Appendices > Glossary

Glossary

Accrual accounting: the system of accounting where items are brought to account and included in the financial statements as they are earned or incurred, rather than as they are received and paid.

Additional estimates: a Government process through which the expenditure and performance plans outlined in the Portfolio Budget Statements are revised. This normally occurs around the middle of the financial year.

Administered appropriation: revenues, expenses, assets and liabilities administered by an agency for the Commonwealth (such as taxes, benefits payments and public debt) which are not concerned with running the agency or its commercial activities.

Administered items: resources administered on behalf of the Commonwealth by Defence, including grants, subsidies and benefits. Such resources may be used by third party organisations.

Agency: assets, liabilities, revenues and expenses which are controlled by Defence or a subsidiary. Includes officials allocated to the organisation.

Amortisation: a term used interchangeably with depreciation, except that it applies to a non-current physical asset under finance lease, or a non-current intangible asset, over its limited useful life.

Appropriation: an authorisation by Parliament to spend money from the Consolidated Revenue Fund (the principal working fund of the Commonwealth) for a particular purpose.

Assets: future economic benefits controlled by Defence as a result of past transactions or other past events. Assets include property, plant and equipment under the control of the Department. Assets are initially recognised at the cost of acquisition. Non-financial, non-current assets are subject to ongoing revaluation assessment.

Assets under construction: assets under construction by Defence for Defence, or for the use of another entity according to a construction contract where Defence controls the asset until completion, or assets under construction or otherwise being made ready by another entity for use by Defence.

Australian Accounting Standard: Australian Accounting Standards specify techniques of accounting practice and the method of presenting financial information about a reporting entity.

Average Funded Strength: a budgetary measure used to determine the resource requirement for the average number of members paid working full-time in the military workforce during a financial year.

Capability: the combination of military equipment, personnel, logistics support, training, resources, etc. that provides Defence with the ability to achieve its operational aims.

Capital budget: all proposed capital expenditure funded by appropriation for outcomes, by equity injections or loans and/or appropriations for administered capital, or by other sources.

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Chief Executive Instructions: instructions issued by the Chief Executive of Defence (the Secretary) for the administration of the department. These instructions are issued under the authority of the Financial Management and Accountability Act 1997 and carry the force of the law.

Chief of the Defence Force's Preparedness Directive: see preparedness concepts and planning.

Combined exercise: an exercise or activity involving one or more Services of the ADF with the forces of other countries.

Company scorecard: an approach to performance measurement that translates an organisation's strategic objectives into a useful set of performance measurements. It supplements the traditional financial measures with information on three additional perspectives of organisational performance: customer satisfaction, internal business processes, and innovation and learning.

Consultants/Consultancies: individuals or organisations contracted to provide independent advice on an agreed subject.

Corporate governance: the process by which agencies are directed and controlled. It is generally understood to encompass authority, accountability, stewardship, leadership, direction and control.

Customer-supplier agreement: an agreement between internal customers and suppliers for the supply of a service at an agreed quantity, standard and price.

Defence Assistance to the Civil Community: a program which provides Defence resources, in exceptional circumstances, for the performance of emergency or non-emergency tasks which are the responsibility primarily of the civil community. While a high priority is given to civil emergencies and natural disasters where lives or property are at risk, other tasks include flyovers and displays at significant public events and various support tasks for local authorities and charitable organisations around Australia.

Defence Employees Certified Agreement: an enterprise agreement made under the Workplace Relations Act 1996 about terms and conditions of service, including rates of pay, for Australian Public Service Defence employees. The agreement is negotiated between Defence, Australian Public Service employees and their representatives and is certified by the Australian Industrial Relations Commission.

Defence Integrated Distribution System: an outsourced logistics project that provides national warehousing, distribution and selected land equipment maintenance support for Joint Logistics Command.

Defence Information Environment: encompasses all of Defence's computing and communications capabilities at all classification levels. It supports all Defence warfighting functions, including Defence's overseas deployed elements and connection to coalition networks, as well as the day-to-day management functions of Defence.

Defence Management and Finance Plan: Defence's principal internal planning document which satisfies whole-of-government budget requirements and forms part of the Portfolio Budget Submission to the Government in February each year.

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Defence Plan: Defence's principal internal planning document which satisfies whole-of-Government budget requirements. It provides a 'whole-of-business' focus with important links between the strategic resource and capability planning.

Discretionary grants: payments where the portfolio minister and paying agency has discretion in determining whether or not a particular applicant receive funding and may or may not impose conditions in return for the grant. There is a central discretionary grants register.

Distribution rules (previously referred to as attribution rules): a process using percentage attribution rules, for expense, revenue, asset and liability items in the profit centre accounting module, applied against profit centre/account code combinations. In Defence this process is used to move amounts from Group profit centres to output profit centres. The original account the amounts relate to remains unchanged.

Employee: any Australian Public Service officer of Defence or serving Defence Force member who receives a salary or wage, along with other benefits, for the provision of services whether on a full-time, part-time, permanent, casual or temporary basis.

Employee expenses: include, but are not limited to, benefits provided to employees in the form of salaries and wages, performance pay, senior officers' allowances, leave, and superannuation, but does not include amounts paid or owed to employees as reimbursement of out-of-pocket expenses.

Equity injection: an additional contribution, over and above the cost of outputs to the Government as customer, to Defence by the Commonwealth as owner. Equity injections form part of the Commonwealth's investment in Defence and partly reflect the Commonwealth's ownership interest in Defence.

Expenses: consumptions or losses of future economic benefits, in the form of reductions in assets or increases in liabilities of Defence, other than those relating to distributions to the Commonwealth, that result in a decrease in equity during the reporting period.

Financial Management and Accountability Act 1997: the Act establishes the regulatory framework for financial management within Defence and other public sector agencies.

Five Power Defence Arrangements: agreed in 1971 and commits Australia, Malaysia, New Zealand, Singapore and the United Kingdom to consult in the event of an attack on Singapore or Malaysia.

Force element: a component of a unit, a unit or an association of units having common prime objectives and activities.

Force element group: a grouping of force elements with an appropriate command and control structure for a specified role or roles (eg the Navy Submarine Force).

Force structure: see preparedness concepts and planning.

Forward estimates: the level of proposed expenditure for future years (based on relevant demographic, economic and other future forecasting assumptions). The Government requires forward estimates for the following three financial years to be published in each annual Federal Budget paper.

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Garrison support services: include a range of base support services including: grounds maintenance, hospitality, training area management, base security, transport, air support and fire-fighting and rescue services.

Group: a high-level organisational grouping of functions and activities used by the Defence Executive as its primary management grouping (see Chapter One - Corporate Governance for more information).

Infrastructure: items owned, leased or otherwise under the control of Defence in support of activities on land and within buildings. Infrastructure includes items such as runways, roads, car parks, parade grounds, ovals, lighting, water, sewerage and other general service related items. It does not include land upon which, or within which, it is constructed or those fixed items integral to, and under, buildings.

Interoperability: the ability of systems, units or forces to provide the services to, and accept services from, other systems, units or forces and to use the services so exchanged to enable them to operate effectively together.

Inventory: comprises consumable stores and supplies, fuel and explosive ordnance used in the delivery of Defence services. These are items which are consumed in normal use, lose their identity during periods of use by incorporation into, or attachment upon, another assembly, as a result of wear and tear, cannot be reconditioned because their design does not make it possible or their specific values do not justify it.

Joint exercise: an exercise involving two or more Services of the ADF.

Joint Operations Command Operational Preparedness Requirement: sets the capability and preparedness requirements for force elements across the ADF to ensure that a coordinated response to a range of contingencies can be mounted within realistic timeframes.

Liabilities: sacrifices of future economic benefits that Defence is presently obliged to make to other entities as a result of past transactions or other past events.

Military capability: see preparedness concepts and planning.

Military response options: a set of generic tasks that describe the range of military options the Government could consider as a basis for a response to a particular situation or contingency.

Mission capability: the required level of unit readiness for tasking for which a force element is scheduled at any time through its operational cycle (includes all scheduled activities to achieve assigned Defence operations, international engagement requirements and levels of preparedness required for a military response).

Network Centric Warfare: the aim of Network Centric Warfare is to improve the ability of the ADF to collaborate internally, with supporting agencies, and with coalition partners across organisational and geographic boundaries. Network Centric Warfare will allow Defence to harness recent developments in computing and communications technologies to enhance decision making and warfighting capability.

Operational release: replaces 'acceptance into naval service', and is the milestone which represents the in-service date of a new capability at which the Chief of Navy is satisfied that the equipment is in all respects ready for operational service.

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Other property, plant and equipment: comprises the following sub classes; administrative assets, commercial vehicles, general military assets, heritage assets and other (includes all items not specific to one of the classes or sub-classes referred to above and can include testing equipment and non-specific non-rotable spares.)

Outcome: the results that the Government seeks from Defence, and are achieved by the successful delivery of its outputs, to the standards set in the Portfolio Budget Statements (see Chapter Two - Defence Outcomes and Outputs for more information).

Output: the product or service produced by Defence (see Chapter Two - Defence Outcomes and Outputs for more information).

Permanent forces: the permanent Navy, the regular Army and the permanent Air Force.

Platforms: refers to air, land, surface or sub-surface assets that are discrete and taskable elements within the ADF.

PMKeyS (Personnel Management Key Solution): Defence's personnel management system for the administration of ADF and civilian staff.

Portfolio Additional Estimates Statements: similar to the Portfolio Budget Statements and prepared at Additional Estimates time to support an update on the Government's original annual budget for Defence.

Portfolio Budget Statements: a document presented by the Minister for Defence to Parliament to inform Senators and Members of the basis for the Defence budget appropriations in support of the provisions in Appropriation Bills 1 and 2. The statements summarise the Defence budget and provides detail of outcome performance forecasts and resources in order to justify expenditure for Defence.

Preparedness concepts and planning: military capability is achieved by developing a force structure appropriately prepared for operations. Preparedness is a measure of how ready (readiness) and how sustainable (sustainability) the ADF is to undertake military operations. Preparedness is, therefore, of fundamental importance to Defence, which must be able to manage it effectively and communicate its status to the Government.

Force structure: relates to the type of force required - personnel, equipment, facilities and military doctrine - to achieve the level of capability necessary to conduct operations effectively. In the medium to long term, military capability will vary due to changes in force structure generated by the capability development process.

In the short term, force structure is the more constant component of military capability and the level of capability available for operations is determined by Defence's management of preparedness of the current force.

Changes to force structure usually affect the preparedness of the associated forces. For example, the introduction of a new platform, retirement of an old platform or capability enhancement will have a direct impact on the resource, training and facility requirements of the forces involved.

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Military capability: the two levels of military capability specified for forces within the ADF are derived from the concept of maintaining forces at an appropriate minimum level of capability in peacetime to ensure that those forces are ready to work up to an appropriate higher level of task-specific capability (operational level of capability) within a given time, in order to conduct effective operations.

The maintenance of a force at a higher level of preparedness or at an operational level of capability for a prolonged period is resource intensive. Defence balances the mix of capabilities, or outputs, from within its budget to meet Government tasking priorities.

Preparedness planning: the preparedness planning process begins with a strategic appreciation involving an analysis of the national security objectives which are specified in Government guidance. These objectives are considered against current strategic circumstances and defence policy. In the light of this appreciation, military strategies are developed or refined to achieve the objectives. Military strategic objectives and military response options are then derived from the military strategies and are used to provide preparedness planning guidance.

Readiness: the readiness of forces to be committed to operations within a specified time, dependent on the availability and proficiency of personnel, equipment, facilities and consumables.

Sustainability: the ability to provide personnel, equipment, facilities and consumables to enable a force to complete the needed period of operations.

The Chief of the Defence Force's Preparedness Directive: a principal strategic-level directive containing strategic planning guidance. It lists military response options and sets preparedness requirements. It informs all subordinate preparedness directives at the operational level, which set specified levels of preparedness and contain the capability standards against which force units measure and report.

The implementation of preparedness involves the allocation of resources to the current force to ensure that preparedness objectives can be met and managed properly. The evaluation and reporting of preparedness ensure that there is regular feedback in the process and that objectives and resource allocations are refined as necessary.

Professional Service Providers: individuals with specialist skills contracted to fill a line position.

Purchaser-provider arrangements: are arrangements under which the outputs of one agency are purchased by another agency to contribute to outcomes. Purchaser-provider arrangements can occur between Commonwealth agencies of between Commonwealth agencies and state/territory government or private sector bodies.

Qualifying assets: assets under construction.

Readiness: see preparedness concepts and planning.

Receivables: amounts payable to Defence, including debtors, bills of exchange and promissory notes, loans to other governments and other entities, interest accrued but not yet received, and advances to Defence employees and other entities that are to be returned or acquitted.

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Reconstitution: a component of the phases of operations, immediately following an operation, being a period required to revert a force element to the directed level of capability in a specific time. The preparedness cycle is not complete until reconstitution to a directed level has been achieved, including immediate maintenance, rest and recuperation, and redistribution of supplies and systems if necessary.

Reserves: the Naval Reserve, the Army Reserve and the Air Force Reserve.

Revenues: inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of Defence, other than those relating to contributions by the Commonwealth, that result in an increase in equity during the reporting period.

Risk management: at the highest level, it involves the identification and mitigation of those risks that have the potential to affect adversely the achievement of agreed output performance at the agreed output price.

Resource and Output Management and Accounting Network (ROMAN): Defence's primary financial management system incorporating corporate budgeting, accounting and reporting.

Specialist Military Equipment: items of a specific military nature and that are not available though the normal external market in their current form to other than government military purchasers. It includes the prime military equipment plus the direct support items associated with the equipment.

Standard Defence Supply System (SDSS): a key information system for the financial management of inventory, general stores, repairable items and other assets associated with Defence's logistic capability.

Sustainability: see preparedness concepts and planning.

Theatre: the area in which military operations/activities take place.

'Two pass' approval process: the process by which major capital investment proposals are developed for consideration and approval by Government (see Chapter One - New Capability Development and Acquisition Process).

Unit Ready Days: the number of days that a force element is available for tasking within planned readiness requirements. Planned unit ready days are determined for each Force Element Group by aggregating total days for the unit in commission, less all days when the unit is programmed to be in major maintenance and conducting pre-workup (preparations for initial operational training).

Weighted average cost: an inventory valuation method which considers the fluctuating prices and quantities of acquired goods in computing of the cost of inventory. The weighted average method takes the prices of units at the beginning inventory and the varying prices of purchases made and are weighted by the number of units to determine the weighted average cost per unit. It may be computed as the weighted average cost of all available goods present in a given period, or as a weighted moving average cost adjusted when new goods are delivered.

Write-offs: the recording in the accounting records of irrecoverable or uneconomic to recover debts.

Write-downs: the reduction in value of assets.

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