International Journal of Auditing – April 2003
ANAO Better Practice Guides
The Australian National Audit Office (ANAO) produces better practice
guides (BPGs) as part of its integrated audit approach, which includes
providing information support services to audit clients.
BPGs aim to improve public administration by ensuring that better practices employed in some organizations are recognized and promulgated to the whole of the Australian Public Service. This can involve examining practices in the public and private sectors in Australia or overseas. From its knowledge and understanding of the public sector, the ANAO endeavors to identify, assess, and articulate good practice as well as areas where improvements are warranted.
Depending on the subject matter and nature of information collected during an audit, BPGs may be produced in conjunction with an audit. Alternatively, a BPG might be prepared as a result of a perceived need to provide guidance material in a particular area of public administration.
For a complete list of all BPGs published by the ANAO, from 1996 to date, go to the ANAO web site: http://www.anao.gov.au. These BPGs can be listed by date, title, or theme. A summary identifies the purpose of the BPG, and the guide can also be downloaded from the web site.
Some earlier BPGs that may be of interest include the following:
- Life Cycle Costing
- Some Better Practice Principles for Developing Policy Advice
- Rehabilitation: Managing Return to Work
- Internet Delivery Decisions
- Planning for the Workforce of the Future
In the coming months, the ANAO will update its 1999 BPG entitled Corporate Governance in Commonwealth Authorities and Companies.
Recently published BPGs of likely interest to other supreme audit institutions are outlined below.
Building Capability, A framework for managing learning and development in the APS (April 2003)
Efficient and effective achievement of government outcomes by Australian Public Service (APS) agencies depends on the capabilities of their people. Capability building, which is central to organizational performance, requires a systematic management approach to learning and development as an integral part of workforce planning.
Learning and development is a key management function for all APS agencies that requires the same rigor and attention as any other management task. Well managed, learning and development can deliver the right people with the right skills at the right time to enable agencies to deliver government objectives and outcomes into the future.
The ANAO performance audit report Management of Learning and Development in the APS (No. 64 2002-2002) and benchmarking study Managing People for Business Outcomes (No. 61 2001-2002) identified opportunities for improvement in the planning, integration, delivery, and evaluation of learning and development.
This guide, produced in collaboration between the ANAO and the Australian Public
Service Commission, draws on the experiences of the ANAO audit of learning and development, as well as international and private sector trends. It is tailored specifically to the public sector through examples of APS agency better practice experience. The intention is to inform and influence key agency stakeholders as well as to encourage ongoing improvement by those with direct responsibility for learning and development.
This guide articulates the principles and characteristics of a framework for building capability. It provides advice on how to promote learning and development planning; identifies processes to position agencies to achieve good business outcomes; stresses the need for alignment and integration with other workforce activities (such as workforce planning and performance management) and shows the way forward to support a learning culture. It articulates governance considerations and appropriate reporting arrangements to fulfill Parliament’s accountability expectations.
The framework for managing learning and development in the APS presented in this guide is based on the following principles:
- align learning with business,
- integrate learning with human resources and other business processes,
- create a learning culture,
- provide appropriate learning options,
- manage learning effectively,
- support application of skills in the workplace, and
- evaluate learning and development.
Internal Budgeting (February 2003)
This guide deals with the internal budget processes in organizations and the extent to which those processes contribute effectively to the organization’s control environment and ability to meet its stated objectives. It has particularly close links with the Building Better Financial Management Support and Building a Better Financial Management Framework guides released in 1999.
Publications dealing with aspects of control structures in organizations include the following:
- Contract Management, February 2001
- Business Continuity Management - Keeping the wheels in motion, January 2000
- Building Better Financial Management Support - Functions, systems and activities for producing financial information, November 1999
- Building a Better Financial Management Framework - Defining, presenting and using financial information, November 1999
- Security and Control for SAP R/3, October 1998
- Controlling Performance and Outcomes - Control Structures in the Commonwealth
The ANAO has produced this guide following the conduct of a recent Financial Control and Administration Audit of internal budgeting processes. The audit identified a need for further guidance on the development of robust and businesslike internal budgeting practices to help managers operate more effectively in the accrual-based outcomes and outputs framework.1
Well developed and implemented budgeting processes are critical to providing a sound basis for controlling activity levels and for effectively monitoring and managing financial performance. Effective budgeting processes, in turn, can be a key driver in the successful delivery of an organization’s outputs (services). This guide is designed to assist managers
responsible for making decisions on the allocation, use and administration of resources.
In particular, it outlines a series of better practice elements that, if adopted, will encourage more efficient and effective management of resources and improve the capacity of internal budgeting to support the achievement of organizational goals and objectives.
The framework has three broad components:
- integrating internal budgeting processes with strategic planning, including the setting of priorities, and supporting them with a robust control and financial management structure;
- putting efficient and effective internal budget development processes in place, including the use of appropriate technology to provide decision-support tools; and
- regularly analyzing performance against budgets, using consistent and timely flows of information and implementing auditable accountability measures.
This guide should serve as a useful tool for managers responsible for internal budget development. This should, in turn, result in wider and more informed use of better internal budgeting practices contributing to better results.
Performance Information in Portfolio Budget Statements (Budget
Estimates) (May 2002)
Performance information is a critical tool for public sector management and accountability. Since the ANAO2 issued the Better Practice Guide Performance
Information Principles in November 1996, the public sector has adopted a framework for outcomes and output. This has required changes to agencies’ performance management regimes, particularly the development and reporting of performance information in Portfolio Budget Statements (PBS) and related Annual Reports.
A Parliamentary Committee, the Senate Finance and Public Administration Legislation Committee, has undertaken three reviews of performance information in PBS, which raised a number of concerns. In addition, the ANAO has undertaken an audit on the issue, the findings of which were provided in Audit Report Number 18, 2001-02, Performance Information in Portfolio Budget Statements. This audit examined performance information in the PBS in 10 Commonwealth agencies. This guide aims to address many of the issues highlighted by the Parliamentary Committee and the audit.
The examples and better practices included in this guide are drawn from the audit and a subsequent related workshop. They are aimed at helping practitioners develop and improve organizational performance information. The guide focuses on performance information in the PBS. However, the principles highlighted apply to all performance information, as PBS (accountability-related) performance information and general management performance information should be part of a fully integrated framework. The guide is intended to be used in conjunction with information provided by the Department of Finance and Administration on its website (http://www.finance.gov.au) in relation to the requirements for performance information in the PBS.
Reforms in the Australian Public Service (APS) over many years have emphasized the importance of a performance culture supported by clear lines of accountability. The performance of the APS, particularly its effectiveness, is now subject to increased levels of scrutiny. Performance information, assessment, and reporting are critical tools for monitoring and improving performance.
In the 1999-2000 budget, the APS moved from reporting performance on a program basis to an outcomes and outputs framework. Under the new arrangements, the focus is on improved accountability for performance. The foundation for agency accountability and transparency is performance information presented initially in agency Portfolio Budget Statements (PBS) with results being reported later in annual reports.
This guide addresses performance information under the following broad areas:
- performance information concepts–outcomes, output groups and outputs;
- performance information, including indicators, targets, cost, and data quality; and
- performance assessment and reporting–monitoring, annual reports, and presentation of performance information.
Administration of Grants (May 2002)
This Better Practice Guide has been prepared to provide practical assistance to those who may be involved with the planning, project selection, management, and review of grant programs within the Commonwealth. It also provides a useful basis for any future audits of grant programs. This edition of the Guide builds on previous editions issued in 1994 and 1997. The ANAO decided to update the Guide in the light of audits of grant programs since that time and to incorporate a number of fundamental changes that have occurred in the public sector environment. These changes particularly affect the accountability framework, performance management, and risk management of grant programs and funding agreements.
Among these changes are
- the introduction of the Financial Management and Accountability Act 1997 and associated legislation, which substantially changed the Commonwealth’s accountability framework;
- the Public Service Act 1999 incorporating the Australian Public Service (APS) Values and Code of Conduct;
- the move toward more networked service delivery, which has resulted in a more collaborative approach in the delivery of grant programs;
- the introduction of a new tax system, including the introduction of a Goods and Services Tax; and
- greater use of “one stop” shops for service delivery and on-line applications to improve responsiveness.
In 2000–2001, direct Commonwealth expenditure on grants to the private sector, including overseas grants, was estimated to be $3.2 billion. Public sector managers have a strong interest in ensuring that grant programs are appropriately designed and well administered to achieve the objectives of government.
This guide is most relevant for those funding arrangements that are
- discretionary, such that a minister or grant-giving organization has discretion in determining whether or not a particular applicant receives funding and the conditions that are imposed (as opposed to nondiscretionary, where the program or legislation creates an entitlement);
- selected from competing proposals on merit, based on an assessment against prespecified criteria;
- directed at achieving goals and objectives consistent with government policy; and
- designed for individuals and community groups that are, generally, in the not-for-profit sector (but profit-seeking organizations are not excluded).
Nevertheless, this guide contains administrative principles applicable to a wide spectrum of circumstances where the Commonwealth funds the activities of others, including payments to state, territory, or local governments.
This guide addresses grant administration under the following headings:
- planning for an effective grant program, including establishing the need for the program, appropriate strategies and controls, performance measures, and a planning checklist;
- selection of projects, including handling and appraising applications, and a selection checklist;
- management of funding agreements, including form of funding agreements, setting up monitoring arrangements, acquittal of grants, and a management checklist; and
- evaluation of the grant program, including managing the review/evaluation, carrying out a review or evaluation, and an evaluation checklist.
If you would like additional information, please contact the Publications Officer at
webmaster@anao.gov.au or via fax on +61 2 6203 7777 or telephone on +61 2 6203
7505.