two, the AOT Group will provide accommodation services to the department and Thrifty and Europcar will become the department's car rental suppliers for travel within Australia.

Whole-of-Australian-government stationery and office supplies

On 1 February 2013 the department transitioned to the Whole-of-Australian-Government Arrangements for Stationery and Office Supplies. Under that arrangement, Officemax has become the department's stationery provider until 30 June 2015.

Exempt contracts

There were no contracts or standing offers in excess of $10 000 (including GST) exempted from publication in the Purchasing and Disposal Gazette (AusTender) on the basis that publication would disclose exempt matters under the Freedom of Information Act 1982.

Consultancy services

The department engages consultants where it lacks specialist expertise or when independent research, review or assessment is required. Consultants are typically engaged to investigate or diagnose a defined issue or problem; carry out specific reviews or evaluations; or provide independent advice, information or creative solutions to assist in the department's decision-making.

Prior to engaging consultants, the department takes into account the skills 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 FMA Act and related regulations including the Commonwealth Procurement Rules and relevant internal policies.

During 2012–13, 16 new consultancy contracts were entered into involving total actual expenditure of $752 840. In addition, nine ongoing consultancy contracts were active during the 2012–13 year, involving total actual expenditure of $945 402.

Information on the value of contracts for consultancies to the value of $10 000 or more (including GST) is on the AusTender website at http://www.tenders.gov.au.

Table 14: Consultancy expenditure

2010–11
2011–12
2012–13
Expenditure on new consultancy contracts
328,114
1,133,653
752,840
Expenditure on ongoing consultancy contracts
1,133,010
293,312
945,402
Total
1,461,124
1,426,965
1,698,242

Overseas property–leased estate

See Program 3.2, Overseas property.

Domestic property

Office accommodation for the department's operations in Australia is provided through commercially-leased premises in Canberra and each state capital, Darwin and Newcastle. The department also owns a residence on Thursday Island for the head of the Torres Strait Treaty Liaison Office.

Outlook

The budgetary framework set out in the May budget will continue to demand a careful approach to managing the department's resources.

We will ensure adequate resourcing for our obligations regarding UNSC membership and hosting the G20, as well as for advancing the establishment of new posts in Senegal (Dakar) and China (Chengdu). Managing the department's diplomatic and civilian presence in Afghanistan and Baghdad will remain a core priority, as will readiness to set up crisis management arrangements, especially given ongoing instability in the Middle East.

The department will continue to roll out measures to address areas for improvement identified in the 2012 staff survey, including in relation to the ICT environment.

An important priority for the coming year will be to reflect on and respond to a Capability Review of DFAT undertaken between April and June 2013, as part of an APS-wide review program agreed by Government in 2011. The department will develop an action plan to respond to the review findings.