2.1
In accordance with Standing Order 25(20)(a), the Committee has examined annual reports against relevant reporting requirements and found them to be 'apparently satisfactory'. This chapter highlights some of the Committee's findings in relation to annual reports of Commonwealth entities and companies.
Availability of performance framework documents
2.2
As noted in Chapter 1, agencies are required to develop a corporate plan at the beginning of the reporting cycle to identify their purpose/s, operating context, key activities, and how performance will be measured and assessed. Annual reports for Commonwealth entities are required to reconcile all planned performance measures set out in the corporate plan and, where relevant, portfolio budget statements (PBS) in the annual performance statement for the corresponding year. While Commonwealth companies are not required to prepare an annual performance statement, they are still required to report the results of measurement of performance against any performance measures and targets in the company's corporate plan for the period under review. Therefore, in assessing the 2019-20 annual reports the Committee required access to all 2019-20 corporate plans and PBS.
2.3
The 2019-20 corporate plans for all bodies with annual reports examined were available from the agencies' websites, mostly through a navigable link. It was noted that the Department of Foreign Affairs and Trade's (DFAT) corporate plan could only be located via a search of the website.
2.4
As noted above, the Portfolio Budget Statements also set out performance information for budget funded Commonwealth entities. It was noted that the Department of Defence (Defence) had these documents available on its website back to 2004-05; DFAT had them available on its website back to 2007-08; and the Department of Veterans' Affairs (DVA) had them available on its website back to 2013-14.
2.5
The Committee previously noted the introduction of the new Transparency Portal website, launched March 2019, to provide full digitisation of the Commonwealth's plans and reports under the performance framework, including portfolio budget documents, corporate plans and annual reports, enabling:
…the ability…to read between intended budgets, performance targets and results; supporting the comparison of forecasts and actual outcomes for each year.
2.6
It was noted that the amount of information published on the Transparency Portal is expanding but there was some inconsistency in the information available across agencies. The Committee was pleased to note that all of the 2019-20 annual reports examined were published on the Portal. While most 2020-21 corporate plans and PBS were available; the earlier budget documents and corporate plans for 2019-20 were not available for many agencies. It was noted that Defence and Tourism Australia's 2019-20 corporate plans and PBSs were available (but their 2020-21 corporate plans and PBS were not).
2.7
The Committee hopes to see further progress on ensuring the availability of earlier corporate plans and PBS on the Transparency Portal, and not just the most recent versions.
Performance reporting
2.8
In its examination of the annual reports, the Committee noted if the performance measures set out in the corporate plan and PBS were readily reconciled with performance results in the annual report. Overall, the Committee found that agencies demonstrated a 'clear read' between annual reports and source documents in regard to performance information being easily navigated and complete.
2.9
The Department of Finance guidance on the preparation of annual performance statements advises that they:
…should include information that demonstrates the connection between the corporate plan, PBS and annual performance statements to enable a 'clear read' across the three documents.
Navigation between annual report and source documents
2.10
The Committee noted that a number of reports helpfully included a reference to the relevant page or section in the corporate plan or PBS for each performance measure which aided navigation.
Inclusion of all performance measures in the performance statements
2.11
The Committee was pleased to note that most annual performance statements addressed all performance measures set out in the corporate plan and, if relevant, the PBS. However, there were instances where some measures were not referred to in the annual report. For example, the performance statement for the Australian Signals Directorate did not include the performance criterion as set out in the 2019-20 PBS; and the Australian Strategic Policy Institute's (ASPI) annual report did not include two measures from its corporate plan. While the annual performance statement for the Australian War Memorial included all performance criteria from the PBS, there was not a 'clear read' to the measures set out in the corporate plan. The measures from the corporate plan were linked to relevant PBS program components; however, it was unclear how some measures were addressed in the performance statement.
Performance measures
2.12
The Committee noted that some bodies reported work undertaken to review and revise performance information to more accurately reflect how the achievement of the key performance measures contribute to delivering the organisation's purpose.
Department of Veterans' Affairs
2.13
DVA advised that it undertook a review of its Corporate Plan 2019-23 and performance measures during 2019-20 which identified a number of areas for improvement. The resulting changes included the clarification of its purpose statement and the removal of 23 performance measures that it determined did not directly align to its purpose. DVA advised that these changes 'were important to provide a clearer picture to readers of DVA's purpose and how it will measure its performance'.
2.14
The report noted that as the review took place in June 2020 DVA determined that it was not appropriate to reissue the Corporate Plan 2019-23 with the revisions being incorporated into the Corporate Plan 2020-21.
Independent assurance report on the DVA annual performance statement
2.15
The Committee noted the tabling of the Australian National Audit Office's (ANAO) Independent assurance report on the annual performance statements – Department of Veterans' Affairs – 2019-20 on 3 February 2021 which included looking at the appropriateness of the performance criteria presented in the corporate plan and PBS.
2.16
In assessing the performance criteria, the ANAO:
…reviewed the performance criteria that are effectiveness or efficiency measures or effectiveness or efficiency proxy measures as meeting the threshold for reporting on the achievement of the Department's purposes.
Not all measures included in the Department's Portfolio Budget Statements and corporate plan met this threshold and a number were removed from reporting by DVA within the performance statements to enhance the readability and usefulness of the performance information presented. All performance criteria that met the threshold were considered to be of equal importance in measuring the achievement of the entity's purposes.
The performance criteria and relevant performance information in the 2019-20 Annual Performance Statements were assessed as appropriate to measure the achievement of the Department's purpose.
Department of Foreign Affairs and Trade
2.17
At the recent Budget Estimates hearings, DFAT advised the Committee on changes to its performance measures in the department's corporate plan and PBS which have been consolidated from 56 to 34. The Secretary of DFAT, Ms Frances Adamson, elaborated on the challenges in developing performance indicators for some of the work DFAT performs:
Passports in normal times are very easy to measure; we can be more specific on elements of the aid program; and pure foreign policy is much, much harder. We've done quite a lot of work over my term as secretary to try and refine those. I think there was a question about whether that reflects the change of minister. My answer to that is absolutely not. It reflects our very detailed work to try and improve the alignment between these various accountability documents to provide useful information to the parliament.
Export Finance Australia
2.18
EFA noted the inclusion of qualitative measures in this year's annual performance statement:
These qualitative metrics were included for the first time in the 2019-20 Corporate Plan, consistent with a recommendation from the Australian National Audit Office…Performance Audit completed in June 2019, and also consistent with the PGPA Rules.
2.19
EFA's enhanced performance reporting included achievements against each of the agency's five functions and this section of the performance statement included case studies.
Trend information
2.20
The inclusion of results from the previous year or years was helpful in some of the performance statements examined. While not a requirement, the Department of Finance guidance on the preparation of annual performance statements suggests the inclusion of prior year(s) results where possible should be a consideration. The Committee noted that DVA, EFA and Tourism Australia included results for 2018-19 for some or all measures in addition to those for 2019-20; and Austrade included results for previous four years.
Compliance indexes
2.21
The PGPA Rule requires all Commonwealth entities and companies to include the list of relevant reporting requirements with details of where those requirements are to be found in the annual report.
2.22
Most agencies satisfactorily met this requirement; however, there were some instances of incomplete compliance indexes. For example, the compliance index in EFA's annual report did not include items 17BE(n) and (o) of the PGPA Rule regarding information on transactions with related Commonwealth entities or related companies, item 17BE(q) on judicial decisions or decisions of administrative tribunals, and item 17BE(s) regarding information not obtained from a subsidiary. However, information on judicial and administrative decisions and a brief statement on related entity transactions were contained in the report.
2.23
If a reporting item has a nil return for the reporting period, the inclusion of these items, with a note or statement indicating a nil return for that item during the year is required to ensure clarity. Guidance from the Department of Finance on this matter advises that 'if an item specified in the checklist is not applicable to an entity, it should be reported as 'not applicable' rather than omitted from the list'.
2.24
It was also noted that some compliance indexes were not current and omitted recent amendments. For example, ASPI's compliance index did not include requirements which have been added in recent years, including item 28E(ga) regarding staffing statistics, item 28E(oa) regarding executive remuneration and 28E(ob) regarding audit committee disclosures. However, it was noted that some of the required information for these items was included in the report.
2.25
Agencies are reminded that the full and up-to-date list of annual reporting items is a mandatory inclusion in the annual report.
2.26
The Committee also notes the use of references in a compliance index to a chapter or section of a report, rather than a page number, to indicate the location of information, see for example the reports of the Australian War Memorial and ASPI. While the PGPA Rule does not specify the type of references in the compliance index, the inclusion of precise page numbers or page range greatly assists in assessing reports against the reporting requirements.
2.27
It was noted that the reports of the Royal Australian Air Force Veterans' Residences Trust and Navy Canteens again did not include a compliance index for a corporate Commonwealth body and hopes to see this rectified in future reports.
Enhanced reporting requirements
2.28
The Committee was pleased that most bodies included all the required information for the enhanced audit committee disclosures in their 2019-20 annual reports. However, not all required elements could be located in some reports, for example, ASPI, AAF Company, and Australian Centre for International Agricultural Research. The Committee hopes to see further progress in this area in the next annual reports.
Senator the Hon Eric Abetz
Chair