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Corporate Governance

Corporate governance

This section discusses Finance's support services and governance structures, which provide a framework to promote accountability and overall effectiveness.

Enabling services

The Corporate Services and Information and Communications Technology divisions, under the Department's Business Enabling Services, provide high-quality and efficient services to Finance. In addition to delivering these services, in line with compliance requirements and service standards, there is a strong focus on best practice delivery and looking ahead strategically to ensure services and technology remain fit for purpose for our clients.

The Department's internal transformation and business optimisation commitments provide direction for how we can improve service delivery with innovative and forward-looking initiatives.

The Corporate Services Division provides strategic advice to the Secretary and Executive Board on corporate governance and departmental administration. The division connects its operational delivery of corporate services with strategic organisational planning and reporting activities through the integrated business planning framework. The division provides a range of services to the Department and our ministers including:

  • parliamentary coordination and liaison
  • human resource services
  • financial advice and support
  • in-house legal services
  • facilities management and security
  • corporate engagement (including communications) and media
  • corporate planning and performance reporting
  • advice and knowledge management.

The Information and Communications Technology Division delivers business services to the Department and other government entities. The division supports the Chief Information Officer and Chief Information Security Officer functions of IT security, architecture, service and program delivery, as well as online, technical and government network services.

Governance

Finance’s governance framework promotes the principles of good governance and supports our performance in line with government and organisational priorities. This is achieved through engaging with staff on risk management and accountability, and the transparent operation of the Executive Board and its committees. The framework incorporates integrated business planning to ensure decision-making on resourcing is aligned with Finance's priorities and management of risk, and supports the Secretary in discharging her duties under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Service Act 1999.

Figure 3 shows Finance's governance structure at 30 June 2021.

Executive Board

The Executive Board is the chief advisory and decision-making body in Finance. It supports the Secretary in discharging her duties under the PGPA Act. Members of the Board provide strategic leadership to ensure the Department delivers its purpose in keeping with the Government’s policy objectives. The Board also monitors performance and maintains accountability.

In addition to its decision-making role, the Board structures its business to ensure it discusses key strategic issues, considers emerging risks and receives regular updates from the chairs of its subcommittees. The Board sets the direction of, and oversees progress against, the Department’s transformation commitments to ensure we remain a high-performing, modern, efficient and continuously improving public sector organisation.

The Secretary chairs the Executive Board, supported by the four deputy secretaries of the Department as permanent members. In addition, membership of the Board is offered for a period of nine months on a rotating basis to two senior members of staff—a first assistant secretary and an assistant secretary from across the Department.

These arrangements reflect the Executive’s commitment to encouraging a wide range of perspectives in Board deliberations and developing leadership capability among the Senior Executive Service, including through exposure to robust decision-making at the highest level within the Department.

Finance's Executive Board model is flexible to support the pace and approach required for effective decision-making. The Board moved to a virtual meeting environment in the initial phases of the COVID-19 pandemic, made possible by Finance's ICT infrastructure. The Board has since resumed a hybrid mode, with virtual attendance enabled for staff where needed.

Executive Board subcommittees

In 2020–21, the Executive Board had five standing subcommittees:

  • Senior Leadership Committee
  • People Committee
  • Leadership and Remuneration Subcommittee
  • Major Investments Committee
  • Risk Subcommittee

The Senior Leadership Committee (SLC) consists of all deputy secretaries, all first assistant secretaries and those assistant secretaries who have organisational responsibility for human resources and internal budgets. The SLC is chaired by the Deputy Secretary of Business Enabling Services. The SLC ensures the entire senior leadership cohort plays an active and collaborative role in shaping operational and strategic departmental issues including resourcing, communication and culture, and business improvement issues.

The People Committee provides oversight, advice and assurance to the Executive Board on the strategic direction for people management, leadership development and workforce capability in Finance. This includes dealing with workforce strategy, diversity and inclusion, department-wide work health and safety and other priorities as directed by the Executive Board. The People Committee is co-chaired by two deputy secretaries and has first assistant secretary representatives from each business group and two assistant secretary representatives. The Assistant Secretary responsible for human resources is an adviser to the Committee.

The Leadership and Remuneration Subcommittee is chaired by the Secretary and includes all the deputy secretaries. It is responsible for overseeing and providing advice on specific people management matters.

The Major Investments Committee provides oversight, advice and assurance to the Executive Board on the implementation of Finance's high-risk projects and significant financial investments. The Major Investments Committee is co-chaired by two deputy secretaries and has first assistant secretary representatives from each business group. The Chief Information Officer and Chief Financial Officer are advisers to the Committee.

The Risk Subcommittee ensures the Department has an effective (practical and adequate) risk management framework in place, with the capability to manage its risks effectively. The Risk Subcommittee is chaired by a deputy secretary and consists of staff from a range of levels and all business groups across the Department.

Additionally, the terms of reference of the Executive Board allow for the ad hoc creation of the Policy Working Group which is a topic-specific working group able to work flexibly to address emerging topical issues as required. Its membership is flexible, based on the identified issue and draws upon a diverse membership to enable strong engagement from leaders across the Department, harnessing their diverse policy expertise and experience.

Figure 3: Finance’s governance structure, at 30 June 2021

 Finance’s governance structure, at 30 June 2021 This diagram outlines Finance’s committee governance structure which supports the Secretary in discharging responsibilities. The Executive Board, Leadership and Remuneration Subcommittee and Audit Committee directly support the Secretary. The Executive Board is supported by the Senior Leadership Committee, People Subcommittee, Major Investments Subcommittee and Risk Subcommittee. The Audit Committee is supported by the Financial Reporting Subcommittee and the Performance Reporting Subcommittee.

Audit Committee

The Audit Committee provides independent advice and assurance to the Secretary on the appropriateness of the Department's accountability and control framework, particularly those aspects concerning performance and financial reporting and systems relating to risk and control. It provides assurance on the adequacy of the Australian Government's consolidated financial statements production and risk planning process in Finance. The Audit Committee's functions are set out in its Charter: www.finance.gov.au/publications/charter/audit-committee-charter.

In 2020–21, the Audit Committee had four external members (including an independent Chair) and two departmental members. Professor Brendan Sargeant commenced as independent Chair and external member on 2 January 2020. The Audit Committee met five times during 2020–21.

The Audit Committee has two subcommittees, chaired by external members, to support it in performing its functions.

  • The Financial Reporting Subcommittee (FRSC) maintains an ongoing review of the process for preparing the Department's annual financial statements. The FRSC met four times in 2020–21.
  • The Performance Reporting Subcommittee (PRSC) assists the Audit Committee in meeting its performance reporting responsibilities under the PGPA Act. The PRSC met six times in 2020–21.

The Audit Committee works closely with the Risk Subcommittee on oversight of the Department's risk management framework, with the Audit Committee Chair attending the meetings of that subcommittee as an observer.

Table 1 shows Audit Committee membership during 2020–21 and the number of meetings attended by each member during the year.

Table 1: Audit Committee membership, 2020–21

Name and position

Qualifications, knowledge, skills or experience (include formal and informal as relevant)

Meetings attended in 2020–21

Membership details

Prof Brendan Sargeant

(external member)

Chair, Audit

Committee

Chair, FRSC

Prof Sargeant previously held the role of Associate Secretary, Department of Defence. In this role, Prof Sargeant was responsible for oversight of the implementation of a major reform of Defence organisation and enterprise governance, planning, performance and risk management. Prof Sargeant is presently the Head of the Strategic and Defence Studies Centre at the Coral Bell School of Asia Pacific Affairs at the Australian National University.

Audit

Committee

5/5

Mr Sargeant joined the
Audit Committee as Chair
in January 2020.

FRSC

4/4

PRSC

1/1

RSC

5/5

Mr Ian McPhee AO PSM

(external member)

Deputy Chair, Audit Committee

Member, PRSC

From 2005 to 2015, Mr McPhee was the Auditor-General for Australia. Mr McPhee was responsible for discharging the responsibilities of the Auditor-General Act 1997 including the audits of the financial statements of all Australian Government-controlled entities and a program of some 50 performance audits annually.

Audit

Committee

5/5

Mr McPhee joined the
Audit Committee
in January 2017.

PRSC

6/6

Dr Wendy Southern

(external member)

Member, Audit Committee

Chair, PRSC

Dr Southern previously held the roles of Deputy Director-General of the Australian Security Intelligence Organisation and Deputy Secretary at both the Department of Health and the Department of Immigration and Border Protection. Her responsibilities ranged across strategic policy, program management, organisational governance, transformation and corporate management.

Audit Committee

2/2

Dr Southern joined the
Audit Committee in
January 2021.

FRSC

1/1

PRSC

1/1

Ms Patricia Kelly

(external member)

Member, Audit Committee

Member, FRSC

Ms Kelly previously undertook a number of senior APS roles with a focus on performance improvement, digital transformation, risk management and financial efficiency, most recently as Director-General of IP Australia

(2013–2018).

Audit Committee

2/2

Ms Kelly joined the
Audit Committee in
January 2021.

FRSC

1/1

Mr Nathan Williamson

(departmental member)

Audit Committee

and PRSC

Mr Williamson is the Deputy Secretary of Governance and Resource Management Group.

Audit Committee

2/2

Mr Williamson joined the Audit Committee as a departmental member in January 2021.

PRSC

1/1

Ms Amanda Lee (departmental member)

Audit Committee

and FRSC

Ms Lee is the First Assistant Secretary, Budget Policy and Coordination.

Audit

Committee

5/5

Ms Lee joined the Audit Committee as a departmental member in January 2019.

FRSC

4/4

Ms Jennifer Clark

(external member)

Deputy Chair,

Audit Committee

Chair, PRSC

Ms Clark has an extensive background in business, finance and governance through her career as a non-executive director and investment banker. She has been the Chair or member of over 20 audit, risk and finance committees in the Commonwealth and private sectors over the past 30 years.

Audit

Committee

2/3

Ms Clark joined the Audit

Committee in December 2015 and was appointed as the Deputy Chair in March 2017. Ms Clark’s term concluded in December 2020.

PRSC

5/5

Ms Gayle Ginnane (external member)

Ms Ginnane was the Chief Executive Officer of the Private Health Insurance Administration Council with regulatory responsibility for the private health insurance industry until May 2008.

Ms Ginnane is also a member of a range of other boards and audit committees.

Audit

Committee

3/3

Ms Ginnane joined the Audit Committee in January 2017. Her term concluded in December 2020.

Integrated business planning framework

Finance’s integrated business planning framework ensures alignment across domains of enterprise decision-making, including:

  • enterprise priorities
  • enterprise risk framework
  • corporate planning
  • divisional business planning
  • budgeting
  • investment and resource planning
  • performance reporting and committee governance.

Finance operates a regular integrated business planning mechanism. The Executive Board uses this process to set departmental strategy and make decisions on departmental priorities and resourcing, aligned with Finance’s approach to managing risk and identifying opportunities for improvement. This enables strategic investment decisions to contribute to Finance's goal to be a high-performing, modern, efficient and continuously improving public sector organisation that delivers government priorities efficiently and effectively.

In 2020–21, Finance's approach to integrated business planning provided the Executive Board with a comprehensive understanding of emerging priorities, risks and opportunities to inform departmental investment. Throughout 2020–21, the Executive Board, supported by its subcommittees, regularly reviewed:

  • immediate and future priorities, associated investment (including in major ICT projects and property capital works) and resourcing implications and opportunities/risks
  • opportunities for improvement, optimisation, deregulation/streamlining and greater alignment within and across business areas to enhance delivery of advice and services
  • people management, leadership development and workforce capability.

Planning and performance reporting framework

Finance’s integrated performance cycle aligns with the Corporate Plan which is the principal planning document. The Corporate Plan sets out how Finance manages its responsibilities and its use of public resources. Performance planning occurs through regular budgeting processes and Finance’s portfolio budget statements, and performance reporting in the Annual Report. Integrated business planning and governance processes direct individual and team activities to achieve our purpose and create a clear line of sight between Finance’s strategic and operational business planning. The relationship between elements included in Finance’s performance is illustrated in Figure 4.

Figure 4: Finance’s planning and performance reporting cycle

 Finance’s planning and performance reporting cycle The diagram shows Finance’s integrated performance cycle. Our purpose, shown at the cycle’s core, underpins the planning we do as well as the work activities we undertake. Our integrated business planning and budgeting is documented in the Portfolio Budget Statements and Corporate Plan. This informs the development of individual and teamwork activities. At the end of the year, the work we planned for and delivered is reported on in the Annual Performance Statements and in the broader Annual Report. Around the edge of the circle are those elements that contribute to achieving our purpose. Our operating context and the risks we face inform our planning and the capabilities we require. Finance’s relationships, leadership culture and governance processes serve as overarching frameworks that maximise the Department’s success in achieving our purpose.

Managing risk

Finance’s risk management framework sets out the Department’s risk management policy and guides how we identify, manage and report risks where they may affect the achievement of our purpose. The Secretary and the Executive Board (through the Risk Subcommittee) oversee the framework.

The framework supports the Secretary to meet her duties under section 16 of the PGPA Act and complies with the Commonwealth Risk Management Policy.

In 2020–21, Finance continued to integrate risk considerations across our governance structures and business planning. Mr Andrew Jaggers, Deputy Secretary, Commercial and Government Services, continued his role as Chief Risk Officer and Chair of the Risk Subcommittee, supporting strategic consideration of opportunity, risk and innovation by the Executive Board and its subcommittees.

We support a positive risk culture to drive productivity and ensure the effective and efficient use of public resources. During 2020–21, Finance introduced an Integrity Framework to underpin that positive risk culture. Risk is actively considered as part of prioritisation and allocation of resources, to strengthen strategic partnerships, transform processes and deliver services. The Department’s Enterprise Risk Management Plan documents Finance’s key strategic, program and operational risks, and is reviewed regularly by the Risk Subcommittee to ensure changes in the operating environment, controls and treatment strategies remain effective. We support enhanced risk management capability across the Department including through educational materials dealing with transformation, innovation and risk.

Business continuity management

Business continuity management (BCM) is a key element of the Department’s enterprise risk management arrangements. The Department’s BCM process involves the development of comprehensive plans and procedures to enable the continuation or timely resumption of critical functions and eventual restoration to normal business operations following a business interruption event.

Under the Department’s BCM framework, if a business interruption occurs, a Central Control Team (CCT) is convened by the CCT Leader (Deputy Secretary, Business Enabling Services). The CCT is the central point of communications and coordination for the Department’s response and recovery.

Business continuity plans are reviewed and tested annually to ensure they meet business requirements. During 2020–21, critical function business owners reflected on the lessons learned from the major incidents that occurred in 2019–20 (bushfires, hailstorm events and the onset of COVID-19), when reviewing and updating their plans.

Effective business continuity arrangements remained a key focus in 2020–21 in light of the ongoing response to the COVID-19 pandemic. The CCT continued to actively manage the Department’s COVID-19 Recovery Plan as well as collaborating with key stakeholders within the Department and across the APS.

In line with the Department’s COVID-19 Recovery Plan, the Department moved to Phase 3 of its recovery on 26 October 2020, following the further relaxation of restrictions and the absence of community transmission of COVID-19 in the Australian Capital Territory. This transition resulted in the majority of staff returning to work in the Department’s offices, with some staff still making use of flexible work arrangements.

An external post-implementation review of Finance’s response to COVID-19 was undertaken during the period, finding that Finance demonstrated a mature and well-considered response to the COVID-19 pandemic, including a strong focus on staff wellbeing and business priorities.

In response to the pandemic, the Department remains focused on the continuity of business operations and the safety and wellbeing of staff.

Fraud and risk certification

The Department has zero tolerance for unethical behaviour, does not tolerate fraud and corruption and takes all reasonable measures to prevent, detect and deal with fraud.

The Department's Fraud and Corruption Control Framework (the framework) aligns with the Commonwealth Fraud Control Framework. The framework is a set of components and arrangements that provides the foundations and organisational arrangements for fraud prevention, detection, investigation and reporting strategies in the Department.

A key component of the framework is the Fraud and Corruption Control Plan. The plan meets the Department’s responsibility for compliance with section 10 of the PGPA Rule 2014. The plan summarises the Department’s approach to mitigating key fraud risks, with an emphasis on the prevention of fraud.

Fraud prevention and awareness strategies across the Department include:

  • fraud awareness training, with tailored communication activities
  • a dedicated intranet page linking to all relevant information and tip-off channels.

The Department continues to respond to reports of fraud and corruption through the implementation of robust and consistent processes and in accordance with the Australian Government Investigations Standards. The Department has a range of channels through which individuals can report suspected fraud or corruption including:

  • email: fraud [at] finance.gov.au
  • fraud hotline: 02 6215 3735
  • fraud and corruption incident form
  • mail: Department of Finance Fraud Officer, 1 Canberra Avenue Forrest ACT 2603.

The Department has adopted a risk-based approach to managing fraud and corruption through its policies, procedures and practices. The Department’s Enterprise Risk Management Framework facilitates and promotes sound risk management practices and processes across the Department. In line with the Enterprise Risk Management Framework, the Department has a Fraud Risk Management Framework that includes key risk management activities, such as fraud risk assessments, conducted regularly to identify the likelihood and consequences of fraud and corruption occurring and assess the adequacy of existing controls to prevent or detect such risks.

Significant non-compliance issues with finance law

In 2020–21, the Department made no reports to the Minister for Finance of significant non-compliance with the finance law under paragraph 19(1)(e) of the PGPA Act.