Chapter One > Year in Review > Implementing the White Paper > page 3 of 6

Implementing the White Paper

Alignment of Budget with Strategic Direction

Further development of the Defence Management and Finance Plan was undertaken in accordance with the Government's budget timetable. The 2004-14 Defence Management and Finance Plan was available by 31 October 2003 for the Senior Ministers' Review. An assessment of Defence's resourcing position formed part of the Defence Capability Review completed in November 2003 and was reflected in the published 2004-14 Defence Management and Finance Plan.

Further work was undertaken to develop the Group-based Organisational Performance Agreements, which are a key element of the Defence Business Model. These agreements underpinned the finalisation of the 2004-05 Budget and have been further enhanced to support the development of the 2005-15 Defence Management and Finance Plan. They are signed by each Group Head with the Secretary and Chief of the Defence Force and set out the Group's planned performance and resourcing for the budget year and the ten-year period with particular focus on the forward estimates.

Monthly reporting to the Defence Committee on corporate and Group financial performance was further strengthened during 2003-04. The regular monitoring of the budget by the Committee reinforced the budget management business rules that have been put in place and ensured improved accountability by senior leaders in managing their budget allocations in accordance with overall strategic priorities.

During the course of the year, Defence implemented the recommendations of the Government's Budget Estimates and Framework Review. Having consistently met whole-of-government reporting time frames (other than for the 2003-04 Financial Statements), the focus is now on improving the quality and accuracy of reports and forecasts.

Other achievements include:

  • the successful completion of a number of Government-directed reviews arising out of the Government's consideration of Defence's 2003-04 Budget;
  • progression of the Defence Procurement Review's recommendations;
  • development of a Financial Systems Strategy to provide a road map for ongoing improvements to Defence financial systems; and
  • further development of the budget and output reporting and information system to provide a common budget development and reporting tool for use across Defence and the force element product costing tool.

Important work is under way on the financial transformation program. This has been addressed by the Secretary and the Chief of the Defence Force in the Year in Review at the beginning of this chapter.

Defence continued to focus attention on high-risk financial areas including assets, inventory, employee leave provisions and other key areas that have been the subject of previous audit qualification. Some improvement has been made in these areas, although greater scrutiny in 2003-04 highlighted the extent of the Department's challenges and will likely lead to further audit qualifications. Comprehensive remediation programs have now commenced and progress in these activities is regularly reported to the Defence Audit Committee and the Australian National Audit Office. Service Chief/Group Head sign-off statements have been improved, driving a greater degree of accountability for information provided and included in the 2003-04 Financial Statements.

Notwithstanding the recurrence of qualifications on the annual financial statements, significant improvements have been made in cash management, debt collection, supplier payment, commitment and lease recognition, financial accounting and management reporting. Defence will continue to build on these enhancements in 2004-05 and beyond.

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