Financial Management Standard 1997

Queensland Financial Administration and Audit Act 1977 Financial Management Standard 1997 Reprinted as in force on 13 October 2006 Reprint No. 4 This reprint is prepared by the Office of the Queensland Parliamentary Counsel Warning—This reprint is not an authorised copy NOT FURTHER AMENDED LAST REPRINT BEFORE REPEAL See 2009 SL No. 104 s 61

Information about this reprint This standard is reprinted as at 13 October 2006. The reprint— • shows the law as amended by all amendments that commenced on or before that day (Reprints Act 1992 s 5(c)) • incorporates all necessary consequential amendments, whether of punctuation, numbering or another kind (Reprints Act 1992 s 5(d)). The reprint includes a reference to the law by which each amendment was made—see list of legislation and list of annotations in endnotes. Also see list of legislation for any uncommenced amendments. Minor editorial changes allowed under the provisions of the Reprints Act 1992 mentioned in the following list have also been made to— • use different spelling consistent with current drafting practice (s 26(2)) • use standard punctuation consistent with current drafting practice (s 27) • use aspects of format and printing style consistent with current drafting practice (s 35). This page is specific to this reprint. See previous reprints for information about earlier changes made under the Reprints Act 1992. A table of reprints is included in the endnotes. Also see endnotes for information about— • when provisions commenced • editorial changes made in earlier reprints. Dates shown on reprints Reprints dated at last amendment All reprints produced on or after 1 July 2002, hard copy and electronic, are dated as at the last date of amendment. Previously reprints were dated as at the date of publication. If a hard copy reprint is dated earlier than an electronic version published before 1 July 2002, it means the legislation was not further amended and the reprint date is the commencement of the last amendment. If the date of a hard copy reprint is the same as the date shown for an electronic version previously published, it merely means that the electronic version was published before the hard copy version. Also, any revised edition of the previously published electronic version will have the same date as that version. Replacement reprint date If the date of a hard copy reprint is the same as the date shown on another hard copy reprint it means that one is the replacement of the other.

Queensland Financial Management Standard 1997 Contents Part 1 Division 1 1 2 3 Division 2 4 5 Division 3 6 7 8 9 10 Division 4 11 12 13 14 Part 2 Division 1 15 16 Division 2 17 18 Page Introductory Preliminary Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Dictionary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Purposes of standard and commentaries Purpose of standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Purposes of commentaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Application of standard Application generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Special application provisions for pt 2 . . . . . . . . . . . . . . . . . . . . . 9 Special application provisions for pt 3 . . . . . . . . . . . . . . . . . . . . . 10 Special application provision for pt 4 . . . . . . . . . . . . . . . . . . . . . . 10 Special application provision for pt 5 . . . . . . . . . . . . . . . . . . . . . . 10 Overview of relationship of standard, the Act and other documents Other financial management legislation and this standard. . . . . . 11 Responsibilities of accountable officers and statutory bodies . . . 12 Relationship between this standard and auditor-general’s report about financial statements . . . . . . . . . . . . . . . . . . . . . . . . . 13 Relationship of this standard with other documents. . . . . . . . . . . 13 Planning Purpose of part and relationship of plans Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Relationship of strategic plan to other plans . . . . . . . . . . . . . . . . 14 Strategic and operational planning for agencies Responsibility for strategic plan and operational plan . . . . . . . . . 15 Elements of strategic plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

19 20 21 Division 3 22 23 Division 4 24 25 26 Division 5 27 Part 3 Division 1 28 29 Division 2 30 31 Division 3 32 33 34 35 36 37 Division 4 38 39 40 41 42 43 Division 5 44 45 2 Financial Management Standard 1997 Consultation about strategic plans . . . . . . . . . . . . . . . . . . . . . . . . Strategic plan to be submitted . . . . . . . . . . . . . . . . . . . . . . . . . . . Operational plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic planning for ICT resources Responsibility for strategic planning for ICT resources . . . . . . . . Elements of ICT resources strategic plan . . . . . . . . . . . . . . . . . . Strategic planning for assets Responsibility for strategic planning for assets . . . . . . . . . . . . . . Elements of assets strategic plan. . . . . . . . . . . . . . . . . . . . . . . . . Consultation about assets strategic plan . . . . . . . . . . . . . . . . . . . Commercialisation Responsibility for commercialisation . . . . . . . . . . . . . . . . . . . . . . Management of resources Purpose of part and separation of duties Purpose of part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Separation of duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenue management Responsibility for revenue management . . . . . . . . . . . . . . . . . . . Elements of systems for revenue management . . . . . . . . . . . . . . User charging Definitions for division. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Responsibility to charge for goods and services . . . . . . . . . . . . . Elements of systems for charging for goods and services . . . . . . Considerations as to whether charge is to be applied . . . . . . . . . Level of charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Level of charges for certain entities . . . . . . . . . . . . . . . . . . . . . . . Expense management Responsibility for expense management . . . . . . . . . . . . . . . . . . . Elements of systems for expense management. . . . . . . . . . . . . . Credit card facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Record of special payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Action to be taken when losses are identified . . . . . . . . . . . . . . . Record of material losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset management Responsibility for asset management. . . . . . . . . . . . . . . . . . . . . . Elements of systems for asset management . . . . . . . . . . . . . . . . 16 16 17 18 18 20 20 21 22 23 23 24 24 27 28 28 28 29 30 31 32 34 35 36 37 37 38

47 48 49 50 Division 6 51 52 Division 7 53 54 54A Division 8 55 56 57 Division 9 57A 57B Part 4 58 59 60 61 62 63 Part 5 Division 1 65 66 Division 2 67 68 69 3 Financial Management Standard 1997 Evaluations of acquisitions, maintenance and improvements of physical assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Maintenance of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Suspense accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash management Responsibility for cash management . . . . . . . . . . . . . . . . . . . . . . Elements of systems for cash management. . . . . . . . . . . . . . . . . Liability management Responsibility for systems for liability management . . . . . . . . . . . Elements of systems for liability management . . . . . . . . . . . . . . . Other documents to which accountable officers and statutory bodies must have regard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial information management Responsibility for financial information management . . . . . . . . . . Elements of systems for financial information management . . . . Availability of financial information . . . . . . . . . . . . . . . . . . . . . . . . Management of contingent assets and contingent liabilities Responsibility for systems for contingent assets and contingent liabilities ...................................... Elements of systems for managing contingencies . . . . . . . . . . . . Performance management Purpose of part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Responsibility for information about performance . . . . . . . . . . . . Elements of systems for information about financial performance Elements of systems for information about operational performance ................................. Reporting about performance . . . . . . . . . . . . . . . . . . . . . . . . . . . Elements of systems for evaluating achievement of agency’s goals .................................... Corporate management Introduction What is corporate management . . . . . . . . . . . . . . . . . . . . . . . . . . Purpose of part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internal control structure Responsibility for internal control structure . . . . . . . . . . . . . . . . . Elements of structure for internal control . . . . . . . . . . . . . . . . . . . Control environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 42 43 43 44 44 46 46 47 48 48 50 52 52 53 53 54 55 56 56 57 58 58 59 59

4 Financial Management Standard 1997 70 71 Division 3 72 73 74 Division 4 75 76 77 78 79 80 81 82 Division 5 Subdivision 1 83 84 85 Subdivision 2 86 Subdivision 3 87 87A 87B 87C 87D 87E 87F 87G 87H Division 6 88 89 Information systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Control procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appraisal and risk assessment of agencies’ systems Responsibility for appraisal and risk assessment of systems. . . . Elements of framework for systems appraisal . . . . . . . . . . . . . . . Requirements for appraisal and risk assessment of systems . . . Internal audit and audit committees Application of division. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Responsibility for internal audit function . . . . . . . . . . . . . . . . . . . . Charter of internal audit function . . . . . . . . . . . . . . . . . . . . . . . . . Planning by internal audit function . . . . . . . . . . . . . . . . . . . . . . . . Reports by internal audit function. . . . . . . . . . . . . . . . . . . . . . . . . Consideration of reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relationship with authorised auditors. . . . . . . . . . . . . . . . . . . . . . Audit committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk management General Responsibility for policies and systems for risk management . . . Elements of systems for risk management . . . . . . . . . . . . . . . . . Risk management committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance contracts Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contract performance guarantees Definitions for sdiv 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Responsibility for contract performance guarantees . . . . . . . . . . Agency’s systems not limited by ss 87C–87G . . . . . . . . . . . . . . . Elements of systems for contract performance guarantees . . . . . Contract performance guarantees . . . . . . . . . . . . . . . . . . . . . . . . Contract performance guarantee by contractor . . . . . . . . . . . . . . Contract performance guarantee by approved security provider . Replacement of contract performance guarantees . . . . . . . . . . . Treasurer’s approval of security provider . . . . . . . . . . . . . . . . . . . Delegations Responsibility for delegations. . . . . . . . . . . . . . . . . . . . . . . . . . . . Elements of systems for delegations . . . . . . . . . . . . . . . . . . . . . . 59 60 63 64 64 65 65 65 66 67 68 68 68 70 70 71 72 73 74 75 75 75 76 76 77 77 78 78

5 Financial Management Standard 1997 Part 6 Division 1 94 Division 2 95 95A 96 Division 3 97 97A 98 98AA 98A Division 4 99A Part 7 Division 1 100 101 Division 2 102 103 104 105 Division 3 106 107 Schedule 1 Reporting by departments and statutory bodies Purpose of part Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annual and final reporting Content of annual report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Content of final report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional requirements for other entities in annual or final report Annual and final financial statements Requirements for annual financial statements of departments . . Requirements for final financial statements of abolished departments ................................... Requirements for annual financial statements of statutory bodies Requirements for final financial statements of abolished statutory bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other requirements for annual and final financial statements of agencies ................................... Reporting about derivatives Requirement to report to appropriate Minister about derivatives—Act, s 43D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitional provisions Transitional provisions for Subordinate Legislation 1997 No. 141 Definition for part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitional provisions for Financial Management Amendment Standard (No. 1) 1999 Definitions for div 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitional provisions for contract performance guarantees . . . . Procedure if approved security provider under previous guarantee no longer rated as approved security provider under previous provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Physical assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitional provisions for Financial Management Amendment Standard (No. 1) 2004 Prescribed accounting standards for a financial year ending before 1 July 2005—accountable officers . . . . . . . . . . . . . . . . . . Prescribed accounting standards for a financial year ending before 1 July 2005—statutory bodies . . . . . . . . . . . . . . . . . . . . . . Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies ....................................... 79 80 83 85 87 88 89 90 91 92 93 93 94 94 95 95 96 96 97

6 Financial Management Standard 1997 Schedule 2 Schedule 3 Schedule 4 Schedule 6 System of information management . . . . . . . . . . . . . . . . . . . . Prescribed accounting standards for a financial year ending before 1 July 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prescribed accounting standards for a financial year starting on or after 1 January 2005 . . . . . . . . . . . . . . . . . . . . . Dictionary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 101 106 111 Endnotes 1 2 3 4 5 6 7 8 Index to endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date to which amendments incorporated. . . . . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of reprints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tables in earlier reprints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of annotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of annotations to commentaries. . . . . . . . . . . . . . . . . . . . . . . . . . 118 118 119 119 120 120 121 129

s1 7 s4 Financial Management Standard 1997 Financial Management Standard 1997 [as amended by all amendments that commenced on or before 13 October 2006] Part 1 Introductory Division 1 Preliminary 1 Short title This standard may be cited as the Financial Management Standard 1997 . 2 Commencement (1) Section 97(1) and schedule 3 1 commence on 6 June 1997. (2) The remaining provisions commence on 1 July 1997. 3 Dictionary The dictionary in schedule 6 defines particular words used in this standard. Division 2 Purposes of standard and commentaries 4 Purpose of standard (1) The purpose of this standard is to provide for the following— 1 Section 97 (Requirements for annual financial statements of departments) and schedule 3 (Prescribed accounting standards for a financial year ending before 1 July 2005)

s5 8 s5 Financial Management Standard 1997 (a) the policies and principles to be observed in financial management, including planning, performance management, internal control and corporate management; (b) the content of financial statements, final financial statements, annual reports and final reports; (c) the matters to be included in manuals. 2 (2) The purpose is achieved by stating the functions of each accountable officer, former accountable officer, statutory body and administering department about matters for which this standard may be made. 3 5 Purposes of commentaries (1) This standard also includes commentary provisions. 4 (2) The commentary provisions— (a) provide extra guidance, by including examples and referring to other policies and guidelines, about provisions identified in the commentary; and (b) may state the best way for complying with this standard; and (c) may include a provision about related topics ( associated topics ). 2 The purpose reflects the matters about which the Treasurer may make standards under section 46L(1) (Financial management standards) of the Act. 3 Section 46L(3) of the Act provides that ‘Each accountable officer and statutory body must comply with relevant provisions of a standard.’. 4 Section 46LB (Financial management standard may include commentary about its operation) of the Act provides that the Treasurer may include in a standard a commentary if ‘the Treasurer considers it desirable’. However, the commentary is not part of the standard.

s6 9 s7 Financial Management Standard 1997 Division 3 Application of standard 6 Application generally This standard applies to each accountable officer, former accountable officer, statutory body or administering department unless— (a) this standard provides otherwise; or (b) the accountable officer or statutory body is exempted from compliance under section 46LC of the Act. 5 7 Special application provisions for pt 2 (1) Part 2 does not apply to— (a) a government owned corporation; or (b) a business undertaking of a department, if the undertaking has entered into an annual performance contract under the document called ‘Commercialisation of Government Service Functions in Queensland’. 6 (2) Sections 19, 20 and 26 7 do not apply to the auditor-general. (3) However, the auditor-general must consult with the Treasurer and the parliamentary committee about the resource implications of strategic plans for the audit office. 5 Section 46LC (Exemption from financial management standards) of the Act 6 Part 2 (Planning). Also, see schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document. 7 Sections 19 (Consultation about strategic plans), 20 (Strategic plan to be submitted) and 26 (Consultation about assets strategic plan)

s 8 10 s 10 Financial Management Standard 1997 8 Special application provisions for pt 3 (1) Part 3, division 3 and sections 41, 43, 45(7) and (9)(e), 47, 48(3) and 56(2) 8 do not apply to a government owned corporation. (2) Also, section 48(3) does not apply to a business undertaking of a department, if the undertaking has entered into an annual performance contract under the document called ‘Commercialisation of Government Service Functions in Queensland’. (3) If, under the document called ‘Code of Practice for Government Owned Corporations’ Financial Arrangements’, 9 the board of a government owned corporation approves a policy for the corporation and the subject matter of the policy is the same as the subject matter of a document mentioned in section 54A, 10 the corporation is not required to comply with the document. 9 Special application provision for pt 4 Section 63 11 does not apply to government owned corporations or the auditor-general. 10 Special application provision for pt 5 The following provisions do not apply to a government owned corporation— (a) section 71(2)(g); (b) part 5, division 3; 8 Part 3 (Management of resources), division 3 (User charging) and sections 41 (Record of special payments), 43 (Record of material losses), 45 (Elements of systems for asset management), 47 (Evaluations of acquisitions, maintenance and improvements of physical assets), 48 (Maintenance of assets) and 56 (Elements of systems for financial information management) 9 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document. 10 Section 54A (Other documents to which accountable officers and statutory bodies must have regard) 11 Section 63 (Elements of systems for evaluating achievement of agency’s goals)

s 11 11 s 11 Financial Management Standard 1997 (c) part 5, division 5, subdivision 3; (d) section 98(2)(b). Commentary—Application of standard In complying with division 3, the following comments should be considered— 1 Statutory GOCs must comply with this standard because, under the Government Owned Corporations Act 1993, section 127(1), the Financial Administration and Audit Act 1977 applies to a statutory GOC with any necessary changes . 2 This standard does not apply to company GOC’s because, under the Government Owned Corporations Act 1993, section 128(3), the provisions of the Financial Administration and Audit Act 1997 (other than section 38C and those prescribed by the Government Owned Corporations Act 1993, schedule 3) do not apply to a company GOC. 3 Although government owned corporations, and business undertakings of departments, are exempted from part 2, the statement of corporate intent of a government owned corporation, and the annual performance contract of a departmental business undertaking, reflect provisions similar to the requirements of this standard. Division 4 Overview of relationship of standard, the Act and other documents 11 Other financial management legislation and this standard (1) The financial management of an agency is governed by the Act, this standard and other legislation that applies to the agency. (2) The Act— (a) authorises the Treasurer to make standards as subordinate legislation; and (b) requires each accountable officer and statutory body to prepare a manual for the agency, stating the particulars of the agency’s financial systems and the practices and

s 12 12 s 12 Financial Management Standard 1997 controls necessary to give effect to matters about the agency’s financial management; 12 and (c) requires each officer engaged on duties in connection with the financial management of an agency to comply with the agency’s manual. (3) This standard provides a framework for an accountable officer or statutory body to develop and implement systems, practices and controls for inclusion in the agency’s manual. 12 Responsibilities of accountable officers and statutory bodies (1) Under the Act, each accountable officer and statutory body is assigned various functions. 13 (2) As part of the functions, every accountable officer and statutory body must manage the agency efficiently, effectively and economically, including, for example, by developing and implementing systems to ensure the appropriate use of, accountability for and safeguarding of, public resources. (3) Accountable officers and statutory bodies must not be limited by this standard but adopt a proactive approach in monitoring the appropriateness of the agency’s systems, operations and overall financial position. Example of subsection (3) — An accountable officer or statutory body may include matters in a system other than matters mentioned in this standard as elements of the system. 12 See sections 36(1)(g) (Functions and duties of all accountable officers), 46C(h) (Functions and duties) and 46M(2) (Financial Management Practice Manuals) of the Act. 13 See sections 36 (Functions and duties of all accountable officers) and 46C (Functions and duties) of the Act.

s 13 13 s 14 Financial Management Standard 1997 13 Relationship between this standard and auditor-general’s report about financial statements Compliance with the provisions of this standard about the establishment and keeping of accounts forms part of the audit report for the financial statements of an agency. 14 14 Relationship of this standard with other documents (1) This standard states the status and relationship of other documents to it. (2) If this standard provides that an accountable officer, former accountable officer, statutory body or administering department must have regard to another document, the officer, body or department complies with the provision by considering the contents of the document and deciding if the contents apply to the agency’s or abolished agency’s circumstances. (3) Schedule 1 states the documents made by the Treasurer, or published by the treasury department, that are mentioned in this standard together with details about the particular time the document is in force. 15 (4) Other documents mentioned in a provision of this standard are the documents as in force from time to time, unless the provision otherwise provides. 16 (5) Documents mentioned in a commentary are included for guidance only. 14 See sections 40 (General purpose financial statements) and 46G (Report of auditor-general) of the Act. 15 See section 46L(2) (Financial management standards) of the Act. 16 See section 38(2)(b) (Responsibility for expense management) for an example of an exception.

s 15 14 s 16 Financial Management Standard 1997 Part 2 Planning Division 1 Purpose of part and relationship of plans 15 Purpose (1) The purpose of this part is to state the functions of each accountable officer and statutory body for ensuring— (a) the agency plans its operations to focus on its performance and achieving results; and (b) the agency’s ICT resources support its operations; and (c) the agency effectively plans for its assets; and (d) the agency’s operations are reviewed to assess whether an operation is suitable for commercialisation. (2) Each accountable officer and statutory body is responsible for the development of plans under this part and for the ongoing implementation of the plans. 16 Relationship of strategic plan to other plans (1) Divisions 2, 3 and 4 state the functions of each accountable officer and statutory body for an agency’s— (a) strategic plans and operational plans; and (b) ICT resources strategic plans; and (c) assets strategic plans. 17 (2) Each accountable officer and statutory body must ensure the agency’s operational plans, ICT resources strategic plan and assets strategic plan are consistent with, and support, the agency’s strategic plan covering the timeframes of the operational plans, ICT resources strategic plan and assets strategic plan. 17 Divisions 2 (Strategic and operational planning for agencies), 3 (Strategic planning for ICT resources) and 4 (Strategic planning for assets)

s 17 15 s 18 Financial Management Standard 1997 (3) Subject to section 25(3), the agency’s ICT resources strategic plan and assets strategic plan may be included in the agency’s strategic plan. 18 Division 2 Strategic and operational planning for agencies 17 Responsibility for strategic plan and operational plan (1) During every financial year, each accountable officer and statutory body must develop— (a) a strategic plan for the agency; and (b) operational plans at levels of the agency that the accountable officer or statutory body considers appropriate, or an operational plan for the whole of the agency. (2) A strategic plan must cover a period of at least 4 years. 19 (3) An operational plan must cover a period of not more than 1 year. (4) A strategic plan and operational plan must be developed in the context of the Government’s social and fiscal objectives. 18 Elements of strategic plan (1) Each strategic plan for an agency must provide for— (a) stating the timeframe to be covered by the plan; and (b) identifying the agency’s purpose, role, goals and outputs; and (c) identifying and analysing the potential impact of key issues on— (i) the agency’s operations; and 18 Section 25 (Elements of assets strategic plan) 19 Even though a strategic plan must cover a period of at least 4 years, the plan must be developed every financial year.

s 19 16 s 20 Financial Management Standard 1997 (ii) achieving the Government’s social and fiscal objectives; and (d) stating the relationship between the agency’s goals and outputs and the Government’s social and fiscal objectives; and (e) stating the ways in which the agency intends to— (i) achieve its goals and outputs; and (ii) assist in achieving the Government’s social and fiscal objectives; and (f) setting performance measures for reviewing the progress towards achieving the agency’s goals and outputs. (2) An accountable officer or statutory body must ensure the agency’s strategic plan is prepared, and available before the start of the timeframe to which the plan relates. 19 Consultation about strategic plans (1) In developing an agency’s strategic plan, 20 the accountable officer or statutory body must consult with— (a) the appropriate Minister and, if the agency is a department, the Treasurer; and (b) other relevant persons. (2) For subsection (1)(a), the accountable officer must give to the appropriate Minister and the Treasurer a statement of major policy changes and consequential resource implications resulting from the proposed strategic plan. 20 Strategic plan to be submitted (1) After a department’s strategic plan has been prepared and consultations under section 19 are complete, the accountable officer must submit the strategic plan to the Premier, Treasurer and the appropriate Minister. 20 This section does not apply to the auditor-general—see section 7 (Special application provisions for pt 2).

s 21 17 s 21 Financial Management Standard 1997 (2) If the appropriate Minister directs a statutory body to submit the body’s proposed strategic plan to the Premier and Treasurer, the body must comply with the direction. (3) A submission under subsection (1) or (2) must state major policy changes and consequential resource implications resulting from the proposed strategic plan. 21 Operational plans (1) An agency’s operational plan must provide for the outputs the agency intends to deliver during the plan’s timeframe. (2) The plan must include details about output performance measures that allow the accountable officer or statutory body to assess the agency’s performance in delivering the outputs. (3) An operational plan must be available for distribution before the start of the timeframe to which it relates. Commentary—Strategic and operational planning for agencies In complying with division 2, the following comments should be considered— 1 Each accountable officer and statutory body is required to structure the agency’s operations to facilitate the achievement of the agency’s goals and the delivery of its outputs to the required standards. They are also required to assess their performance in achieving the goals. 2 The resource implications of an agency’s operations should be assessed against a department’s approved forward estimates or a statutory body’s available levels of resources. 3 As a general guide, an agency should start its strategic planning before the end of the agency’s budget processes. 4 Associated topics include— part 4—Performance management.

s 22 18 s 23 Financial Management Standard 1997 Division 3 Strategic planning for ICT resources 22 Responsibility for strategic planning for ICT resources (1) During every financial year, each accountable officer and statutory body must develop a strategic plan for the agency’s ICT resources. (2) The plan must— (a) be consistent with the targets stated in the GEA; and (b) demonstrate how the agency aligns with the targets stated in the GEA, including, for example, by— (i) meeting a target within the period stated in the GEA for the target; or (ii) qualifying for an exception for a target; and (c) be consistent with the mandatory principles of each information standard; and (d) cover a timeframe of at least 4 years. (3) If an information standard states a period in which a mandatory principle of the standard must be applied, the plan must provide for applying the principle— (a) in the period; or (b) if the results of a risk assessment indicate the principle is to be applied in another period—in the other period. (4) If an information standard does not state a period in which a mandatory principle of the standard must be applied, the plan must provide for applying the principle in a period that is consistent with the results of a risk assessment about when the principle is to be applied. 23 Elements of ICT resources strategic plan (1) Each ICT resources strategic plan for an agency must provide for the following— (a) stating the timeframe to be covered by the plan; (b) stating the goals of the plan and how the goals assist in—

s 23 19 s 23 Financial Management Standard 1997 (i) delivering the agency’s outputs; and (ii) achieving the Government’s social and fiscal objectives; (c) stating how the agency intends to support the whole-of-government policy about information and communication technology; (d) evaluating the needs of the agency and its clients for the agency’s existing ICT resources and any additional ICT resources; (e) stating how the agency will optimise the use of, and fund, existing and future ICT resources; (f) evaluating the effect on the agency’s operations of relevant external factors, including, for example, changes to the agency’s business environment. (2) Asset implications arising from the agency’s ICT resources strategic plan must be disclosed in the agency’s assets strategic plan developed under part 2, division 4. (3) The accountable officer or statutory body must ensure the ICT resources strategic plan is developed and available before the start of the timeframe to which the plan relates. Commentary—Strategic planning for ICT resources In complying with division 3, the following comments should be considered— 1 An agency’s ICT resources strategic plan is dependent on the agency’s direction under its strategic plan. The ICT resources strategic plan may be affected by other areas of the agency’s operations, including human resources, assets and finance plans. The dependencies should be identified and the appropriate processes documented. 2 Although agencies are required to align with targets in the GEA and apply the mandatory principles of the information standards, in developing ICT resources strategic plans, agencies should also have regard to other guidelines issued by the Office of Government ICT about ‘best practice’ . 3 In deciding the period in which a mandatory principle of an information standard is to be applied, the department administering the standard should consult with each agency that has significant ICT resources and have regard to the agency’s capacity to apply the

s 24 20 s 25 Financial Management Standard 1997 mandatory principle within the period to be stated in the information standard. 4 The Government’s social and fiscal objectives are stated in the charter of social and fiscal responsibility for the State prepared under part 1A of the Act. 5 Associated topics include— part 3—Management of resources, division 8—Financial information management. Division 4 Strategic planning for assets 24 Responsibility for strategic planning for assets (1) During every financial year, each accountable officer and statutory body must develop for the agency a strategic plan for assets. (2) The plan must cover a period of at least 4 years. 25 Elements of assets strategic plan (1) In developing an assets strategic plan for an agency, the accountable officer or statutory body must have regard to the following documents— (a) ‘Asset Strategic Plan Guidelines’; 21 (b) ‘Maintenance Management Framework’, as issued by the Department of Public Works. 22 (2) Each assets strategic plan for an agency must provide for— (a) analysing the key issues that may influence the agency’s requirements for assets in the medium to long term; and 21 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document. 22 A copy of this document may be obtained during business hours from the office of the Department of Public Works at 80 George Street, Brisbane or from that department’s website at <www.build.qld.gov.au>.

s 26 21 s 26 Financial Management Standard 1997 (b) analysing the appropriateness of existing assets in relation to the agency’s strategic plan and needs of its clients; and (c) identifying the need for new assets and developing strategies to meet the needs; and (d) identifying and developing strategies for— (i) achieving and maintaining the appropriate level of operational performance for assets; and (ii) maintaining physical assets in an appropriate condition; and (e) developing strategies for disposing of assets that are surplus to the agency’s requirements. 23 (3) If the agency’s investment in assets is expected to be more than $30000000 over any 4 consecutive financial years during the plan’s timeframe, the plan must be developed, and available for distribution, as a separate document. 24 (4) The accountable officer or statutory body must ensure the plan is developed and available before the start of the timeframe to which the plan relates. 26 Consultation about assets strategic plan In developing an agency’s assets strategic plan, the accountable officer or statutory body must consult with— (a) the appropriate Minister and, if the agency is a department, the Treasurer; and (b) other departments and statutory bodies with whom the accountable officer or statutory body considers it is necessary or appropriate to consult to ensure coordination of capital investment. 23 See section 49 (Disposal of assets). 24 Section 16(3) (Relationship of strategic plan to other plans) provides— Subject to section 25(3), the agency’s ICT resources strategic plan and assets strategic plan may be included in the agency’s strategic plan.

s 27 22 s 27 Financial Management Standard 1997 Commentary—Strategic planning for assets In complying with division 4, the following comments should be considered— 1 An agency’s assets strategic plan complements the agency’s strategic plan because it focuses on the strategic plans of the agency in relation to its management of assets. The plan should be linked with other aspects of strategic planning elements including, for example, goals, finance, human resource and information systems. 2 A best practice analysis of the asset needs of an agency would involve analysing the following— (a) the service environment, including, for example, the impact of population and distribution trends; (b) whether the existing level and configuration of assets are optimal for the agency’s strategic plan and client needs, including an assessment of utilisation, valuation, functionality, location, whole-of-life costs and relationship with the strategies of other relevant departments and statutory bodies; (c) appropriate actions to be carried out, including options for dealing with inadequately maintained assets and disposal action for surplus assets; (d) the cost needed to maintain the service potential of existing assets including cost needed to replace and upgrade existing assets to maintain the service potential of the asset; (e) apparent gaps between forecasted needs and existing asset infrastructure and a broad assessment of options to fill the gaps, including, for example, the disposal of surplus assets, funding from budget sources, private funding and other non-budget financing. 3 Consultation with other accountable officers and statutory bodies prevents duplication of service delivery and enables a whole of government perspective to be taken in considering the asset needs of the State. Division 5 Commercialisation 27 Responsibility for commercialisation (1) An accountable officer must regularly review the department’s operations to assess whether an operation may be commercialised.

s 28 23 s 29 Financial Management Standard 1997 (2) In conducting a review, the accountable officer must have regard to the document called ‘Commercialisation of Government Service Functions in Queensland’. 25 (3) Before commercialising an operation, an accountable officer must consult with the Treasurer. Part 3 Management of resources Division 1 Purpose of part and separation of duties 28 Purpose of part The purpose of this part is to state the functions of each accountable officer and statutory body for ensuring the efficient and effective management of the agency’s resources, namely— (a) the agency’s revenue (including charging for goods and services), expenses, assets (including cash) and liabilities; and (b) the agency’s information, including, for example, the storage, retention, reproduction and destruction of financial information. 29 Separation of duties (1) To the extent practicable, an accountable officer or statutory body must assign responsibility for each element of the management of the agency’s resources to different officers of the agency. 25 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document.

s 30 24 s 31 Financial Management Standard 1997 (2) Also, each accountable officer and statutory body must have regard to part 5, division 2 and ensure there are cost-effective controls for the management of the agency’s resources. 26 Commentary—Separation of duties In complying with section 29, the following comments should be considered— 1 Specific officers should be assigned responsibility to perform the different elements. All elements should be assigned. Responsibility ensures an officer is held accountable for performing the element. 2 Guidance on establishing and maintaining cost-effective internal control structures for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agenc y Performance’, as published by the treasury department. Division 2 Revenue management 30 Responsibility for revenue management Each accountable officer and statutory body must manage the agency’s revenue efficiently and effectively, including, for example, by developing and implementing systems for managing the agency’s revenue. 31 Elements of systems for revenue management (1) An agency’s systems for revenue management must provide for promptly identifying, collecting and writing-off revenue, and recording information about revenue. (2) Identifying revenue includes reviewing— (a) the agency’s operations to identify the existing sources of revenue; and (b) the environment in which the agency operates to identify potential sources of revenue; and (c) the size of each source of revenue, and difficulties, limitations or problems associated with each source. 26 Part 5 (Corporate management), division 2 (Internal control structure)

s 31 25 s 31 Financial Management Standard 1997 (3) Collecting revenue includes— (a) calculating amounts receivable and giving notice requiring payment of the amounts; and (b) providing credit to a person; and (c) collecting revenue; and (d) following-up outstanding revenue. (4) Writing-off revenue includes requiring appropriate authority before revenue is forgone, remitted, waived or otherwise written-off. (5) Recording information about revenue includes— (a) identifying and recording all transactions about revenue; and (b) identifying and managing amounts received for goods and services the agency has not yet provided; and (c) maintaining an adequate audit trail; and (d) obtaining information about revenue to allow the timely provision of relevant and reliable information for the agency’s managers and its external reports. (6) The systems may include arrangements for using a credit card facility, electronic funds transfer facility and any other facility for receipting amounts. (7) However, the systems may not allow the use of credit cards for paying taxation payable to the consolidated fund. Commentary—Revenue management In complying with division 2, the following comments should be considered— 1 Each accountable officer and statutory body should examine the agency’s operations to identify sources or potential sources of revenue, including, for example, fees, fines, grants, levies, subsidies and charging. Guidance about revenue may be found in the ‘Accounting Policy Guidelines’, published by the treasury department and available on that department’s website at <www.treasury.qld.gov.au>. It would be preferable if an agency’s review of revenue sources was carried out by managers who are familiar with the operation of the agency and aware of proposed initiatives. Because the budget processes involve consideration of

s 31 26 s 31 Financial Management Standard 1997 resources and requirements, the review may be undertaken at the same time. 2 Each accountable officer and statutory body should also identify the limits on the revenue base. Examples of possible limits on revenue are government policies, pricing tribunals, limitations on taxation increases and funding restrictions. 3 Most amounts are not payable by a person until a claim is made. It is beneficial to issue an invoice and request payment as early as possible to facilitate the cash flow of the agency. This notifies the debtor of the requirement to pay. A control should be established over the issue of invoices, for example, sequentially numbered invoices. 4 Each accountable officer and statutory body should also establish an appropriate accounting policy to establish the recognition of a debt if revenue is raised without issuing an invoice. 5 Each accountable officer and statutory body should decide and approve an appropriate credit policy that, amongst other things, identifies the required terms of payment for revenue raised (for example, 30 days credit). The policy should also include, if applicable, details of credit reference requirements and discount policies. 6 Procedures should be implemented to ensure the accuracy of the information, including, for example, the establishment and maintenance of control accounts (for recording total revenues less total amounts received) and the performance of regular and independent checks to ensure the total of the individual account balances agree with the control account total. 7 An agency’s internal controls should apply to the policies and procedures about the operations of the payment facility, including, obtaining authorisations, authorised floor limits and detecting unauthorised and forged signatures. 8 An assessment of long outstanding debtors should be performed on a regular basis, by an independent officer, to determine whether the amounts should be written-off after considering the follow-up action taken. The actions taken and reasons should be documented with reference to supporting records. 9 Each accountable officer and statutory body should clearly identify and monitor the amounts received by the agency for which neither goods nor services have been provided, for example, payments in advance. The amounts represent the unfulfilled obligation of the agency. 10 Records for revenue management need to identify when money is owed. Once recorded, the status of a debt can be monitored and, if necessary, followed-up until satisfied. The information in the record should include the date of the debt, payments, the outstanding

s 32 27 s 32 Financial Management Standard 1997 balance and any particular circumstances concerning the debtor and the debt, to enable management to assess whether the debt is likely to be, and should be, collected. 11 Guidance on establishing and maintaining cost-effective revenue management processes for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agency Performance’, as published by the treasury department. 12 Associated topics include— part 5—Corporate management, division 2—Internal control structure. Division 3 User charging 32 Definitions for division In this division— charge , for goods or services, includes a fee but does not include a fine, levy or tax. equity financing costs means amounts of public moneys that are financial returns payable by an agency to the consolidated fund, including, for example, charges and dividends. full cost , of goods or services, means all costs attributable to the goods or services, including, for example— (a) direct and indirect labour and management costs, including accruing staff entitlements and workers’ compensation; and (b) materials, including on-costs to cover handling and holding costs; and (c) the opportunity cost of non-current physical assets used in producing the goods or services; and (d) costs of non-current physical assets consumed; and (e) costs of debt financing and equity financing costs; and (f) taxes and tax equivalent costs, other than income tax. goods includes products and items. opportunity cost , of a non-current physical asset, means the return available from a similar investment.

s 33 28 s 35 Financial Management Standard 1997 services includes professional services. user , of goods or services, means an entity that uses the goods or services supplied by a department or statutory body. 33 Responsibility to charge for goods and services Each accountable officer and statutory body must develop and implement systems for charging for goods and services supplied by the agency. 34 Elements of systems for charging for goods and services An agency’s systems for charging for goods and services must provide for— (a) identifying the goods and services for which users must be charged; and (b) regularly examining the level of charges for the goods and services; and (c) ensuring the basis for charging complies with the information standards applicable to the goods and services; and (d) recording information to collect accurate and reliable data about the goods and services. 35 Considerations as to whether charge is to be applied In identifying an agency’s goods and services for which users must be charged, the accountable officer or statutory body must consider whether— (a) the users have the capacity to pay for the goods or services; and (b) the users have a choice to accept the goods or services; and (c) the goods or services are available from a supplier other than a department or statutory body; and (d) the goods or services are required or permitted by legislation; and

s 36 29 s 36 Financial Management Standard 1997 (e) the goods or services are supplied for the benefit of the general public or exclusively for the benefit of users who do not have the capacity to pay; and (f) the administrative costs of charging and collecting the charges are more than, or may be more than, the revenue collected and resulting long term gains in efficiency; and (g) an agreement exists about charging for the goods or services; and (h) charging for the goods or services improves, or may improve, resource allocation through the more economical use of the goods or services by users; and (i) other factors exist that the accountable officer or statutory body considers relevant. 36 Level of charges (1) Each accountable officer and statutory body must decide the charges for goods and services supplied by the agency. (2) In deciding charges, the accountable officer or statutory body must have regard to the full cost of providing the goods or services. (3) However, the accountable officer or statutory body may decide a charge for a particular good or service that is less than the full cost of the good or service (the lower charge ) if the officer or body is satisfied the lower charge is appropriate for another reason, including, for example— (a) the lower charge reflects the commercial market rates that apply to comparable goods or services in the market in which the agency is operating; and (b) the lower charge may encourage a rational choice by users; and (c) the impact of the lower charge on achieving the social objectives implicit in delivering the goods or services; and (d) if the particular good or service involves information held by a department or statutory body—the information standard applicable to the good or service; and

s 37 30 s 37 Financial Management Standard 1997 (e) other factors exist that the accountable officer or statutory body considers relevant. (4) This section is subject to section 37. 37 Level of charges for certain entities (1) This section applies to the accountable officer of a department if an operation of the department— (a) has been commercialised; or (b) is about to be commercialised by the accountable officer; or (c) is declared, under an Act, to be a significant business activity. (2) The accountable officer must decide the charges for goods or services provided by a commercialised operation, or an operation about to be commercialised, under the document called ‘Commercialisation of Government Service Functions in Queensland’. 27 (3) The accountable officer must decide the charges for goods or services provided by a significant business activity under the document called ‘Full Cost Pricing Policy’, unless the charge must be decided under subsection (2). 28 Commentary—User charging In complying with division 3, the following comments should be considered— 1 Users of an agency’s goods or services should be charged for the consumption of the goods or services. However, charging for goods and services may not occur in every situation. Section 35 lists a number of factors the accountable officer or statutory body should consider before deciding whether a charge should be applied to the provision of a particular good or service. The factors are not 27 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document. 28 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document.

s 38 31 s 38 Financial Management Standard 1997 exhaustive and consideration may be given to other factors considered relevant. 2 Goods and services provided by a department or statutory body may be provided as a social benefit, free of charge. However if the recipient of the goods or services has the capacity to pay for the goods or services, charging may be appropriate. 3 The discretion of the user as to the amount of the goods or services received, and the choice of alternative suppliers indicates a market situation that allows the supplier to charge for goods or services. 4 In deciding the full cost of providing goods and services, all relevant overheads should be allocated. Division 4 Expense management 38 Responsibility for expense management (1) Each accountable officer and statutory body must develop and implement systems for managing the agency’s expenses efficiently and effectively, to achieve reasonable value for money. (2) To the extent the following documents apply to the agency, the accountable officer and statutory body must comply with them when developing the agency’s systems for expense management— (a) The Queensland Ministerial Handbook, as published by the Department of the Premier and Cabinet; 29 (b) General Guidelines for Personal Expenses and the Use of Credit Cards by Public Service Employees, as issued by the Office of the Public Service Commissioner. 30 (3) In developing the agency’s systems for expense management, the accountable officer or statutory body must ensure the agency’s systems provide that, if the agency does not comply 29 A copy of this document may be obtained during business hours from the Department of the Premier and Cabinet at 100 George Street, Brisbane or from that department’s website at <www.premiers.qld.gov.au>. 30 A copy of this document may be obtained during business hours from the Office of the Public Service Commissioner at 61 Mary Street, Brisbane or from that office’s website at <www.opsc.qld.gov.au>.

s 39 32 s 39 Financial Management Standard 1997 with the State Purchasing Policy published by the Department of Public Works, 31 the accountable officer or statutory body must record the reason for not complying with it. 39 Elements of systems for expense management (1) An agency’s systems for expense management must deal with the issues of identifying, approving, paying and recording expenses. (2) Identifying expenses includes reviewing the agency’s operations to identify the sources of, and reasons for, incurring expenses. (3) Approving expenses includes— (a) requiring appropriate approval before incurring the commitment for an expense; and (b) incurring an expense only for authorised purposes; and (c) ensuring an expense represents reasonable value for money for the agency. (4) Paying expenses includes— (a) obtaining reasonable assurances that the amount of an expense is correct and the goods or services the subject of the expense have been provided as requested by the agency; and (b) paying, under the agency’s systems for cash management, an expense when it is due; and (c) issuing payments in a secure way; and (d) ensuring an officer, with appropriate authority, authorises a payment before it is made. (5) Recording expenses includes— (a) identifying and recording all transactions in which an expense is incurred; and (b) maintaining an adequate audit trail; and 31 A copy of this document may be obtained during business hours from the office of the Department of Public Works at 80 George Street, Brisbane or from that department’s website at <www.qgm.qld.gov.au>.

s 39 33 s 39 Financial Management Standard 1997 (c) obtaining information about expenses to allow the timely provision of relevant and reliable information for the agency’s managers and its external reports. (6) An agency’s systems for expense management must also provide for— (a) fair and competitive procurement; and (b) delegations supporting the efficient operation of the agency. Commentary—Elements of systems for expense management In complying with section 39, the following comments should be considered— 1 In identifying the sources of expenses, and when they occur, each accountable officer and statutory body should consider the information needed to manage the agency’s operations efficiently, effectively and economically. This information should be used when developing the agency’s budget as well as monitoring the agency’s operations. 2 To prepare relevant and reliable information for an agency’s managers and its external reports, all transactions for expenses should be recorded accurately, completely and promptly. This requires a process to ensure an obligation is identified and immediately recorded in the accounting system. Once recorded, management can monitor the amount of the expense and approve payment at the appropriate time. 3 All payments should be properly approved by an officer who has the appropriate delegated authority. The approval of the payment assigns responsibility for the amount spent and ensures the money is expended in accordance with the agency's objectives. 4 The cost of internal controls, and the benefits and functions they provide, should be regularly evaluated. In addition to managing the resources of the agency effectively, the agency is required to be accountable for its use of the resources. The use of cost-effective internal controls helps in this process by confirming transactions are performed accurately, completely, on a timely basis and with appropriate approval. 5 In developing an agency’s systems for expense management, the accountable officer or statutory body should have regard to the ‘Accounting Policy Guidelines’, as published by the treasury department. 6 Guidance about cost-effective expense management processes for an agency may be found in the document called ‘Guidelines for

s 40 34 s 40 Financial Management Standard 1997 Grant Administration’, as published by the treasury department in April 1997. A copy of this document may be obtained from the department’s office at 100 George Street, Brisbane or from the department’s website at <www.treasury.qld.gov.au>. 40 Credit card facilities (1) For an agency’s systems for expense management, the accountable officer or statutory body may enter into arrangements for the following credit card facilities— (a) general credit card facilities, including, for example, a purchase card facility established by the Treasurer; (b) special purpose credit cards facilities, including, for example, a fuel card facility. (2) The arrangement for a credit card facility must— (a) state the charges that may be imposed by the provider of the facility; and (b) provide for the accountable officer or statutory body to be given frequent and regular information, including, at least, a monthly statement or record of transactions and balances; and (c) provide for individual card limits and security against unauthorised use; and (d) state the agency and the State are not liable for unauthorised use of individual cards by a person other than the authorised user. (3) Each accountable officer and statutory body must implement systems for credit card facilities that ensure— (a) credit cards are used only for authorised purposes; and (b) misuse is promptly detected, through the operation of internal controls, and reported to the accountable officer or statutory body; and (c) use of an official credit card facility is restricted to appropriate officers; and (d) if practicable, only one account in the name of the department or statutory body is opened with the provider of the facility; and

s 41 35 s 41 Financial Management Standard 1997 (e) reasonable documentation about the transactions is kept; and (f) for a department—the systems are consistent with the document called ‘Treasurer’s Guidelines for the use of the Queensland Government Corporate Purchasing Card’. 32 Commentary—Credit card facilities In complying with section 40, the following comments should be considered— 1 When an officer uses a credit card facility, the officer responsible for the card should keep the relevant documents, including supporting invoices and dockets. This documentation can be used to substantiate the use of the card and form the basis of supporting documentation for payment of the account within the settlement period. In addition, the provision of relevant and reliable information helps the agency in monitoring the usage and transactions of the facility. 41 Record of special payments (1) Each accountable officer and statutory body must keep a record of the agency’s special payments 33 of more than $5000 ( prescribed special payments ), including the following details about each payment— (a) its date; (b) the recipient; (c) the reason for the payment; (d) the approval given. (2) The record may include other details the accountable officer or statutory body considers relevant. 32 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document. 33 Schedule 3 (Dictionary) of the Act— special payments includes ex gratia and extra-contractual expenditure.

s 42 36 s 42 Financial Management Standard 1997 Commentary—Record of special payments In complying with section 41, the following comment should be considered— 1 The classes of special payments include ex-gratia payments, extra-contractual payments, out of court settlements and court ordered damages. 42 Action to be taken when losses are identified (1) After an accountable officer or statutory body becomes aware of a material loss, the officer or body must promptly— (a) investigate the circumstances of the loss; and (b) prepare a report about it; and (c) take action to prevent the loss recurring. (2) If the accountable officer or statutory body suspects any loss to be a result of an offence under the Criminal Code or another Act, the accountable officer or body must also give written notice about the loss to— (a) a police officer; and (b) if official misconduct of an officer of a department or statutory body is suspected—the Crime and Misconduct Commission; and (c) the auditor-general. Commentary—Action to be taken when losses are identified In complying with section 42, the following comment should be considered— 1 If a loss is not material, an agency’s Financial Management Practice Manual should provide for the action to be taken, including, for example, the following— (a) whether to investigate the circumstances of the loss; (b) the extent of any investigation; (c) whether to prepare a report about the loss; (d) the action to be taken to obtain reimbursement of the loss; (e) when to write-off the loss.

s 43 37 s 44 Financial Management Standard 1997 43 Record of material losses (1) Each accountable officer and statutory body must keep a record of each material loss of property, including money. (2) The record must include the following details about each material loss— (a) a description of the property, including its value; (b) the reason for the loss; (c) action taken about the loss, including, for example, action taken to obtain reimbursement; (d) provision established in anticipation of the type of loss; (e) details about approval for writing-off the loss. Commentary—Record of material losses In complying with section 43, the following comments should be considered— 1 Losses may result from various causes including theft, writing-off bad debts, unauthorised acts and omissions and wilful destruction. Losses do not include provisions for doubtful debts nor periodic inventory adjustments. Also losses do not include the consequences of events such as floods, bush fires, cyclones or similar events. 2 The agency’s report must recommend an action required to minimise the resulting loss and prevent its recurrence. The losses must be written off under the approved delegations. 3 Associated topics include— part 5—Corporate management, division 6—Delegations. Division 5 Asset management 44 Responsibility for asset management (1) Each accountable officer and statutory body must manage the agency’s assets efficiently and effectively, including, for example developing and implementing systems for asset management. (2) Also, each accountable officer and statutory body must review the agency’s operations for the following—

s 45 38 s 45 Financial Management Standard 1997 (a) the need for existing or additional assets; (b) the appropriateness of the depreciation rates used; (c) the agency’s assets maintenance system for physical assets. 45 Elements of systems for asset management (1) An agency’s systems for asset management must provide for— (a) identifying, acquiring, maintaining, disposing of, valuing, recording and writing-off assets; and (b) dealing with assets held in trust separately from other assets. (2) Identifying assets includes— (a) identifying cost-effective options for acquiring, maintaining and disposing of assets; and (b) promptly identifying assets; and (c) verifying the existence of assets on a regular basis. (3) Acquiring assets includes obtaining appropriate authority before acquiring the assets. (4) Maintaining assets includes— (a) using assets for authorised purposes only; and (b) maximising the benefits from using assets; and (c) protecting assets from loss; and (d) storing assets securely; and (e) checking for compliance, and taking action to remedy any noncompliance, with the agency’s assets maintenance system. (5) Disposing of assets includes developing and implementing systems for disposing of the assets, as required under section 49. (6) Valuing assets includes— (a) valuing and revaluing assets under the prescribed accounting standards; and

s 45 39 s 45 Financial Management Standard 1997 (b) accurately and regularly appraising the useful life of assets to the agency. (7) In identifying, acquiring, maintaining, disposing of, valuing or revaluing, recording or writing-off an agency’s assets, the accountable officer or statutory body must comply with the document called ‘Non-Current asset policies for the Queensland public sector’. Editor’s note — See schedule 1 for information about this document. (8) For material assets that are valued at fair value, the accountable officer or statutory body must— (a) comprehensively revalue the assets at least once every 5 years; and (b) otherwise revalue the assets at least annually between comprehensive revaluations. (9) Recording assets includes— (a) accurately calculating depreciation based on the asset’s useful life to the agency; and (b) maintaining an adequate audit trail; and (c) identifying and recording transactions for assets; and (d) obtaining information about assets to allow the timely provision of relevant and reliable information for the agency’s managers and its external reports; and (e) for land assets, complying with the Government Land Policy section on ‘Property Tenure’. 34 (10) Writing-off assets includes obtaining appropriate authority for writing-off the assets. (11) In this section— material assets means those assets in a class, the combined value of which forms a material proportion of the total value of all the assets in the class. 34 The Government Land Policy section on ‘Property Tenure’ may be found in the PMC Property Management Portal at the website address <www.pmc.qld.gov.au>.

s 45 40 s 45 Financial Management Standard 1997 Commentary—Elements of systems for asset management In complying with section 45, the following comments should be considered— 1 Most agencies hold significant assets. It is important for the assets to be used for their intended purpose and put to their optimal use. During asset verification procedures, agencies should be able to identify surplus assets and assets that are not used to their full capacity. 2 Before purchasing an asset, an agency should consider other alternatives. The evaluation process should also involve an assessment of the efficiency and effectiveness of the asset, the benefits expected from the asset, its suitability for the purpose and alternative methods of achieving the expected benefits. In choosing the most appropriate option for asset investment, opportunities for improved design and functional efficiency (having regard to whole-of-life costs and quality of service delivery outcomes) should be considered. 3 If an asset is identified and recognised as soon as it exists, an agency can promptly record, monitor and manage the benefits flowing from the asset and the associated expenses. 4 Assets should be appropriately maintained to maximise their benefit to the agency. There are further requirements about the development of a strategy for the maintenance of physical assets in section 48. 5 The document called ‘Non-Current Asset Policies for the Queensland Public Sector’ sets out the classes of assets required to be revalued using the fair value system. It is not necessary to revalue all assets in a class that are valued using the fair value system. However, accountable officers and statutory bodies should ensure the total value of assets that are not revalued does not form a material proportion of the total value of the assets within the class. Guidance on applying the concept of materiality is contained in AAS 5/AASB 1031 ‘Materiality’. 6 The frequency of asset verification procedures should be decided after considering the risk profile and materiality of each class of asset. Assets should be verified on a rolling basis to ensure all assets are verified at least once every 3 years. 7 To prepare and produce relevant and reliable information for an agency’s managers and its external reports, it is essential that all transactions about assets are recorded accurately, completely and promptly. Therefore, a system should be established for identifying when an asset exists or is acquired and recording the details in the accounting systems. These details would include the acquisition date, acquisition cost, location, useful life and other identifiable details, including a serial number. Once recorded, management can

s 47 41 s 47 Financial Management Standard 1997 make decisions regarding the asset’s use. This should help management in planning and managing the agency’s resources. 8 In addition to managing the resources of the agency efficiently and effectively, the accountable officer or statutory body is required to be accountable for its use of the resources. The use of internal controls helps in this process by confirming transactions are performed accurately, completely, on a timely basis and with appropriate approval. The internal controls required under part 5, division 2 are some of the internal controls to be implemented by agencies. 9 Guidance on establishing and maintaining cost-effective asset management processes for an agency may be found in the ‘Government Asset Management System” (“GAMS”) as developed by the Department of Natural Resources and Mines. GAMS may be viewed at the website address, <http://gams.govnet.qld.gov.au>. 47 Evaluations of acquisitions, maintenance and improvements of physical assets (1) This section applies if an accountable officer or statutory body estimates the cost of acquiring, maintaining or improving a physical asset is $1000000 or more. (2) Before acquiring, maintaining or improving the asset, the accountable officer or statutory body must prepare a written evaluation about the acquisition, maintenance or improvement. (3) When evaluating the acquisition, maintenance or improvement of the asset, the accountable officer or statutory body must— (a) prepare an appraisal of all reasonable options that would meet the needs of the agency; and (b) ensure the most appropriate and best value for money option is chosen; and (c) assess the priority of acquiring, maintaining or improving the asset as opposed to acquiring, maintaining or improving other physical assets, for which the cost is $1000000 or more; and (d) provide for a review of completed assets to ensure the agency’s needs were met, and compare actual performance with original objectives of the assets.

s 48 42 s 48 Financial Management Standard 1997 (4) Within 6 months after the end of a department’s financial year, the accountable officer must give to the Treasurer— (a) a list of the evaluations, and relevant amounts, performed in the financial year; and (b) a document describing the processes and results of evaluations under this section if— (i) the Treasurer has asked for the document; or (ii) the cost of acquiring, maintaining or improving the asset is estimated to be more than $5000000. 48 Maintenance of assets (1) Each accountable officer and statutory body must develop and implement a system for the maintenance of the agency’s assets. (2) An agency’s system must ensure the agency’s assets remain appropriate and productive at the lowest possible long term cost. (3) Each accountable officer and statutory body must ensure the agency’s system is consistent with, and supports, the agency’s asset strategic plan. Commentary—Evaluations of acquisitions, maintenance and improvements of physical assets—Maintenance of assets In complying with sections 47 and 48, the following comments should be considered— 1 Guidance about managing an agency’s assets may be found in the documents called the ‘Accounting Policy Guidelines’ and the ‘Project Evaluation Guidelines’, as published by the treasury department. 2 The physical assets maintenance system of a department or statutory body may include an analysis of the following— (a) the most cost-effective ways of maintaining the agency’s physical assets; (b) the appropriateness of the current level and cost of maintenance, in the context of the service potential and need for the agency’s physical assets. 3 An agency’s physical asset maintenance system may—

s 49 43 s 50 Financial Management Standard 1997 (a) evaluate and list maintenance projects according to appropriate maintenance criteria; and (b) identify assets for which the maintenance requirements warrant consideration of retirement or disposal of the asset and link to the agency’s system for the disposal of its assets. 49 Disposal of assets (1) Each accountable officer and statutory body must develop and implement systems for disposing of the agency’s assets that are surplus to the agency’s requirements. (2) An agency’s systems for disposing of assets must provide for— (a) the way of disposing of the assets, including disposing of the assets to another agency; and (b) the amounts that are to be the thresholds for each way of disposing of the assets; and (c) the assignment of authority to stated officers to authorise disposal of assets; and (d) the assignment of responsibility to stated officers for disposing of assets. (3) The concurrent aims of each agency’s systems must be— (a) reasonable value for money; and (b) best overall use of public property. Commentary—Disposal of assets In complying with the section 49, the following comments may be considered— 1 Best overall use of public property should include consideration of whether the asset may be used by another area of the agency, or another agency, and the processes for the appropriate transfer. 50 Suspense accounts (1) Each accountable officer and statutory body must develop and implement systems for accounts ( suspense accounts ) for holding money until the way in which the money is to be accounted for is decided.

s 51 44 s 52 Financial Management Standard 1997 (2) An agency’s systems for suspense accounts must ensure— (a) the sources of items in the accounts are readily identified; and (b) amounts included in the accounts are promptly cleared; and (c) reconciliations are performed regularly to confirm the balance of each account; and (d) reports are provided to the accountable officer or statutory body about items that have been in the agency’s suspense accounts for more than 6 months. (3) A report must state— (a) the action taken to identify the source of each item; and (b) a recommendation about the proposed action for the item; and (c) a record of the consideration and decisions of the accountable officer or statutory body about the item. Division 6 Cash management 51 Responsibility for cash management Each accountable officer and statutory body must manage the agency’s cash resources efficiently and effectively, including, for example, by developing and implementing systems for managing the agency’s cash and the agency’s involvement in cash transactions. 52 Elements of systems for cash management (1) An agency’s systems for cash management must provide for identifying, collecting, paying and investing cash, and recording transactions involving cash. (2) Identifying cash includes identifying when transactions in cash are made and when cash is received. (3) Collecting cash includes— (a) receipting and banking receipts promptly; and

s 52 45 s 52 Financial Management Standard 1997 (b) storing cash securely. (4) Paying cash includes making payments at a time that maximises returns on cash and satisfies payment terms. (5) Investing cash includes— (a) promptly identifying cash surpluses or deficiencies to maximise the return on cash held; and (b) for a statutory body—investing cash under the prescribed requirements. (6) Recording transactions involving cash includes— (a) recording details about the receipt of cash promptly; and (b) accounting for interest earned on money held in trust under a trust deed or an Act; and (c) identifying, recording and reconciling cash transactions; and (d) maintaining an adequate audit trail; and (e) recording information about transactions to allow the timely provision of relevant and reliable information for the agency’s managers and its external reports. (7) Also, a department’s systems for cash management must provide for transmitting timely and reliable cash flow forecasts to the Treasurer. Commentary—Cash management In complying with division 6, the following comments should be considered— 1 The Treasurer invests cash on behalf of accountable officers through the power conferred on the Treasurer under the Financial Administration and Audit Act 1977, section 41. Statutory bodies may be authorised to invest cash, on their own behalf, under the Statutory Bodies Financial Arrangements Act 1982 or another Act. 2 For restrictions on the investment and lending powers of a body, including a department, see the Financial Administration and Audit Act 1977, section 40C(1). Subject to section 40C(2) of that Act, a body, including a department, may operate a deposit and withdrawal account with a financial institution. 3 An agency needs to be able to identify the sources of cash transactions, to anticipate the timing of the transactions and

s 53 46 s 54 Financial Management Standard 1997 resultant impact on the agency’s cash balance. This analysis enables adequate planning to be performed to manage the various increments and decrements of the cash balance and to maximise the investment of funds surplus to immediate requirements. Agencies should also conduct reviews to assess the accuracy of their cash flow forecasts. 4 Interest earned should be compared with the amount the agency expected to earn. 5 Guidance on establishing and maintaining cost-effective cash flow management processes for an agency may be found in the document called ‘Cost-Effective Internal Control-Underpinning Agency Performance’, as published by the treasury department. Division 7 Liability management 53 Responsibility for systems for liability management Each accountable officer and statutory body must manage the agency’s liabilities efficiently and effectively, including, for example, by developing and implementing systems for managing the agency’s liabilities. 54 Elements of systems for liability management (1) An agency’s systems for liability management must deal with the issues of identifying, incurring, measuring, satisfying and recording liabilities. (2) Identifying liabilities includes providing for— (a) identifying the options for incurring a liability; and (b) promptly identifying the existence of a liability, including, for example, employee entitlements, loans, repayable advances, leasing liabilities and revenue received for goods or services that have not yet been provided. (3) Incurring liabilities includes— (a) incurring liabilities for authorised purposes; and (b) requiring appropriate authority before incurring liabilities.

s 54A 47 Financial Management Standard 1997 s 54A (4) Measuring liabilities includes assessing the amount of the liabilities. (5) Satisfying liabilities includes settling the liabilities when they become due. (6) Recording liabilities includes— (a) recording the liabilities in the name of the agency; and (b) recording the details of the liabilities, including, for example, the date it is incurred, the settlement date, payment terms and interest rate; and (c) maintaining an adequate audit trail; and (d) identifying and recording transactions about liabilities; and (e) providing information about liabilities to allow the timely provision of relevant and reliable information for the agency’s managers and its external reports. (7) Also, the systems for liability management must include— (a) complying with the prescribed requirements; and (b) promptly identifying, monitoring, recording and reporting contingent liabilities and commitments for capital expenditure. 54A Other documents to which accountable officers and statutory bodies must have regard Each accountable officer or statutory body must, in managing an agency’s liabilities, comply with the following documents— (a) Overdraft Facilities—Operational Guidelines for the Public Sector; (b) Leasing in the Queensland Public Sector—Policy Guidelines. 35 35 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2 ) of the Act applies) for details about these documents.

s 55 48 s 56 Financial Management Standard 1997 Commentary—Liability management In complying with division 7, the following comments should be considered— 1 Guidance on liabilities may be found in the ‘Accounting Policy Guidelines’, as published by the treasury department. 2 An agency should forecast its cash flows to ensure it is able to satisfy its liabilities as they fall due. Reasonable details about liabilities should be kept to ensure the correct amount is calculated and settled. 3 In some instances it may be necessary to estimate, on reasonable grounds, the amount of a liability, for example, employee entitlements. 4 Guidance on establishing and maintaining cost-effective liability management processes for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agency Performance’, as published by the treasury department. Division 8 Financial information management 55 Responsibility for financial information management Each accountable officer and statutory body must manage the agency’s financial information efficiently and effectively, including, for example, developing and implementing systems for information management. 56 Elements of systems for financial information management (1) An agency’s systems for financial information management must deal with the issues of recording, storing, keeping, retrieving and destroying financial information. (2) In developing and implementing the systems, each accountable officer and statutory body must— (a) apply the mandatory principles of the information standards; and (b) ensure the systems align with targets stated in the GEA; and

s 56 49 s 56 Financial Management Standard 1997 (c) ensure the Public Records Act 2002 is complied with; and (d) for information about a person other than a department or statutory body—ensure information about the person is secure. (3) Also, the agency’s systems must provide for— (a) responding to reasonable requests for information within a reasonable period; and (b) providing information on a cost-effective basis; and (c) providing relevant and reliable information; and (d) providing safe custody for documents the accountable officer or statutory body— (i) must, under an Act, keep in safe custody; or (ii) considers it appropriate to keep in safe custody. (4) Before introducing a computerised financial information system or significantly changing a financial information system, the accountable officer or statutory body must consult with— (a) the person immediately responsible for the agency’s internal audit function, if relevant; and (b) the authorised auditor or, if the auditor-general has been exempted from the audit, the other auditor appointed under section 74 36 of the Act, on matters regarding audit and internal control. Commentary—Elements of systems for financial information management In complying with section 56, the following comments should be considered— 1 To prepare and produce relevant, reliable and timely information for an agency’s managers and its external reports, it is essential all necessary information about transactions is recorded accurately, completely and promptly. 36 Section 74 (Exemption of certain public sector entities from audit by auditor-general) of the Act

s 57 50 s 57 Financial Management Standard 1997 2 The information management systems should be coordinated around the needs of management. The systems established should be cost-effective, for example, the cost of obtaining and retrieving the information should be, in most cases, less than the benefit obtained by having this information available. This analysis should consider the risks of not having the information available when making a decision. 3 When developing computerised financial information systems, liaison with internal and external auditors ensures appropriate processes and controls are included in the system to ensure the accountability of public funds and the safeguarding of public property. Also, liaison with the State archivist ensures appropriate processes and controls are included in the systems to ensure information is able to be kept in an appropriate form for the necessary retention period and suitable strategies are developed for migrating information of continuing value through successive systems. 4 Each accountable officer and statutory body should keep registers for certain types of documents including, for example, legal documents, cheques and other documents to be accounted for. The register for each type of document should include details about— (a) the existence of the document; and (b) its nature; and (c) the destruction, cancellation, transfer or issue of the documents. 5 Associated topics include— part 4—Performance management. 57 Availability of financial information (1) Each accountable officer and statutory body must keep financial information, in its original form, for— (a) if the information relates to 1 financial year—1 year after the date of the audit report for the financial year; or (b) if the information relates to more than 1 financial year—1 year after the date of the audit report for the last of the financial years to which the information relates. (2) After the period for which financial information must be kept under subsection (1), the information may be kept in another form.

s 57 51 s 57 Financial Management Standard 1997 (3) The financial information stated in schedule 2 must be kept, in its original form or another form, for the period stated in the schedule for the information. 37 (4) Each accountable officer and statutory body must ensure financial information that may be required in evidence in proceedings or otherwise, or for an audit purpose, is kept until no longer required even if— (a) for information stated in schedule 2—the period stated in the schedule for the information has ended; or (b) for other information—the period mentioned in subsection (1)(a) or (b) has ended. (5) This section applies even if the State archivist has authorised the disposal of the financial information. 38 (6) In this section— another form , for keeping information, means keeping the information in a form that— (a) ensures the integrity and reliability of data; and (b) enables it to be reproduced with or without the aid of another article or device. Commentary—Availability of financial information In complying with section 57, the following comments should be considered— 1 Each accountable officer and statutory body should consider keeping a register of information kept in another form under section 57(2). If financial information is destroyed on purpose, a register of destroyed information should be kept with information about each destruction. The registers should contain details to ensure an adequate audit trail is maintained about the information. 37 Schedule 2 (System of information management) 38 However, this section does not authorise the disposal of financial information. The Public Records Act 2002 provides for disposing of public records and creates an offence of disposing of public records other than under that Act.

s 57A 52 Financial Management Standard 1997 s 57B Division 9 Management of contingent assets and contingent liabilities 57A Responsibility for systems for contingent assets and contingent liabilities Each accountable officer or statutory body must manage the agency’s contingent assets (the contingencies ) and contingent liabilities (also the contingencies ) efficiently and effectively, including, for example, by developing and implementing systems for managing the agency’s contingencies. 57B Elements of systems for managing contingencies (1) An agency’s systems for managing its contingencies must provide for reporting to the accountable officer or statutory body, at least quarterly, about the agency’s material contingencies. (2) Reports must include— (a) action taken by the agency to identify the source and value of its contingencies; and (b) a recommendation about proposed action for the contingencies; and (c) details of the accountable officer’s or statutory body’s consideration of, and decision about, the contingencies. (3) Also, an agency’s systems for managing its contingencies must include a register of the contingencies. (4) For each contingency, the register must include the following— (a) a description of the contingency; (b) the contingency’s value, if the value can be measured reliably; (c) the way in which the contingency arose, for example, its source; (d) any action relating to the contingency, for example, action to minimise potential loss.

s 58 53 s 59 Financial Management Standard 1997 Commentary—Management of contingent assets and contingent liabilities In complying with division 9, the following comments should be considered— 1 Guidance on establishing and maintaining cost-effective contingency management processes for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agency Performance’, as published by the treasury department. Part 4 Performance management 58 Purpose of part (1) The purpose of this part is to ensure departments and statutory bodies are operating efficiently, effectively and economically. (2) The purpose is achieved by requiring each accountable officer and statutory body— (a) to obtain information about the agency’s operations and decide if the operations are— (i) achieving the goals, and delivering the outputs, identified in its plans; and (ii) meeting the output performance measures identified in its plans; and (b) to report to the appropriate Minister about— (i) achieving the goals, delivering the outputs and meeting the output performance measures; and (ii) whether the goals, outputs and measures remain appropriate. 59 Responsibility for information about performance Each accountable officer and statutory body must obtain information about the way the agency performs its operations, including, for example, by developing and implementing systems—

s 60 54 s 60 Financial Management Standard 1997 (a) to monitor the agency’s financial and operational performance; and (b) to evaluate the achievement of its goals and the delivery of its outputs. 60 Elements of systems for information about financial performance An agency’s systems for obtaining information about financial performance must ensure the accountable officer or statutory body decides if the agency is— (a) maximising the yield of revenue from its available revenue base; and (b) operating within its budget and achieving reasonable value for money; and (c) maximising the benefits arising from its investments, including long and short term investments; and (d) maximising the use of, and the benefits available from, its assets, including, for example, receivables, inventories and non-current physical assets; and (e) minimising its costs and risks in relation to its liabilities and contingent liabilities; and (f) monitoring events or transactions that may have a material impact on the agency’s operations. Commentary—Elements of systems for information about financial performance In complying with section 60, the following comments should be considered— 1 Accountable officers and statutory bodies are dependent on quality information to facilitate effective decision making. Information should be collected, compiled and available in an appropriate format to give a timely indication of the agency’s performance. 2 Associated topics include the following divisions in part 3—Management of resources— division 2—Revenue management division 4—Expense management

s 61 55 s 61 Financial Management Standard 1997 division 5—Asset management division 6—Cash management division 7—Liability management. 61 Elements of systems for information about operational performance An agency’s systems for obtaining information about operational performance must ensure the accountable officer or statutory body decides if the agency is— (a) achieving its goals efficiently, effectively and economically; and (b) allocating its resources to produce best value for money; and (c) delivering its outputs and meeting its output performance measures as stated in its operational plan. Commentary—Elements of systems for information about operational performance In complying with section 61, the following comments should be considered— 1 The information captured should be consistent with the intent of the goals and reflect the purpose of the output performance measures. The information may be quantitative in monetary terms or statistical or qualitative information. 2 The systems should also enable a comparison to be made between the progress of the agency’s output performance (actual results to date) and the set operational targets. This comparison must be available on a timely basis to ensure reasonable time is available for appropriate action to be identified, assessed and implemented. Also, the information should be accurate, reliable and appropriate as the agency’s officers should use the information for important decisions and making recommendations about the agency’s operations and direction. 3 Relevant criteria for output performance measures include quality, quantity, timeliness, location and cost. 4 Guidance on establishing and maintaining performance management and review processes for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agency Performance’, as published by the treasury department.

s 62 56 s 63 Financial Management Standard 1997 62 Reporting about performance The systems mentioned in sections 60 and 61 must provide for the information to be given to— (a) the accountable officer or statutory body— (i) at least once every 3 months; and (ii) when the accountable officer or statutory body asks for the information; and (b) the appropriate Minister— (i) at least annually; and (ii) when the Minister asks for the information. 63 Elements of systems for evaluating achievement of agency’s goals An agency’s systems for evaluating the achievement of its goals includes assessing the following— (a) the appropriateness of the goals, and the strategies to achieve each goal, as identified in the agency’s strategic plan; (b) whether the agency’s performance measures are suitable to assess or evaluate the degree to which the goals have been achieved; (c) the options to improve the efficiency, effectiveness and economy of the agency’s operations.

s 65 57 s 65 Financial Management Standard 1997 Part 5 Corporate management Division 1 Introduction 65 What is corporate management (1) Corporate management is the way the management of a department or statutory body controls the agency’s functions and operations, and includes corporate governance. (2) Corporate management is based on principles of openness, integrity and accountability. (3) Corporate management incorporates the cultural and operational aspects of an agency that are influenced by management’s actions and decisions. (4) Also, corporate management includes the concepts of— (a) due care; and (b) public defensibility; and (c) the ethical principles under the Public Sector Ethics Act 1994 , section 4. 39 (5) Corporate management also includes performance management, see part 4. 40 Commentary—Corporate management In complying with division 1, the following comments should be considered— 39 The Public Sector Ethics Act 1994 , section 4 provides that— ethics principles for public officials are— • respect for the law and the system of government • respect for persons • integrity • diligence • economy and efficiency. 40 Part 4 (Performance management)

s 66 58 s 67 Financial Management Standard 1997 1 Guidance on internal controls about governance and ethics for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agency Performance’, as published by the treasury department. 66 Purpose of part The purpose of this part is to state the responsibilities of accountable officers and statutory bodies for the following aspects of corporate management— (a) internal control structure; (b) appraisal and risk assessment of systems; (c) internal audit function; (d) risk management; (e) delegations. Division 2 Internal control structure 67 Responsibility for internal control structure (1) Each accountable officer and statutory body must establish a cost-effective internal control structure for the agency. 41 (2) In establishing the internal control structure, the accountable officer or statutory body must have regard to the document called ‘Cost-Effective Internal Control-Underpinning Agency Performance’. 42 (3) The internal control structure must be included in the agency’s manual. 41 Schedule 3 (Dictionary) of the Act— internal control means the methods adopted within an entity— (a) to safeguard its assets; and (b) to check the accuracy and reliability of its accounting information; and (c) to secure compliance with the prescribed requirements that apply to the entity. 42 See schedule 1 (Documents made by the Treasurer or published by the treasury department and to which section 46L(2) of the Act applies) for details about this document.

s 68 59 s 70 Financial Management Standard 1997 68 Elements of structure for internal control An agency’s internal control structure must provide for— (a) the agency’s control environment; and (b) the agency’s information systems; and (c) the agency’s control procedures. 69 Control environment Each accountable officer and statutory body must develop and implement a control environment within the agency, including— (a) a strong emphasis on accountability, best practice management of the agency’s resources and internal control; and (b) an organisational structure and delegations, supportive of the agency’s goals and operations; and (c) efficient, effective and economic operation of the agency’s internal audit function and, if an audit committee is established for the agency, the committee; and (d) employment of qualified and competent officers, training of the officers and assessment of their performance; and (e) if the agency controls another entity—the efficient, effective and economic operation of the entity and the maintenance of accountability for it. 70 Information systems (1) Each accountable officer and statutory body must develop and implement information systems 43 within the agency for ensuring all transactions in which the agency is involved are recorded— 43 Section 56(4) (Elements of systems for financial information management) requires each accountable officer and statutory body to consult with certain persons before introducing a computerised financial information system or significantly changing a financial information system.

s 71 60 s 71 Financial Management Standard 1997 (a) accurately, completely and promptly, including, for example, with details about the authority for the transactions; and (b) during the correct accounting period adopted by the agency; and (c) in a way that allows for the preparation of financial reports under the prescribed accounting standards. (2) Each information system must provide for— (a) controlling access to the system, including, for example, physical controls on access to computers and use of passwords to restrict access for authorised purposes only; and (b) maintaining an adequate audit trail; and (c) obtaining approval before developing or changing the agency’s software applications; and (d) implementing, operating, maintaining and securing the information system; and (e) specifying, developing, modifying or purchasing information systems for the agency’s business needs; and (f) recovering the information system if there is a breakdown of the system. 71 Control procedures (1) Each accountable officer and statutory body must develop and implement internal controls within the agency for— (a) ensuring the effective, efficient and economical management of the agency’s resources; and (b) accomplishing the agency’s strategic goals. (2) Without limiting subsection (1), the internal controls must include— (a) assigning responsibility to appropriate officers; and (b) separating the function of record-keeping from any other function to the extent practicable; and

s 71 61 s 71 Financial Management Standard 1997 (c) establishing physical controls over access to and use of assets and records; and (d) internally checking and independently verifying data; and (e) preparing reconciliations and other administrative controls; and (f) properly authorising transactions and activities; and (g) authorising, dealing with and keeping a register of— (i) gifts and benefits given by the agency; and (ii) gifts and benefits received by officers or members of the agency, other than gifts and benefits received in a purely personal capacity; and (h) preparing reasonable documentation and records on a timely basis; and (i) maintaining a well organised chart of accounts; and (j) preparing and maintaining comprehensive and current manuals; and (k) verifying transaction balances; and (l) providing regular assurance to the accountable officer or statutory body as to whether the agency’s systems are cost-effective; and (m) regularly verifying the existence of assets against recorded information about the assets, and follow-up on the results of the comparison; and (n) complying with the prescribed requirements; and (o) preserving the accuracy, integrity and reliability of information systems; and (p) promptly detecting irregularities or errors. (3) In developing and implementing an agency’s internal controls, the accountable officer or statutory body must consider— (a) the inherent limitations of internal controls; and

s 71 62 s 71 Financial Management Standard 1997 (b) the availability of alternative controls; and (c) the cost-effectiveness of particular controls. Commentary—Internal control structure In complying with division 2, the following comments should be considered— 1 An agency’s internal control structure plays an integral part in ensuring accountability. It is crucial the structure is cost-effective and appropriate for the transactions involved and gives reasonable assurance to the accountable officer or statutory body about the efficient, effective and economical operation of the agency. 2 The internal control structure includes— • management's philosophy and operating style—as well as the competence and integrity of management, style includes effective delegation, supervision, fiscal discipline and regular review of the internal control structure; • organisational structure—this includes the assigning of responsibility to appropriate officers, direct lines of communication and reporting and an efficient structure that is aligned with the goals and operations of the agency to facilitate the planning, coordination and monitoring of the agency’s activities; • human resources policies—the development and operation of various human resource policies covering recruitment and selection, training, qualifications, job rotation and performance assessment. 3 Guidance on establishing and maintaining cost-effective corporate management processes for an agency may be found in the document called ‘Cost-Effective Internal Control, Underpinning Agency Performance’, as published by the treasury department. 4 In developing and implementing internal controls for authorising, dealing with and recording gifts and benefits given by an agency or received by an officer or member of an agency, the accountable officer or statutory body should consider relevant policies or guidelines issued by the Office of the Public Service Commissioner, the agency’s code of conduct, and relevant legislation, including the Public Sector Ethics Act 1994, the Criminal Code and the Crime and Misconduct Act 2001.

s 72 63 s 72 Financial Management Standard 1997 Division 3 Appraisal and risk assessment of agencies’ systems 72 Responsibility for appraisal and risk assessment of systems (1) Each accountable officer and statutory body must ensure the agency’s systems required under part 3 44 remain cost-effective and appropriate for the agency’s operations. (2) Subject to subsection (3), for ensuring an agency’s systems remain cost-effective and appropriate for the agency’s operations under subsection (1), the accountable officer or statutory body must carry out an appraisal or a risk assessment of each system at least once every 3 years. (3) If an agency existed immediately before the commencement and has continued to exist since the commencement, the accountable officer or statutory body must carry out an appraisal or a risk assessment of each of the agency’s systems by 30 June 2006. (4) Before carrying out an appraisal or a risk assessment of a system, the accountable officer or statutory body must develop and implement a framework for carrying out the appraisal or risk assessment. (5) If a risk assessment of a system indicates an appraisal of the system is required, the accountable officer or statutory body must carry out an appraisal of the system within 3 months after the risk assessment is carried out. (6) Subject to subsection (5), if an appraisal or a risk assessment of a system indicates that action is required, the accountable officer or statutory body must carry out the action as soon as practicable. (7) In this section— commencement means the commencement of this section. 44 Part 3 (Management of resources)

s 73 64 s 74 Financial Management Standard 1997 73 Elements of framework for systems appraisal An agency’s framework for appraising each of its systems must provide for deciding if each system is— (a) adequately documented in the agency’s manual; and (b) functioning as documented; and (c) appropriate for its objectives; and (d) operating efficiently, effectively and economically; and (e) the best practice alternative for the agency’s operations; and (f) providing for cost-effective controls to minimise the risks associated with the agency’s operations. 74 Requirements for appraisal and risk assessment of systems (1) Subject to subsections (2) and (3), an appraisal or a risk assessment of an agency’s system under section 72 must be carried out by the accountable officer or statutory body in a way the officer or body considers appropriate. (2) An appraisal or a risk assessment of a system must be documented and include the following— (a) the results of the appraisal or risk assessment; (b) the action required as a result of the appraisal or risk assessment; (c) recommendations for follow-up action; (d) if an appraisal or a risk assessment of the system has been previously carried out—an evaluation about the actions, if any, taken as a result of the last appraisal or risk assessment carried out. (3) An appraisal or a risk assessment must not be devolved to the internal audit function. Commentary—Appraisal and risk assessment of systems of agencies In complying with division 3, the following comments should be considered—

s 75 65 s 77 Financial Management Standard 1997 1 Systems appraisals and risk assessments give each accountable officer and statutory body a continuous improvement mechanism to help ensure the agency’s systems remain the most appropriate, cost-effective and relevant for the agency’s operations. 2 One of the main benefits of a systems appraisal or risk assessment is the increased awareness for line managers of their responsibilities for the review and maintenance of adequate and cost-effective systems. 3 The internal audit function may perform an independent review of the systems as part of the function’s approved work program, as distinct from the manager’s performance of the systems appraisal or risk assessment. 4 The agency’s manual should contain the broad principles and objectives of the appraisals and risk assessments, who is responsible for performing them, whether there are timing considerations and the mechanisms to be employed in reporting the results. Division 4 Internal audit and audit committees 75 Application of division This division applies to each accountable officer and statutory body that has established an internal audit function within the agency. 45 76 Responsibility for internal audit function Each accountable officer and statutory body must develop and implement systems for ensuring the agency’s internal audit function operates efficiently, effectively and economically. 77 Charter of internal audit function (1) An agency’s internal audit function must operate under an internal audit charter. (2) Each agency’s internal audit charter must— 45 Schedule 3 (Dictionary) of the Act— internal audit means an independent appraisal activity established and maintained for this Act.

s 78 66 s 78 Financial Management Standard 1997 (a) be consistent with auditing standards of CPA Australia, the Institute of Internal Auditors and The Institute of Chartered Accountants in Australia; and (b) be approved by the accountable officer or statutory body; and (c) be readily available to the agency’s officers. (3) An agency’s internal audit charter must include provisions about— (a) the scope of the internal audit function; and (b) organisational relationships, including the relationship with each controlled entity; and (c) the independence of the function; and (d) ancillary roles of the function; and (e) competence and standards; and (f) conduct of audit work; and (g) audit planning; and (h) reporting directly to the accountable officer or statutory body; and (i) shared internal audit staff and contracting for internal auditing by persons other than officers of the agency; and (j) confidentiality. 78 Planning by internal audit function (1) An agency’s internal audit function must prepare— (a) a strategic audit plan that provides an overall strategy for the internal audit function over a period of more than 1 year; and (b) an annual audit plan, having regard to— (i) the responsibilities of the accountable officer or statutory body under the prescribed requirements; and

s 79 67 s 79 Financial Management Standard 1997 (ii) a risk assessment for each area of the agency’s operations; and (c) a plan for each audit to be performed under the annual audit plan. (2) During the preparation of the agency’s audit plans, the internal audit function must consult with— (a) the accountable officer or statutory body; and (b) the agency’s officers in charge of the areas to be audited under the plan; and (c) the authorised auditor. (3) An agency’s strategic and annual audit plans must be approved by the accountable officer or statutory body. (4) An agency’s annual audit plan must provide for reviewing the agency’s annual financial statements. 79 Reports by internal audit function (1) An agency’s internal audit function must give to the accountable officer or statutory body and audit committee— (a) each audit report; and (b) a report about the performance of the annual audit plan and progressive results to date; and (c) other reports as the accountable officer or statutory body or internal audit function considers necessary or useful. (2) However, the manager or officer in charge of an audited area must be given a copy of the proposed audit report for the area and any comments of the person about the proposed report must be included in the final report. (3) In this section— audit report means a report by an agency’s internal audit function about the results of an audit it has conducted within the agency.