MANAGEMENT & ACCOUNTABILITY

CORPORATE MANAGEMENT AND ACCOUNTABILITY CORPORATE GOVERNANCE EXTERNAL SCRUTINY MANAGEMENT OF HUMAN RESOURCES PURCHASING AND ASSETS CONSULTANTS AND COMPETITIVE TENDERING AND CONTRACTING SECTION 3 CORPORATE MANAGEMENT & ACCOUNTABILITY

CORPORATE GOVERNANCE CORPORATE MANAGEMENT AND ACCOUNTABILITY CORPORATE GOVERNANCE Corporate Plan AusAID s Corporate Plan 1998 2000 links the agency s priorities to the Government s policy objectives, as defined in Better Aid for a Better Future. The plan defines the key result areas that are the basis for planning, setting priorities and measuring the performance of AusAID s programs. The plan also outlines the agency s work values and practices and commitment to quality services to ensure that Australia s aid efforts are innovative and responsive to the changing needs of partner countries. Work units within AusAID link their daily work to corporate objectives through business plans and the performance planning and review process. In 1999 2000, AusAID initiated a review of the corporate plan, with an updated version to be published at the end of 2000. Executive AusAID s Executive advises the Director General on strategic planning and management issues. The Executive also focuses on the relationship with the Minister and the Parliamentary Secretary. The members of AusAID s Executive are: Bruce Davis, Director General Jennifer Rawson, Deputy Director General Asia and Corporate Division Peter McCawley, Deputy Director General Program Quality Group Charles Tapp, Deputy Director General Pacific, Humanitarian and International Division Corporate Management Arrangements In 1999 2000, AusAID had corporate committees overseeing issues relating to program quality, program strategies and corporate change. The committees roles and priorities have been kept under review, to ensure they are meeting their objectives and adding value. Program Quality Committee The Program Quality Committee worked extensively on the agency s key quality issues and concerns identified within the agency during the year. In particular, the committee: supervised work of the Quality Assurance Group in its analysis of strengths and weaknesses of project preparation and implementation presided over substantial improvements in AusAID s project performance monitoring and assessment procedures, which were supported by enhancements to the Activity Management System 80 AUSAID ANNUAL REPORT 1999 2000

CORPORATE MANAGEMENT AND ACCOUNTABILITY CORPORATE GOVERNANCE strengthened project and program management systems, most notably by the development of new guidelines and manuals. Meeting monthly, the committee considered over 40 substantial papers, evaluations and reviews. It noted the high quality of evaluations and reviews of the impacts of AusAID s projects and programs. Program Strategies Committee The Program Strategies Committee revised the agency s guidelines on the formulation and review of program strategies, so that strategies place a stronger emphasis on incorporating a poverty reduction framework, identifying developmental impacts and taking sustainability considerations into account. The committee reviewed 12 existing program strategies and approved three new strategies during 1999 2000. It established a performance system to assess the value added to the agency of the strategy development and review process, as well as the role of the committee itself. Corporate Change and Development Committee AusAID s Corporate Change and Development Committee was responsible for overseeing the organisational changes needed for AusAID to implement the agenda defined in Better Aid for a Better Future. In 1999 2000, these activities included assisting the development and implementation of AusAID s People Management Strategy, preparing an internal communications strategy, and overseeing the review of the performance planning and review system. The committee was wound up at the end of 1999 following a review of work completed and the forward agenda. The committee s view was that it had fulfilled its purpose and that corporate change would be more efficiently achieved through existing channels, including the People Management Strategy Implementation Group and line areas. 2000 Senior Management Conference AusAID s annual Senior Management Conference is an important corporate planning tool. In 1999 2000, the conference focused on four issues central to AusAID s challenging policy agenda: achieving poverty reduction and sustainability, improving the quality of aid, organisational rebasing, and working smarter. The conference defined an action agenda on these issues that will be carried forward during 2000 01. Aid Advisory Council The Aid Advisory Council provides the Minister for Foreign Affairs with independent expert advice on the planning and delivery of Australia s aid program. The council helps to ensure the aid program reflects the values of the Australian community and is an important means of debating new ideas and approaches to aid management and development. Members of the council are distinguished Australians from academia, the private sector, religious organisations, non-government organisations (NGOs) and community groups. AUSAID Annual Report 1999 2000 81

CORPORATE GOVERNANCE CORPORATE MANAGEMENT AND ACCOUNTABILITY The Minister chairs the council, and the Parliamentary Secretary is the deputy chair. The council met twice during 1999 2000 and considered priority issues for the aid program, including the effectiveness of multilateral aid and how it complements the bilateral program, and the contribution of aid to regional security. The membership of the Aid Advisory Council is outlined in Appendix 11 on pages 165 6. Organisational Change In 1999 2000, AusAID refined its structure to enable reallocation of resources to better reflect agency priorities and to strengthen AusAID as a professional, team-based and learning organisation. The changes included the establishment of the Executive Branch to provide a centralised capacity for policy development, coordination and executive support. Budget and finance activities were brought into close alignment, with a Chief Financial Officer designated to oversee these functions. Bilateral and regional programs were centralised in four branches. In 1999 2000, AusAID refined the role of its sectoral advice and analysis group. The group gathers, analyses and disseminates sectoral information between country, regional and multilateral programs. A new program development unit was established to develop ways to incorporate lessons learned into the design of activities and provide advice on program and project design issues. Internal Audit and Risk Management AusAID s internal audit function contributes to quality assurance in the agency and provides advice on financial management issues. Professional accounting firms are contracted to undertake many of the audits. During 1999 2000 AusAID completed 18 major internal audits of key aspects of the agency s management systems in Canberra, overseas posts, and the administration of official overseas aid by NGOs and development assistance contractors. Given the risks inherent in development assistance, risk management has become an integral part of the AusAID approach to decision-making and accountability. AusAID adopts a risk-based approach in its auditing work. An audit committee, comprising senior AusAID staff, an external advisor and a representative of the Australian National Audit Office (ANAO) meets monthly and is responsible for overseeing and providing corporate assurance on the adequacy of risk management across AusAID. AusAID s Audit Section assists this through reviewing functional systems and monitoring risk management policies and control structures. In 1999 2000, AusAID completed an analysis of lessons and common findings from audits of commercial contractors and NGOs over the past few years. The results highlighted opportunities for improving aid quality through enhancing monitoring systems. They were disseminated to interested parties and placed on AusAID s Intranet 82 AUSAID ANNUAL REPORT 1999 2000

CORPORATE MANAGEMENT AND ACCOUNTABILITY CORPORATE GOVERNANCE for easy access. The lessons learned will be maintained as a source of ready advice on common pitfalls. NGOs reviewed during 1999 2000 included UNICEF, Adventist Development Relief Agency, Save the Children Fund Australia and Quaker Services Australia. Major contractors, projects or programs reviewed were: GRM International, the Commonwealth Scientific and Industrial Research Organisation (CSIRO), the trust fund mechanisms for the PNG National Airports Maintenance and Upgrading Project, the PNG National Roads Re-gravelling and Sealing Project, and the Qinghai Community Development Program (Micro-credit Program). Audits of aid administration at AusAID s offices in Phnom Penh, Beijing, Harare, Maputo, Pretoria and Nairobi and the Queensland and South Australian State Offices were also completed. AusAID s Activity Management System and the Financial Management Information System were also reviewed during the year. This program of audits resulted in systematic improvements and augmented internal controls in aid delivery through: enhanced contract management development of management information systems strengthened financial management practices in AusAID application of risk management procedures. The ANAO provides AusAID s external audit function. During the year, the ANAO tabled reports on AusAID s management of the Australian Development Scholarships Scheme (report no. 15, 25 October 1999) and on Commonwealth Foreign Exchange Risk Management Practices, including the practices in AusAID (report no. 45, 31 May 2000). The agency has welcomed these reports and taken action to respond to the recommendations (see page 84 for further information). APS Values and Code of Conduct The AusAID Corporate Plan 1998 2000 includes a statement of work values and practices that is closely linked to the Australian Public Service (APS) values and Code of Conduct. AusAID emphasises the need to maintain high ethical standards in all areas of its employment. These values are reflected in staff circulars covering a wide range of issues such as workplace diversity, performance planning, occupational health and safety, postings, placements and rotations. All staff are notified of these publications through AusAID s intranet. A range of mechanisms is in place in AusAID which provide staff with an opportunity to request reviews of administrative decisions. These include the appointment of an Administrative Inquiry Officer to investigate complaints that may fall outside established channels or procedures. AUSAID Annual Report 1999 2000 83

EXTERNAL SCRUTINY CORPORATE MANAGEMENT AND ACCOUNTABILITY Senior Executive Remuneration Senior Executive Service (SES) employees remuneration is determined through Australian Workplace Agreements (AWAs). Pay increases are at the same percentage rate as those available in the AusAID Certified Agreement that covers non-ses employees. To obtain an increase in salary, SES employees have to achieve a Fully Effective rating under the SES Performance, Planning and Review Scheme. SES employees who achieve a rating above Fully Effective are paid an annual performance pay bonus. Performance Pay for the 1999 2000 cycle was paid to eight SES employees, with an aggregate total of $62 593.28. Performance pay for these employees was in line with the arrangements set out in their Australian Workplace Agreements. Further details of SES remuneration are provided in the Financial Statements on page 125. EXTERNAL SCRUTINY Australian National Audit Office Activity During the year, the ANAO tabled two reports relevant to AusAID s management of the aid program. The first was Audit Report No. 15, 1999 2000: Management of the Australian Development Scholarships Scheme (October 1999). The audit concluded that the administrative arrangements for the scheme were a substantial improvement over those in place under previous scholarship schemes. The audit made 11 recommendations aimed at improving the management and effectiveness of the scheme. AusAID is progressively implementing these recommendations. The second was Audit Report No. 45, 1999 2000: Commonwealth Foreign Exchange Risk Management Practices (May 2000), which reported on four agencies with substantial foreign exchange exposure, including AusAID. The audit made a number of recommendations aimed at encouraging agencies to substantially improve foreign exchange management in their business activities. As part of a whole-ofgovernment response, AusAID is addressing four recommendations specifically relating to the aid program. Ombudsman The Commonwealth Ombudsman finalised investigation of two complaints involving AusAID tender selections during the review period. In both cases, the Ombudsman found that AusAID acted reasonably. The Ombudsman expressed appreciation for the open and detailed manner in which AusAID responded to enquiries, and considered that AusAID has put considerable effort into developing a tender selection process that is transparently fair as well as being open to continuous improvement. 84 AUSAID ANNUAL REPORT 1999 2000

CORPORATE MANAGEMENT AND ACCOUNTABILITY MANAGEMENT OF HUMAN RESOURCES AusAID received advice from the Ombudsman that a definitive legal opinion should be sought on issues relating to a small number of overstaying Australian Development Scholarship students. The Australian Government Solicitor was engaged and provided advice which has greatly assisted in developing clear policy guidelines on this matter. Parliamentary Committees During 1999 2000 AusAID appeared at, or made submissions to seven parliamentary committees. Details of these are provided at Appendix 7 (see pages 155 6). MANAGEMENT OF HUMAN RESOURCES AusAID has continued to meet the challenges involved in defining, maintaining and building its key human resource management capabilities, strengthening the skills needed to achieve the aid program s outcome, meeting the development needs of employees and examining alternatives for managing and organising work to enhance performance. The People Management Strategy is the principal vehicle through which these challenges have been confronted. Developed in 1999 2000 with broad staff involvement and strong support, the strategy: identifies the key capability requirements for the agency incorporates an integrated performance assessment system (called performance planning and review), which ensures that all staff, together with their supervisors, assess performance and identify strengths, areas for improvement and strategies for filling skills and knowledge gaps includes a learning and development framework, which is aimed at enhancing AusAID s credentials as a professional development agency by ensuring all staff have the skills and knowledge to deliver a high quality aid program and advise the Minister on development issues has led to a review of the agency s recruitment, selection and placement processes that will be completed in late 2000. As well as using the 1999 AusAID staff survey to inform its development, the People Management Strategy has a built-in mechanism for review, using the survey results as a benchmark for tracking changes in staff attitudes to people management in the agency. AUSAID Annual Report 1999 2000 85

MNAGEMENT OF HUMAN RESOURCES CORPORATE MANAGEMENT AND ACCOUNTABILITY Performance Planning and Review AusAID introduced a performance planning and review process for all staff in 1998. The process provides a framework for work planning and performance review that encourages regular structured and unstructured feedback on performance against key organisational goals and desired behaviours. The process is an essential element of the agency s overall human resource strategy. In 1999 2000, AusAID completed a review of the process, finding that it has been a significant improvement over previous systems and successful in encouraging more direct and meaningful discussions of performance. Critical performance factors (a set of behaviours, skills and language against which performance can be measured) have provided staff with a clearer understanding of their respective strengths, areas for improvement and training and development needs. The review highlighted a number of areas in which the process could be further strengthened and these are now being implemented. Certified Agreement AusAID s Certified Agreement 1998 2000 came into effect in August 1998. The agreement sought to develop a culture of continuous improvement through developing a strategic focus on people management. To this end the agreement committed both management and staff to ensuring AusAID promotes a culture of learning to meet the changing needs of the aid program. Integral to this objective was the parties commitment to the development of a number of management tools specifically designed to encourage a performance focus by staff and their managers. The agreement provides tools that are used to acknowledge the performance of effective staff as well as tools that can be used to improve or deal with those staff in AusAID who are not contributing to the overall goals and objectives of the agency. The key tool used by AusAID to reward effective performance is the performance increment system. Staff have accepted this system of incremental advancement and regression as a legitimate mechanism to both reward performance and remove complacency among those staff who do not perform to the level expected. The agreement also includes streamlined misconduct provisions as well as procedures for managing unsatisfactory performance and abandonment of employment. These procedures have had limited use but have been effective in dealing with performance matters. The agreement also recognises the importance of encouraging staff to participate in self-development programs in order to improve AusAID s overall productivity. The agreement facilitates this through such provisions as study leave and language proficiency allowance. 86 AUSAID ANNUAL REPORT 1999 2000

CORPORATE MANAGEMENT AND ACCOUNTABILITY MANAGEMENT OF HUMAN RESOURCES Staffing and Turnover In June 1999, an internal team reviewed staffing and salaries allocations for 1999 2000, basing its work on operational requirements occasioned by the 1999 2000 budget outcome. A new East Timor section was created in response to the budget priority for an increased aid program to East Timor. Greater agency priority on donor coordination activities and international policy development led, in part, to the transfer of a post from Rome to Paris to improve AusAID s engagement and coordination with other donors. Actual staff numbers at 30 June 2000 were 561. This figure is made up of 280 men and 281 women. All departures during the year were offered exit interviews that enable AusAID to ascertain reasons for staff leaving the organisation. Reorganisation of AusAID s presence in the States at the end of 1999 2000 reflected a change in role from scholarship management to outreach. This led to a reduction in staff numbers in the States. Details of staffing are provided in Appendix 3 (see pages 141 6). Training and Staff Development AusAID maintains a strong commitment to staff training and development, recognising that a skilled workforce is essential to the success of Australia s aid program. The agency s learning and development framework, developed in 1999 2000, recognises that learning and development are both a corporate and individual responsibility. In 1999 2000, AusAID s average investment in training increased by 15 per cent to almost $2 200 per staff member. Details of AusAID training expenditure are shown in tables 7 and 8 on page 144. AusAID targeted its staff training and development activities to strengthening capabilities in the following areas: program and project management knowledge and skills: 350 staff in Australia and overseas attended AusGUIDE training activities (see page 72 for more details on AusGUIDE). Seventy staff undertook training on the Activity Management System (see page 71 for more details on the system) financial and contract management: about 250 staff attended contracts training courses, 165 received training in the accrual-based outcomes and outputs framework, and 200 attended in-house training sessions on the implications for the agency arising from introduction of The New Tax System strategic and analytic thinking: 25 work group planning sessions aimed at achieving better business results and strengthening teams. AUSAID Annual Report 1999 2000 87

MNAGEMENT OF HUMAN RESOURCES CORPORATE MANAGEMENT AND ACCOUNTABILITY AusAID uses a competitive tendering process to engage human resources development specialists to design and deliver learning activities targeted to agency needs. All AusAID courses are evaluated to determine the extent to which specific learning outcomes have been achieved. During 1999 2000, the agency has consistently met its training quality targets, with a participant satisfaction rate of 90 per cent or more. Details of training and development activities are provided in Appendix 3 (see page 144). Occupational Health and Safety AusAID s occupational health and safety agreement sets out the responsibilities of all parties and seeks to establish a structure and procedures within which all parties may be involved in protecting employees from exposure to hazards in the course of their duties. AusAID continued its commitment to provide a healthy and safe working environment for all employees. During this review period there was a number of new health and safety representatives nominated and selected by the staff representatives. Over 80 employees had their individual workstations ergonomically assessed, resulting in the purchase of a number of aids, appliances and furniture. In addition, AusAID has ensured that staff have access to first aid boxes at all hours and has purchased a scoop stretcher for emergencies. In December 1999, as part of AusAID s health and lifestyle initiatives, all staff were given the opportunity to undergo health assessments. A total of 73 people (40 men and 33 women) participated. The workplace health assessments act as a catalyst in motivating people to develop responsibility for their own health by developing strategies and goals for lifestyle change. There were two Section 68 notices to Comcare in relation to the deaths of two AusAID employees who were among the four aid workers who died in an aircraft crash in Fiji on 24 July 1999. This tragic loss of life was deeply felt by all AusAID staff and is a reminder of the dangers faced by Australian officials working in developing countries. 88 AUSAID ANNUAL REPORT 1999 2000

CORPORATE MANAGEMENT AND ACCOUNTABILITY PURCHASING AND ASSETS PURCHASING AND ASSETS In 1999 2000, AusAID s procurement practices complied with the requirements of the Commonwealth Procurement Guidelines issued by the Minister for Finance. Policies in AusAID s Financial Management Manual ensured that all purchases were in accordance with the core principles of the guidelines. AusAID awarded procurement contracts in line with competitive tendering processes where practices were fair, ethical and represented value for money to the Commonwealth. Procurement opportunities were advertised in the gazette and through AusAID s Consultnet. In special circumstances where procurement of goods and services could not be strictly in accordance with these processes, the purchasing officer was required to provide written documentation to delegate for approval, prior to purchase. AusAID s assets include information technology, furniture and equipment. These assets were held at AusAid central office, state offices and at overseas posts. All asset purchases, transfers and disposals throughout 1999 2000 were recorded in AusAID s Asset Management System. Annual stocktakes were conducted at each location to reconcile against assets held on the Asset Manual. The accounting treatment of assets was in accordance with Australian Accounting Standards. Over 70 per cent of all AusAID assets procured during 1999 2000 were purchased from Australian and New Zealand industry. CONSULTANTS AND COMPETITIVE TENDERING AND CONTRACTING Delivery of Australia s aid program is entirely outsourced. AusAID is a major purchaser of Australian consultancy services for overseas work, using contractors primarily to design and implement bilateral and regional projects funded by the aid program. AusAID has implemented a range of qualitative improvements in competitive tendering and contracting procedures, in accordance with the Commonwealth Government s Procurement Guidelines. These guidelines promote open and effective competition, ethics and fair dealing, accountability and transparency. Experience has demonstrated the importance of high-quality contracting to achieve effective and efficient aid delivery. AusAID has made improvements in contractor selection procedures and in project and program effectiveness, and has developed flexible program approaches. All of these measures aim to achieve the best value for money, an emphasis on quality and overall improved outcomes for the aid program. AUSAID Annual Report 1999 2000 89

CONSULTANTS & COMPETITIVE TENDERING & CONTRACTING CORPORATE MANAGEMENT AND ACCOUNTABILITY Most AusAID contracts are awarded following a competitive selection process. AusAID s procedures for engagement of consultancy services being one type of contract for service are described in Appendix 8 on pages 157 8. Appendix 8 also provides a list of consultancy contracts entered into by the agency during the year (pages 159 60). A full list of contracts valued at over $2 000 awarded by the agency (encompassing consultancy contracts and other contracts for service such as food aid contracts, student contracts and service contracts) is published each year in Business Participation in Australia s Aid Program. This publication can be obtained from AusAID or viewed on the AusAID Internet homepage at http://www.ausaid.gov.au/business/publications/index.html. In 1999 2000, AusAID obtained external advice on the cost-effectiveness of its corporate services and associated performance improvement strategies. In the coming year AusAID will develop a market-testing program, in accordance with the Department of Finance and Administration s requirements, for the corporate and other service areas of AusAID on a cost-benefit basis. 90 AUSAID ANNUAL REPORT 1999 2000

Australian development assistance allows Dr Max Wearne of Melbourne to volunteer his time and expertise for a few weeks each year to help the patients of the Port Moresby Hospital. Photo by Peter Davis. Senator Kay Patterson with Australian Youth Ambassadors for Development Angela Kerry and Nikii Nguyen at a farewell function at Parliament House. Contract Services Group staff at work. AusAID managed more than 1 000 contracts in 1999 2000. Photo by Peter Duncan-Jones.