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(21) 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(21) 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 their 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(21). 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. These are required to comply with the Department of 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.

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. These reports must be produced in accordance with the Commonwealth Authorities and Companies (Report of Operations) Orders 2002, the Finance Minister's Orders made under section 48 of the CAC Act, stipulating the requirements for annual reports presented pursuant to the Act. Annual reports of government companies limited by shares are required to comply with Corporations Law requirements.

1.7        The Department of Finance (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(21)(f), the committee is required to report on annual reports tabled by 31 October each year by the tenth sitting day of the following year. This year, that date is 22 March 2007. The committee is also required to report on annual reports tabled by 30 April each year by the tenth sitting after 30 June of that year.

1.10      This report examines the following annual reports which were tabled in the Senate or presented to the President between 1 May 2006 and 31 October 2006:

Departments and executive and prescribed agencies (under the FMA Act)
  • Australian Bureau of Statistics - Annual Report 2005-06
  • Australian Competition and Consumer Commission - Annual Report 2005-06
  • Commissioner of Taxation - Annual Report 2005-06
  • Commissioner of Taxation – Correction to Annual Report 2005-06
  • Department of Industry, Tourism and Resources - Annual Report 2005-06
  • Department of Industry, Tourism and Resources – Correction to Annual Report 2005-06
  • Department of the Treasury –Annual Report 2005-06
  • Inspector-General of Taxation - Annual Report 2005-06
  • National Competition Council - Annual Report 2005-06
  • National Offshore Petroleum Safety Authority - Annual Report 2005-06
  • National Offshore Petroleum Safety Authority Board - Annual Report 2005-06
Statutory authorities (under the CAC Act)
  • Reserve Bank of Australia - Annual Report 2005-06
  • Reserve Bank - Equity and Diversity 2006
Statutory authorities (not subject to the FMA or CAC Acts)
  • Australian Statistics Advisory Council - Annual Report 2005-06
  • Financial Reporting Council, Australian Accounting Standards Board and Auditing Assurance Standards Board - Annual Reports 2005-06 [3]
  • Reserve Bank - Payments System Board - Annual Report 2005-06
Reports on the operation of Acts
  • Report on the government Co-contribution Scheme under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 - Annual Report 2005-06
  • Report on the government Co-contribution Scheme under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 - Quarterly Report for the period 1 April to 30 June 2006

Timeliness

1.11      Standing Order 25(21)(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 laid before the Parliament on or before 31 October in the year the report is given. 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.

1.14      The committee notes that Tourism Australia requested an extension for the tabling of its Annual Report 2005-06. The agency 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. In accordance with section 34C (4) of the Acts Interpretation Act 1901, the agency wrote to the Minister for Tourism explaining that it would not be possible to comply with the deadline:

due to the considerable changes in senior management which have occurred since the end of the financial year. These changes have resulted in delays in the reporting and verification process.[4]

1.15      The Minister granted an extension until 17 November 2006 and tabled both of these letters in the Senate on 6 November 2006.

1.16      The committee notes that Tourism Australia's Annual Report 2005-06 was sent to the Minister on 17 November 2006 and tabled in the Senate on 6 February 2007. This report will be examined in the committee's Report on Annual Reports no. 2 of 2007.

1.17      The following agencies did not meet the reporting deadlines for their Annual Reports 2005-06 and will be examined in Report no. 2 of 2007:

  • The Australian Office of Financial Management, a prescribed agency under the FMA Act, should have tabled its report by 31 October 2006. The committee notes that while the report was received by the Minister on 5 October 2006, it was not tabled until 7 November 2006.
  • Another prescribed agency under the FMA Act, the Royal Australian Mint, sent its report to the Minister on 22 September 2006. It was received by the Minister on 20 October 2006 and tabled late on 7 November 2006.
  • The Superannuation Complaints Tribunal is required to provide its Annual Report to the Minister within 3 months after the year end of 30 June, that is, by 30 September. Its report was sent to the Minster on 22 November 2006, almost two months late. However, it was tabled by the Minister on 28 November 2006, within 15 sitting days of receipt, the deadline prescribed by its own governing legislation.
  • The Australian Securities and Investments Commission (ASIC), which reports under the CAC Act, failed to meet the 15 October deadline for reporting to the Minister. Its report was sent on 18 October 2006. However, it was tabled by the Minister on 7 November, within the deadline prescribed by the CAC Act and the Acts Interpretation Act.

Comments on reports

1.18      In accordance with Standing Order 25(21)(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 various departments and agencies present their annual reports.

1.19      The committee considers that the reports it has examined are generally 'apparently satisfactory', although some do not appear to completely meet all of their legislative requirements. Generally, however, the departures from these requirements are minor.

1.20      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, particularly for executive departments and FMA Act agencies, and considerably assists the committee's task of assessing reports. It also assists agencies by clearly showing that compliance obligations have been met. The committee commends the Australian Bureau of Statistics and the Commissioner of Taxation on their compliance indexes which both provided a useful level of detail.

1.21      While most agencies provided varying degrees of information about their fraud control plans, the committee draws attention to the Commonwealth Fraud Control Guidelines 2002. Under these guidelines:

CEOs of agencies covered by the Commonwealth Fraud Control Guildelines are to certify to their Minister or Presiding Officer in their agency's annual report that they are satisfied that their agency has prepared fraud risk assessments and fraud control plans, and has in place appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes that meet the specific needs of the agency and comply with the Guidelines.[5]

1.22      The committee encourages agency heads to make a specific certification in keeping with the guidelines. The committee highlights the reports of the Department of Industry, Tourism and Resources, the Commissioner of Taxation and the National Competition Council as examples of how to fully comply with this requirement.

1.23      The committee notes that all agencies included a Freedom of Information (FOI) statement, however, not all of them provided information on arrangements that exist for others to participate in their agency's policy formulation processes. The Australian Competition and Consumer Commission, the Treasury and the Inspector-General of Taxation addressed this requirement to a high standard.

1.24      Under the Legal Services Directions 2005, introduced on 1 March 2006, FMA agencies must publicise their total expenditure on legal services for the previous financial year. The committee was pleased to note that the Commissioner of Taxation provided this information in an appendix to its annual report. Most other agencies included these details on their website, except where mentioned below.

Department of Industry, Tourism and Resources (DITR)

1.25      DITR's annual report provides a comprehensive review of the department's outcomes and activities. The committee was generally satisfied with the standard of reporting in accordance with the guidelines set out in the Requirements for Annual Reports, except for the following:

1.26      As previously noted in the committee's Report on Annual Reports no. 1 of 2006, the annual report must contain a list of discretionary grant programmes administered by the department. In addition, a list of each grant recipient is required to be available as an appendix to the report or on the Internet.[6]

1.27      In its annual report for 2005–06, it is again unclear whether the department administers any discretionary grant programmes. A list of programs/grants/loans administered by the department is available on the department's website, however, it is not evident whether any of these are discretionary grant programmes and grant recipients are not identified.

1.28      The committee considers it would be useful for the department to include this information, even if it is to note that the department has not administered any discretionary grant programmes in the reporting year.

1.29      In the committee's view, the DITR annual report would benefit from the inclusion of a compliance index, recording a nil entry where the department has nothing to report against a particular requirement.

1.30      The committee notes that DITR has provided information on external scrutiny of the department, including audit reports by the Australian National Audit Office (ANAO), but does not mention any reporting by the Commonwealth Ombudsman.

1.31      The committee was interested to note DITR's reporting under section 74 of the Occupational Health and Safety (Commonwealth Employment Act) 1991 (the OH&S Act). The Secretary announced the DITR Smoke Free Workforce Policy on 30 March 2006. Coinciding with the move to the department's new premises in October 2006, staff will not be allowed to take smoke breaks during work hours apart from official meal breaks and smoking will not be permitted within 15 metres of any departmental premises.

1.32      The committee commends DITR on its reporting on ecologically sustainable development and environmental performance, which was particularly comprehensive.

National Offshore Petroleum Safety Authority (NOPSA)

1.33      NOPSA's annual report is clear, concise and well presented. The inclusion of a compliance index aided the committee in its assessment of the report. The committee was pleased to note the inclusion of a date on the letter of transmittal (as mentioned in the committee's Report on Annual Reports no. 1 of 2006).

1.34      While NOPSA has briefly mentioned its Fraud Control Plan, the committee encourages the agency to provide a specific certification in line with the Commonwealth Fraud Control Guidelines, as outlined in paragraphs 1.21 and 1.22 above.

1.35      The committee notes that NOPSA has complied with the requirement to include a summary statement which separately lists the number of new and ongoing consultancy contracts and the total actual expenditure for each category. However, in addition to this information, agencies must complete a mandatory proforma listing each individual consultancy to the value of $10,000 or more, in accordance with the Requirements for Annual Reports. This information must be provided either in an appendix to the report or through the Internet.[7]

1.36      According to NOPSA's Annual Report, this information can be viewed on the NOPSA website and a link has been given. The committee notes that when the NOPSA website was accessed at the end of January 2007, this information was not available. However, the committee is pleased to note that when clarification was sought from NOPSA, the required information was added to the website within a few weeks.

Department of the Treasury

1.37      The Treasury has provided a comprehensive review of its performance for 2005-06. Its reporting on corporate governance, internal and external scrutiny, and section 8 of the FOI Act, including arrangements for outside participation in forming policy was particularly thorough.

1.38      The committee notes that the Treasury's summary statement on consultancies was not in accordance with the guidelines set out in the Requirements for Annual Reports.[8] It included only consultancy contracts valued at $10,000 or above. While individual consultancies valued at $10,000 or above are to be included in the mandatory proforma, the summary statement should include the number and value of all consultancy contracts.

1.39      While the Treasury has included a statement that its Fraud Control Plan complies with the relevant guidelines, the committee encourages the agency to provide a specific certification in line with the Commonwealth Fraud Control Guidelines (see paragraphs 1.21 and 1.22 above).

1.40      The committee notes that the report included a compliance index, however, it did not address all of the mandatory reporting requirements and was not detailed enough to be useful.

Australian Bureau of Statistics (ABS)

1.41      The ABS has, on the whole, fulfilled its reporting requirements to a high standard. The use of a table format to present information such as performance against outcomes, and ecologically sustainable development and environmental performance was clear and easy to follow. The ABS annual report also included a detailed and useful compliance index.

1.42       The committee notes that the mandatory proforma listing individual consultancies to the value of $10,000 or more was included in the report. However, it was not in the approved format: it did not include a summary description of the nature and purpose of the consultancy, and the terms used to describe the selection process were not in line with the standard terms used in the Requirements for Annual Reports.[9] The committee encourages the ABS to remedy this in its next annual report.

Australian Competition and Consumer Commission (ACCC)

1.43      The ACCC's annual report is well presented and provides a comprehensive review of its activities and performance.

1.44      The committee notes that while this report included a compliance index, it was not very detailed and did not address all of the mandatory reporting requirements. Furthermore, the committee notes that some of the page references in the alphabetical index were incorrect.

1.45      The committee considers this report would benefit from a more comprehensive compliance index, as some difficulty was encountered in establishing compliance with various requirements, including whether or not any discretionary grant programmes are administered by the ACCC. The committee recommends that the ACCC implements the practice of recording a nil entry against requirements on which it has nothing to report.

1.46      According to the ACCC's Annual Report, full details of consultancy contracts with a value of $10,000 or more are available on its website. However, when the website was accessed at the end of January 2007, this information was only available for previous financial years from 2001-02 to 2004-05. The committee notes that immediately prior to finalising this report in March, the information for 2005-06 had been added. The committee encourages the ACCC to make this information available on its website at the time of publishing of its annual report.

Commissioner of Taxation (ATO)

1.47      The ATO has fulfilled its reporting requirements to a high standard. The report is clear, well-presented and easy to read. The use of appendices to provide detailed tables on consultancies, legal services expenditure, advertising, external scrutiny and so on was most effective. The committee was pleased to note the inclusion of a compliance index in this year's annual report, which thoroughly addressed all of the reporting requirements.

1.48      The ATO's reporting on issues such as fraud prevention and control, including the Commissioner's certification, and external scrutiny was particularly comprehensive. The committee notes that the ATO is reviewing its FOI processes against recommendations and observations made by the Commonwealth Ombudsman in his report into the administration of the FOI Act 1982 in 22 selected agencies.[10]

1.49      The committee also notes that two reviews by the Inspector-General Taxation were finalised during the year, into:

  • the length of time taken to complete Tax Office active compliance activities; and
  • the Tax Office's administration of penalties and interest arising from active compliance activities.

1.50      The committee notes a number of corrections to the figures contained in the ATO's annual report for 2004–05. A correction to page 14 of its annual report for 2005–06 has also been tabled.

Inspector-General of Taxation (IGT)

1.51      The Inspector-General has provided a thorough review of the challenges faced by his office during the past financial year. The committee notes that the IGT has included a reference to his Fraud Control plan in this year's annual report (mentioned as lacking in the committee's Report on Annual Reports no. 1 of 2006). However, the committee encourages the IGT to provide a specific certification in line with the Commonwealth Fraud Control Guidelines, as outlined in paragraphs 1.21 and 1.22 above.

1.52      The committee has been unable to locate publicly available information in relation to the IGT's total expenditure on legal services for the previous financial year, within their annual report or on their website (as discussed in paragraph 1.24 above).

National Competition Council (NCC)

1.53      As previously noted in the committee's Report on Annual Reports no. 1 of 2006, the NCC is a prescribed agency under the FMA Act and, as a matter of government policy, the Requirements for Annual Reports apply.

1.54      The committee notes the NCC's lack of compliance with the same requirements as last year's annual report, namely:

  • summary resource tables by outcomes;
  • performance pay;
  • advertising and market research;
  • ecologically sustainable development and environmental performance; and
  • discretionary grants.

1.55      The committee considers that while the report contains a compliance index it was difficult to follow, lacking in detail, did not address all of the mandatory reporting requirements and included some items which are not part of the checklist of requirements.

1.56      The NCC's summary statement on consultancies did not include the number of ongoing consultancy contracts or the total actual expenditure on ongoing consultancies. The committee encourages the NCC to remedy this and other omissions listed above for next year's annual report.

1.57      The committee considers that all of the additional requirements under the NCC's governing legislation, subsection 29O (2) of the Trade Practices Act 1974, have been met. However, as mentioned above, the committee considers that the NCC, as a prescribed agency under the FMA Act, is also required to comply with the Requirements for Annual Reports.[11]

Reserve Bank of Australia

1.58      The committee notes that the Reserve Bank of Australia's Annual Report 2005-06 is the last report of the Reserve Bank Governor, Mr Ian Macfarlane. The report includes a resolution of the Board which "pays tribute to the immense contribution to the conduct of Australian economic policy made by Ian Macfarlane". Mr Macfarlane retired from the Reserve Bank on 17 September 2006, after a ten-year term as Governor and Chairman of the Board.

Remarks made in the Senate

1.59      Senate Standing Order 25 (21)(d) directs the committee to take into account remarks made in the Senate when considering annual reports.

1.60      When the Reserve Bank of Australia Annual Report 2005-06 was tabled in the Senate on 12 September 2006, Senator McGauran noted that it paid a fitting tribute to Mr Ian Macfarlane in his last annual report as Reserve Bank governor.[12]

1.61      Senator O'Brien referred to Tourism Australia's Annual Report for 2005-06 during the supplementary budget estimates hearing on 1 November 2006. He asked about the current status of the report and when it would be tabled. Tourism Australia advised that it was not quite finished and an extension had been granted by the Minister. Senator O'Brien emphasised that one of the purposes of the supplementary budget estimates round was to enable Senators to examine agencies about their annual reports.[13]

 

Senator the Hon Michael Ronaldson
Chair

Navigation: Previous Page | Contents | Next Page