Defence

Feature

A better way of doing business

General Cosgrove, Auditor-General Ian McPhee and Secretary of Defence, Ric Smith, at the launch of the Financial Controls Framework.

In the June edition of Defence, we introduced you to the Defence Financial Controls Framework (DFCF) project. Following the official launch of the DFCF project in Canberra on 29 June, this month's focus is on Frequently Asked Questions about the Defence Financial Controls Framework.

What are financial controls?

Financial Controls embrace the efficiency and effectiveness of an organisation's financial operations and comprise those elements of an organisation (including resources, systems, policies, processes, procedures, culture, structure and tasks) that, taken together, support people in the achievement of the organisation's objectives. In addition controls will assist in the reliability of reports through increased data integrity, compliance with applicable laws and regulations, as well as 'soft controls' such as leadership, teamwork, culture, values, communication, accountability, anticipation, flexibility and capability.

What is the financial controls framework?

The Financial Controls Framework draws together in a structured and integrated fashion, all the components necessary to build a best practice financial management environment for Defence. At its core the framework will provide all Defence personnel with access to a comprehensive and integrated source of the policies, processes and procedures necessary to manage all financial aspects of our business.

Who is affected by the financial controls framework?

Efficient, effective and competent financial management is not just the preserve of the finance domain experts, rather responsibility rests with everyone, whether military or civilian, since we are all in some way accountable for the efficient and effective use of public monies. For example through regular and thorough stocktaking of inventory, timely and accurate submission of leave records and appropriate use of authorised delegations.

Why are we doing this? Haven't we done this before? Why is this time different?

The Defence Financial Controls Framework project has an end to end perspective, not just a focus on individual problem rectification. It is the major vehicle to transform the financial management environment in Defence, and the key enabler to implement the Secretary's vision for the finance domain in Defence, which is for 'Defence to be recognised by Government as highly competent, professional and business-like financial managers within the next 5 years.'

What's in it for me? How will it help me do my job?

A fully integrated Financial Controls Framework will give all staff access to the relevant information they need to do their job. The Financial Certification Framework will also create clear career paths through the finance domain, allowing people to more effectively utilise their training, skilling and experience to progress through the organisation.

Who will do the work? How will this impact on my resources and budget?

A project team has been set up within CFO Group to manage this project, and will be dedicated for the life of the framework development and until fully implemented. The technical content of the framework will be developed within CFO Group, except for financial controls within the following key functional areas, which will be developed and managed by the following groups -

• Property, Plant and Equipment - CSIG
• IT Hardware and Software - CIO
• Inventory - DMO
• Employees - DPE

Acting Chief Finance Officer Ken Moore, flanked by (l-r) Secretary of Defence Ric Smith, Auditor-General Ian McPhee and members of the Financial Controls Framework team, at the recent launch of the project.

What about my current processes, procedures and systems? Will I still use them?

A key goal of this project is to not reinvent the wheel and use as much as possible of the work that Groups have done within the finance domain. The DFCF project team will be consulting with all Defence Groups to gather information on -

• Current processes, procedures and systems that exist
• Policy and process gaps
• Other issues within the financial domain

The framework will pull this information together and ensure it is accessible to staff through an intuitive, user-friendly web based interface.

Gathering this information from across the Defence portfolio will enable a comprehensive review of current financial controls. Commonality will be identified, and opportunities to standardise on best practice will be pursued to ensure efficient and effective implementation of financial policy.

Will I need training?

Training and support will be available to all staff to assist with the implementation of the financial controls framework. This will include training on processes and how to access them through the web-based interface, as well as skilling against the processes within the framework. The Financial Certification Framework will ensure all staff are adequately trained and experienced for their role, detailing the combination of training, qualification, and experience (not necessarily all 3) required to undertake tasks within the Finance Domain.

Will there be a clear accountability structure within the framework?

Accountability for all aspects of the financial controls framework is vital to ensure successful implementation and ongoing effectiveness. All policy, processes and procedures will be assigned document owners who will be responsible for maintaining and updating those documents. Group Heads will also be clearly accountable for key functional area (eg. Property, Plant and Equipment) finance controls.

How will the framework be maintained?

The Financial Control Framework will be maintained through self-assessment of risk and control effectiveness by those accountable for the management of the controls. All policy, process and procedures will be managed through a robust configuration management system to ensure all information within the framework is current.

When will all of this occur?

The Secretary's vision is for Defence to be recognised by Government as highly competent, professional and business like financial managers within the next 5 years. To achieve this it is planned to implement the financial controls framework over 3 years, followed by two years to test its effectiveness and ensure there are no on-going problems.

What is the end-state? How will we know the framework is complete?

A fully accepted, embedded and comprehensive Defence Financial Controls Framework that is transacted and managed by competent staff who follow standardised processes across the portfolio and achieve high quality, repeatable outcomes accepted by external auditors.

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