Progressing Operation Sunlight
Operation Sunlight is the government’s reform agenda to improve budget transparency and accountability. The agenda was advanced in 2008-09 with the public release on 9 December 2008 of the Review of Operation Sunlight: Overhauling Budget Transparency by former Senator Andrew Murray, together with the government’s response and an updated Operation Sunlight policy document that incorporated agreed changes arising from the Review.
As part of the 2009-10 Budget, Finance made further improvements to the readability and usefulness of Budget Papers and Portfolio Budget Statements. Outcome statements were made more specific to provide clarity and transparency on the outcomes to be achieved by agencies, and program reporting was introduced. Additional information about special accounts was included and a net cost of services presentation of agency income statements was re-introduced to focus on the cost of public services, rather than on the concept of profit or loss.
Grants Policy Framework
On 9 December 2008, the government introduced a new policy framework for the administration of grants. The new framework implemented recommendations from the Strategic Review of the Administration of Australian Government Grant Programs1 and included a requirement that from 1 January 2009 agencies publish the details of individual grants on their websites.
On 25 June 2009, the Finance Minister issued the Commonwealth Grant Guidelines and these took effect from 1 July 2009. The guidelines provide whole-of-government rules and guidance for Ministers and officials on grants administration and complement changes to the Financial Management and Accountability Regulations, which took effect at the same time.
2007-08 FMA Certificate of Compliance Process
Chief Executives of FMA Act agencies and Directors of CAC Act bodies in the general government sector are required to report annually on their entity’s compliance with the financial framework and financial sustainability. They do this through a Certificate of Compliance for FMA Act agencies and a Compliance Report for CAC Act bodies. Chief Executives and Directors are asked to provide their certificate or report to their portfolio Minister and to the Minister for Finance by 15 October each year.
The second year of certificate reporting was completed on 15 October 2008, covering the 2007-08 financial year. Agencies reported instances of non-compliance across a greater number of areas than for the previous year. The Auditor-General noted in Audit Report Number 14 2008/2009, Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2008, that the Certificate of Compliance process had resulted in agencies having an increased awareness of legislative requirements and that this had resulted in officials giving higher priority to meeting these requirements, particularly where breaches had occurred in the previous year.
The most common area of non-compliance reported by Chief Executives for 2007-08 related to the commitment, approval and spending of public money. This is the most common daily financial function undertaken by all agencies. Consequently, amendments to the Financial Management and Accountability Regulations 1997 were made, commencing on 1 July 2009, to improve the clarity of the requirements relating to the approval of spending proposals including in relation to approving spending proposals for grants. On 30 June 2009, Finance also released updated guidance on the approval of spending proposals.2
The Review of Operation Sunlight: Overhauling Budgetary Transparency recommended that an aggregate analysis of all certificates be prepared to advise agencies, the ministry and Parliament on overall trends. The government accepted this recommendation in its response to the review, released on 9 December 2008. Finance will table an analysis of the 2008-09 results in the Parliament during the 2009-10 financial year.
Implementing harmonised accounting standards
The Australian Accounting Standards Board (AASB) accounting standard, AASB 1049 – Whole-of-Government and General Government Sector Financial Reporting, came into effect on 1 July 2008 and its use is required for whole-of-government and general government sector consolidated financial reporting. The financial statements included in the 2008-09 Budget were the first prepared by the Australian Government using the new standard and they enabled Finance to reduce the number of sets of financial statements in the budget documents from three to one.
During 2008-09, Finance worked with the Treasury, the Australian Bureau of Statistics and the governments of the states and territories to identify the differences in their accounting and disclosure policies, in order to achieve harmonised reporting for the first time. Finance is also working with the Australian National Audit Office to facilitate a smooth audit process for the harmonised financial statements.
Finance is continuing to support proposals to undertake a post-implementation review of the new standard and to apply these harmonised financial statement standards at the agency level. Applying these standards at the agency level will ensure consistency with the consolidated level, allow for greater and more consistent analysis of consolidated statements, and give readers a more meaningful analysis of agency financial activities.
Completion of the 2007-08 Consolidated Financial Statements
The Australian Government’s Consolidated Financial Statements for the 2007-08 financial year were signed by the Minister for Finance and Deregulation and provided to the Auditor-General on 27 November 2008. On 28 November 2008, the Auditor-General issued an unqualified audit report for the second consecutive year. The statements were tabled in the Parliament on 9 December 2008.