Financial management

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Body text for: Financial management

This section should be read in conjunction with our audited financial statements for 2016–17, which appear in the financial statements section of this report.

Financial overview

This section highlights the Department’s financial performance during 2016–17 for both departmental and administered activities.

The Department’s financial statements are presented as part of this report. The ANAODefinition:Australian National Audit Office issued an unmodified audit opinion of these statements on 22 September 2017.

Departmental finances

The Department’s net cost of services for 2016–17 was $109.2 million, with revenue from government of $108.9 million, resulting in an operating deficit of $0.3 million. The surplus excluding depreciation was $4.6 million which primarily reflects an accounting adjustment to realign the lease arrangements at 38 Sydney Avenue, Forrest to end in November 2017.

Administered finances

Administered expenses increased by $376.4 million which reflects the Government's various decisions on amounts to be appropriated to each of the corporate Commonwealth entities and a full year impact of payments made to Arts portfolio entities acquired through the September 2015 Machinery of Government changes.

Administered income increased by $57.8 million primarily as a result of a dividend payment of $50.1 million received from the Australian Postal Corporation.

Administered financial assets increased by $3,301.20 million primarily as a result of changes in the net asset position of portfolio entities as at 30 June 2017 and the first time recognition of Old Parliament House due to a change in status from a non-corporate Commonwealth entity to a corporate Commonwealth entity from 1 July 2016.

Table 3.2 Summary of departmental financial performance and position

2015–16
$m

2016–17
$m

Change last year

Employee and supplier expenses

101.2

105.3

4.1%

Up

Depreciation

5.2

5.0

(3.8%)

Down

Other Expenses

3.1

5.1

64.5%

Up

Total expenses

109.5

115.4

5.4%

Up

Revenue from Government

99.9

108.9

9.0%

Up

Other revenue

4.2

5.7

35.7%

Up

Gains

0.5

0.5

0%

Total income

104.6

115.1

10.0%

Up

Net cost of services

104.8

109.2

4.2%

Up

Operating result (loss)

(4.9)

(0.3)

(93.9%)

Down

Financial assets

27.4

26.6

(2.9%)

Down

Non-financial assets

54.6

53.2

(2.6%)

Down

Liabilities

38.3

32.7

(14.6%)

Down

Net assets

43.7

47.1

7.8%

Up

Table 3.3 Summary of administered financial performance and position

2015–16
$m

2016–17
$m

Change last year

Grants

168.7

294.1

74.3%

Up

Other expenses

366.5

373.1

1.8%

Up

Payments to CAC Bodies

1,491.3

1,735.8

16.4%

Up

Total expenses

2,026.5

2,403.0

18.6%

Up

Sales of goods and rendering of services

3.0

4.3

43.3%

Up

Interest

2.5

2.6

4%

Up

Dividends

0.0

50.1

100%

Up

Other revenue

4.4

10.7

143.2%

Up

Total income

9.9

67.7

583.8%

Up

Financial assets

26,112.3

29,425.7

12.7%

Up

Non-financial assets

228.3

217.1

(4.9%)

Down

Liabilities

367.2

396.2

7.9%

Up

Net assets

25,973.4

29,246.6

12.6%

Up

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 and processes are consistent with the PGPADefinition:Public Governance, Performance and Accountability Act and the Commonwealth Procurement Rules, and appropriate controls are in place to make sure procurement is carried out in accordance with legislative requirements and the Commonwealth Procurement Rules.

We publish procurement activities and annual procurement plans on AusTender. Information on expected procurement activities in 2017–18 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, and 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 2016–17 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:

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

During 2016–17, 40 new consultancy contracts were entered into involving total actual expenditure during that period of $0.622 million. In addition, 19 ongoing consultancy contracts were active during 2016–17, involving total actual expenditure during that period of $1.959 million. Therefore, total consultancy expenditure during 2016–17 is $2.581 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 at www.tenders.gov.au.

Figure 3.1 Expenditure on consultancy contracts, 2014–15 to 2016–17

Graph showing the Department’s expenditure on consultancy contracts, 2014–15 to 2016–17. In 2016–17, the Department spent 2.58 million dollars, trending downwards significantly from the 2014–15 expenditure figure of 7.85 million dollars.

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 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 identifies late payments so these can be remedied.
    • We adopted the Commonwealth Contracting Suite for low-risk procurements valued under $200,000 (GSTDefinition:goods and services tax inclusive).
    • Where procurements are considered low risk and their value is below the procurement threshold of $80,000 (GST inclusive), a streamlined process is followed.
    • For procurements valued under $10,000 (GST inclusive), we encourage the use of payment by credit card.
    • We have exceeded our portfolio target for supporting Indigenous businesses by raising awareness of the Commonwealth Indigenous Procurement Policy both within the Department and with our external portfolio agencies, many of whom are not bound by the policy. By teaming with our portfolio agencies, we have achieved 202 contracts worth $14.076 million, against a financial year target of 28.

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 published by the Treasury on its website at www.treasury.gov.au/publication/australian-government-pay-on-time-survey-performance-report/

Auditor-General’s access to contractor premises

During 2016–17, 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 2016–17, 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 FOIDefinition:freedom of information Act.

Grants

We have systems in place to ensure our grants programs are managed in accordance with the Australian Government’s legislative framework, including the Commonwealth Grants Rules and Guidelines.

Information on grants awarded by the Department during 2016–17 is available on our website at www.communications.gov.au/who-we-are/department/funding-reporting.