Standing Directions 2016
The new standard for financial
management in the VPS
Objectives of the VPS Financial Management Framework
requirements (Standing Directions)
• The Standing Directions were developed to deliver a set
of financial management requirements that provide
stronger accountability for efficient and effective resource
governance and use throughout the VPS.
• The 2016 Directions:
– set high standards of accountability and a sound control
framework, accompanied by efficient processes;
– balance devolution of responsibility for managing agency
finances with appropriate accountability for decisions and actions
taken;
– maintain currency and validity of the Directions over a longer
timeframe; and
– increase agency financial management performance through
improved compliance with the intent of the Directions.
VPS Financial Management Framework
Financial
Management
Act 1994
Financial
Reporting
Directions
Standing
Directions
Instructions
Budget Operations
Framework (BOF)
*Portfolio
departments only
Guidance
Guidance
Financial Reporting
Operations
Framework (FROF)
Performance
Management
Framework (PMF)
* Portfolio
departments only
* Portfolio
Departments only
Mandates other Frameworks/
Policies e.g. Asset Management
Accountability Framework
(AMAF)
Victorian Government Risk
Management Framework (VGRMF)
Gifts, Benefits and Hospitality Policy
What do the Directions do?
• Establish rules and guidance for sound financial
management.
• Applies to over 250 VPS departments and agencies.
• Sets accountabilities for Governing bodies, CEOs and CFOs.
• The key rules cover:
–
–
–
–
–
–
financial management governance;
internal controls;
Audit Committee;
Internal Audit;
reporting; and
Compliance.
• Mandates government policy frameworks e.g. Asset
Management Accountability Framework (AMAF) for all
Agencies, Budget Operations Framework (for Portfolio
departments) etc.
Evolution of the Directions
Maturity of
agencies’ financial
management
1994
Focus on:
• Departments
• Internal
controls
Accountability
2003
Focus on:
• All VPS
agencies
• Financial
management
governance
Prescriptiveness
2016*
• Tailorable
application to
agencies
• Appropriate
accountability
Accountability
Prescriptiveness
Accountability
for key roles and
portfolio
departments
Higher-level
Directions
Public
attestation
Risk-based
Instructions and
non-mandatory
Guidance
Key changes
Useability and
cohesiveness
Assessment
Reporting and
Public
Attestation
Tailored
framework
Strengthened
accountability
Planning and
performance
management
Asset management
accountability
(including key
responsibilities of
Responsible Body, Audit
Committee, CEO, CFO
and Internal Audit)
Fraud and
corruption
Reporting and
portfolio role
Useability and cohesiveness
Directions
Instructions
Guidance
•
•
•
•
•
Mandatory.
Issued by Minister for Finance.
Financial management objectives and key controls.
Sufficient flexibility to be tailored to agency size and risk.
Mandates key government policy frameworks e.g. Asset
Management Accountability Framework
•
•
•
•
Mandatory.
Issued by DTF under Minister’s delegation.
Linked to specific Directions.
More detailed requirements for areas of risk or new financial
management approaches.
• Operational processes that are more likely to require
update.
•
•
•
•
•
Non-mandatory.
Issued by DTF.
Linked to specific Directions.
Information to build knowledge and fill capability gaps.
Relevant to all agencies.
Tailored framework
FMA departments
and public bodies
Independent
Offices of
Parliament
Excluded
bodies
Committees of
management
DELWP
Class B
cemetery
trusts
DHHS
School
councils
DET
VicSES
volunteer units
VicSES
CFA volunteer
brigades
CFA
Strengthened accountability
Responsible Body
Government objectives, governance, oversight, review.
Public attestation of compliance.
Accountable Officer
Financial, performance and risk management, review, reporting, support portfolio agencies.
Chief Finance Officer
Strategic advice, financial capability,
financial information, reports, systems.
Reporting and portfolio role
DTF
Advice and support to portfolio agencies and relevant minister;
information to DTF
Departments and agencies
Subject to Directions; information to portfolio departments and
DTF
Information
Portfolio departments
Advice
Advice on whole of State financial issues, risks and strategies
Planning and performance management
Plan and manage performance
• Plans, budgets and financial projections
• Consider government objectives
• Allocate resources to deliver plans
• Monitor, evaluate and report on performance
to achieve planning and delivery of
agreed services in a financially
sustainable way
Fraud and corruption
Recordkeeping
Significant
issues
Manage and
minimise risk of fraud
Keep records of
fraud, corruption and
other losses
Notify the Portfolio
Minister, Audit
Committee, Portfolio
Department and
Auditor-General
Establish and
implement a fraud,
corruption and other
losses policy
Provide to Portfolio
Minister, Portfolio
Department or Audit
Committee on
request
Take action to
mitigate future issues
Fraud policy
Asset management accountability
• Asset Management Accountability Framework (AMAF)
introduced in February 2016 and specific requirements
mandated by the 2016 Directions
• Establishes VPS Agency responsibilities and obligations
for whole of life cycle asset management
• Applies to physical and intangible non-current assets
and excludes financial assets
• Aligned to the international standard for asset
management standard (ISO 55000)
• First public attestation concession in 2018 – compliance
as at 30 June 2018 not entire 2017-18 year
Annual Assessment and Compliance Report
In preparing their annual assessment and compliance report (to Portfolio
Department by 15 September), Agencies should document a summary of:
• the levels of compliance achieved;
• Compliance Deficiencies and actions to be taken to remedy deficiencies
and timeframes involved;
• an assessment of the most significant compliance risks for the Agency; and
• proposed plan/schedule of internal audit detailed financial management
requirement reviews over the next three to four years.
In addition for 2016-17:
• a trial attestation in the form set out under Instruction 5.1, Clause 5.2
• progress with transitional provisions under Direction 1.4
Departments provide a portfolio summary report to DTF by 31 October
DTF provide a whole of government report to the MinFin by 15 December
Public attestation and compliance
Annual Report of the Victorian Hypothetical Agency for 2017-18:
‘I, John Doe, on behalf of the Responsible Body, certify that the Victorian
Hypothetical Agency has complied with the applicable Standing Directions
of the Minister for Finance under the Financial Management Act 1994 and
Instructions except for the following Material Compliance Deficiencies:
• Direction 2.3.1(b): The Auditor-General qualified the Agency’s financial
statements on the basis of not being able to rely on the internal control
systems relating to revenue collection and expenditure. This will be
remedied by implementing strengthened controls recommended by the
Auditor-General and Internal audit in the first quarter of 2018-19.
• Direction 3.5.1(b): A Fraud, Corruption and Other Losses prevention
and management policy has not been established or implemented
across the Agency. This will be completed by September 2018.’
Changing compliance requirements
2015-16
2016-17
• 2003 Directions, Financial
Management Compliance
Framework policy (FMCF)
and Compliance Monitoring
System (CMS) apply
• Reporting compliance outcomes
to Portfolio Department/DTF
• Public attestation in relation
to risk management
• Trial attestation (not public)
disclose any material
deficiencies (including with
AMAF)
• Public attestation in relation to
risk management.
2017-18
onwards
• Reporting compliance
outcomes to Portfolio
Department/DTF
• Public attestation to all
requirements in annual
report for entire period
(except for AMAF - as at 30
June 2018)
DTF’s role – implementation program
Presentations and meetings
•Relevant forums for departments and agencies.
•For example, Audit Committee members, departmental and portfolio agency compliance managers, CFOs and
other relevant staff.
Website and electronic useability
•Revamped website with better structure. All information and tools available online.
•DTF’s website: http://www.dtf.vic.gov.au/Publications/Government-Financial-Managementpublications/Standing-Directions-of-the-Minister-for-Finance-2016/Standing-Directions-2016-publications.
•Word and PDF Directions now include hyperlinked cross-references.
Information and tools
•Published: Fact sheet, Consultation summary, 2003-2016 comparison, Compliance checklist
•Developed: Evidence guidance and Reporting templates issued to agencies via departments
Help desk
•[email protected] and 9651 0035.
Assurance program
•Independent review of a sample of agencies’ readiness for commencement.
DTF’s role – ongoing
Advice and information to agencies
• Through information and tools, regular engagement (e.g. departmental
compliance community of practice group and forums) and dealing with queries.
Issuing formal rules and guidance
• Issuing Instructions, Guidance, Budget Operations Framework, Financial
Reporting Operations Framework and Performance Management Framework.
Advising Minister for Finance
•
•
•
•
Receiving reporting (e.g. on whole of state financial issues and compliance).
Advising on annual compliance results.
Advising on exemptions.
Currency of and any changes to Directions and other mandated Frameworks
(e.g. Asset Management Accountability Framework).
Portfolio Department’s role – implementation
Internal implementation
• Implement the Directions and Instructions across the department.
Portfolio role
• Support and advise portfolio agencies on implementation, such as:
• coordinating portfolio information sessions;
• facilitating liaison and information sharing between portfolio agencies; and
• being a focal point for agency issues and concerns with escalation to DTF
where necessary.
• The approach to this role can be tailored to different sizes, risks, or groups of
portfolio agencies.
Portfolio Department’s role – ongoing
Compliance
• Implement and comply with the Directions
Portfolio role
• Support and advise portfolio agencies on the Directions.
• Secretary and CFO have specific portfolio obligations such as:
• Secretary must support the relevant responsible minister’s oversight of their
agencies; and
• CFO must actively assist agencies to manage significant financial issues and have
effective relationship with portfolio agency CFOs.
• Receive reporting from portfolio agencies, e.g. on fraud and corruption
Advising DTF and portfolio ministers
• Be responsive to financial information requests.
• Annual compliance reporting to DTF (internal and portfolio).
• Advise relevant portfolio ministers of any significant financial management issues in
the department and in portfolio agencies
Questions
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