Chapter One - Overview > Year in Review by the Secretary and the Chief of the Defence Force > page 3 of 4
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Year in Review by the Secretary and the Chief of the Defence Force

Financial Management

Defence's financial statements for 2004-05 are set out fully in this report. The Secretary and Acting Chief Finance Officer again concluded this year, as in 2003-04, that they could not attest that the overall statements were true and fairly stated. Again, however, they considered that the results in terms of cash management, receivables, revenues from government, and specialist military equipment exclusive of repairable items were fairly stated. They also considered that the value of land and buildings was fairly stated.

While the overall result remains disappointing, it does reflect improvement on the 2003-04 statements. The total value of the uncertainty has been reduced, and the qualification on land and building values removed. As well, 53 of last year's 95 audit findings were submitted to the Australian National Audit Office (ANAO) for clearance during the period.

We continue to drive to improve and reform our management of assets and liabilities. In June 2005, as part of this drive, we launched the Defence Financial Controls Framework project. This project, under the Chief Finance Officer's leadership, aims to establish a best practice financial controls framework in Defence that results in high quality, repeatable, outcomes that are accepted by external auditors.

As well, detailed remediation plans were developed to address the major adverse findings from the previous year's financial statements. The plans are driven by a project board, chaired by the Secretary, comprising the Service Chiefs, and senior Defence officials and representatives from the Department of Finance and Administration and the private sector.

Further progress in the areas in which our statements remain qualified will depend in large part on our ability to equip our people with the necessary financial skills. A comprehensive review of our financial skilling requirements has been undertaken. Close to 7,000 people in Defence received financial training during the year, some 5,000 of them on our financial management information systems.

That said, and notwithstanding the enormous efforts made, challenging issues remain and the standards we must aspire to will not be achieved easily or early. We will continue to drive the change management and remediation plans vigorously, recognising that taken as a whole they represent a very significant management change agenda.

We continued to work during the year to streamline other management practices. We have achieved significant reform in the maintenance of our aging estate through improved maintenance planning. During 2004-05, the Business Improvement Program, which develops and implements a range of business improvement initiatives, successfully introduced the Defence Travel Card for all business travel (which will enable the recovery of the GST not previously achievable) and implemented the invoice scanning and imaging system (which has reduced the overall number of staff required to process Defence's payments).

We also strengthened the management of Defence's information environment and systems by appointing a Chief Information Officer (CIO) with enhanced reach and responsibility for our performance in this area. All of the significant enterprise application development functions are being brought into the CIO Group to facilitate the growth of deeper and more sustainable expertise in business system technical and project management, and facilitate better integration of business processes and systems. We have also moved to finalise the outsourcing of most of our network management functions.

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