ENHANCING PUBLIC SECTOR GOVERNANCE

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ENHANCING PUBLIC SECTOR GOVERNANCE
Andrew Morris Senior Director Australian National
Audit Office
2
Introduction

• My presentation will
• outline the role of the ANAO especially to
  enhance public sector governance
• discuss the key elements of the ANAOs Better
  Practice Guide on Public Sector Governance
• provide examples of how we have audited against
  the better practice guide
• consider the future of auditing governance.

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Defining Governance
Public sector governance has a very broad
coverage, including how an organisation is
managed, its corporate and other structures, its
culture, its policies and strategies and the way
it deals with its various stakeholders. The
concept encompasses the manner in which public
sector organisations acquit their
responsibilities of stewardship by being open,
accountable and prudent in decision-making, in
providing policy advice, and managing and
delivering programmes.
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Defining Governance

• pure governanceinvolves the interactions
  between Minister(s), the board, the CEO, and
  audit.

• organisational governancemanagement and
  administration.

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The Role of the ANAO

• Our integrated auditing framework comprises
• financial audits
• performance audits and
• other information support services, including the
  development of better practice guides.

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Performance Audits

• ANAO audits covering agency-wide assessments of
  governance arrangements include
• ANAO Audit Report No. 29 of 2003-04, Governance
  of the National Health and Medical Research
  Council
• ANAO Audit Report No. 40 2001-02, Corporate
  Governance in the Australian Broadcasting
  Commission and
• ANAO Audit Report No.1, 1998-99, Corporate
  Governance Framework, Australian Electoral
  Commission.

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Better Practice Guides

• Recent BPGs include
• Public Sector Governance (Volumes 1 and 2) (July
  2003)
• Fraud Control in Australian Govt Agencies (August
  2004)
• AMODEL Non-Commercial Authority Illustrative
  Financial Statements for the Year Ended 30 June
  2004 (May 2004)
• Administration of Grants (May 2002) and
• Business Continuity Management (January 2000).

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Principles of public sector governance

• Accountability
• Transparency
• Integrity
• Stewardship
• Leadership
• Efficiency.

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Legal elements affecting governance in the
Commonwealth

Australian Constitution


eg, ss.51, 53, 54, 61, 64, 67, 81, 83




Parliament, its
Separation of Powers



Financial

committees, privilege and

Public


Management
conventions



Service


Accountabi
lity

Annual and specific
Workplace
Remuneration

Act

1999

Appropriations by
Act 1997

Relations

Parliament

on Tribunal



Act 1996


Act 1973

Agency

Commonwealth
Charter of Budget
Specific

Honesty


Authorities

State/Territory
Corporations
Acts

associations partnerships
Companies

Act 2001

law

Act 1997


Contract, i
nsurance,
Administrative

trust, principal/agent,
Arrangements Orders

confidentiality, intellectual
Responsible representative government
t


property law

Auditor
-
General Act 1997
Accountability
Ombudsman, FOI, AAT, ADJR, Archives Judiciary
Acts, Acts
Interpretation, Trade Practices, Privacy, OHS
and Crimes Acts specific secrecy
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The house of public sector governance
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Key governance processes

• Effective corporate and business planning
• Structured and regular performance monitoring
• Clear and robust budgeting and financial planning
• Integrated risk management
• Whole-of-Government approach

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Risk Management

• Prominent issues when auditing risk management
• clarity or roles and responsibilities for
  managing risk
• whether risk management is appropriately
  monitored, and aligned to the performance
  measurement framework
• whether identified risks are appropriately
  controlled
• whether strategic risks are aligned to the
  business risks
• consistency of risk management practices and
  processes.

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ANAO Audits of Board Issues

• Three recent ANAO audits have examined board
  issues
• ANAO Audit Report No. 29 of 2003-04, Governance
  of the National Health and Medical Research
  Council
• ANAO Audit Report No. 26 of 2003-04, Supporting
  ManagersFinancial Management in the Health
  Insurance Commission
• ANAO Audit Report No. 51 of 2002-03, Defence
  Housing and Relocation Services

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National Health and Medical Research Council

• Recommendation No.1 included
• assess the appropriateness of existing governance
  arrangements, particularly links between the
  Council, the Principal Committees, the Management
  Committee and the CEO, and amend as necessary
• document and endorse a governance charter and
• delegate powers where necessary and implement
  appropriate reporting against delegated powers.

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Financial Management in the Health Insurance
Commission

• Findings
• improve financial reporting to the Board.
• better combine financial and non-financial
  reporting to the Board for major projects.

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Defence Housing
The ANAO recommended that Defence consider
reviewing, and providing advice to the
Government on, the provision in the Defence
Housing Authority Act 1987 for Defence officers
to be appointed to the DHA board, in view of the
potential conflict of interest that such
appointments create for those officers.
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MRI probity audit

• Findings
• Could not determine whether there were
  inappropriate disclosures however
• probity arrangements not adequate for the
  circumstances
• conflict of interest arrangements did not work
  properly in all instances.

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Control Structures Report

• The Control Structures Report found that
• internal controls are improving slightly
• scope for continued improvement, eg. for
  reconciliations, use of delegations, monitoring
  of grant and funding agreements, timeliness of
  recording asset movements
• one entity with A category issues, 20 entities
  with B category issues.

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Concluding Remarks

• ANAO encourages better governance mainly through
  performance audits, financial audits and BPGs
• ANAO audits have shown some improvement in public
  sector governance but core issues remain
• could increase pure governance audits and
  coverage of governance principles, but will still
  focus on core organisational governance issues .

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ANAOs ROLE IN INCOURAGING BETTER PUBLIC SECTOR
GOVERNANCE
Andrew Morris Senior Director Australian National
Audit Office