Standing Committee on Economics, Finance and Public
Administration
Recommendations
1 That the power of Commonwealth statutory authorities to accept liabilities,
including contingent liabilities, be regularly reviewed by portfolio departments,
in consultation with the ANAO and Finance, to ensure that the Commonwealth's
interests are protected. (paragraph 2.15)
2 That agencies be required to follow the recommendations of the ANAO
and Finance concerning the formal authorisation of officers to issue indemnities
on behalf of a Minister. Each agency should also be required to provide
a copy of its register of authorised officers to Finance on a regular
basis. (paragraph 2.19)
3 That agency heads be required to take account of their responsibility
with regard to management of the Commonwealth's contingent liabilities.
Subject to ultimate Ministerial responsibility and accountability to the
Parliament, it is the responsibility of agency heads to ensure the agency
complies with guidelines and other instructions concerning contingent
liabilities. (paragraph 3.12)
4 That agencies take account of the direction to include a limit where
possible. Agencies should always attempt to measure the potential financial
cost as part of risk assessment, either internally or with external assistance,
and should keep a record of that assessment. Where a limit is not included,
agencies should record the reason for that arrangement as part of the
risk assessment. (paragraph 3.22)
5 That the Department of Finance in consultation with the ANAO issue
a 'better administrative practice' document to provide agencies with more
direct assistance on how to introduce and maintain a central register
of contingent liabilities. (paragraph 3.29)
6 That agencies consider introducing contract registers, in particular
with a view to addressing concerns about the increased emphasis on outsourcing
Commonwealth functions. In the absence of a register, agencies should
ensure that contingent liabilities in contracts, if any, are recorded
separately on a Register of Guarantees, Indemnities and Letters of Comfort.
(paragraph 3.40)
7 That Defence review its existing contracts and its contract management
practices to ensure that its central record keeping and finance areas
are fully informed of all contingent liabilities contained in contracts.
(paragraph 3.41)
8 That agencies which report contingent liabilities to the public or
to Ministers, review those values, in consultation with the ANAO where
relevant, to ensure that they calculate the values accurately. (paragraph
3.60)
9 That the Department of Finance, in consultation with the ANAO, takes
all steps necessary to ensure that whole of government risk reporting
in the Statement of Risks provides an accurate description of the Commonwealth's
exposure. (paragraph 3.61)
10 That Finance, in its review of the Commonwealth policy of self insurance,
take account of the need for expertise in managing risk and the cost to
departments of providing such expertise in-house or externally. (paragraph
3.88)
11 That the review of the governing legislation for EFIC under the Commonwealth's
Legislation Review Schedule include consideration of the appropriate prudential
regulation arrangements for EFIC where commercial risks are covered. (paragraph
3.97)
12 That the ANAO review the management of the Commonwealth's contingent
liabilities, and agency compliance with the guidelines on issuing indemnities,
guarantees and letters of comfort, in two years time. (paragraph 3.108).
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