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Annual Report 2015/16

03 Management and accountability

Financial Management

This section should be read in conjunction with our audited financial statements for 2015–16, which appear in the financial statements section of the report.

Financial overview

Following the changes to the Administrative Arrangement Orders (AAOs) of 21 September 2015, the Department assumed responsibility for cultural affairs, classification, and copyright functions. In addition from 1 July 2015 the Telecommunications Service Agreements and Grants function was assumed from the Telecommunications Universal Service Management Agency.

Departmental finances

The Department’s net cost of services for 2015–16 was $104.8 million, with revenue from government of $99.9 million, resulting in an operating deficit of $4.9 million. The surplus excluding depreciation was $0.3 million.

Table 3.2 Summary of departmental financial performance and position

 

2014-15 ($m)

2015-16 ($m)

Change last year

Employee and supplier expenses

91.6

101.2

10.5%

up

Depreciation

5.9

5.2

(11.9%)

down

Other Expenses

0.8

3.1

287.5%

up

Total Expenses

98.3

109.5

11.4%

up

Revenue from Government

91.4

99.9

9.3%

up

Other Revenue

1.2

4.2

250.0%

up

Gains

0.4

0.5

25.0%

up

Total Income

93.0

104.6

12.5%

up

Net cost of services

96.7

104.8

8.4%

up

Operating Result (Loss)

(5.3)

(4.9)

(7.5%)

down

Financial Assets

21.0

27.4

30.5%

up

Non-financial assets

15.2

54.6

259.2%

up

Liabilities

33.6

38.3

14.0%

up

Net assets

2.6

43.7

1580.8%

up

The additional functions transferred from the AAOs were the primary driver for the increases to total expenses of $11.2 million, total income of $11.6 million and net assets of $41.1 million in 2015–16.

Administered finances

The additional functions transferred from the AAOs and the administration of the Telecommunications Universal Service Obligation, were the primary drivers for the increase to total expenses of $536.3 million and total income of $5.6 million.

The increase to financial assets of $14.0 billion was primarily driven by Commonwealth authorities and companies transferred into the Portfolio as part of the AAOs, and an increase in the Commonwealth’s investment in NBNDefinition:National Broadband Network Co.

Table 3.3 Summary of administered financial performance and position

 

2014-15 ($m)

2015-16 ($m)

Change last year

Grants

111.8

168.7

50.9%

up

Subsidies

-0.1

0.0

-100.0%

down

Other expenses

29.3

366.5

1150.9%

up

Payments to CAC Bodies

1,349.2

1,491.3

10.5%

up

Total Expenses

1,490.2

2,026.5

36.0%

up

Sales of goods and rendering of services

0.0

3.0

100.0%

up

Interest

1.3

2.5

93.8%

up

Dividends

0.0

0.0

0.0%

down

Other revenue

2.0

4.4

120.0%

up

Gains

1.0

0.0

-100.0%

down

Total Income

4.3

9.9

130.1%

up

Financial Assets

12,111.3

26,112.3

115.6%

up

Non-financial Assets

179.3

228.3

27.3%

up

Liabilities

25.4

367.2

1345.7%

up

Net assets

12,265.2

25,973.4

111.8%

up

Administered non-financial assets increased by $49.0 million primarily due to the transfer of the Administered National Institute of Dramatic Arts Building as a part of the AAOs.

Administered liabilities increased by $341.8 million and again relates to additional functions transferred from the AAOs.

Assets management

Our capital plan reflects the Government’s priorities and business needs and complies with the financial management framework. We monitor asset acquisitions and disposals against this plan, and we carry out a risk based annual stocktake for non-artwork targeting key asset classes or events to update and verify the accuracy of our asset records and review their condition and utility. A separate stocktake of all artworks held on premises by Artbank is completed annually, and leased artwork held by customers is subject to regular spot checks throughout the year.

Procurement

Our procurement policies, processes and practices are consistent with the Public Governance, Performance and Accountability Act 2013 (PGPA ActDefinition:Public Governance and Performance Accountability Act 2013) and the Commonwealth Procurement Rules. Appropriate controls are in place to make sure procurement is carried out in accordance with all legislative requirements and the Commonwealth Procurement Rules.

We publish procurement activities and annual procurement plans on AusTender. Information on expected procurement activities in 2016–17 is included in our latest annual procurement plan and is also available on AusTender.

Consultants

We engage consultants to provide specialised professional services when we do not have the capability or capacity to perform these in-house, or where we need independent research, review, assessment or advice. Consultants are typically engaged to investigate or diagnose a specific issue or problem, carry out reviews or evaluations, as well as provide independent advice, information or solutions to help us make decisions.

Before engaging consultants, we take into account the skills and resources needed for the task, the skills available internally and the cost-effectiveness of engaging external expertise. Our policy for selecting and engaging consultants in 2015–16 was in accordance with the PGPA Act and the Commonwealth Procurement Rules: it is based on the core principle of achieving value for money.

The main categories in which consultants were engaged are for the provision of:

  • specialist legal services
  • auditing and accounting services
  • economic services
  • recruitment services
  • consulting services, including in relation to engineering, broadcasting and telecommunications.

During 2015–16, 41 new consultancy contracts were entered into involving total actual expenditure during 2015–16 of $0.760 million. In addition, 21 ongoing consultancy contracts were active during the 2015–16 year, involving total actual expenditure during 2015–16 of $4.692 million. Therefore, total consultancy expenditure during 2015–16 is $5.452 million.

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website, www.tenders.gov.au

Figure 3.1 Expenditure on consultancy contracts from 2013–14 to 2015–16

Column graph showing the expenditure on consultancy contracts from 2013-14 to 2015-16
 2013-142014-152015-16
Expenditure ($ million)9.217.855.45

Procurement initiatives to support small business

We support small business participation in the Australian Government procurement market. Small and medium-sized enterprises and small enterprise participation statistics are available on the Department of Finance’s website at www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/.  

We have met government policy requirements in terms of supporting Small and Medium Enterprises (SMEs) in the following ways:

  • Our approach-to-market documents are clear and straightforward to help potential suppliers to produce a response that does not require extensive time and effort.  
  • Our financial management information system facilitates the payment of invoices on time and provides reports highlighting if invoices have not been paid within a certain period of time to allow remedy.
  • We are phasing in the use of the Commonwealth Contracting Suite for low-risk procurements valued under $200,000 (GST inclusive).
  • Where procurements are considered low risk and their value is below the procurement threshold of $80,000 (GST inclusive), a streamlined process is encouraged and the supplier is engaged using a purchase order in lieu of a more formal arrangement.
  • For procurements valued under $10,000 (GST inclusive), we encourage the use of payment by credit card.

We recognise the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website.

Auditor-General’s access to contractor premises

During 2015–16, each competitively tendered contract of $100,000 or more (inclusive of GST) included a provision that allowed the Auditor-General access to the premises of the contractor.

Exempt contracts

During 2015–16, no contracts or standing offers were exempted by the Secretary from being published on AusTender on the basis they would disclose matters exempt under the Freedom of Information Act 1982.

Grants

We managed our grants programs in accordance with the Australian Government’s legislative framework, including the Commonwealth Grant Rules and Guidelines.

Information on grants awarded by the Department during 2015–16 is available on our website at www.communications.gov.au/who-we-are/department/funding-reporting.