Review of annual reports


Review of annual reports

Introduction

1.1        Annual reports of departments and agencies are referred to Senate Standing Committees under Senate Standing Order 25(20) in accordance with an allocation of departments and agencies in a resolution of the Senate.[1] In accordance with that resolution, the Senate Standing Committee on Economics has responsibility for the oversight of the following portfolios:

  • Industry, Tourism and Resources; and
  • the Treasury.

1.2        Standing order 25(20) requires the committee to:

  1. examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory;
  2. consider in more detail, and report to the Senate on, each annual report which is not apparently satisfactory, and on the other annual reports which it selects for more detailed consideration;
  3. investigate and report to the Senate on any lateness in the presentation of annual reports;
  4. in considering an annual report, take into account any relevant remarks about the report made in debate in the Senate;
  5. if the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates;
  6. report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on annual reports tabled by 30 April each year by the tenth sitting day after 30 June of that year;
  7. draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and
  8. report to the Senate each year whether there are any bodies which do not present annual reports to the Senate and which should present such reports.[2]

Purpose and requirements of annual reports

1.3        Annual reports provide information on the success (or otherwise) of departments and agencies in meeting targets outlined in the portfolio budget statements, their primary function being to assist in ensuring the public accountability of government departments and agencies. This is undertaken through the tabling of annual reports in the Parliament; and their scrutiny by Senate committees in accordance with Senate Standing Order 25(20). This process thus allows Parliament to make informed judgments on the executive's performance in administering government programs.

1.4        Departments of State and Executive Agencies present their annual reports pursuant to sections 63(2) and 70(2) of the Public Service Act 1999, respectively. For 2005-06, these are required to comply with the Department of the Prime Minister and Cabinet's Requirements for Annual Reports (updated June 2006), approved by the Joint Committee of Public Accounts and Audit on 21 June 2006.[3]

1.5        Section 3(1) of the Requirements for Annual Reports states that 'As a matter of policy, they [the annual reporting requirements] also apply to prescribed agencies under section 5 of the Financial Management and Accountability Act 1997' (FMA Act).

1.6        Statutory authorities and government companies present their annual reports pursuant to their own enabling legislation and/or sections 9 and 36 of the Commonwealth Authorities and Companies Act 1997 (CAC Act), respectively. The reports of statutory authorities subject to the CAC Act must be produced in accordance with the Commonwealth Authorities and Companies (Report of Operations) Orders 2005. Annual reports of government companies limited by shares are required to comply with Corporations Law requirements.

1.7        The Department of Finance and Administration (DoFA) publishes a useful chart which shows which agencies are subject to the FMA Act and the CAC Act. This information is also available on the DoFA website at http://www.finance.gov.au/finframework/fma_agencies.html; and http://www.finance.gov.au/finframework/cac_bodies.html.

1.8        The enabling legislation of prescribed agencies, including some FMA Act agencies, may require each agency to report on matters other than those included in the guidelines, or impose different reporting requirements, for example in relation to the date by which the report should be presented. The committee's view is that such agencies, while bound by their enabling legislation, should also comply with the requirements imposed under the government's policy, to the extent that the requirements do not conflict.

Reports referred to the committee

1.9        Under Standing Order 25(20)(f), the committee is required to report on annual reports of departments and agencies tabled by 31 October each year by the tenth sitting day of the following year, and on annual reports tabled by 30 April each year by the tenth sitting day after 30 June of that year. This year that date is 12 September 2007.

1.10      This report examines the following annual reports which were tabled in the Senate between 1 November 2006 and 30 April 2007:

Prescribed agencies (under the FMA Act)
  • Australian Office of Financial Management - Annual Report 2005-06
  • Productivity Commission - Annual Report 2005-06
  • Royal Australian Mint - Annual Report 2005-06
Statutory authorities (Commonwealth authorities under the CAC Act)
  • Australian Prudential Regulation Authority - Annual Report 2005-06
  • Australian Reinsurance Pool Corporation - Annual Report 2005-06
  • Australian Securities and Investments Commission - Annual Report 2005-06[4]
  • Corporations and Markets Advisory Committee  - Annual Report 2005-06
  • Tourism Australia - Annual Report 2005-06
Commonwealth companies (under the CAC Act)
  • IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited - Annual Reports 2004-05
Other agencies, statutory authorities and companies (not subject to the FMA or CAC Acts)
  • Companies Auditors and Liquidators Disciplinary Board - Annual Report 2005-06
  • Foreign Investment Review Board - Annual Report 2005-06
  • Industry Research and Development Board - Annual Report 2005-06
  • Pooled Development Funds Registration Board - Annual Report 2005-06
  • Snowy Hydro Limited - Annual Report 2005-06
  • Superannuation Complaints Tribunal - Annual Report 2005-06
  • Takeovers Panel - Annual Report 2005-06

Timeliness

1.11      Standing Order 25(20)(c) requires the committee to report to the Senate on the late presentation of annual reports.

1.12      Section 4 of the Requirements for Annual Reports states that annual reports are to be presented to each House of Parliament on or before 31 October in the year the report is given. This ensures that annual reports are available for scrutiny by Senate committees at the supplementary budget estimates hearings. Section 9 of the CAC Act stipulates that the deadline for furnishing the Minister with relevant annual reports is the 15th day of the 4th month after the end of the financial year, that is, 15 October where the end of the financial year is 30 June.

1.13      The committee notes that government agencies reporting in accordance with their own legislation are often required to prepare for the relevant Minister their annual report 'as soon as is practicable' after a particular date. The committee draws attention to sections 34C(2) and (3) of the Acts Interpretation Act 1901, which stipulate that where no date for providing a report to a Minister is specified, the report should be presented no more than six months after the reporting period, and the Minister must provide the report to the Parliament within 15 sitting days after he or she receives it.

Tourism Australia

1.14      As outlined in the committee's first report on annual reports of 2007, Tourism Australia requested an extension for the tabling of its 2005-06 Annual Report. Tourism Australia was not able to meet its reporting deadline under section 9 of the CAC Act, that is, to provide its report to the responsible Minister by 15 October 2006. Please refer to paragraphs 1.14-1.16 of the committee's first report on annual reports of 2007 for further details.[5]

IIF companies

1.15      IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited tabled their annual reports for 2004-05 on 6 February 2007. The Chairman of the IIF company explained that the:

... late finalisation of these accounts [was] due to the need to undertake additional unexpected valuation work on a number of investments. For the 2005-06 financial year, processes have been implemented to address these issues.[6]

Tabling annual reports concurrently in the Senate and House of Representatives

1.16      The Australian Office of Financial Management (AOFM) is a prescribed agency under the FMA Act and as such its annual report should have been presented to the Senate by 31 October 2006.  While the report was received by the Minister on 5 October 2006, it was not tabled in the Senate until 7 November 2006.

1.17      Similarly, the Royal Australian Mint (the Mint) is also a prescribed agency under the FMA Act. While the Mint's report was sent to the Minister on 22 September 2006 it was not received by the Minister until 20 October 2006 and was tabled late in the Senate on 7 November 2006.

1.18      However, the annual reports of both the Mint and AOFM were tabled on time in the House of Representatives on 31 October 2006.

1.19      The committee suggests that it would be useful for all agencies to present their annual reports to both the Senate and House of Representatives on the same day so that reports are not received late in the Senate. If the Senate is not sitting when reports are ready for tabling they can be presented to the Senate 'out of sitting' by following the procedures in paragraphs 8.1-8.6 of the Guidelines for the Presentation of Government Documents to the Parliament (June 2006)[7].

1.20      Other reports tabled in the House of Representatives before being presented or tabled in the Senate included:

  • Australian Prudential Regulation Authority - Annual Report 2005-06
  • Australian Reinsurance Pool Corporation - Annual Report 2005-06
  • Australian Securities and Investments Commission - Annual Report 2005-06
  • Companies Auditors and Liquidators Disciplinary Board - Annual Report 2005-06
  • Corporations and Markets Advisory Committee - Annual Report 2005-06
  • Foreign Investment Review Board - Annual Report 2005-06
  • Productivity Commission - Annual Report 2005-06
  • Takeovers Panel - Annual Report 2005-06
  • Tourism Australia - Annual Report 2005-06

Correction to previous report

1.21      In the committee's first report on annual reports for 2007 the committee indicated that the Superannuation Complaints Tribunal (SCT) was late in tabling its 2005-06 report in the Senate. However after further examination of the report it became apparent that the SCT's report was in fact tabled on time according to the relevant provisions in its governing legislation (section 67 of the Superannuation (Resolution of Complaints) Act 1993).

Comments on reports

1.22      In accordance with Standing Order 25(20)(a) the committee is required to examine reports and inform the Senate as to whether they are 'apparently satisfactory'. The committee considers compliance with the reporting guidelines specified by the legislation under which departments and agencies present their annual reports.

1.23      The committee considers that the reports it has examined are generally 'apparently satisfactory'.

1.24      While no longer mandatory under the reporting requirements, the committee recommends the inclusion of a compliance index in annual reports, which preferably should include a nil return entry where the agency has nothing to report under an item. A compliance index is a useful feature of reports and considerably assists the committee's task of assessing reports. It also assists agencies by clearly showing that their compliance obligations have been met.

1.25      Alternatively, where agencies have reporting requirements under various Acts the inclusion of a 'statutory report' is a useful addition to agency annual reports. The committee commends the Australian Prudential Regulation Authority for its inclusion of such a report in its 2005-06 annual report.

Australian Office of Financial Management (AOFM)[8]

1.26      The Australian Office of Financial Management is a prescribed agency under the FMA Act. The committee considers the AOFM's annual report to be satisfactory and commends the AOFM for including a compliance index. The committee suggests that the compliance index could be improved by including a nil return entry where the AOFM has nothing to report under an item in the Requirements for Annual Reports.

Australian Prudential Regulation Authority (APRA)[9]

1.27      For 2005-06, the Australian Prudential Regulation Authority was subject to the CAC Act and section 59 of the Australian Prudential Regulation Authority Act 1998 in relation to its annual reporting requirements. The committee considers that APRA has met its reporting requirements under both Acts and commends APRA for its inclusion of a 'statutory report' which systemically addressed its reporting requirements under the APRA, and various other, Acts.

Australian Reinsurance Pool Corporation (ARPC)[10]

1.28      The Australian Reinsurance Pool Corporation (ARPC) is a statutory authority under the CAC Act. The committee considers that the ARPC has met its reporting requirements under the Act, however, the committee suggests that the ARPC's report could be improved by including a specific compliance index.

Australian Securities and Investments Commission (ASIC)[11]

1.29      For 2005-06, the Australian Securities and Investments Commission was largely subject to the CAC Act, although ASIC was also a prescribed agency under the FMA Act but only to the extent that it handles public money. ASIC's annual reporting requirements for 2005-06 are therefore outlined in the CAC Act and section 136 of the Australian Securities and Investments Commission Act 2001. The committee considers that ASIC has largely met its reporting requirements under both Acts and that therefore the report is satisfactory. However, as ASIC reports under a number of Acts, and the requirements in the ASIC Act are quite detailed, the committee suggests that a specific compliance index should be included in future annual reports.

Companies Auditors and Liquidators Disciplinary Board (CALDB)[12]

1.30      The committee notes that there are only a few requirements in section 214 of the Australian Securities and Investments Commission Act 2001 for the Companies Auditors and Liquidators Disciplinary Board's annual report, and considers the report to be satisfactory.

Corporations and Markets Advisory Committee (CAMAC)[13]

1.31      For 2005-06, the Corporations and Markets Advisory Committee was subject to the CAC Act and section 162 of the Australian Securities and Investments Commission Act 2001 in relation to its annual reporting requirements. The committee considers that CAMAC has largely met its reporting requirements under both Acts and notes the clear layout of CAMAC's report in relation to its CAC Act requirements. However, the committee suggests that CAMAC's report could be improved by including a specific compliance index.

Foreign Investment Review Board (FIRB)[14]

1.32      The committee notes that the Foreign Investment Review Board is not subject to the FMA or CAC Acts, but reports annually to the Treasurer as part of its 'responsibility to advise the Government on foreign investment matters'.[15]

IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited (IIF companies)[16]

1.33      IIF Investments Pty Limited, IIF (CM) Investments Pty Limited, IIF BioVentures Pty Limited, IIF Foundation Pty Limited and IIF Neo Pty Limited are Commonwealth companies and are therefore required to report under section 36 the CAC Act. The committee considers that the IIF companies have met these requirements and that therefore their reports are satisfactory.

Industry Research and Development Board (IRDB)

1.34      The Industry Research and Development Board is required to report annually under section 46 of the Industry Research and Development Act 1986 (the IRD Act). The committee considers that the IRDB has met these requirements and that therefore the report is satisfactory. However, as the requirements outlined in the IRD Act are quite detailed the committee suggests that a specific compliance index should be included in future reports.

Pooled Development Funds Registration Board (PDFRB)

1.35      The Pooled Development Funds Registration Board is required to report annually under section 75 of the Pooled Development Funds Act 1992 and section 33 of the Venture Capital Act 2002. The committee commends the PDFRB for systemically addressing these reporting requirements in the appendices of its annual report and considers the report to be satisfactory.

Productivity Commission[17]

1.36      The Productivity Commission is a prescribed agency under the FMA Act and also has additional annual reporting obligations under section 10 of the Productivity Commission Act 1998. The committee considers that the Commission has complied with the requirements under both Acts and commends the Commission for including a compliance index in its report. The committee suggests that the compliance index could be improved by including reference to the Commission's reporting requirements under the Productivity Commission Act.

Royal Australian Mint[18]

1.37      The Royal Australian Mint (the Mint) is a prescribed agency under the FMA Act. The committee considers the Mint's annual report to be satisfactory and commends the Mint for including a compliance index. The committee suggests that the compliance index could be improved by including a nil return entry where the Mint has nothing to report under an item in the Requirements for Annual Reports.

Snowy Hydro Limited

1.38      Under section 55 of the Snowy Hydro Corporatisation Act 1997 Snowy Hydro Limited is required to table its financial reports in Parliament. Given that there are no further requirements imposed on Snowy Hydro Limited by the legislation the committee considers the report to be satisfactory.

Superannuation Complaints Tribunal (SCT)

1.39      The committee notes that there are only a few requirements in section 67 of the Superannuation (Resolution of Complaints) Act 1993 for the Superannuation Complaints Tribunal's annual report, and considers the report to be satisfactory. The committee commends the SCT for including a compliance index which indicates that the Panel's report includes information beyond that required under their Act. However, the committee suggests that references to the various documents outlining annual reporting requirements on page 54 of the report should be updated to the latest version of the documents indicated.

Takeovers Panel[19]

1.40      The committee notes that there are only a few requirements in section 183 of the Australian Securities and Investments Commission Act 2001 for the Takeovers Panel's annual report, and therefore considers the report to be satisfactory. The committee commends the Panel for including a compliance index which indicates that the Panel's report includes information beyond that required under the ASIC Act.

Tourism Australia[20]

1.41      Tourism Australia is a statutory authority under the CAC Act and has additional annual reporting requirements under section 39 of the Tourism Australia Act 2004. The committee considers that Tourism Australia has largely met its reporting requirements under both Acts, however, the committee suggests that Tourism Australia's report could be improved by including a specific compliance index.

Remarks made in the Senate

1.42      Senate Standing Order 25(20)(d) directs the committee to take into account remarks made in the Senate when considering annual reports.

1.43      None of the annual reports considered in this report have been the subject of debate in the Senate.

Future developments

1.44      The committee notes that the Financial Reporting Panel (FRP) will table its first annual report later this year. The Financial Reporting Panel was established under the Corporate Law and Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 and commenced operations on 3 July 2006. The FRP's function is to resolve disputes between ASIC and companies concerning accounting treatments in their financial reports. The purpose for establishing the FRP is to remove the need to initiate legal proceedings in court in order to resolve a financial reporting matter. The FRP is designed to provide an efficient and cost effective way of dealing with disputes, the opportunity to be heard by persons with relevant expertise, and remove concerns of courts' limited understanding of accounting standards.[21]

1.45      The Governance Review Implementation (Treasury Portfolio Agencies) Act 2007 was passed by the Parliament earlier this year and was assented to on 5 June 2007. As a result, the Australian Prudential Regulation Authority, Australian Securities and Investments Commission and Corporations and Markets Advisory Committee will be brought under the FMA Act from the 2007-08 financial year.

 

Senator the Hon Michael Ronaldson
Chair

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