Overview of Queensland s Financial Accountability Framework

Transcription

1 Queensland Treasury and Trade Overview f Queensland s Financial Accuntability Framewrk Queensland Treasury and Trade Nvember Ecnmic and Fiscal Challenges

2 Cntents 1. Intrductin Legislative Requirements Whle f Gvernment Financial Reprting State Budget Cnslidated Fund Financial Reprt Reprt n State Finances Agency Financial Reprting Service Delivery Statements (budget reprting) Annual reprts (including financial statements) Financial Gvernance in Queensland Auditr-General and Queensland Audit Office Crime and Miscnduct Cmmissin Parliamentary Cmmittees Rle f Queensland Treasury and Trade (QTT) Appendices...14 Appendix A Queensland s legislatin framewrk fr financial management an verview Appendix B Gvernment Financial Reprting Framewrks Appendix C QTT Resurces Appendix D Acrnyms and Glssary... 20

3 1. Intrductin Since 1977, the requirements relating t public sectr financial management and reprting have changed significantly. Over this time, Queensland has seen changes in legislatin, the mve frm cash t accrual budgeting and reprting, the adptin f internatinal accunting standards, and the cnvergence f accunting framewrks. In June 2011, the frmer Public Accunts and Public Wrks Cmmittee issued its Reprt N. 10 Enhancing Accuntability thrugh Annual Reprting. The Cmmittee cmmented that the Queensland accuntability framewrk is nt easily understd by thse utside gvernment, and that a readers guide that explains the verall accuntability framewrk, including the budget acquittal, and accuntability prcess, wuld assist many t understand the framewrk and thus imprve the knwledge base f stakehlders. This dcument has been prepared t address the recmmendatins f the frmer Public Accunts and Public Wrks Cmmittee. It is designed t prvide infrmatin t all interested stakehlders abut the financial accuntability framewrk in Queensland, as it applies t departments and statutry bdies. Thrughut the dcument, the wrd agency is used t refer t bth departments and statutry bdies. While this dcument fcuses n departments and statutry bdies, a brief verview f the legislative framewrks applicable t Gvernment Owned Crpratins and ther public sectr cmpanies is prvided in Sectin 2. Appendix D cntains a list f acrnyms used thrughut the dcument, as well as a glssary f sme cmmnly used financial management and accuntability terms used in the Queensland public sectr. Page 1 f 25

4 2. Legislative Requirements The legislatin underpinning Queensland s departments and statutry bdies has undergne significant change since Appendix A prvides a diagrammatic verview f the legislative framewrk which currently applies t Queensland gvernment agencies. T prvide histrical cntext, in 1977, the Financial Administratin and Audit Act (FA&A Act) cmmenced peratin, replacing a law passed by Parliament sme 103 years previusly. Initially the FA&A Act applied nly t departments; hwever, in 1985 its scpe was extended t include the financial administratin and audit f statutry bdies. The FA&A Act was supprted by the Treasurer s Instructins, which were subrdinate legislatin. The Treasurer s Instructins were drafted t deal with matters that were cmmn t all departments and their purpse was t ensure that, as far as practicable, unifrmity was established and maintained thrughut the departments with respect t matters where unifrmity was necessary. In 1990, the Treasurer s Instructins were replaced by the Public Finance Standards. The Public Finance Standards reduced the amunt f prescriptive requirements, required agencies t utline practices and prcedures in their financial management practice manuals, and required the adptin f prfessinal accunting standards. In 1997, the Public Finance Standards were replaced by the Financial Management Standard. The Financial Management Standard again reduced the level f prescriptin within the subrdinate legislatin. Fllwing a cmprehensive review f the financial management legislatin in Queensland, the FA&A Act was repealed and replaced by the Financial Accuntability Act 2009 (FA Act), and the Financial Management Standard was replaced by the Financial and Perfrmance Management Standard 2009 (FPMS). The revised legislatin intrduced the fllwing five majr plicy changes: it is principles-based, fcussing n accuntability and utcmes. It prvides an apprpriate level f discretin t executives t ptimise resurce allcatin and tailr systems fr the administratin f their departments and statutry bdies. This is a significant shift frm the previus legislative apprach which prescribed a significant number f lw level cmpliance activities. it mved the prvisins relating t the Auditr-General frm the financial management legislatin t a separate Auditr-General Act t reinfrce the independence f the external audit functin. it intrduced the requirement fr an accuntable fficer t nminate an apprpriately qualified fficer t assume the respnsibilities f chief finance fficer, with the legislatin utlining the minimum respnsibilities t be undertaken by this fficer. it intrduced the requirement fr the chief finance fficer t prvide an annual statement t the accuntable fficer abut whether the financial internal cntrls f the department are perating efficiently, effectively and ecnmically. it intrduced the requirement fr an accuntable fficer t nminate an apprpriately qualified fficer t assume the respnsibilities f head f internal audit and mandated minimum respnsibilities t be undertaken by this fficer. The revised financial legislative framewrk cmprises a fur tier system, as illustrated by the fllwing: Page 2 f 25

5 Mdel Level f detailed prescriptin High-level legal bligatins Act Minimal Minimum requirements t cmply with legal bligatins Subrdinate Legislatin Mderate Detailed tpicspecific plicies Plicy and Guidance Dcuments High Detailed agencylevel plicies Financial Management Practice Manuals High Act the Financial Accuntability Act 2009 sets ut strategic legal bligatins with which agencies must cmply. The Act is principles-based, with a minimal level f prescriptin. Subrdinate legislatin this cnsists f the Financial and Perfrmance Management Standard 2009 and Financial Accuntability Regulatin 2009 and prvides a mderate level f prescriptin, with the aim f establishing brad requirements within which agencies must perate t meet their legal bligatins under the Act. Plicy and guidance dcuments (such as the Financial Accuntability Handbk) are referred t in the Act and subrdinate legislatin. These dcuments, which are prduced and maintained by varius departments, prvide guidance t agencies t assist them in meeting their financial, peratinal and regulatry bligatins. A list f Queensland Treasury and Trade (QTT) publicatins (nt exhaustive) is prvided in Appendix C. Examples f mandated publicatins prduced by ther departments include: A Guide t the Queensland Gvernment Perfrmance Management Framewrk (Department f the Premier and Cabinet (DPC)) Agency Planning Requirements (DPC) Annual Reprt Requirements fr Queensland Gvernment Agencies (DPC), and Queensland Prcurement Plicy (Prcurement Centre f Excellence). The legislatin requires agencies t either cmply with r have regard t the referred dcuments. Cmply with is self-explanatry. Have regard t means that an agency must cnsider the cntents f the dcument and cmply when its cntents are applicable in the agency s circumstances. Financial Management Practice Manuals (FMPMs) are agency dcuments that must cmply with the Act, subrdinate legislatin and, where applicable, subsidiary plicy dcuments. An FMPM sets ut the plicies and prcedures that have been implemented by the agency t meet its legislative bligatins. While certain elements f the cntent f an agency s FMPM are determined by the FPMS, agencies have cnsiderable flexibility in the creatin f their FMPM thrugh the incrpratin f agency-specific cntent, apprpriately structured frmats and peratinal prcesses that are applicable t the effective peratin f the agency. Page 3 f 25

6 As shwn in Attachment A, as well as cmplying with the Financial Accuntability Act and its subrdinate legislatin, statutry bdies must als cmply with the Statutry Bdies Financial Arrangements Act 1982 (SBFA Act) and its subrdinate legislatin, as well as its wn enabling legislatin. A statutry bdy s enabling legislatin establishes the bdy and sets ut its purpse and specific pwers. The SBFA Act establishes the brrwing and investment pwers f statutry bdies. Where tw pieces f legislatin are cntradictry, generally the legislatin which takes precedence will state that fact. Alternatively, a rule f thumb that may be applied is that specific legislatin will verride general legislatin. Users f legislatin shuld be aware that the definitin f statutry bdy may differ depending upn the legislatin being referred t. Fr example, a lcal cuncil is nt a statutry bdy fr the purpses f the FA Act, but it is fr the purpses f the SBFA Act. Als included in Attachment A are: Gvernment Owned Crpratins, which must cmply with the Gvernment Owned Crpratins Act and its subrdinate legislatin, as well as the Cmmnwealth s Crpratins Act. ther public sectr cmpanies, which are generally frmed by the State Gvernment fr specific purpses, such as fr the cnstructin f infrastructure. These entities must als cmply with the Cmmnwealth s Crpratins Act. Page 4 f 25

7 3. Whle f Gvernment Financial Reprting The FA Act requires the Treasurer t prepare and table in Parliament a Charter f Fiscal Respnsibility (the Charter) which prvides details f the Gvernment s fiscal bjectives and the fiscal principles that supprt thse bjectives. The Treasurer must reprt regularly t Parliament n the utcmes the Gvernment has achieved against the bjectives stated in the Charter. The Gvernment publishes a number f reprts t supprt the Charter and t ensure accuntability and transparency fr the utcmes f Gvernment decisins. These reprts include the State Budget and its mid-year update, the Cnslidated Fund Financial Reprt, and the Reprt n State Finances. Each f these is cnsidered in further detail belw. 3.1 State Budget The Queensland Gvernment prduces a State Budget annually, usually in June, thugh this can be changed by the Gvernment. The budget prcess is the methd by which the Gvernment: articulates fiscal imperatives and principles sets the strategic directin f its finances ver the medium term establishes and cmmunicates its resurce allcatin decisins fr the fiscal year, and reprts n the prgress f achieving service delivery targets. The prcess generally cmmences with an update f existing revenue and expenditure frward estimates. Frward estimates cnsist f figures fr the current year, next budget year and prjected figures fr the fllwing three years. These estimates prvide an initial fiscal cntext frm which the Gvernment may cnsider and priritise prpsed plicy initiatives as part f its verall Budget strategy. The Auditr-General des nt have the mandate t audit the budget prcess in Queensland. Hwever, an audit f apprpriatins is perfrmed as part f the annual financial statement audit prcess f departments, as well as thrugh the auditing f a number f whle f Gvernment reprts (fr example, the Cnslidated Fund Financial Reprt, which is discussed in further detail belw). The diagram belw prvides an verview f the budget cycle, assuming a nrmal June budget day: Frward Estimates Update (Feb/March) Budget Strategy (January) Mid Year Fiscal and Ecnmic Review (Nv/Dec) Frward Estimates Update (Sept/Octber) Budget Submissins (Feb/March) Budget Mnitring (Onging) Budget Apprval (July/August) CBRC Meetings (early April) Budget Day (June) Budget Develpment and Frward Estimates Update (April/May) Budget Dcumentatin (April/May) Page 5 f 25

8 Fllwing is a discussin abut sme key pints in the budget cycle: Budget strategy In this stage, as well as cnsidering the verall budget strategy, key budget decisins are made by the Cabinet Budget Review Cmmittee (CBRC). QTT prvides CBRC with five year frward estimates n a cnslidated whle f Gvernment basis. These frm a baseline fr the cnsideratin f plicy issues. Budget develpment In this stage, CBRC cnsiders agency funding issues, including thse fr new plicies. QTT prvides advice t CBRC n the budget prpsals. Budget dcumentatin When CBRC has finalised its plicy deliberatins, QTT liaises with agencies t cmpile the annual budget dcuments. The specific frmat f the Budget dcuments may vary frm year t year, hwever they generally cmprise: a Budget Speech utlining the Gvernment's strategic directins, pririties and plans annual Apprpriatin Bills infrmatin n ttal Gvernment revenues and expenses and financial statements fr the Gvernment as a whle an verview f the State's recent ecnmic perfrmance and frecasts f key ecnmic aggregates infrmatin n budgeted capital expenditure a summary f plicy decisins, made by Gvernment since the previus Budget, that have funding impacts, and details f the services and activities undertaken within each agency. The Treasurer presents the budget dcuments t the Queensland Parliament. These are als released t the public as a detailed statement f the Gvernment's fiscal and ecnmic plicies. Budget apprval The Budget dcuments are read in Parliament by the Treasurer, and the Oppsitin Leader presents a budget reply. The Budget dcuments are reviewed thrugh a series f Parliamentary Estimates Cmmittees, arranged by prtflis, which cmprise Gvernment and ppsitin members. This prcess infrms general parliamentary debate n the Budget and prvides the accuntability and transparency f the verall Budget prcess. Once the Apprpriatin Bills are passed as Acts by Parliament, they authrise the payment f amunts frm the Cnslidated Fund t departments fr the prvisin f services. In Queensland, apprpriatin is nly made t departments. Funding frm the Cnslidated Fund t ther public sectr entities flws thrugh departments and is paid as grants r equity injectins. Further infrmatin abut Apprpriatins is prvided belw. Mid Year Fiscal and Ecnmic Review The Mid Year Fiscal and Ecnmic Review is an annual dcument which presents revised fiscal estimates fr the current Budget year and the three fllwing years. These revised estimates take int accunt fiscal and ecnmic develpments since the preparatin f the Budget. Page 6 f 25

9 Budget mnitring (nging) Departments and Treasury Analysts mnitr financial and nn-financial perfrmance f agencies n an nging basis, by cmparing frecasted data with actuals t identify trends and instigate crrective actin if required. Apprpriatins The Cnstitutin Act 1867 and the FA Act prvide the legal framewrk t supprt the State s apprpriatin prcess. Parliament prvides an apprpriatin t each department which may cmprise funding fr: departmental services t reflect Queensland Gvernment funding cntributins necessary t prvide the departmental services administered items administered grants, transfer payments r funds paid frm Cnslidated Fund t external entities ver which a department des nt exercise management cntrl r discretin (these funds may als be used t deliver nn-departmental utputs that cntribute t Gvernment bjectives), and/r equity adjustments CBRC will determine if an equity injectin r withdrawal is necessary t increase r decrease the net asset psitin f an agency. Parliament s apprpriatin authrises the Treasurer t make payments frm the Cnslidated Fund t relevant departments. The Treasurer may issue departmental services, administered items and equity adjustments in amunts different t what appears in the Annual Apprpriatin Act prvided the ttal fr the department des nt exceed its vte (apprpriatin) ttal r unless an unfreseen expenditure apprval is btained fr the excess. Apprpriatin will lapse autmatically where the Treasurer has made less than the apprved payments t departments fr their services, administered items r equity adjustments. The Apprpriatin Bills will generally cntain apprval fr the fllwing: the Budget fr the upcming financial year, and Interim Supply, which makes apprpriatin available fr the fllwing financial year t allw the nrmal peratins f gvernment t cntinue until that year s Annual Apprpriatin Bill is passed by Parliament and given assent. Fr example, the 2014 Apprpriatin Bill cntained the budget fr the financial year and interim supply fr the financial year. Unfreseen expenditure During the curse f the year, the Gvernment may prvide in-principle apprval fr the prvisin f additinal apprpriatin t cver pst-budget emergent cst pressures fr departments. Where this additinal apprpriatin is required, the FA Act prvides that the Gvernr in Cuncil, acting n the recmmendatin f the Treasurer, may authrise the issue f mneys frm Cnslidated Fund fr which there was n apprpriatin r where the existing apprpriatin allcated t that vte is insufficient. The additinal apprpriatin (with explanatins) is reprted in the June quarter Cnslidated Fund Financial Reprt, which is prepared by the Treasurer and audited by the Auditr-General. The Reprt is then tabled in Parliament and can be accessed frm the Tabled Papers repsitry n the Parliament f Queensland website. Apprval fr the unfrseen expenditure must be sught and btained frm Gvernr in Cuncil within fur weeks f the end f the financial year and is cntained in the Cnslidated Fund Financial Reprt. Unfreseen expenditure must als be frmally apprved by Parliament via Apprpriatin Bills, hwever, there are n specific legislative requirements regarding the timing f this apprval. Page 7 f 25

10 Separate Apprpriatin Bills fr supplementary apprpriatin are currently prepared and intrduced int Parliament as sn as pssible after the end f financial year t which they relate, with timing bradly aligned with the tabling f the Cnslidated Fund Financial Reprt as this reprt includes explanatins f unfreseen expenditure. 3.2 Cnslidated Fund Financial Reprt The FA Act utlines the Treasurer s accuntability fr the Cnslidated Fund and requires the preparatin f quarterly statements disclsing, fr each quarter and year t date, cash receipts depsited int and amunts paid frm, the Cnslidated Fund perating accunt, including amunts paid t individual departments against their apprved apprpriatin. In additin the balance f the Cnslidated Fund bank accunt and investment accunts must be disclsed. The furth quarter statement, representing the annual Cnslidated Fund Financial Reprt, is audited by the Auditr-General within three mnths after the end f the financial year and tabled in Parliament within 14 days after the statement is returned by the Auditr-General. 3.3 Reprt n State Finances The Reprt n State Finances incrprates the financial statements prepared under tw framewrks the Australian accunting standards framewrk and the Unifrm Presentatin Framewrk (UPF). Australian accunting standards financial statements The FA Act requires the Treasurer t prepare financial statements fr bth the whle f Gvernment and the General Gvernment Sectr (GGS) within six mnths after the end f each financial year. These financial statements are prepared in accrdance with Australian accunting standards and present the perating statement, balance sheet and cash flws f these sectrs as well as cmprehensive detailed ntes t the financial statements. Cmparisns are prvided with the previus year s results. The GGS statements als require an analysis f variances between riginal budget and actual results. These statements are audited by the Auditr-General and tabled in Parliament. Unifrm Presentatin Framewrk The Outcmes reprt cntains financial statements prepared and presented in accrdance with the UPF (agreed t by all States in 1991) and is cnsistent with the Budget presentatin. The Outcmes reprt cmpares the actual results fr the reprting year with the estimated actuals reprted in the mst recent Budget papers. The reprt includes General Gvernment expenses and purchases f nn-financial assets by functin, and Lan Cuncil Allcatin utcmes. Refer t Appendix B fr further infrmatin abut the differences between the Australian accunting standards and UPF framewrks. Page 8 f 25

11 4. Agency Financial Reprting Agency financial reprts are used by Members f Parliament, the media, academics/students, the public and ther interested parties t btain infrmatin n strategies, services and financial perfrmance f individual Queensland Gvernment agencies. Tw such reprts are: Service Delivery Statements (SDS) (prspective fcus) and annual reprts (retrspective fcus). Given the vlume f infrmatin that is ptentially available fr inclusin in agency financial reprts, the nging challenge is t achieve a balance between the level and quantity f detailed infrmatin t be included and the brad needs f users f these dcuments. 4.1 Service Delivery Statements (budget reprting) The SDS predminantly cntains budgeted financial and nn-financial infrmatin abut each General Gvernment reprting entity fr the current and cming financial year. In this way, they cmplement agency annual reprts, which dcument actual perfrmance (including audited financial statements) fr the previus financial year. Given the timing f the State Budget (usually handed dwn in June each year), final infrmatin abut actual financial and nn-financial perfrmance is nt available when the SDS are prduced. Accrdingly, estimated actual data is used t calculate June balances fr perfrmance and psitin. A service area perfrmance sectin is prepared fr each service area in the agency. The functins f an individual gvernment agency span a large number f activities (such as services, schemes and prgrams). In rder fr the SDS t prvide a useful, high level view f the planned budget fr an agency, the agency s range f activities are disaggregated int brad services. This prvides mre granularity f infrmatin and links activities that are cntributing t key agency and gvernment pririties and utcmes. The SDS includes, fr each service delivery area, a summary f perfrmance measures. The relevance, usefulness and cmprehensiveness f these measures are subject t nging review by agencies and central agencies. Under the Auditr-General Act, the relevance f perfrmance measures may be the subject f audit scrutiny and cmment. In this cntext it is imprtant that the starting pint fr perfrmance measures is infrmatin which is required by agency management t effectively allcate and manage resurces t deliver required utcmes. Agencies use the accrual basis f accunting (discussed in Appendix B) t present their budgets in the SDS. As departments must als prepare annual financial statements n this basis, the standardised use f Generally Accepted Accunting Principles (GAAP) in departmental reprting enhances cmparability between their budgeted and estimated actual results. GAAP is discussed in further detail in Attachment B. The SDS is an imprtant surce f infrmatin fr the annual estimates hearings held by each f the Parliamentary Estimates Cmmittees. These hearings examine funding prvided in the State Budget t each Ministerial prtfli, and take place fllwing the presentatin f the Budget. Each year, the Department f the Premier and Cabinet and QTT (the central agencies) wrk with agencies t review service areas, service standards and targets that are published in the SDS. The central agencies will jintly seek the gvernment s apprval (thrugh CBRC) fr changes t these n behalf f all agencies preceding the Budget prcess each year. Additinal infrmatin abut budget reprting can be accessed at Page 9 f 25

12 4.2 Annual reprts (including financial statements) The FA Act requires departments and statutry bdies t: prepare annual financial statements and have them audited by the Auditr-General, and prepare an annual reprt and have the apprpriate Minister table it in Parliament. Bth the financial statements and annual reprt must be prepared in the way, and within the timeframe, stated in the FPMS. The FPMS refers departments and statutry bdies t the dcuments Financial Reprting Requirements fr Queensland Gvernment Agencies (FRRs) and the Annual Reprt Requirements fr Queensland Gvernment Agencies (ARRs). The requirements in these dcuments may change ver time t reflect the changing envirnment and emerging best practice. In the preparatin f annual financial statements, departments must cmply with, and statutry bdies must have regard t, the FRRs (published by QTT), which prvide updates n new and revised accunting plicies and standards and additinal guidance and advice n the applicatin f such plicies and standards. The FRRs als cntain a mdel set f departmental financial statements. The FPMS prvides that an agency s annual reprt must cntain a cpy f the agency s audited financial statements, as well as infrmatin prescribed in the ARRs published by the Department f the Premier and Cabinet. The ARRs utline the nn-financial perfrmance infrmatin that departments and statutry bdies must include in their annual reprt. This annual publicatin cllates fr agencies the many disclsure requirements cntained acrss varius pieces f legislatin and includes disclsure f the agencies perfrmance against specific pririties f the Gvernment. While generic disclsures can be identified, discretin rests with agencies t ensure that all infrmatin relevant t discharge stewardship f resurces entrusted t the entity is adequately reprted in annual reprts. With respect t timeframes, the FPMS prescribes that: financial statements must be certified by the Auditr-General within tw mnths after the end f the financial year, and annual reprts are t be tabled in Parliament within three mnths f the end f each financial year. Page 10 f 25

13 5. Financial Gvernance in Queensland Gvernance is generally accepted t encmpass management s behaviur and accuntability fr the way it directs an agency s peratins. It may als relate t the agency s structure, respnsibilities, cmpetencies, reprting and risk management prcesses. Whilst gvernance is generally cncerned with the internal peratins f an agency, it is imprtant t nte that external scrutineers can als prvide valuable cmments and recmmendatins t assist with cntinuus imprvement in agencies. In Queensland, the fllwing external scrutineers are the mst prminent with respect t financial administratin: the Auditr-General and the Queensland Audit Office the Crime and Crruptin Cmmissin, and Parliamentary cmmittees. Each f these is cnsidered in sme detail belw. 5.1 Auditr-General and Queensland Audit Office The rle and respnsibilities f the Auditr-General and the Queensland Audit Office (QAO) are cntained in the Auditr-General Act The prime respnsibility f the Auditr-General is t prvide Parliament with an bjective and independent assessment as t the manner in which the Treasurer, the varius accuntable fficers, statutry bdies, lcal gvernments, Gvernment wned crpratins and cntrlled entities have discharged their financial management bligatins under: the Financial Accuntability Act 2009, ther relevant Acts, and subrdinate legislatin, including the Financial and Perfrmance Management Standard QAO has been established t supprt the Auditr-General. Audits perfrmed by QAO are: financial and assurance audits, and perfrmance audits. During financial and assurance audits, the auditrs assess whether agency financial statements are true and fair, and check their accunt keeping methds t ensure they meet prescribed requirements. Perfrmance audits fcus n the perfrmance f public sectr entities, and hw effectively, efficiently and ecnmically their bjectives are being met. An audit may identify pssible deficiencies in departmental r statutry bdy peratins and refer these t the agency s management. Each accuntable fficer r statutry bdy has the discretin t accept, r reject, recmmendatins made by the auditrs. The Auditr-General may include infrmatin abut significant issues r recmmendatins in an Auditr-General Reprt t Parliament. Management respnse t issues raised must als be included, when prvided, in these Reprts. Page 11 f 25

14 Further infrmatin abut the rle f the Auditr-General and the Queensland Audit Office can be accessed at Crime and Crruptin Cmmissin As well as investigating rganised crime, drugs and firearms, and netwrked paedphilia, the Crime and Crruptin Cmmissin investigates public sectr crruptin. It als has special pwers t cnduct a public inquiry where an issue r cmplaint has been brught t their attentin which have the ptential t reduce public cnfidence in fundamental systems f public administratin and gvernment. The Crime and Crruptin Cmmissin has the respnsibility t ensure cmplaints abut crruptin are dealt with apprpriately, with a particular fcus n cases invlving mre serius r systemic crrupt cnduct. The Crime and Crruptin Cmmissin has jurisdictin ver crrupt cnduct affecting departments and statutry bdies, the Queensland Plice Service, gvernment wned crpratins, universities, lcal gvernments, and pliticians in certain circumstances. Further infrmatin abut the rle f the Crime and Crruptin Cmmissin can be accessed at Parliamentary Cmmittees A number f Parliamentary Cmmittees have been established t assist the Queensland Parliament t perate mre effectively. Sme cmmittees have cntinuing rles t mnitr and review public sectr rganisatins. Other cmmittees may be established t investigate specific issues and reprt back t the Parliament. Fr example, the Finance and Administratin Cmmittee has versight functins in relatin t the Auditr-General, and it may elect t cnduct an inquiry t cnsider the findings and recmmendatins cntained in an Auditr-General's Reprt. The Parliamentary Cmmittees als undertake the annual estimates prcess, part f the Parliament s budget review prcess. Further infrmatin abut the rle f Parliamentary Cmmittees can be fund n the internet at Page 12 f 25

15 6. Rle f Queensland Treasury and Trade (QTT) QTT is the custdian f the financial management legislatin, hwever, there is clse liaisn with the Department f the Premier and Cabinet when preparing/reviewing infrmatin abut planning r perfrmance. T supprt the financial management legislatin, QTT publishes a number f plicy and guidance dcuments, many f which are utlined in Appendix C. QTT als has a central rle in the preparatin f the annual State Budget. QTT is respnsible fr State Budget management and strategy develpment which is supprted by QTT s rle f management f the State's financial assets and liabilities. The key activities f QTT include: crdinating the State Budget prcess wrking with ther State Gvernment agencies t mnitr and assess financial and nn-financial perfrmance against Budget frecasts. As part f this prcess, updated Budget frecasts are published annually as part f the Mid Year Fiscal and Ecnmic Review with actuals reprted in the Reprt n State Finances assisting in managing and mnitring the State's assets and liabilities administering the financial accuntability and management legislatin and plicies n behalf f Gvernment, including the Financial Accuntability Act and its subrdinate legislatin; the Financial Accuntability Handbk; and the Financial Reprting Requirements fr Queensland Gvernment Agencies, and prviding advice t Gvernment agencies n financial management and accunting. While QTT has a rle in mnitring f a department s finances, it des nt have a rle in directing hw the department s apprpriatin can be spent. As prvided fr in the Explanatry Ntes t the annual Apprpriatin Bill, Accuntable Officers may apply the ttal f funds received frm the Treasurer fr departmental services acrss the individual services f the department. That is, accuntable fficers are able t expend their funds in the manner they cnsider apprpriate t deliver the department s services. Page 13 f 25

16 7. Appendices Appendix A Queensland s legislatin framewrk fr financial management an verview Cnstitutin Act 1867 and Cnstitutin f Queensland 2001 Gvernr Plicy utside the legislative framewrk Crpratins Act 2001 Parliament Cabinet, Cabinet Budget Review Cmmittee & Ministers Cabinet Decisins Public sectr cmpanies Legislatin administered by QTT Executive Cuncil Executive Cuncil Minutes Lcal Cuncils Legislatin administered by Department f Lcal Gvernment, Cmmunity Recvery and Resilience Lcal Gvernment Act 2009 Varius Lcal Gvernment Regulatins (inc. Lcal Gvernment (Finance, Plans and Reprting) Regulatin 2010) Gvernment Owned Crpratins Statutry Bdies Departments and Statutry Bdies Gvernment Owned Crpratins Act 1993 Gvernment Owned Crpratins Regulatin 2004 Varius ther Gvernment Owned Crpratins Regulatins Statutry Bdies Enabling Legislatin Statutry Bdies Financial Arrangements Act 1982 Statutry Bdies Financial Arrangements Regulatin 2007 Financial Accuntability Act 2009 Financial Accuntability Regulatin 2009 Financial and Perfrmance Management Standard 2009 Annual Apprpriatin Acts Gverning Queensland series f publicatins (inc. Queensland Parliamentary Prcedures Handbk and the Queensland Cabinet Handbk) Treasury Financial Circulars Financial Management Practice Manual Separate Act and Regulatins specifically fr the City f Brisbane Subsidiary Plicy Dcuments (mandated under legislatin) Subsidiary Plicy Dcuments (mandated under legislatin inc. Financial Accuntability Handbk) Page 14 f 25

17 Appendix B Gvernment Financial Reprting Framewrks Currently the Queensland Gvernment budgets and reprts financial perfrmance under tw separate reprting framewrks: Australian Accunting Standards als knwn as Generally Accepted Accunting Principles (GAAP), and Unifrm Presentatin Framewrk (UPF). Bth framewrks exist t prvide financial infrmatin t interested parties and decisin makers. There is substantial verlap between the principles, practices and measurement methds adpted by bth framewrks, thugh the underlying cncepts differ between the framewrks. This sectin prvides an verview f the bjectives and uses f the GAAP and UPF framewrks. A brief discussin is als prvided belw t utline the histry f the tw framewrks in Australia and emerging develpments. GAAP reprting framewrk (the accuntant view ) The Australian Accunting Standards Bard (AASB) versees the develpment f Australian Accunting Standards, as expressed in the Statements f Accunting Cncepts, accunting standards and ther authritative prnuncements. Australian accunting standards are based n the internatinal accunting standards. Sme public sectr specific standards have als been develped (such as AASB 1004 Cntributins and AASB 1049 Whle f Gvernment and General Gvernment Sectr Financial Reprting), while mdificatin t reflect public sectr specific circumstances are addressed in ther sectr neutral standards by inserting Aus paragraphs (fr example AASB 116 Prperty, Plant and Equipment). GAAP seeks t identify, measure, recgnise and disclse ecnmic transactins f a reprting entity. GAAP is based n principles that are intended t enable external stakehlders t assess stewardship, perfrmance, financial psitin, and financing and investing decisins. Such assessment is nrmally t assist r evaluate the allcatin f scarce resurces. Financial statements include five basic elements: assets, liabilities, equity, incme and expenses. AASB 101 Presentatin f Financial Statements and AASB 1049 Whle f Gvernment and General Gvernment Sectr Financial Reprting require adptin f a full accrual basis f accunting fr reprting entities, such as departments and statutry bdies and fr the State, respectively. That is, transactins are recrded when they have their ecnmic impact rather than when the cash flws assciated with these transactins ccur. The standards prescribe mdel general-purpse financial reprts which can be mdified t suit the needs f the reprting entity. UPF reprting framewrk (the ecnmist/statistician view ) The Unifrm Presentatin Framewrk (UPF) is based n the Gvernment Finance Statistics (GFS) cncepts and classificatins used by the Australian Bureau f Statistics (ABS) in the preparatin f public finance reprts. These, in turn, are based n internatinal standards set ut by the Internatinal Mnetary Fund (IMF). The fcus f GFS is n the result f transactins, rather than valuatin impacts. The primary bjective f the UPF is t ensure that the Cmmnwealth, State and Territry Gvernments prvide a cmmn cre f financial infrmatin. The UPF is primarily structured n a sectral basis. A gvernment is regarded as cmprising three sectrs: the General Gvernment Sectr (GGS), which cmprises all gvernment units and nn-prfit institutins cntrlled and mainly financed by gvernment Page 15 f 25

18 the Public Nn-Financial Crpratins (PNFC) sectr, which cmprises bdies such as Gvernmentwned crpratins that mainly engage in the prductin f gds and services (f a nn-financial nature) fr sale in the market place at prices that aim t recver mst f the csts invlved, and the Public Financial Crpratins (PFC) sectr, which cmprises publicly wned institutins which prvide financial services usually n a cmmercial basis. These sectrs can then be further aggregated as fllws: GGS + PNFC = Nn-Financial Public Sectr (NFPS) NFPS + PFC = Ttal State Sectr (TSS). The GFS framewrk includes nly thse transactins ver which a gvernment exercises cntrl under its legislative r plicy framewrk. The ABS prvides GFS data t the IMF fr publicatin with similar statistics fr all IMF member cuntries. Because these statistics are prepared in accrdance with the IMF standard, they can be used fr internatinal cmparisns between member cuntries and internatinal cnslidatins. Histry GFS was develped in 1986 by the IMF and established the standards fr cmpilatin and presentatin f fiscal statistics as part f a wrldwide trend tward greater accuntability and transparency in gvernment finances, peratins and versight. In 1991, all jurisdictins in Australia, thrugh the Australian Lan Cuncil (ALC) wrked t develp unifrm reprting arrangements, using the ABS s GFS standard. This was subsequently updated int the UPF in Prir t 1997, gvernments in Australia prepared bth budgets and financial reprts n a cash basis and there was n cmpsite recrd f assets held by gvernment. As a result f public demand fr increased transparency and accuntability, gvernments in Australia agreed t reprt their annual financial results in accrdance with the same GAAP standards as applied t the private sectr, but with additinal public sectr specific standards t cater fr thse transactins unique t gvernment. Departments prepared their first accrual financial statements in and the first whle f Gvernment accrual financial statements were prepared in These reprts are termed general purpse financial reprts as they are designed t meet the infrmatinal needs f users wh are reasnably knwledgeable but wh cannt cmmand specific infrmatin frm the reprting entity. The UPF was revised by the ALC in March 2000 t include cmmn accrual-based budgetary and fiscal infrmatin. Queensland intrduced accrual budgets frm With the increasing glbalisatin f cmmerce, a cnverged internatinal set f financial reprting standards (IFRS) was develped and replaced the previus GAAP standards. The first general purpse financial reprt under the internatinally cnverged standards ccurred in Australia fr the financial year. Emerging Develpments Budgetary Reprting AASB 1055 Budgetary Reprting becmes effective frm reprting perids beginning n r after 1 July AASB 1055 applies t all nt-fr-prfit agencies (departments and statutry bdies) within the General Gvernment Sectr, as well as t the financial statements fr the whle-f-gvernment and the General Gvernment Sectr itself. Page 16 f 25

19 T the extent that budgeted financial statements are presented t Parliament in respect f such an agency, it will need t disclse: the riginal budgeted financial statement, presented cnsistently with the crrespnding (actuals) financial statement; and explanatins f majr variances between the actual amunts and the crrespnding budgeted financial statement. The updated Financial Reprting Requirements fr will set ut the plicies that agencies must fllw in cmplying with AASB Differential Reprting Framewrks AASB 1053 Applicatin f Tiers f Australian Accunting Standards establishes a differential reprting framewrk cnsisting f tw tiers f reprting requirements fr preparing general purpse financial statements: a) Tier 1: full range f recgnitin, measurement and disclsure requirements under GAAP, and b) Tier 2: same recgnitin and measurement requirements as in tier 1, but with fewer disclsures in the ntes t the financial statements. In respect f public sectrs, Australian Gvernment and State, Territry and Lcal Gvernments must cmply with tier 1 requirements. All ther public sectr entities may adpt tier 2 requirements, thugh QTT (as regulatr) is able t direct whether tier 1 r tier 2 requirements shuld be adpted by these latter public sectr entities. QTT s plicy psitin is t require all departments and thse statutry bdies captured within the whle f gvernment financial statements t apply tier 1 reprting requirements. Thse statutry bdies nt captured within the whle f gvernment financial statements may apply tier 2 reprting requirements (thugh they may chse t vluntarily adpt tier 1 requirements). Adptin f the reprting tiers became effective fr reprting perids beginning n r after 1 July Page 17 f 25

20 Appendix C QTT Resurces The fllwing resurces are available frm QTT s website at Financial Accuntability Handbk (the Handbk) the Handbk is designed t assist agencies with meeting their bligatins under the Financial Accuntability Act 2009 and the Financial and Perfrmance Management Standard It als prvides infrmatin fr agencies n better practice management and internal cntrl structures. All agencies must have regard t the Handbk, which means that agencies must cmply with the cntents f the Handbk when they apply t agency circumstances. Financial Management Tls (the Tls) the Tls cntain a number f examples and cnsideratin pints t assist agencies in meeting their bligatins under the new financial management legislatin and the Handbk. The Tls have been prepared t prvide guidance nly, and the cntents may be mdified t meet agency needs and requirements. Financial Reprting Requirements fr Queensland Gvernment Agencies (FRRs) the FRRs are issued t assist agencies in the preparatin f their annual financial statements. The FRRs cnsist f fur distinct parts: Part A Intrductin Part B Minimum Reprting Requirements (prescribed requirements and the minimum reprting requirements fr agencies, as well as further explanatin t assist preparers) Part C Accunting Plicy Guidelines (prvide in-depth supprt t agencies in interpreting and applying the FRRs and ther accunting prnuncements t their particular circumstances), and Part D Sunshine Department Mdel Financial Statements (agencies must fllw the general frm and cntent f the mdel financial statements). Nn-Current Asset Plicies fr the Queensland Public Sectr (NCAPs) the NCAPs are designed t assist agencies in develping a framewrk fr identifying, acquiring, maintaining, dispsing f, valuing r revaluing, recrding and writing-ff assets. The NCAPs are mandatry fr agencies (subject t any flexibility allwed in limited circumstances fr certain statutry bdies), and it is expected that prcesses which reflect each agency s circumstances and peratinal characteristics will be adpted. Leasing in Queensland Public Sectr Plicy Guidelines these are mandatry guidelines that apply t the lease f all assets, but exclude tenancy leases f real prperty and leases f passenger r cmmercial mtr vehicles btained frm Q-Fleet. The plicy guidelines address issues regarding asset leasing, including: the lease v buy decisin and the pwer t enter int a lease arrangement. A Guide t Risk Management risk management is the cmprehensive prcess f identifying, assessing and respnding t risks. This dcument is a guide nly, nt a cmprehensive reference fr risk management. The guide seeks t add t and cntextualise the substantial bdy f existing material relating t risk management. The guide prvides infrmatin abut bth whle f Gvernment and agency-level risks (strategic and peratinal) and risk management. Audit Cmmittee Guidelines: Imprving Accuntability and Perfrmance agencies with an audit cmmittee must have regard t these guidelines. The guidelines have been prepared t assist agencies with the establishment and maintenance f audit cmmittees. The guidelines incrprate example reprting, checklists t assist audit cmmittee members in carrying ut their duties and ther practical tls. The appendices have als been issued in Wrd frmat s that the example checklists and reprting can be tailred t meet the requirements within each agency. Page 18 f 25

21 Investment Plicy Guidelines fr Statutry Bdies these guidelines are designed t assist statutry bdies in understanding their bligatins under the Statutry Bdies Financial Arrangements Act 1982, and t prvide directin n sme f the key cnsideratins which shuld infrm the develpment f a prudent and apprpriate investment plicy framewrk. The guidelines als seek t assist statutry bdies with the preparatin f a frmal investment plicy, which shuld utline principles and practices fr a statutry bdy t invest in the required manner, and be able t demnstrate it has dne s. Guidelines fr the Frmatin, Acquisitin and Pst Apprval Mnitring f Cmpanies the Financial Accuntability Act 2009 requires the Treasurer t apprve the frmatin r acquisitin f a cmpany by departments, and these guidelines utline the varius issues that must be addressed by departments in seeking that apprval. A statutry bdy may als be required t seek the apprval f the Treasurer t frm r acquire a cmpany under either its wn enabling legislatin r the Statutry Bdies Financial Arrangements Act. Where that is the case, these guidelines may assist a statutry bdy in btaining any necessary apprvals. Cmpany Financial Reprting in the Queensland Public Sectr this plicy aims t ensure transparency f public sectr cmpanies and t discharge public accuntability t the cmmunity. The plicy requires that where financial statements are prepared in respect f a public sectr cmpany, thse statements are t be audited by the Auditr-General, and prvided t the relevant prtfli Minister fr tabling in Parliament. Thse statements must als be published n the cmpany s website (r n the website f the cmpany s cntrlling entity) after the Auditr-General s certificatin. Charter f Fiscal Respnsibility a dcument that must be prepared by the Treasurer pursuant t the Financial Accuntability Act 2009 which utlines details f the Gvernment s fiscal bjectives and the fiscal principles that supprt thse bjectives. Mid Year Fiscal and Ecnmic Review an annual dcument required by the Australian Lan Cuncil's Unifrm Presentatin Framewrk. It presents revised fiscal estimates fr the current Budget year and the three fllwing years fr the General Gvernment, Public Nn-financial Crpratins and Nn-financial Public sectrs. These revised estimates take int accunt fiscal and ecnmic develpments since the preparatin f the Budget. Reprt n State Finances an annual reprt which incrprates bth the Outcmes Reprt and the Cnslidated Financial Statements prviding a cmprehensive view f the financial peratins and psitin f the Queensland Gvernment. The Queensland State Budget, including a reader s guide, can be accessed at The Cnslidated Fund Financial Reprt can be accessed at Page 19 f 25

22 Appendix D Acrnyms and Glssary Acrnyms The fllwing acrnyms have been used thrughut this framewrk: AASB ABS ALC APGs ARRs CBRC DPC Australian Accunting Standards Bard Australian Bureau f Statistics Australian Lan Cuncil Accunting Plicy Guidelines Annual Reprt Requirements fr Queensland Gvernment Agencies Cabinet Budget Review Cmmittee Department f the Premier and Cabinet FA Act Financial Accuntability Act 2009 FA&A Act Financial Administratin and Audit Act 1977 FMPM Financial Management Practice Manual FPMS Financial and Perfrmance Management Standard 2009 FRRs GAAP GFS GGS IFRS IMF NCAPs PFC PNFC Financial Reprting Requirements fr the Queensland Public Sectr Generally Accepted Accunting Principles Gvernment Finance Statistics General Gvernment Sectr Internatinal Financial Reprting Standards Internatinal Mnetary Fund Nn-Current Asset Plicies fr the Queensland Public Sectr Public Financial Crpratins sectr Public Nn-Financial Crpratins sectr SBFA Act Statutry Bdies Financial Arrangements Acts 1982 SDS UPF Service Delivery Statements Unifrm Presentatin Framewrk Page 20 f 25

23 Glssary The fllwing is a cllectin f financial management and accuntability terms used acrss the Queensland public sectr. Accuntability Accrual accunting Administered activities Apprpriatin Apprpriatin Bill Apprpriatin Revenue Australian Bureau f Statistics (ABS) Respnsibility by an fficer fr perfrmance within delegatins and legislatin. Recgnitin f ecnmic events and ther financial transactins invlving revenue, expenses, assets, liabilities and equity as they ccur and reprting in financial statements in the year t which they relate, rather than when a flw f cash ccurs. Administered activities are assets, liabilities, revenues and expenses that an agency administers n behalf f the Gvernment, but ver which the agency des nt exercise direct cntrl. (Als see cntrlled activities). The vehicle by which Parliament apprves expenditure f mneys frm the Cnslidated Fund. Apprpriatin is the prcess whereby Parliament gives apprval t the Treasurer t issue funds t agencies during the Budget year as the State's cntributin t: the delivery f agreed services items administered n behalf f the Gvernment adjusting the Gvernment's equity hlding in that agency. A ttal State cntributin fr each agency is knwn as the agency's Vte. Apprval f funds by Parliament is f three general types: fr a particular financial year, the granting f supply and the apprpriatin f it t particular purpses the ratificatin f expenditure fr particular purpses which the Executive Gvernment has apprved as Unfreseen Expenditure in the previus financial year, and fr a perid in a particular financial year until the Budget can be presented, supply withut apprpriatin t particular purpses. An Apprpriatin Bill may seek ne r all f these types f apprvals. Where there is mre than ne Apprpriatin Bill in a year, they are numbered e.g. Apprpriatin Bill N. 2. The amunt issued by the Treasurer frm the Cnslidated Fund t the department fr the prvisin f services r fr ther items administered n behalf f the whle f Gvernment. A Cmmnwealth agency that has prime respnsibility fr Natinal Accunts and Gvernment Financial Statistics data. Australian Lan Cuncil (ALC) Budget The bdy cmprising the Treasurers f the Cmmnwealth, the States and Territries which has respnsibility fr crdinating the brrwing activities fr the Public Sectr within Australia. The dcuments presented t Parliament detailing the frecast revenues and expenses by Gvernment fr the fllwing financial year, including any capital investment prjects. It prvides an utline f the Gvernment's pririties and plans fr the cming year, including an utline f the State's fiscal and ecnmic standing. Page 21 f 25