Corporate governance

The department underwent significant organisational restructuring and developed revised governance arrangements to ensure effective implementation of the Government's foreign policy, trade and development agenda in a cohesive whole-of-portfolio manner. The department commenced strengthening leadership, strategy and delivery capabilities in response to the findings of an APSC Capability Review and began preparations for the implementation of the new Public Governance, Performance and Accountability Act 2013 (PGPA Act). (See also the section on capability improvement and change below.)

The Executive

The Secretary and deputy secretaries oversaw all significant foreign, trade and development policy, and corporate management issues in the post-integration department. The executive was also responsible for placements of senior executive staff. The deputy secretaries supported the Secretary through strategic overview of the department's work units. (See Figure 2 for the organisational structure and the deputy secretaries' areas of responsibility.) Members of the executive represented the Government at meetings in Australia and overseas and chaired key corporate governance bodies.

Senior management committees and their roles

Portfolio coordination

The machinery of government changes which brought management of the aid program, development, tourism and international climate change policy into the department were designed to ensure a cohesive approach to implementing the Government's foreign, trade and development policy agenda, with a particular focus on economic diplomacy. In this context, the department worked closely with portfolio agencies to ensure a consistent and co-ordinated approach to policy formulation and implementation. The Secretary met regularly with his portfolio counterparts at portfolio agency heads meetings to ensure high-level coordination on policy and corporate issues. Cross-portfolio coordination at the working level was also intensified. (See Figure 4.)

Whole-of-government coordination

The department's leading coordination role across Australia's overseas network is set out in the Prime Minister's Directive: Guidelines for the Management of the Australian Government Presence Overseas. Working closely with other agencies, the department helped achieve whole-of-government objectives, including by coordinating policy approaches to bilateral and multilateral trade negotiations, building and maintaining regional cooperation on issues such as counter-terrorism and people smuggling, hosting and participating in major international meetings, delivering an effective aid program and responding to humanitarian and consular crises.

The Secretary and senior executive met senior officers from other Australian government departments and agencies regularly to coordinate whole-of-government approaches to current and emerging policy matters, as well as shared management challenges.

Management mechanisms

The department's structure of management bodies and meetings enables effective sharing of information, robust corporate governance, communication of priorities, and strong and ethical organisational values.

The Departmental Executive (DE)—comprising the executive, the head of Corporate Management Division, the Chief Financial Officer, the Chief Information Officer and rotating representatives from the senior executive service (SES)—is the department's major formal management body. Meeting weekly, the DE focuses on strategic resource management and priorities, including the budget and cross-cutting policy matters requiring high-level attention. The DE evaluates performance and discusses the priorities and challenges for overseas posts and state and territory offices through the Post/Office Evaluation Report (PER/OER) and Post Liaison Visit (PLV) processes.

The following committees, chaired at deputy secretary-level, support the DE. Two of these committees were established following the integration of the department and AusAID to oversee and report on aid policy and investments.

The Audit and Risk Committee provides independent assurance and advice to the Secretary and Departmental Executive on the department's risk, control and compliance framework, and its external accountability responsibilities.

Both the AusAID Audit Committee and DFAT Audit and Risk Committee met separately twice prior to integration. The fully integrated Audit and Risk Committee was established on 1 November 2013. The committee met three times during the reporting period.

The committee has four permanent departmental members and two independent external members. Other designated departmental officers and representatives from the ANAO may attend meetings as observers.

The committee monitored departmental compliance with obligations under legislation and recommended improvements to certain management systems and key business processes, the corporate governance framework and financial reporting processes.

The committee also provided a forum for both informal and formal communication between key stakeholders, including the Secretary, the DE, senior managers, Internal Audit Branch, others areas of the department with governance responsibilities and the ANAO.

The Ethics Committee met twice during 2013–14 to oversee and make recommendations on the development and implementation of the department's conduct and ethics policies, including conducting investigations. Membership of the committee was reviewed and expanded during the year to reflect integration of the aid function into the department. The department's Conduct and Ethics Manual is regularly reviewed and updated, and is available on the departmental website at www.dfat.gov.au/publications/conduct-ethics/.

As the peak consultative bodies for workplace matters, the Workplace Relations Committee and the AusAID Consultative Forum met separately once and jointly six times during 2013–14, including to consult on workplace changes arising from integration. Other workplace issues including parking, conditions of service, performance management and the impact of the budget on staffing levels were also canvassed. Membership on both forums included elected staff, union and management representatives. The AusAID Consultative Forum was disbanded on 30 June 2014.

The Aid Investment Committee provides effective oversight of Australia's aid investment portfolio, ensuring it aligns with government policy, achieves development impact, and promotes value for money in aid expenditure. The committee provides strategic guidance on Aid Investment Plans for major programs and reviews high-risk and/or high-value aid investments.

The Development Policy Committee ensures the design and delivery of the aid program is consistent with the national interest and government policy priorities, and aligns with foreign, trade and development policy.

Intradepartmental communication

The Secretary communicated with departmental staff through the following mechanisms:

• weekly meetings with division heads to communicate the department's foreign, trade and investment, and development policy and corporate priorities
• administrative circulars, the department's intranet and all staff messages
• regular meetings with relevant senior officers to discuss policy, staffing, budget and other corporate management issues
• regular forums open to all staff to discuss policy and corporate issues affecting the department (transcripts of these forums are made available to all staff in Australia and overseas)
• meetings with divisions to discuss policy and corporate issues
• publication on the intranet of his speeches and presentations.

The overseas network was informed of policy and corporate issues through:

• regular formal and informal communication with divisions in Canberra
• regional heads of mission/post meetings
• video conferences between the Secretary and some overseas posts
• regional management conferences
• post liaison visits led by a deputy secretary.

The Secretary and deputy secretaries used these mechanisms to communicate regularly with departmental staff in Canberra and overseas on the integration process.

Evaluation and planning

Regular evaluation takes place across the department to ensure resources are best directed to support the Government's foreign, trade and investment, and development policy objectives.

The department's Portfolio Budget Statements 2013–4 outlined our performance expectations and planned use of resources. The development program functions, international climate change negotiations and tourism policy, now integrated in the department, were reported on in other Portfolio Budget Statements. The department updated its deliverables and key performance indicators for the Portfolio Budget Statements 2014–15 to ensure they closely aligned with the department's new priorities.

The department evaluated the performance of posts and state and territory offices (PERs/OERs), on a rolling basis (each post and office is reviewed once every 18 months). In 2013–14 six OERs and 42 PERs were discussed with the relevant state directors and heads of mission. The department sought input from more than 60 federal or state government agencies and departments on the performance of our posts and offices as part of the review process. Feedback from these agencies was strongly positive about our ability to achieve outcomes important to Australian interests.

Divisional evaluation reviews, conducted on a rolling basis throughout 2013–14, enabled the executive to evaluate each division's performance and to determine or refine priorities for the year ahead.

As a result of integration, the findings of the APSC Capability Review and changes under the new PGPA Act, the department began work to enhance strategic planning processes, including through the introduction of divisional and post business plans and changes to evaluation processes for work units. The PGPA Act will also require the development of a Corporate Plan for 2015–16.

In 2013–14, post liaison visits led at deputy secretary level were conducted in Ottawa, New Delhi, Chennai and Mumbai to assess first hand each post's performance and their operating environment.

Office of Development Effectiveness

An operationally independent unit in the department—the Office of Development Effectiveness (ODE)—evaluates the quality and effectiveness of the aid program. ODE monitors performance, evaluates impact and contributes to international evidence and debate about aid and development effectiveness. In 2013–14, ODE published seven reports on Australian aid investments. (See also DPSO.)

The ODE also verifies, through an annual spot check, the ratings given by staff on the performance of individual aid investments. This process enhances the overall reliability and robustness of the department's ratings system. The work of ODE is overseen by the Independent Evaluation Committee.

Conduct and ethics

The department's Conduct and Ethics Unit (CEU) investigates allegations of fraud and misconduct, including against locally engaged staff overseas. Of the 21 allegations investigated in 2013–14, 11 allegations were substantiated.

One of the key roles of the CEU is to promote the APS Values, Employment Principles and Code of Conduct as well as our own Code of Conduct for Overseas Service. We provided awareness training to our staff in Australia and at Vientiane, Port Moresby and Paris posts, complementing the department's mandatory e-learning training modules on APS values, ethical behaviour and accountable decision-making. We also provided specific pre-posting briefings on overseas conduct and ethics issues for heads of mission, deputy heads of mission and senior administrative officers.

To meet obligations imposed by the entry into force of the Public Interest Disclosure Act 2013 on 15 January 2014, the department established rigorous procedures for effectively managing complaints relating to any allegations of malfeasance as defined under the act involving departmental staff. The new procedures complement existing policies on reporting potential breaches of the APS Code of Conduct and suspected criminal offences.

Child protection compliance

The Child Protection Compliance Section reviews the implementation of the Child Protection Policy for the aid program. The section monitors compliance by staff and partner organisations, conducts audits and spot checks to monitor the child protection systems of partner organisations, and ensures that any allegation of child exploitation or abuse by an aid program delivery partner is responded to appropriately.

The section provides policy guidance, conducts staff training, delivers briefings to partner organisations and provides advice on program design and the management of risks to children.

Countering fraud

The Fraud Control Section (FCS) investigates allegations of fraud within the aid program and other incidents of external fraud. When fraud in the aid program is substantiated, FCS seeks the recovery of any losses and the application of appropriate penalties, including the prosecution of offenders.

During 2013–14, FCS staff delivered 46 training sessions to 1026 participants consisting of department, partner government, multilateral, contractor and NGO staff in Canberra and overseas.

The department's fraud prevention, investigation, reporting and data collection procedures comply with the Commonwealth Fraud Control Guidelines and the Australian Government Investigation Standards. The department's Fraud Control Plan stresses zero tolerance for dishonest or fraudulent behaviour by employees, clients, contractors and recipients of Australian aid program funds, and underlines the department's strong commitment to reducing the risk and incidence of fraud across its operations both within Australia and overseas.

The department conducts a biennial department-wide fraud risk assessment. A fraud risk assessment was completed for the integrated department and will inform a new fraud control plan in 2015.

Risk management and business continuity planning

As a result of integration, the department began reviewing business continuity planning (BCP) processes in Canberra. We managed BCP processes during the transitional integration period by prioritising higher risk areas. The department focused on improved business continuity management, taking account of lessons learned from desktop exercises in Canberra and at state and territory offices.

The department's result in the 2014 Comcover Risk Management Benchmarking Survey exceeded the average across participating agencies. We performed most strongly in our business continuity and disaster recovery policies and processes, achieving the highest possible rating in the survey.

The department commenced work on a revised risk management policy to provide all divisions and business areas across the integrated department with the necessary tools and guidance to engage with risk as a core professional responsibility, consistent with the new Commonwealth Risk Management Policy. Risk reporting will be embedded as part of the new business planning processes.

Regulatory practice

The department established a deregulation unit to drive red tape reduction initiatives and provide advice on regulatory impact analysis requirements for new policies. We assisted in the establishment of the Trade and Investment Policy Advisory Council (see 1.1(9)) which has deregulation as a permanent agenda item. We completed a stocktake of our regulatory footprint and identified areas for reform in the short, medium and long term. We began work to calculate the total regulatory cost burden imposed by the department on individuals, business and community organisations to guide future red tape reduction initiatives. Given our relatively small regulatory footprint—primarily in the areas of passports, sanctions, nuclear and chemical stakeholder permits, consular services, grants, and interaction with small and medium enterprises—most red tape savings will be realised through changes to business processes rather than the repeal of legislation.

Internal audit

The department's Internal Audit Branch, under the direction of the Chief Auditor, reviews the quality, accountability, efficiency and effectiveness of the functions and processes used by the department to develop and implement foreign, trade and development policy, deliver an effective aid program and provide high quality consular assistance.

The internal audit program provides assurance that critical policies and procedures are complied with and identifies areas for improvement in administrative and program functions and processes. The internal audit program is delivered using a combination of internal resources and external providers.