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Chapter 13 - Financial management

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Financial management

Analysis of financial performance

The departmental operating result for 2010–11 was a surplus of $0.367 million compared to a deficit of $0.244 million for 2009–10.

Total departmental income increased by $1.105 million or 0.4 per cent to $265.291 million, and total departmental expenses increased by $1.598 million or 0.6 per cent to $266.028 million. The increases primarily reflect additional funding from Budget measures.

During the year, there were two Administrative Arrangements Orders affecting the Department:

  • on 14 September 2010, responsibility for Australian Territories functions transferred to the Department of Regional Australia, Regional Development and Local Government with effect from 1 October, and
  • on 14 October 2010 the Department assumed responsibility for natural recovery policy and the Australian Government Disaster Recovery Payment from the Department of Families, Housing, Community Services and Indigenous Affairs.

As a result, the mix of the Department’s administered expenses has changed significantly. Overall, administered expenses increased by $898.137 million or 150 per cent in 2010–11 compared to a decrease of $249.987 million in 2009–10 due to the payment of personal benefits to individuals following the floods and severe weather events that occurred early in 2011.

The Department’s net assets increased by $7.248 million or 4.4 per cent to $171.785 million primarily due to a reduction in receivables, leases and payables and an increase in non-financial assets and employee provisions.

The Department’s administered assets decreased by $754.561 million or 62 per cent resulting from the transfer of responsibility for Australian territories functions to the Department of Regional Australia, Regional Development and Local Government. Administered liabilities decreased by $18.114 million to $24.167 million for the same reason.

Figure 7: Departmental revenues and expenses, 2009–10 and 2010–11

Figure 7: Departmental revenues and expenses, 2009–10 and 2010–11

 

Figure 8: Administered expenses, 2009–10 and 2010–11

Figure 8: Administered expenses, 2009–10 and 2010–11

 

Contracts and Australian National Audit Office access clauses

During 2010–11, the Department had no contracts to report over the value of $100,000 that did not provide for the Auditor-General to have access to the contractor’s premises.

Exempt contracts

There were two contracts ($56,100 and $100,000) over the value of $10,000 exempted from being published in AusTender by the Secretary of the Department on the basis that to do so would disclose exempt matters under the Freedom of Information Act 1982.

Consultancy services

A consultant is an entity—whether an individual, a partnership or a corporation—engaged to provide professional, independent and expert advice or services. The key characteristics of a consultancy are that the services involve developing an intellectual output that assists the Department’s decision making, and that the output reflects the independent views of the service provider.

During 2010–11 the Department entered into 35 new consultancy contracts involving total actual expenditure of $1.924 million. In addition, 11 ongoing consultancy contracts were active during the year involving total actual expenditure of $0.529 million.

The main purposes for engaging consultants were:

  • reviews of processes and mechanisms
  • independent assessments, analysis, advice, and application of high level expertise, and
  • to undertake research, and studies and modelling exercises.

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website
<http://www.tenders.gov.au>.

Further information about consultancy services appears at Appendix 5.

Advertising and market research

During 2010–11 the Department conducted only one advertising campaign—the national security campaign. Further information is available at <http://ag.aglink.ag.gov.au> and in the reports on Australian Government advertising that are prepared by the Department of Finance and Deregulation. Those reports are available at <http://www.finance.gov.au/advertising/index.html>.

The Department is required to disclose expenditure made to specific types of organisations under section 311A of the Commonwealth Electoral Act 1918. These categories of organisations are advertising agencies, market research organisations, polling organisations, direct mail organisations and media advertising organisations.

Details of payments are provided at Appendix 6.

Legal services expenditure

Paragraph 11.1(a) of the Legal Services Directions 2005, issued by the Attorney-General under the Judiciary Act 1903, requires chief executives of departments and agencies to ensure that legal services expenditure is appropriately recorded and monitored. Chief executives must also ensure that their agencies make publicly available records of their legal services expenditure for the previous financial year by 30 October in the following financial year. External legal services expenditure for 2010–11 was $10.640 million.

A detailed breakdown of both internal and external legal expenditure is at Appendix 7.

Grants

The Department manages its grants program in accordance with the Government’s legislative framework, the Commonwealth Grant Guidelines and the Department’s grants management guidelines.

In 2010–11, the Department published information for 26 grants programs:

  • Australia’s Human Rights Framework—Education Grants Program
  • Australia’s Contribution to the International Criminal Court
  • Building Community Resilience Program
  • Building Community Resilience Youth Mentoring Grants Program
  • Closing the Gap—Northern Territory Law and Order
  • Community Legal Services Program
  • e-Security
  • Family Relationships Services Program
  • Financial Assistance Towards Legal Costs and Related Expenses
  • Grants to Australian Organisations
  • Indigenous Justice Program
  • Indigenous Legal Aid and Policy Reform Program
  • National Emergency Management Program
  • National Community Crime Prevention Program
  • National Pro Bono Resource Centre Grant
  • Native Title Anthropologist Grants Program 
  • Pacific Police Development Program
  • Payments for Provision of Legal Aid—Legal Aid Commissions
  • Payment for Membership to International Bodies
  • Proceeds of Crime Act 2002 —Section 298 Payment
  • Provision of Family Violence Prevention Legal Services for Indigenous Australians
  • Personal Property Securities Register Data Migration Project
  • Safer Suburbs Program
  • Secure Schools Program, and
  • Services to Indian Ocean Territories.

Information on grants awarded by the Attorney-General’s Department since 1 January 2009 is available at <http://ag.aglink.ag.gov.au>.

Purchasing

The Department procures property and services consistent with the requirements of the Commonwealth Procurement Guidelines. The guidelines are applied to procurement activities through the Chief Executive Instructions and the Department’s Financial Guidance and Procedure Manual.

A financial management learning and development program includes modules on procurement and contract management as well as on the Chief Executive Instructions, authorisations and delegations.

A central procurement advisory unit within the Department provides advice to staff involved in procurement activities. In addition, the unit undertakes quality assurance testing of procurement activities undertaken across the Department.

The procurement advice unit periodically reviews all procurement-related documentation and training material to ensure consistency with the Commonwealth Procurement Guidelines and other policies that interact with procurement. The Department is currently implementing a procurement module within the Department’s financial management information system to enhance administrative workflow and compliance. The introduction of this module will require a complete review of internal procurement rules, guidance, forms and templates.

Asset management

The composition of the Department’s fixed asset base covers a wide range of asset types, including office fit-outs, purchased and internally-developed software, computer equipment, infrastructure and centrally held library materials.

On 14 September 2010, responsibility for the Territories transferred to the Department of Regional Australia, Regional Development and Local Government and as a consequence responsibility for these assets is no longer with the Department.

The Department undertakes an annual stocktake of assets to maintain the accuracy of asset records.

The Department also has asset management guidance and procedures as part of the Financial Guidance and Procedure Manual, which has been disseminated to divisions and is available on the Department’s intranet.

 


Our people

Streamlining processes to improve access to justice

A significant shift in thinking

The Financial Assistance Section is responsible for administering 26 schemes which provide individuals with financial assistance for legal and related costs. This is an important element of the Australian Government’s commitment to improving access to justice as the assistance allows individuals to pursue their legal rights in situations where there is no other assistance available.

The Section recently examined its processes in a project led by Principal Legal Officers, Terina Koch and Eleanor Lewis, using the ‘Lean Six Sigma’ methodology. This combines the Lean principles of creating more value with less work and the Six Sigma principles of identifying and eliminating defects in a process.

Team member Lynda Marsden says that Lean Six Sigma allows organisations to accelerate decision-making while reducing production inefficiencies and increasing product quality.

‘The principles involve a significant shift in thinking and at times presented a challenge for individuals and the Section as a whole,’ she says, ‘but once it was understood it became a natural way of approaching our regular work.’

Eleanor says the team wanted to change its processes, but just needed to know how. ‘The key to the success of this project was to use process mapping skills to analyse how we worked and how it could be improved.’

The implementation of the Lean Six Sigma principles has resulted in streamlined processes for the Section that has enabled it to increase staff engagement, stakeholder satisfaction and deliver strategic objectives more efficiently and effectively.

The principles were initially piloted in the Native Title Respondent Funding scheme and over the coming months will be applied to other schemes in the Section.

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