Governance framework

Our governance arrangements assist the department to deliver outcomes consistent with our legal, accountability and policy obligations.

The Executive Board, chaired by the Secretary, is responsible for setting the department’s strategic direction, meeting the Government’s objectives, and ensuring compliance with the department’s obligations under the Public Governance, Performance and Accountability Act 2013. Membership consists of the Secretary and deputy secretaries.

The department’s governance committees (Figure 3.1) provide direction and organisational stewardship, and support the department to meet its priorities and objectives. All committees— except the Investment and Implementation Committee, which makes decisions related to capital budgets—are advisory bodies and report to the Executive Board or the Secretary.

Figure 3.1: The department's governance structure, at 30 June 2020

Audit and assurance committee

The department’s Audit and Assurance Committee (AAC) provides independent advice and assurance to the Secretary on the appropriateness of the department’s:

• financial reporting
• performance reporting
• systems of risk oversight and management
• systems of internal control.

The AAC’s roles and responsibilities are clearly set out in section 45 of the Public Governance Performance and Accountability Act 2013 (PGPA Act) and section 17 of the Public Governance Performance and Accountability Rule 2014 (PGPA Rule), and the AAC’s charter is at www.dese.gov.au/aac. The AAC met five times during the year.

At 30 June 2020, the AAC had six external members and one departmental member. Table 3.1 provides details of the AAC members’ roles on current and former audit committees. Table 3.2 provides details of the AAC members’ remuneration (inclusive of Goods and Services Tax [GST]), qualification and experience, and Table 3.3 provides details of members’ remuneration (inclusive of GST), qualification and experience for the former departments’audit committees.

Also attending the AAC as observers were the Deputy Secretary Corporate and Enabling Services (Chief Operating Officer), CFO, CIO, Chief Risk Officer, and the Chief Internal Auditor. Representatives from the ANAO attended as observers.

The AAC has two subcommittees: the Financial Statements Subcommittee and the Performance Reporting Subcommittee. These subcommittees assist the AAC to meet its financial and performance reporting obligations under the PGPA Rule.

The AAC works closely with the Risk, Security and Governance Committee (RSGC), which further assists the AAC to meet its obligation to review the appropriateness of the department’s systems of risk oversight and management.

Corporate and business planning

Our 2019–20 Corporate Plan reflects the department’s formation on 1 February 2020. Our corporate plan combined the content from the two former departments’ plans.

The corporate plan is the department’s primary planning document and sets the direction for how we work, build our capability, and engage with risk to deliver on our purpose. The corporate plan is a key component of our performance framework. It reflects the requirements of the Commonwealth Performance Framework, and the structures (environment, risk, and capability) that help support the department to achieve its purpose.

The corporate plan also outlines our key activities and performance criteria for the next four years. These performance criteria form the basis for the annual performance statement reporting in Part 2 of this report.

As part of the annual business planning cycle, the department’s divisions and branches develop business plans that align with the corporate plan’s outcomes, and also detail strategies, initiatives and deliverables to achieve these outcomes. Our business planning helps the department:

• action strategic priorities
• define delivery strategies
• ensure accountability
• enhance approaches to create better outcomes.

Risk management

The department manages risk in accordance with the Commonwealth Risk Management Policy, and our Risk Management and Framework and Policy.

The department’s Risk Management Framework and Policy:

• governs how we identify, manage and communicate strategic and operational risks
• sets out our risk governance and accountability arrangements
• defines our risk appetite and tolerance approach.

Our Executive Board has overarching responsibility for risk and is supported by the Chief Risk Officer, a centralised enterprise risk function, and governance committees, including the RSGC and AAC.

Responsibility for key strategic and operational risks are assigned to individual senior executive officers to monitor and manage against the delivery of relevant outcomes. Risk management is further embedded by senior risk officers who are responsible for managing risk at the project and activity levels. Risk officers report to governance committees and ensure a line of sight between operational risk management and the department’s strategic risks.

The RSGC oversees the department’s risk management arrangements, is chaired by an independent external expert, and reports to the Executive Board. An external member of the AAC attends as an observer.

In 2019–20, our Risk Management Framework and Policy was updated following the Machinery of Government changes to adopt the methodologies of the two former departments and to ensure that we were meeting our obligations under section 16 of the PGPA Act.

Fraud control

As a Commonwealth entity, the department must ensure public resources are used appropriately to achieve its purpose and promote financial sustainability.

In 2019–20, the department’s Fraud Control Framework was updated. The framework complements other arrangements in place to prevent, detect, investigate, and report fraud against the department’s programs and other interests.

The department continued exploring solutions to manage fraud risk and incidents of fraud. This approach has been supported by improving legislative frameworks, refining data and analytical capability, strengthening existing controls and implementing processes to reduce fraud risk.

During the year, a Child Care Financial Integrity Framework was developed to support the financial integrity of the child care system. This guides the department’s child care financial integrity program, including fraud detection, monitoring, and response activities. The Family Day Care Payment Integrity measures respond to sophisticated and systemic fraud, and serious non-compliance in the family day care sector.

Two investigation teams were responsible for investigating incidents of fraud during the year, the:

• Child Care Fraud Investigations team in the Early Childhood and Child Care Group, which investigated family assistance law cases, primarily fraud in child care. This team also helps detect and prevent fraud in child care and other payment programs through strategic collaboration with other Australian Government agencies
• Fraud Control and Intelligence team in Corporate and Enabling Services Group, which conducted fraud investigations across the department’s activities.

As well as fraud investigation activities, the Fraud Control and Intelligence team:

• implements and maintains the fraud control framework, and undertakes enterprise fraud risk assessments
• promotes awareness of individuals’ roles and responsibilities to prevent and detect fraud through targeted communication and employee training
• advises employees on reporting suspected fraud, the investigations process, and other general fraud-related matters
• advises business areas on considering fraud risks when designing, implementing and managing new policies and programs
• provides annual reporting against the Commonwealth Fraud Control Framework 2017
• provides the departmental response to the annual Australian Institute of Criminology fraud census.

In addition to the department’s centralised fraud functions, there are assurance and compliance frameworks across the department’s programs. Where assurance and compliance activities lead to the suspicion of fraud, this is referred to the Fraud Control and Investigations team.

Shared services arrangements

The department has memorandums of understanding in place for services provided by the Department of Finance (Finance) and the Department of Social Services (DSS) and Services Australia.

Finance’s Service Delivery Office provides transactional services such as payroll and payroll system administration, accounts payable and receivable.

DSS provides grants administration services through the Community Grants Hub.

Services Australia is responsible for the delivery of payments and services in the child care and employment programs. The department also has a joint initiative arrangement with Services Australia to improve the collection of data and to manage data exchange.

The department provides technology and some corporate services to other government agencies under separate arrangements. These include application hosting, network access, end-user computing, service desk support, records management, Learnhub and financial viability assessments.

The department also provides application services to the National Indigenous Australians Agency for Indigenous employment services, the DSS for disability employment services and the Department of Home Affairs for the SkillSelect application.