1. Part II: Use of Public Resources Resource Management and Budget Training November 2014

2. Contact and acknowledgement information
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3. Commonwealth Resource Management Framework
Introduction
Commonwealth Resource Management Framework
Legislative instruments
Policy
Entity internal controls
reporting and evaluation
planning objectives and strategies
budgeting and operational planning
implementing and monitoring
PUBLIC RESOURCES
accountability
governance
performance
risk management
appropriations
procurement
proper use
commitments
efficiency
earned autonomy
spending
grants management
property management
transparency
audit
cooperation with others
Appropriation acts
PGPA Act
Other legislation
Constitution

4. What are public resources?
Introduction
What are public resources?
Relevant property
property owned or held by the Commonwealth or a corporate Commonwealth entity
includes real property, personal property and intellectual property
Relevant money
money held as cash or in a bank account by the Commonwealth or a corporate Commonwealth entity
Appropriations
authority to draw money from the Consolidated Revenue Fund

5. Part II: Use of public resources

6. Accountability and performance
Section learning objectives
Learning objective: understand key elements of governing an entity, e.g. proper use, achievement of purposes, and financial sustainability
Learning objective: understand aspects of proper use, i.e. efficiency, effectiveness, economy and ethics
Learning objective: understand components of the performance management framework, their source within the PGPA Act and their place in the resource management cycle — these include corporate plans, portfolio budget statements, annual reports and annual performance statements
Learning objective: understand the outcomes and programmes framework

7. Accountability for use of public resources
Accountability and performance
Accountability for use of public resources
Your accountable authority is required to govern your entity in a way that promotes:
proper use and management of public resources
the achievement of the purposes of your entity
the financial sustainability of your entity
Your accountable authority will establish internal controls to ensure these things occur and that officials comply with the finance law
Section 15
Learning objective: understand key elements of governing an entity, e.g. proper use, achievement of purposes, and financial sustainability
Section 16

8. Entity internal controls
Accountability and performance
Entity internal controls
may be in the form of:
accountable authority instructions or
operational guidelines
address risks associated with using and managing public resources
e.g. abuse, error, mismanagement, fraud
align closely with internal financial delegations and authorisations
provide clear instructions on the internal requirements, policies and rules that officials must consider and comply with
Accountable Authority Instructions
Learning objective: understand the definition of risk and risk management, and how it relates to an entity’s internal controls

9. Proper use of public resources
Accountability and performance
Proper use of public resources
Efficient
most suitable resources being used to deliver the best results
e.g. consider unit costs or other ways of achieving the particular purposes and objectives
Effective
produces the desired result, i.e. entities’ purpose and objectives
Economical
avoids waste
focus on level of resources applied to deliver results
generally the best cost option to deliver the expected results
Ethical
consistent with the core beliefs and values of society
manages conflicts of interest and personal bias
Learning objective: understand aspects of proper use, i.e. efficiency, effectiveness, economy and ethics
Must balance the 4 Es – one is not more important than the others

10. Purposes of an entity Will be:
Accountability and performance
Purposes of an entity
Will be:
for a statutory entity, generally the entity’s statutory objectives and functions
for many non‑statutory entities (e.g. departments) will align with the Administrative Arrangements Order
for all entities, the corporate plan will be required to reflect the purposes of the entity
For appropriation and budgetary purposes entities will establish outcomes and programmes to facilitate the achievement of their purposes
Learning objective: understand where to find the purpose of an entity

11. Outcomes and programmes
Accountability and performance
Outcomes and programmes
Appropriation Act 1
Appropriation Act 2
Special Appropriations
Appropriations
What the government wants to achieve
Outcome statement
Learning objective: understand how the outcomes and programmes framework supports the purposes of an entity
Programme
Programme
Programme
Deliverables
Reporting to parliament

12. Outcomes and programmes
Accountability and performance
Outcomes and programmes
Appropriation Act 1
Appropriation Act 2
Special Appropriations
Outcome statement
Learning objective: understand how the outcomes and programmes framework supports the purposes of an entity
Activities to achieve intended outcomes
Programme
Programme
Programme
Deliverables
Monitoring and reporting outcomes
Reporting to parliament

13. Framework for managing performance
Accountability and performance
Framework for managing performance
The PGPA Act sets the framework for managing performance in a sustainable way, entities must:
prepare corporate plans
prepare budget estimates
keep performance records
measure and assess performance
prepare annual performance statements
included in annual reports.
Enhancements are currently being made to the Commonwealth Performance Framework for
Sections
35-39
Learning objective: understand components of the performance management framework, their source within the PGPA Act and their place in the resource management cycle — these include corporate plans, portfolio budget statements, annual reports and annual performance statements
Rules and guidance are in development

14. Components of the Performance Framework
Accountability and performance
Components of the Performance Framework
Australian Government’s key priorities and objectives
Annual reports
Planning objectives and strategies
Budgeting and operational planning
Implementing and monitoring
Reporting and evaluation
KPIs
Annual performance statements
Corporate plans
KPI monitoring
Portfolio Budget Statements
Learning objective: understand components of the performance management framework, their source within the PGPA Act and their place in the resource management cycle — these include corporate plans, portfolio budget statements, annual reports and annual performance statements
Line of sight - planning , implementing and reporting

15. Role of performance information
Accountability and performance
Role of performance information
Monitoring, reporting and evaluating performance information helps to:
support government decision-making in planning and allocating resources across competing priorities
contribute to whole-of-government programme and service delivery improvements
improve the effectiveness and efficiency of government programs
provide early warning about emerging problems
Learning objective: understand components of the performance management framework, their source within the PGPA Act and their place in the resource management cycle — these include corporate plans, portfolio budget statements, annual reports and annual performance statements

16. Activity: outcome statements
Accountability and performance
Activity: outcome statements
Objective: review a concrete example of an outcome statement to help participants better understand the performance framework

17. Risk management Section learning objectives
Learning objective: recall the definition of risk and risk management, and describe how it relates to an entity’s internal controls
Learning objective: recall key elements of risk management within the PGPA Act, including the duty to establish and maintain systems of risk management and internal control
Learning objective: list typical risks that entities may face and explain how they are managed
Learning objective: outline the role and principles of the Commonwealth Risk Management Policy

18. Duty to manage risk and maintain controls
Risk management
Duty to manage risk and maintain controls
Your accountable authority is required to establish and maintain appropriate systems of risk oversight and management and internal control
Section 16
Legislative instruments
Policy
Entity internal controls
reporting and evaluation
planning objectives and strategies
budgeting and operational planning
implementing and monitoring
PUBLIC RESOURCES
accountability
governance
performance
risk management
appropriations
procurement
proper use
commitments
efficiency
earned autonomy
spending
grants management
property management
transparency
audit
cooperation with others
Appropriation acts
PGPA Act
Other legislation
Constitution
Learning objective: recall key elements of risk management within the PGPA Act, including the duty to establish and maintain systems of risk management and internal control

19. What is risk? The effect of uncertainty on objectives
Risk management
What is risk?
The effect of uncertainty on objectives
Includes an effect is a deviation from the expected either positive or negative. Risk is often expressed in terms of a combination of the consequences of an event (including changes in circumstances or knowledge) and the associated likelihood of occurrence
Commonwealth Risk Management Policy
Learning objective: recall the definition of risk and risk management, and describe how it relates to an entity’s internal controls

20. What is risk management?
coordinated activities to direct and control an organisation with regard to risk
based on sound judgement and best information available
should inform all financial decisions
Establish the context
Risk assessment
Identify the risks
Analyse the risks
Evaluate the risks
Treat the risks
Communicate and consult
Monitor and review
Learning objective: recall key elements of risk management within the PGPA Act, including the duty to establish and maintain systems of risk management and internal control

21. Commonwealth Risk Management Policy
principles based
sets out risk management attributes for entities to meet government expectations
non-corporate Commonwealth entities required to have regard to the policy and to align own risk frameworks
corporate Commonwealth entities encouraged to have regard to the policy and to align own risk frameworks
Learning objective: outline the role and principles of the Commonwealth Risk Management Policy

22. Fundamental of risk management
structured and linked to the strategic business objectives set out in an entity’s corporate plan
an integral part of the entity’s overarching governance, financial, assurance and compliance frameworks
tailored to the entity’s needs and proportionate to its risks
dynamic with a focus on continual improvement and maintaining better practice
managed transparently with the accountable authority:
accountable for the entity’s risks
responsible for risk being managed by those best able to control the risks
Learning objective: outline the role and principles of the Commonwealth Risk Management Policy

23. Strengthening risk management practices
Establish a risk management policy
Establish a risk management framework
Define responsibility for managing risk
Embed systematic risk management into business processes
Develop a positive risk culture
Communicate and consult about risk
Understand and manage shared risk
Maintain risk management capability
Review and continuously improve the management of risk
Learning objective: outline the role and principles of the Commonwealth Risk Management Policy

24. Activity: Use of credit cards
Risk management
Activity: Use of credit cards
Learning objective: use case study of credit card use to help participants recognise the link between risks and internal controls — i.e. internal controls are in place to treat risks.

25. Spending relevant money
Section learning objectives
Learning objective: understand the definition of commitments and arrangements
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority
Learning objective: understand when additional legislative authority may and may not be required
Learning objective: understand the role and requirements for compliance reporting

26. Key concepts: commitments and arrangements
Spending relevant money
Key concepts: commitments and arrangements
Commitments include:
undertaking an activity or entering an arrangement that results in an obligation to pay relevant money
Arrangements include:
contracts, agreements, deeds or understandings
MOUs, standing offers and grant agreements
commitments with a contingent liability
may give rise to a cost as a result of a future event
e.g. indemnities, guarantees or warranties containing a contingent liability
Learning objective: understand the definition of commitments and arrangements

27. Key concepts: committing relevant money
Spending relevant money
Key concepts: committing relevant money
Consideration before committing relevant money:
your general duties as officials
who has authority to commit the money
the internal controls in your entity
the rules or policies that may apply, in particular whether the commitment will be a procurement or a grant
whether the commitment is consistent with the purposes of your entity
what records must be kept.
Learning objective: the key things officials should consider before committing relevant money

28. Before committing relevant money
Spending relevant money
Before committing relevant money
Consider your duties as an official
To commit relevant money officials must:
exercise care and diligence
e.g. have you taken reasonable steps, given the nature, significance, value and context of the proposed commitment?
act honestly, in good faith and for proper purpose when using relevant money
e.g. is the proposed commitment:
consistent with finance law?
consistent with the aims and operations of your entity?
not use your position or information to gain an advantage or cause detriment
Section 25
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority
Section 26
Sections
27-28

29. Before committing relevant money
Spending relevant money
Before committing relevant money
Determine who has authority to commit relevant money:
accountable authorities have authority to:
approve commitments of relevant money
enter into, vary and administer arrangements relating to the affairs of your entity, on behalf of the Commonwealth or their entity.
the authority comes from:
for non-corporate Commonwealth — PGPA Act
— other legislation
for corporate Commonwealth entities — the enabling legislation and/or the separate legal personality of the entity
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority
Section 23

30. Before committing relevant money
Spending relevant money
Before committing relevant money
Officials can be delegated or authorised to commit relevant money:
for non-corporate Commonwealth entities – accountable authorities can delegate (or authorise) the power to approve a commitment of relevant money under s23(3) of the PGPA Act
for corporate Commonwealth entities s23(3) of the PGPA Act is not applicable – officials can be authorised to commit relevant money on behalf of the entity.
Officials who are authorised or delegated the power in s23 of the PGPA Act, must comply with:
s18 of the PGPA Rule and
directions or instructions from your accountable authority
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

31. Before committing relevant money
Spending relevant money
Before committing relevant money
Consider the operating environment and internal controls in your entity
e.g. Accountable Authority Instructions or operational guidelines
Internal controls should:
provide instructions on the internal requirements and well as any other rules or policies that may apply
e.g. whether the proposed commitment will be a proper use of money, i.e. balance whether the proposal will be efficient, effective, economical and ethical (not just focus on one of these elements to the exclusion of others)
address the risks associated with the use of relevant money
clarify any other requirements that apply
Accountable Authority Instructions
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

32. Before committing relevant money
Spending relevant money
Before committing relevant money
Consider the type of financial arrangement and the other requirements the may apply?
For example are you:
purchasing goods and services for the Commonwealth (procurement)
providing financial assistance to non-government individuals or organisations to achieve government policy objectives (grants)
making discretionary payments (e.g. act of grace)
making some other form of payment
Rules
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

33. Procurements and grants
Spending relevant money
Procurements and grants
Every year the Commonwealth spends:
around $40 billion by procurements
around $30 billion by grants
Procurement statistics from AusTender (for ):
Around 67,854 contracts (over $10k) reported
Approx 11,460 suppliers
Over 70% of contracts are below $80k (but over 95% of contact value is over $80k)
Small medium enterprise represent 55% by volume and 32% by value
Grants.gov.au is being established to collect similar information on Commonwealth grants
Learning objective: understand what the importance of procurement and grants to Government programmes

34. What is a procurement? A procurement is: Not a procurement:
Spending relevant money
What is a procurement?
A procurement is:
the Commonwealth purchasing goods and/or services that assist the Commonwealth in achieving its own goals
the whole process of procuring goods and/or services
Not a procurement:
a grant
an investment
a sale by tender
a loan
a statutory/ministerial appointment
employee engagement
Some Government policies apply to procurements
Learning objective: understand what constitutes a procurement

35. What is a grant? A grant is: Not a grant:
Spending relevant money
What is a grant?
A grant is:
an arrangement for provision of financial assistance
by the Commonwealth or on behalf of the Commonwealth
relevant money or other CRF money to be paid
intended to assist recipient to achieve goals
intended to help address policy objectives
may have terms or conditions for recipient
Not a grant:
a procurement
an act of grace of payment or compensation payment
an investment
an employee engagement
Learning objective: understand what constitutes a grant

36. Procurement and grant rules
Spending relevant money
Procurement and grant rules
Two main types of spending are regulated by rules made under the PGPA Act:
Commonwealth Procurement Rules (CPRs)
Commonwealth Grant Rules and Guidelines (CGRGs)
Some Government policies also apply to procurement
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

37. Commonwealth Procurement Rules
Spending relevant money
Commonwealth Procurement Rules
supports the government’s social and economic policies
core principle is value for money achieved by:
encouraging competition
proper use of public resources
accountability and transparency
incorporates Australia's international obligations
Learning objective: understand the value for money principle for Commonwealth procurement and how it is achieved

38. Government procurement policies
Spending relevant money
Government procurement policies
Apply to non-corporate Commonwealth entities, e.g:
Public Private Partnership principles
Legal Services Directions
Protective Security Policy Framework
Whole-of-government procurement arrangements:
ICT procurement
motor vehicle leasing and travel service
office machines, stationery and office supplies
government advertising
training and professional development
Commonwealth Fraud Control Guidelines
Learning objective: understand types of whole-of-government arrangements

39. Commonwealth Grant Rules and Guidelines
Spending relevant money
Commonwealth Grant Rules and Guidelines
Part 1 outlines the mandatory requirements
establish and document whether a proposed activity is a grant
have regard to the seven key principles for grants administration
develop grant guidelines for all new (or significantly changed) granting activities
advise your minister on requirements of the PGPA Act and CGRGs
record, in writing, the basis for a decision to award a grant
provide written advice to your minister, where they exercise the role of an approver
report individual grants awarded on your website
Learning objective: How the CGRGs apply to grants administration

40. Commonwealth Grant Rules and Guidelines
Spending relevant money
Commonwealth Grant Rules and Guidelines
Part 2 sets seven grants administration principles officials should apply to ensure:
robust planning and design
collaboration and partnership with stakeholders
proportionality by balancing:
the complexity of the grant activity
requirements of the grant recipient
risks for beneficiaries and the Commonwealth
the most efficient and effective use of inputs to achieve outcomes for beneficiaries
value with relevant money
governance and accountability for all parties
probity and transparency
Learning objective: How the CGRGs apply to grants administration

41. Commonwealth Grant Rules and Guidelines
Spending relevant money
Commonwealth Grant Rules and Guidelines
Grants administration involves:
planning and design
selection and decision-making
making of a grant
management of grant agreements
ongoing relationship with grants recipients
reporting, review and evaluation
Learning objective: understand what constitutes a grant

42. Before committing relevant money
Spending relevant money
Before committing relevant money
Consider whether proposed spending consistent with the purposes of your entity?
what outcome is your entity is seeking to achieve?
how will you measure whether the proposed spending is meeting those outcomes?
Appropriation Act 1
Reporting to parliament
Special Appropriations
Outcome statement
Programme
Deliverables
Appropriation Act 2
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

43. Before committing relevant money
Spending relevant money
Before committing relevant money
Record approvals
An approval to commit relevant money must be recorded (in writing or electronically)
The particulars of the approval will depend on the scope of the commitment
Your entity’s internal controls should clarify the record you are required to keep depending on the item, costs, parties, timeframes and risk associated with the proposal
PGPA Rule 18
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

44. Spending relevant money
Recording approvals
Ministers can approve certain commitments (e.g. grants)
If you assist a Minister to consider and approve a commitment you must advise the Minister on:
the proposed arrangement
the requirements of the PGPA Act and relevant rules (e.g. CGRGs)
any selection process
This is so your Minister:
can be satisfied the proposal is a proper use of the money
approve any grants are consistent with the rules
Must keep a record of the approval
Section 71
Learning objective: understand what to consider before spending relevant money, i.e. applicable rules and guidance, internal controls, delegated authority, consistency with purposes, sufficient appropriation and legislative authority

45. Activity: spending proposal
Spending relevant money
Activity: spending proposal
Objective: walk participants through the six spending considerations with a sample proposal

46. Managing relevant property
Learning objective: understand the responsibilities in relation to managing relevant property

47. Types of relevant property
Managing relevant property
Types of relevant property
Real property:
land
buildings or objects fixed to that land
Personal property:
all other (movable) property, eg. equipment, vehicles
 Intellectual property:
rights to creations of the mind, e.g. the coat of arms
Learning objective: understand the different types of relevant property Commonwealth entities use or manage

48. Commonwealth Property Management Framework
Managing relevant property
Commonwealth Property Management Framework
Covers leasing, building, owning and disposing
Combination of legislation, policy and guidance
Applies to non-corporate entities
Principles:
value for money
property management planning
efficient and effective design
appropriate accountability measures
cooperative Commonwealth property management measures
Learning objective: understand when to apply the Commonwealth Property Management Framework, i.e. applies to non-corporate Commonwealth entities for leasing, building, owning, and disposing

49. Entering leases risk based framework
Managing relevant property
Entering leases
risk based framework
e.g. accountable authorities delegated power to grant indemnities where: risk is remote (less than 5%) and expenditure would not be significant (less than $30m)
entities must consider whether proposed lease will be a proper use of public resources
must comply with government policies
e.g. Finance Secretary Lease Endorsement process
Learning objective: understand when to apply the Commonwealth Property Management Framework, i.e. applies to non-corporate Commonwealth entities for leasing, building, owning, and disposing

50. Compliance reporting compliance report
Learning objective: understand the role and requirements for compliance reporting

51. What is being certified?
Compliance reporting
What is being certified?
compliance
report
Based on the entity’s internal control mechanisms, management, and audit committee advice, the accountable authority is required to certify that the entity has complied with:
PGPA Act
PGPA rules
appropriate delegations 
Learning objective: understand the role and requirements for compliance reporting

52. Purpose of compliance reporting
improve compliance with the PGPA framework
keep ministers informed of compliance issues within their portfolios
assist entities to address issues with internal controls
assist Finance to identify issues with the resource management framework
assist the evaluation of the PGPA Framework required by the PGPA Act
Learning objective: understand the role and requirements for compliance reporting
further compliance reporting guidance is in development

53. Wrap up

54. Questions and feedback
Wrap up
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55. Further information Department of Finance Australian Government Budget
finance.gov.au
Australian Government Budget
budget.gov.au
Public management reform
pmra.finance.gov.au
Resource Management and Budget training
finance.gov.au/resource-management/training