Online version of the 2012-13 Department of Health and Ageing Annual Report

3.3: Financial Management

Page last updated: 29 October 2013

We value using resources effectively

The Department’s financial accountability responsibilities are set out in Section 44 of the Financial Management and Accountability Act 1997. They are based on efficient, effective, economical and ethical use of Commonwealth allocated resources that is consistent with the policies of the Commonwealth. The Department meets these responsibilities by working within a financial control framework that supports efficient processing and recording of financial transactions, including the production of audited financial statements (the complete set of financial statements for the Department of Health and Ageing and the Therapeutic Goods Administration is provided in Part 4: Financial Statements). For an overview of the Department’s financial results for 2012-13, refer to the Chief Financial Officer’s Report in volume one.

In 2006-07, an annual financial reporting requirement known as the Certificate of Compliance was introduced. The certificate requires the Secretary to confirm the Department complied with the financial management and accountability legislation and other specified Commonwealth policies. It also confirms whether the Department is operating within the agreed resources for the current financial year.

To ensure the Department has complied with the certificate’s requirements in 2012-13, the Department has maintained effective financial processes and internal control mechanisms as well as ongoing compliance monitoring and reporting activities.

The Department’s corporate governance arrangements include a Finance, Risk and Security Committee to provide advice and make recommendations to the Executive Committee on financial management, risk management and strategic security management policies, initiatives and reviews. In addition, it is a forum for the discussion, prioritisation and planning of such matters.

Further detail on the Department’s committee structure is provided in Part 3.1: Corporate Governance.

Assets Management

The Department’s asset management strategy emphasises whole-of-life asset management. The annual asset review seeks to minimise holdings of surplus and underperforming assets.

The Department’s stocktake of fixed and intangible assets in 2012-13 confirmed their location and condition.

In 2011-12, the Department conducted a revaluation of assets in accordance with the Australian Accounting Standard (AASB 116 Property, Plant and Equipment). In 2012-13, the Department obtained independent expert advice on asset values and conducted a review of assets for impairment (AASB 136 Impairment of Assets) to ensure assets are carried at no more than their recoverable amount.

Discussion relating to the assets administered by the Department in 2012-13 can be found in Part 4: Financial Statements.

Purchasing

In 2012-13, with the exception of those instances reported in the Certificate of Compliance, the Department complied with the Commonwealth’s purchasing policies as stated in the Commonwealth Procurement Guidelines.97 The Department’s procurement framework encourages competition, value for money, transparency and accountability, and the efficient, effective and ethical use of resources.

Consultants

The Department engages consultants where it lacks specialist expertise or when independent research, review or assessment is required. Consultants are typically engaged to investigate or diagnose a defined issue or problem; carry out defined reviews or evaluations; or provide independent advice, information or creative solutions to assist in the Department’s decision making. The Department also engages consultants for information technology projects.

Prior to engaging consultants, the Department takes into account the skills and resources required for the task, the skills available internally, and the cost-effectiveness of engaging external expertise. The decision to engage a consultant is made in accordance with the Financial Management and Accountability Act 1997 and related regulations including the Commonwealth Procurement Guidelines and relevant internal policies.

During 2012-13, 277 new consultancy contracts were entered into involving total actual expenditure of $24.22 million. In addition, 138 ongoing consultancy contracts were active during 2012-13, involving total actual expenditure of $20.16 million. Consultancy contracts are funded from departmental and administered resources.

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Table 3.3.1 Comparison of expenditure on consultancy contracts
2010-11 2011-12 2012-13
$45.33m $39.27m $44.38m

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies greater than $10,000 is available on the AusTender website.

Grants

Information on grants awarded by the Department of Health and Ageing during the period 1 July 2012 to 30 June 2013.

Australian National Audit Office Access Clauses

Three of the Department’s awarded Contracts or Deeds of Standing Offer, valued at $100,000 (GST inclusive) or greater, did not contain standard clauses granting the Auditor-General access to contractor’s premises. These contracts are identified in the table below.

Table 3.3.2 Contracts not containing standard Auditor-General access clauses
Contractor Name Contract Purpose Contract Value
(GST inclusive)
Reason Access Clause wasn’t included
The Royal Children’s Hospital Melbourne Licence for the use of software. $458,372 The Supplier’s contract was used and the Department did not request the inclusion of standard Commonwealth contract clauses.
Ipsos Public Affairs Pty Ltd Subscription contract. $107,505 The Supplier’s contract was used and the Department did not request the inclusion of standard Commonwealth contract clauses.
Telstra Phone services for BreastScreen Australia and National Cervical Screening Program. $298,508 The Supplier’s contract was used and the Department did not request the inclusion of standard Commonwealth contract clauses.

Exempt Contracts

In 2012-13, 114 contracts were exempted from reporting on Austender on the basis that publishing contract details would disclose exempt matters under the Freedom of Information Act 1982.

Spatial Reporting

Table 3.3.3: 2012-13 Expenditure disaggregated for the Department of Health and Ageing 1 , 2
Program Category Budget Estimate $m (a) Actual Expenses $m (b) Variation 3 $m (a-b)
Pharmaceuticals and Benefits (Programs 2.1, 2.2, 2.3) Regional 3,245 2,974 271
Non-regional 6,693 6,134 559
Non-specific 203 186 17
Total 10,141 9,294 847
Medical Services and Benefits (Program 3.1) Regional 5,565 5,588 (23)
Non-regional 12,613 12,666 (52)
Non-specific 371 373 (2)
Total 18,549 18,626 (77)
Residential and Flexible Care (Program 4.4) 4 Regional 2,584 2,599 (15)
Non-regional 5,672 5,706 (34)
Non-specific - - -
Total 8,256 8,305 (49)
Private Health Insurance (Program 9.1) Regional 1,336 1,349 (13)
Non-regional 3,699 3,735 (35)
Non-specific 103 104 (1)
Total 5,138 5,187 (49)
Targeted Rural Expenditure (various program numbers) Regional 2,201 2,066 135
Non-regional - - -
Non-specific - - -
Other Programs 5 (various program numbers) Regional - - -
Non-regional - - -
Non-specific 7,280 7,618 (393)
Portfolio Total Regional 14,931 14,576 372
Non-regional 28,678 28,240 476
Non-specific 7,957 8,280 (379)
Portfolio Total 51,565 51,096 469
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Notes:

  1. Budget estimates have been updated to be consistent with the 2013-14 Portfolio Budget Statements. The regional classification and spatial reporting methodology in this Table is consistent with the Ministerial Statement. A copy of the statement is available at: www.budget.gov.au/201213/content/ministerial_statements/rural_and_regional/html/rural_and_regional-11.htm.
  2. Small errors may occur due to rounding.
  3. The Pharmaceutical Benefits, Medical Benefits, Residential Aged Care and Private Health Insurance programs are demand driven.
  4. The budget estimate and actual expense for program 4.4 have been reduced by the Zero Real Interest Loans concessional loan discount. The concessional loan discount is a non cash accounting expense which represents the difference between an estimate of the market rate of interest, and that recovered under the Zero Real Interest Loan agreements, over the life of the loan.
  5. Data is not available to provide an allocation of regional and non-regional splits.