Defence

Chief Finance Officer

Sharing lessons on finance

During April, the Chief Finance Officer (CFO) Group hosted study tours by the Canadian Department of National Defence / Canadian Forces (DND/CF) and the Singaporean Ministry of Defence. The purpose of the visits was to establish ties with key Australian Defence finance personnel, and to discuss issues relevant to each country. Lyle Dahms reports.

First Assistant Secretary Budgets and Financial Planning George Veitch and Deputy Director Defence Finance Organisation (Singapore) Winston Yean shaking hands at the conclusion of the Singaporean Ministry of Defence delegation's visit.

The Canadian delegation was led by Mr Rod Monette, the Canadian Assistant Deputy Minister, Finance and Corporate Services—an equivalent position to the CFO in Australian Defence Organisation (ADO). Mr Monette's visit included discussions with senior leaders in the CFO Group on a range of financial management matters. What became clear during the discussions were the similarities between the circumstances of, and the issues facing, the two organisations.

The number of people in the DND/CF and the value of its budget and balance sheet are very similar to those of the ADO. Our two defence organisations even have the same suppliers for their key enterprise financial software systems. Mr Monette acknowledged that the DND/CF was facing similar financial accounting issues, such as shortcomings with inventory accounting. However, the challenges for his organisation were not as great, in some respects, because the Canadian Government had not embarked on harmonisation of its accounting standards with international standards and the financial statements for the DND/CF are consolidated at the whole-of-government level only.

Mr Monette was very supportive of the CFO Group's development of accounting positions papers, and he emphasised the importance to the DND/CF of positive relationships with the auditors in CFO Group. It was interesting to note that the DND/CF have a well-developed financial training and practitioner accreditation program and have a similar approach to establishing financial controls as is being implemented in the ADO.

The second visit was by a delegation from the Singaporean Ministry of Defence, consisting of Mr Winston Yean, Deputy Director Defence Finance Organisation; Mr Tang Lee Huat, Financial Controller Finance Development Department; Mr Ooi Yinn Yeong, Head Resource Accounting; and Ms Tan Shun Yin, Head Finance Policies.

The Singaporean Ministry of Defence is introducing accrual accounting. The purpose of the delegation's visit was to gain an understanding of the ADO's experience in implementing accrual-based budgeting and accounting. In a very busy day and a half, the delegation was briefed on the history to accrual accounting in our organisation, the Defence business model and financial management framework, and the way in which we are addressing financial accounting and management challenges. Once again, it became apparent during the course of the visit that there were many similarities between the financial accounting and management issues faced by both organisations.

There was a rich exchange of ideas and views, and the experiences and circumstances of the different organisations were discussed. The visits confirmed that the ADO is not alone in facing significant financial management challenges, and that the approach we are taking to meeting those challenges is consistent with that of other similar defence organisations and, in some ways, is more advanced.

In addition, the range of financial management and accounting issues that the ADO has been required to address simultaneously—for example, compliance with international accounting standards, prescription of the Defence Materiel Organisation, financial statements remediation—is arguably greater than that faced by other similar defence organisations.

Lyle Dahms works in the Chief Finance Officer Group.

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