Standing directions

1. 2016-17 Financial
Management Compliance
Report
Effective financial governance
and resource management
Prepared in accordance with 2016 Standing Directions of the
Minister for Finance, Instruction 5.1
November 2017

2. Background
The 2016 Standing Directions of
the Minister for Finance have
strengthened department and
agency focus on achieving a high
standard of public financial
management and accountability by:
• modernising Victoria’s public
financial management
• strengthening accountability
for financial management in
departments and agencies
Standing Directions of the Minister for Finance
• Minimum financial management requirements for the robust
management of Victorian public resources
• Directions and Instructions apply to all FMA departments and
public bodies
Transition
• Applicable from 1 July 2016, with some transitional provisions for
newer requirements
Exemptions
• Minister for Finance may, by written direction, exempt agencies
• Agency applications must be in writing, stating the rationale for the
request and what alternative actions or procedures will be
implemented to minimise financial management risks
• Exemptions were granted to 29 agencies in 2016-17
2016-17 process
• More than 270 departments and agencies self-assessed
compliance against the mandatory Standing Directions and
Instructions
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FMA
Standing
Directions
Instructions
Mandated
frameworks and
policies
Guidance

3. New expectations
Stronger roles for:
• Portfolio departments
• Audit committees
• Internal audit
Increased accountability for:
• Accountable officers
• Chief finance officers
Roles and responsibilities
• DTF no longer receives detailed compliance reports. Rather, this
information is now held by departments
• Departments are playing a stronger role in supporting portfolio
agencies
• Internal audit is required to periodically review financial compliance
• Audit committees are now expected to annually endorse their
agency’s compliance assessment with the Directions
• Clearer accountabilities are now in place for accountable officers
and chief finance officers
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DTF
Portfolio
departments
Agencies
Reporting
Accountability
Secretary
Deputy Secretary, Budget and Finance
Secretary
Departmental chief finance officer
Responsible body
Accountable officer
Chief finance officer

4. 2016-17 whole of government transitional results
Compliance results will improve
over time as departments and
agencies fully embed the Standing
Directions
Agency audit committees are now
required to review and endorse
their agency’s compliance
assessment
Reported compliance deficiencies
indicate departments and agencies
are taking financial management
legislative obligations seriously
Reporting
• Most departments and agencies adhered to the reporting
timelines
• Departments are following up with five agencies that did not
submit reports
Compliance deficiencies
• A small number of departments have reported material
compliance deficiencies in their agencies relating to business
continuity planning and asset management
• Areas of reported compliance deficiencies include:
– implementing the Asset Management Accountability Framework, including developing
asset management strategies and asset information management systems
– developing, implementing and maintaining business continuity plans, including periodic
testing
– developing and maintaining a sound internal control environment, such as policies and
procedures up to date and disseminated
– developing, implementing and maintaining fraud, corruption and other losses policies,
and reporting significant instances within the required timelines. For example, the new
requirements focus more on prevention
– developing and maintaining sound financial governance practices, specifically for audit
committees and internal audit
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5. Strategies for improving future compliance
Reported compliance deficiencies
are supported by rectification
strategies, ensuring issues are
resolved in a timely manner
Departments and agencies
continue to work towards
implementing transitional
requirements
Fraud and corruption prevention
continues to be a focus for
departments and agencies
There has been increased focus on
sharing better practices across
government
Rectification
• Departments and agencies with reported compliance deficiencies
will work to resolve these in 2017-18, with the aim of being fully
compliant by 2018-19
• Departments have a responsibility to work with and support their
agencies
• DTF continues to work with departments to embed compliance
practices
Transitional provisions
• Departments and agencies continue to work towards becoming
compliant with the fraud and corruption requirements
• The planning requirements are a work in progress for agencies not
previously subject to any planning obligations
Fraud, corruption and other losses
• Departmental and agency focus has shifted from the reporting of all
fraud, corruption and other losses, to preventative activities
Building a culture of compliance
• Activities such as the establishing of community of practices across
and in departments has helped build a culture of sharing better
practices across government
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6. 2017-18 reporting and public attestation process
2017-18 annual reports will include
an attestation against the Standing
Directions of the Minister for
Finance
In the meantime, departments and
agencies continue to work towards
resolving existing compliance
issues
Reporting and attestation
• The 2016-17 transition year included an internal trial attestation
containing any material compliance deficiencies
• In 2017-18 annual reports will include a public attestation,
providing the disclosure of any material compliance deficiencies
• Agencies will continue to report other compliance deficiencies
internally to portfolio departments in line with reporting timelines
• The 2017-18 process is likely to be impacted by the 2018
parliamentary sitting date schedule for tabling annual reports
Areas for focus prior to 2017-18 reporting and attestation
• Resolution of any identified material compliance deficiencies and
other compliance deficiencies
• Ongoing monitoring of compliance with the Standing Directions
• In accordance with mandated requirements, prompt reporting of
significant fraud, corruption and other losses
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7. © State of Victoria 2017
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