Part 3: Management and accountability
In 2003-04 the Inspector-General of Taxation instituted appropriate governance arrangements. This process was greatly assisted by being able to adopt many of the well-established policies and processes in place in the Treasury.
The Inspector-General of Taxation has two distinct roles. As the public office holder he reports, and is accountable to, the Minister for Revenue and Assistant Treasurer and, as well, the Treasurer for meeting his statutory role. As the Chief Executive Officer of the office of the Inspector-General (the agency), the Inspector-General is responsible for the operation and performance of the operation of his office.
The corporate governance practices of the office of the Inspector-General are designed to take into account that the agency is quite small and that it is inextricably linked with the governance processes of the Treasury. This is as a result of the service level agreement entered into by the two agencies. The Inspector-General as Chief Executive Officer and the Deputy Inspector-General as the Chief Financial Officer together act as the Agency Executive. They have developed a full range of governance policies and procedures appropriate to the situation of the agency comprising only seven people in a single office location, performing a function of conducting reviews and exclusively reporting to Government.
Pursuant to section 46 of the Financial Management and Accountability Act 1997, the Inspector-General is establishing an audit committee. Because of the size of the agency, the nature of its operations and administrative expenditure, the predominance of services provided to the Inspector-General by Treasury and its recent establishment, the audit committee arrangement is still evolving. Discussions have been held with the Australian National Audit Office on appropriate arrangements and further advice will be taken.
The Inspector-General and the Deputy Inspector-General comprise the Remuneration Committee. Since all staff directly report to both the Inspector-General and the Deputy Inspector-General, the expectation is to provide ongoing informal feedback to employees on their performance.
The Inspector-General has entered into Australian Workplace Agreements (AWAs) with all employees which provide for performance and remuneration review processes. The introduction of a performance management system will provide for performance being reviewed formally on an annual basis and informally on a six monthly basis. The size of the agency allows for regular and continual discussion of performance with all staff members.
Corporate planning and reporting
The Inspector-General of Taxation Act 2003 provides a clear statement of the role and activities of the office of the Inspector-General. The work program actually shapes and determines the activities of the office.
Administratively, the office draws heavily on the facilities of the Treasury under a formal service level agreement. All day-to-day account processing is undertaken by Treasury utilising the Treasury accounting system infrastructure. However, a financial controller (part time) is employed on a contract basis and reports directly to the Chief Financial Officer (Deputy Inspector-General).
The Deputy Inspector-General is responsible, with input from the Inspector-General, for settling portfolio budget statements, ongoing maintenance of cash flow and monthly reporting of financial position.
Under the Financial Management and Accountability Act 1997, the office of the Inspector-General meets its specific risk management requirements through a integrated framework. The following are the key components of the risk management framework:
- Chief Executive Instructions provide the policy and procedural framework for financial management in the Inspector-General’s office and put into effect the requirements of the Financial Management and Accountability Act 1997. The Chief Executive Instructions have been based on those currently being used by Treasury.
- A physical security risk review was undertaken as part of establishing the Inspector-General’s office, and the office design and associated access security meet required standards and have been reviewed and approved by ASIO Group 4.
- Risk assessments are to be conducted annually as part of the process of applying for insurance renewal. The program is based on the Risk Management Standard AS/NZS 4360:1999 and will measure the Inspector-General’s performance in implementing risk management processes and policies against the national benchmark.
The office of the Inspector-General has a number of strategies in place to ensure risks associated with the delivery of information technology services are identified and managed. This is against a background of the nature of the Inspector-General’s work, and flexible operating environment, creating a relatively low-risk environment. The Inspector-General utilises the IT infrastructure and support systems of the Treasury under a service level agreement. Components of the Treasury information technology governance are listed below:
- The IT Disaster Recovery Plan sets out the strategies and processes to restore services if a complete or partial loss of the Treasury central computing infrastructure occurs. The plan aims to restore services within an appropriate timeframe.
- Business Continuity Plans apply to all of the Treasury IT application systems. Inspector-General of Taxation staff could continue to operate effectively from temporary work locations with portable computing equipment.
- The IT Security Policy developed by Treasury addresses the requirements to protect information holdings and secure operation of the Inspector-General’s IT resources. The policy is based on the protective security policies and standards in the Australian Protective Security Manual, the Draft Australian Communication Security Instruction — Electronic Security Instructions 33 (A).
- The Treasury Internet and Email Acceptable Use Policy sets out individual users’ responsibilities for the appropriate use of the internet and email facilities and services. This policy refers to the Australian Public Service Values and Code of Conduct, the Public Service Act 1999, other relevant Australian Government legislation and the IT Security Policy.
- Website Development Standards and Guidelines are based on ISO 9001 and ACSI 33 International Standards Organisation and Defence Signals Directorate Guidelines. The standards ensure compliance with best practice in relation to website security.
- IT Change Control Guidelines are an internal IT management tool which assists with quality assurance control over proposed changes to the IT technical environment and facilities. This change control process involves reviewing proposed variations and clearing them before releasing changes in the production environment.
- An IT Risk Management Strategy has been developed in accordance with Defence Signals Directorate Guidelines and identifies technical risks associated with IT infrastructure and IT management practices.
Staff awareness of risk management policies and procedures is maintained through training programs and staff notices circulated to Treasury and Inspector-General officers and also made available through access to the Treasury intranet.
Ethical standards and accountability
The Inspector-General’s values embrace the Australian Public Service (APS) values. In particular, the Inspector-General Employment Conditions refer prominently to the current APS values.
The Inspector-General has taken steps to establish and maintain ethical standards through developing policies such as the Chief Executive Instructions and by actively endorsing policy documentation developed by Treasury. This includes such matters as the use of the internet email, conflict of interest guidelines, consultant engagement and management guidelines.
Senior Executive Service remuneration
Remuneration of senior executive staff is determined by reference to a pay model identifying pay points. Allocation to a pay point is determined on the basis of performance review.
There is one Senior Executive Service employee in the office of the Inspector-General and he has an Australian Workplace Agreement in place.
Other than annual financial statement audit activity, there have not been any audits of the Inspector-General undertaken by the Australian National Audit Office.
The service level agreement with the Treasury includes for provision of internal audit services. There have not been any internal audits undertaken at this time.
Reports by the Australian National Audit Office, the Ombudsman and others
The Inspector-General has participated in a number of cross-agency reviews undertaken by the Australian National Audit Office. The Inspector-General supported relevant recommendations. There have not been any comments by the Commonwealth Ombudsman on matters within the office of the Inspector-General in 2003-04.
In 2003-04, no matters relating to the Inspector-General of Taxation were the subject of judicial proceedings, tribunal hearings or consideration by the Ombudsman.
Management of human resources
The office of the Inspector-General consists of a small number of staff and provides a very good environment for staff to develop through their work and participation in a broad range of agency activities and corporate obligations. The nature of the work does provide for a clear sense of achievement and satisfaction in performing an important community role. However, given its small size and relative stability, staff are recruited on the basis of their current competence with the expectation that career progression will occur in the wider public service/professional environment. They are encouraged and supported to provide their best performance while in the service of the Inspector-General.
The Performance Management System is based on an annual performance cycle with a formal annual review and a less formal half-yearly review.
Since all staff have less than eight months service with the office of the Inspector-General at 30 June 2004, the Inspector-General’s Performance Management System is yet to complete a full cycle.
The Inspector-General has utilised the design features and infrastructure of the Treasury Performance Management System in the establishment of the Performance Management System. An important feature is transparency in the process used by the Executive in measuring performance and communicating to each individual staff member. All staff report directly to both members of the Executive. Within a very small office environment, monitoring and assessing performance on an individual basis is relatively straightforward. Conversely, it is more difficult to evaluate individual performance against the wider population of people in similar roles.
Australian Workplace Agreements
All Inspector-General of Taxation staff are employed under Australian Workplace Agreements. The employment terms and conditions are consistent for all staff within the Office of Inspector-General of Taxation. Employment conditions and remuneration are determined by reference to the Employment Guidelines which incorporate a pay model (see tables 5 and 6 for salary scales for SES and non-SES staff). The employment arrangements do not provide for payment of performance pay. This arrangement provides underlying consistency for all employees while providing flexibility in recognising individual circumstances.
The Inspector-General of Taxation Australian Workplace Agreements specifically reference the Australian Public Service Values in the context of setting out expected performance and behaviour.
The Inspector-General consults with employees on matters in the workplace.
Recruitment and succession planning
The Inspector-General recruits staff based on merit. The ability to make an immediate contribution to the role of the office is very important. The opportunity exists under the Inspector-General of Taxation Act 2003 to second staff to the office.
Training and development
The Inspector-General’s Employment Guidelines reinforce the Inspector-General’s commitment to staff development. As well as providing internal staff training on an ad hoc basis, the Inspector-General financially supports individual staff members who wish to complete post-graduate courses or attend specific development opportunities. Several staff members are working towards finalising Masters studies in either tax or law.
Table 4 details the number of staff employed by the Office of Inspector-General of Taxation, by category and gender. All staff are employed under the Public Service Act 1999.
Table 4: Operative and paid inoperative staff by classification and gender as at 30 June 2004
Remuneration of SES staff
Table 5: Salary scales — SES
Senior executives have access to a motor vehicle for private purposes, airline lounge membership, mobile phones, and home office facilities.
The Inspector-General of Taxation has his remuneration package determined by the Remuneration Tribunal.
Remuneration of non-SES staff
Table 6: Salary scales — non-SES
The Inspector-General may provide alternative remuneration arrangements in specific circumstances.
Purchasing and assets management
The Inspector-General of Taxation has adopted Treasury purchasing policies and utilises services under a service level agreement. For example, all IT purchases are undertaken by the Treasury IT Procurement Unit. These policies and procedures are consistent with the Inspector-General’s Chief Executive Instructions and the Commonwealth Procurement Guidelines.
To maintain procurement expertise and procedural compliance with the guidelines, all internal procurement documentation is available to staff of the Inspector-General on the Treasury intranet.
Treasury regularly updates the intranet site to incorporate contemporary procurement practice such as the Better Practice Principles outlined in ANAO reports, Engagement of Consultants, Senate Order of June 2002 (February 2003), and the use of confidentiality provisions in Commonwealth contracts.
The Treasury, for and on behalf of the Inspector-General, manages both current and non-current assets in accordance with the guidelines set out in the Inspector-General’s Chief Executive Instructions and Australian Accounting Standards.
The Inspector-General’s non-current assets are subject to an annual stocktake to ensure the accuracy of asset records.
Consistent with the Chief Executive Instructions and the Commonwealth Procurement Guidelines, the office of the Inspector-General engages consultants and contractors on the basis of:
- value for money;
- open and effective competition;
- ethics and fair dealing;
- accountability and reporting;
- national competitiveness and industry development; and
- support for other Australian Government policies.
The Inspector-General of Taxation contracted a total of five consultancies during 2003-04, at a total cost of $67,708. All consultancies related to corporate service functions.
Table 7: Consultancies over $10,000 in 2003-04
(a) Specialist skills or knowledge not available in house.
While needing to recruit a specialist and numerically small workforce, the Inspector-General has ensured that merit-based recruitment processes recognise gender, age and ethnicity issues. In this regard, a reasonable balance has resulted. Broader community involvement is encouraged, with staff members being supported in their Australian Defence Force Reserve and professional association activities.
Table 8: Operative and paid inoperative staff by EEO target group
Disability Action Plan
The Inspector-General has evaluated the Treasury Disability Action Plan and is considering options appropriate to a small agency.