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Appendix E –
Correspondence from Mr Warren King,
Chief Executive Office, Defence Materiel Organisation to Mr Robert Oakeshott, Chair, Joint Committee of Public Accounts and Audit

CEO DMO/OUT/2012/78


Mr Rob Oakeshott MP
Chair
Joint Committee of Public Accounts and Audit
Parliament House
CANBERRA ACT 2600

Dear Mr Oakeshott,

PRESENTATION OF FINANCIAL DATA FOR THE DEFENCE MATERIEL ORGANlSATION MAJOR PROJECTS REPORT

I. At the private briefing to the Joint Committee of Public Accounts and Audit on Wednesday 8 February 2012, the Auditor-General and I undertook to provide you with an agreed position on the financial disclosures section of the Major Projects Report (MPR).

2. The Auditor-General and I have reviewed the proposed formats as presented in our separate papers to the Committee and, having also noted the guidance of the Committee provided on 8 February 2012, are pleased to advise that we have arrived at an agreed format for the financial performance presentation. This format does not differ greatly from that previously presented to the Committee, but establishes the construct of 'out-turned' budgets and recognises the availability of the financial data from the current DMO financial management systems.

3. The agreed format is contained at Attachments A and B. Attachment A covers those projects who received Government Approval prior to July 2010 (when projects were approved in constant dollars). Attachment B addresses the post June 2010 approved projects (when projects were approved in out-turned dollars). I recommend these templates to the Committee and suggest that they be implemented for the 2011-12 MPR (i.e. as at 30 June 2012). I understand that the Auditor-General will also be recommending these templates to the Committee.

4. I therefore respectfully request the Committee's consideration and approval of the templates at Attachment A and B.

5. On a related issue, the Auditor-General and I have agreed that the DMO should provide an assurance statement for each project as to whether there is sufficient budget remaining to deliver the materiel element of capability at the agreed Final Materiel Release (FMR) milestone. In this regard, we have provided a 'Project Assurance Statement' which is intended to provide an overall assessment of the project's budgetary position, obviating the need for the reader of the PDSS to make their own assessment of a project's budgetary performance (as applies with present arrangements).

6. It is suggested that the ' Project Assurance Statement' will be disclosed within the construct of the MPR Project Data Summary Sheet (PDSS) under Section 1.2 'Current Status - Project Cost' . The agreed format, and 'Project Assurance Statement' contained therein, is provided at Attachment C for the Committees consideration and, if appropriate, approval.

7. I look forward to discussing this proposal with you at the 21 March 2012 Public Hearing.

Yours sincerely,

Warren King
CEO DMO
14 March 2012

Attachment:
A. Agreed Financial Performance Presentation for pre July 2010 projects.
B. Agreed Financial Performance Presentation for post June 201 0 projects.
C. Agreed 'Project Assurance Statement' for PDSS Section 1.2- Project Cost.

Table showing Agreed Financial Performance Presentation for pre July 2010 projects Table showing Agreed Financial Performance Presentation for post June 201 0 projects Table showing Agreed 'Project Assurance Statement' for PDSS Section 1.2- Project Cost

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