Financial processes to be fixed

By Private John Wellfare

DEFENCE has launched a major financial project designed to transform the way it does business and to address the current vicious circle of audit recommendations.

The new Defence Financial Controls Framework Project has been established to put in place a system that simplifies financial processes for all members.

Project head Mike Gibson said even people who don’t work directly in a finance-related field had the ability to influence Defence’s financial system.

“There are 95,000 people in Defence and all 95,000 of them are affected by this framework,” he said.

“A simple example is, everybody has to put their leave form in and everybody needs to check that their leave records are correct. If their leave records aren’t correct, then Defence’s leave liability on our balance sheet is incorrect and we are in trouble with the auditors again.

“The fact is that people out in the field entering data into a system such as the Standard Defence Supply System are just as important for the outcome of our financial statements as anybody here in the Chief Finance Officer’s Group.”

He said although the project had been formed in response to recent criticisms in an Australian National Audit Office report, the aim would be to establish a lasting financial control structure that would go beyond simply addressing those specific audit issues.

“This project is about putting in place a financial control framework that we need to do our business well,” he said.

“What we’re trying to do is get a best-practice financial management environment in Defence, because we need it to run our business, not because the auditor found a problem, although that was the genesis of the idea for the project.”

Mr Gibson identified several important key elements of the project including:

• establishing simple controls for budgeting, financial reporting, inventories and supplies;
  
• developing a workforce strategy for the Defence finance domain, with a focus on staff training, career progress and retention;
  
• initiating cultural change within Defence to ensure members followed the financial processes and did not cut corners; and
  
• introducing an Intranet-based interface for all Defence financial processes.
  

“At the moment there’s a myriad of policies and processes within the organisation, but they’re not collocated, they’re not easy to access and one of the big challenges we’ve got is to make those accessible to the people,” he said.

He said as the project unfolded during the next few years, members would notice important differences.

Once the framework was in place, members would have a clear understanding of where to go for services or information on performing financial tasks.

Members would also benefit from the standardisation of processes across the organisation.

“When people are posted from one location to another, they’ll be doing business in a much more common way than they currently do,” he said.

.