1. Introduction

About the inquiry

The Joint Committee of Public Accounts and Audit (JCPAA) inquiry into Governance in the Stewardship of Public Resources was based on the following Auditor-General reports:
11 (2019-20), Implementation of the Digital Continuity 2020 Policy
31 (2019-20), Management of Defence Housing Australia
39 (2019-20), Implementation of the Commonwealth Scientific and Industrial Research Organisation Property Investment Strategy
2 (2020-21), Procurement of Strategic Water Entitlements
9 (2020-21), Purchase of the ‘Leppington Triangle’ Land for the Future Development of Western Sydney Airport

Report outline

Chapter 1 provides background on the inquiry. The Committee also makes a recommendation regarding Department of Finance (Finance) resource management guidance for the Public Governance, Performance and Accountability Act 2013 (PGPA Act), as matters relating to this area are relevant to all of the Auditor-General reports under inquiry.
Chapters 2-6 consider each of the Auditor-General reports under inquiry, providing a review of the evidence received by the Committee and the Committee’s concluding comments and recommendations.

Governance in the stewardship of public resources

The Commonwealth governance framework is established under key legislation and policies, including:
the PGPA Act, Accountable Authority Instructions (AAIs) and accompanying resource management guidance
the Commonwealth Procurement Rules (CPRs)
the Commonwealth Risk Management Policy
the Public Service Act 1999 (PS Act) and the Australian Public Service (APS) Code of Conduct
The PGPA Act establishes the resource management framework for Commonwealth entities, including general duties of accountable authorities and officials. It also outlines obligations relating to the proper use (efficient, effective, ethical and economical) of public resources. The PGPA Act is principles based and the accountable authority has the flexibility to establish the systems and processes appropriate for their entity.
Finance provides entities with guidance on how to meet the various requirements of the PGPA Act. Key PGPA guidance related to governance includes:
RMG 126, Government Business Enterprises
RMG 131, Developing Good Performance Information
RMG 200, Duties of Accountable AuthoritiesSecretaries, Chief Executives and Governing Boards
RMG 202, Audit Committees
RMG 203, General Duties of Officials
RMG 206, Accountability Authority Instructions
RMG 211, Implementing the Commonwealth Risk Management Policy
RMG 415, Commonwealth Grants and Procurement Connected Policies
RMG 500, Commonwealth Property Management Framework
The guidance on the General Duties of Officials (RMG 203) sets out duties imposed on officials through the PGPA Act, including a duty of care and diligence, and a duty to act honestly. Officials who do not discharge their general duties can be subject to employment sanctions, including termination of employment. Officials need to comply with finance law, including the PGPA Act, and rules and instruments made under that act, as well as internal controls established by their entity, such as AAIs. AAIs are written instruments, issued by the accountable authority of Commonwealth entities, to instruct officials on matters relating to the finance law—AAIs form part of the finance law and officials are required to understand and follow them. AAIs on approving commitments of relevant money and procurement provide instructions to officials on when they are required to seek approval for a commitment of relevant money; the options, risks and outcomes they must consider, if they are authorised to approve a commitment of relevant money; and the information they must provide to the authorised official, if they are not authorised to approve a commitment of relevant money. Commonwealth officials also have record keeping obligations under the PGPA Act and the Archives Act 1983.
The Commonwealth performance framework, established under the PGPA Act, requires Commonwealth entities to measure and assess the performance of the entity in achieving its purposes—in particular, entities are required to provide meaningful information to the Parliament and the Australian public to assist them in understanding how entities are performing, and how they are using the resources that have been entrusted to them. An entity’s performance information should comprise a mix of qualitative and quantitative performance measures that meet better practice principles of relevance, reliability and adequacy. Having effective performance reporting and monitoring arrangements is a key aspect of good governance.
The CPRs, issued under the PGPA Act, are a legislative instrument to govern how Commonwealth entities buy goods and services, and are designed to ensure that the Government and the Australian public gain value for money. Non-corporate Commonwealth entities and prescribed corporate Commonwealth entities must comply with the CPRs. Achieving value for money is a core rule of Commonwealth procurement—when conducting procurement, officials must consider the relevant costs and benefits. Delegates must be satisfied, after making reasonable inquiries, that the procurement achieves value for money outcomes and complies with all CPR requirements—to use public resources in an efficient, effective, economical and ethical manner; and facilitate accountable and transparent decision making.
The Commonwealth Risk Management Policy, established under the PGPA Act, requires Commonwealth entities to establish and maintain systems and appropriate internal controls for the oversight and management of risk. Non-corporate Commonwealth entities must comply with certain elements of the policy, including establishing a risk management framework. The PGPA Act also requires that the accountable authority of a Commonwealth entity ensures that the entity has an audit committee. The audit committee functions include reviewing the appropriateness of the entity’s financial and performance reporting, and the systems of risk oversight and management. Advice from the audit committee assists the accountable authority to meet its broader duties and responsibilities under the PGPA Act.
APS employees under the PS Act are also subject to the APS Code of Conduct, and have legal duties as part of their employment framework. The duties in the PGPA Act are consistent with duties in the APS Code of Conduct.
The following key themes in effective governance in the stewardship of public resources emerged across the Auditor-General reports forming the basis of the Committee’s inquiry:
Organisational culture
Regulatory compliance—with reference to entity enabling legislation and the PGPA Act
Procurement—value for money
Risk management and the role of audit committees
Due diligence and ethical use of resources
Role of entity boards as accountable authorities (corporate Commonwealth entities)
Chapters 2-6 address a number of these themes.

Committee comment

The Committee understands that Finance updates its PGPA guidance as required, including having regard to the findings identified in various ANAO audits. For example, in Auditor-General Report 31, Management of DHA (2019-20), which forms part of the Committee’s inquiry, Finance noted that it would ‘consider the findings’ of this audit report when it reviewed RMG 126, Government Business Enterprises.1 The Committee believes there would be merit in Finance providing the JCPAA with an update on amendments made to the PGPA guidance to reflect the findings of the audits that formed the basis for this inquiry, as well as the findings of this report. The Committee makes a further recommendation relating to broader Commonwealth governance matters in Chapter 6.

Recommendation 1

The Committee recommends that the Department of Finance:
review, and update as required, its resource management guidance for Commonwealth entities under the Public Governance, Performance and Accountability Act 2013 (PGPA Act), having regard to Australian National Audit Office and Joint Committee of Public Accounts and Audit (JCPAA) findings concerning governance in the stewardship of public resources, as well as ANAO Audit Insights on this matter
provide the JCPAA with an update on amendments made to resource management guidance to reflect these audit and JCPAA findings

Conduct of the inquiry

On 17 November 2020, the Committee issued a media release announcing the inquiry and inviting submissions. The Committee also invited submissions from the audited agencies. The inquiry received over 30 submissions and supplementary submissions, as listed at Appendix A. Public hearings were held on 3 March 2021, 14 April 2021 and 19 August 2021. A list of witnesses and organisations is at Appendix B.
A copy of this report, transcripts of public hearings and submissions received are available at the Committee’s website at www.aph.gov.au/Parliamentary_Business/Committees/Joint/Public_Accounts_and_Audit.

  • 1
    Auditor-General Report 31 (2019-20), p. 79.

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