Annual Reports (No

The Senate

––––––––––––––––––––––––––––––––––––––––––––––––– Foreign Affairs, Defence and Trade Committee –––––––––––––––––––––––––––––––––––––––––––––––––

Annual reports (No. 1 of 2008)

March 2008

ISBN 978–0–642–71893–8

This document is produced from camera–ready copy prepared by the Senate Standing Committee on Foreign Affairs, Defence and Trade secretariat, and printed by the Senate Printing Unit, Parliament House, Canberra.

The committee

Senator Mark Bishop, ALP, WA (Chair) Senator Russell Trood, LP, Qld (Deputy Chair) Senator Mathias Cormann, LP, WA Senator Michael Forshaw, ALP, NSW Senator John Hogg, ALP, Qld Senator Hon Sandy Macdonald, NATS, NSW Senator Anne McEwen, ALP, SA

Secretariat

Dr Kathleen Dermody, Secretary Ms Pamela Corrigan, Research Officer

Parliament House Canberra ACT 2600 Phone: (02) 6277 3535 Fax: (02) 6277 5818 e–mail: [email protected] Internet: http://www.aph.gov.au/senate_fadt

iii

Contents

The committee ...... iii

Preface...... 1 Introduction ...... 1 Role of annual reports ...... 2 Assessment of annual reports ...... 2 Annual reports considered...... 3 Defence portfolio ...... 3 Foreign Affairs and Trade portfolio ...... 3 General comments on the annual reports ...... 3 Timeliness in tabling reports ...... 3 Comments made in the Senate ...... 3 Matters of significance ...... 4 Bodies not presenting annual reports to the Senate...... 4 Standard of reports ...... 4

Chapter 1—Annual reports of departments ...... 5 Department of Defence...... 5 Military justice system ...... 5 Significant matters relating to the operations and performance of the department ...... 5 Defence's financial statements...... 5 A history of qualified financial statements...... 6 Financial statements for year ending 2006–2007 ...... 7 Summary...... 8 Department of Foreign Affairs ...... 8 Reporting public diplomacy ...... 10 Summary...... 11 Department of Veterans' Affairs...... 11

Chapter 2—Annual reports of statutory and non–statutory authorities and government companies...... 13 Defence portfolio ...... 13 The Army and Air Force Canteen Service [trading as Frontline Defence Services]...... 13 Australian War Memorial...... 15 Other reports...... 16 Foreign Affairs and Trade portfolio...... 16 Australian Agency for International Development (AusAID)...... 16 Australian Trade Commission (Austrade)...... 19 Other reports...... 20

Appendix 1—Annual reports referred to the Committee...... 21 Defence portfolio ...... 21 Departments...... 21 Statutory authorities...... 21 Non–statutory authorities and government companies ...... 21 Foreign Affairs and Trade portfolio...... 22 Department ...... 22 Statutory authorities...... 22 Non–statutory authorities and government companies ...... 22

Appendix 2—Compliance table of the annual reports referred to the Committee for scrutiny for the period 2006–2007...... 23

Appendix 3—Reporting requirements and guidelines...... 29 Departmental reports ...... 29 Authority for requirements...... 29 Commencement and reporting period ...... 29 Application...... 29 Timetable...... 30 Commonwealth authorities and companies...... 30 Non–statutory bodies...... 31

vi Preface

Introduction 1. The committee is responsible for examining annual reports of departments and agencies within two portfolios: Defence (including the Department of Veterans' Affairs), and Foreign Affairs and Trade.1

2. Under Standing Order 25(20), the committee is required to report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on reports tabled by 30 April each year by the tenth sitting day after 30 June of that year.

3. The standing order states:

Annual reports of departments and agencies shall stand referred to the committees in accordance with an allocation of departments and agencies in a resolution of the Senate. Each committee shall: a) Examine each annual report referred to it and report to the Senate whether the report is apparently satisfactory; b) Consider in more detail, and report to the Senate on, each annual report which is not apparently satisfactory, and on the other annual reports which it selects for more detailed consideration; c) Investigate and report to the Senate on any lateness in the presentation of annual reports; d) In considering an annual report, take into account any relevant remarks about the report made in debate in the Senate; e) If the committee so determines, consider annual reports of departments and budget-related agencies in conjunction with examination of estimates; f) Report on annual reports tabled by 31 October each year by the tenth sitting day of the following year, and on annual reports tabled by 30 April each year by the tenth sitting day after 30 June of that year; g) Draw to the attention of the Senate any significant matters relating to the operations and performance of the bodies furnishing the annual reports; and h) Report to the Senate each year whether there are any bodies which do not present annual reports to the Senate and which should present such reports.

1 See Appendix 1 for a list of all departments and agencies under these portfolios. 2 Preface

Role of annual reports 4. Annual reports place a great deal of information about government departments and agencies on the public record. Accordingly, the tabling of annual reports continues to be an important element of accountability to Parliament. The information provided in annual reports assists Parliament in the effective examination of the performance of departments and agencies and the administration of government programs. Indeed, as noted in the Requirements for Annual Reports:

Annual reports serve to inform the Parliament (through the responsible Minister), other stakeholders, educational and research institutions, the media and the general public about the performance of departments in relation to services provided. Annual reports are a key reference document and a document for internal management. They form part of the historical record.2

Assessment of annual reports

5. The annual reports are examined by the committee to determine whether they are timely and 'apparently satisfactory'.3 The committee considers whether the reports comply with the relevant requirements for the preparation of annual reports of departments and authorities.

6. The requirements are set down in the following instruments: • for portfolio departments: Public Service Act 1999, subsections 63(2) and 70(2), and the Requirements for annual reports for departments, executive agencies and FMA Act bodies, Department of Prime Minister and Cabinet, 13 June 2007; • for Commonwealth authorities and companies: the Commonwealth Authorities and Companies Act 1997; in particular, the Commonwealth Authorities and Companies (Report of Operations) Orders 2002; and • for non–statutory bodies: the guidelines are contained in the Government response to the report of the Senate Standing Committee on Finance and Government Operations on Non–statutory bodies, Senate Hansard, 8 December 1987, vol s124, pp. 2643–45 (requirements were modified in 1987).

Excerpts of the reporting requirements are at Appendix 3.

2 Requirements for annual reports for departments, executive agencies and FMA Act bodies, Department of Prime Minister and Cabinet, 13 June 2007, p. 3. Also at www.dpmc.gov.au/guidelines/index.cfm 3 See Appendix 2 for a compliance table of the reports referred to the committee for scrutiny. Preface 3

Annual reports considered 7. The annual reports of the following organisations have been examined by the committee:

Defence portfolio

Army and Air Force Canteen Service, trading as Frontline Defence Services ASC Pty Ltd Australian Strategic Policy Institute Limited Australian War Memorial Defence Force Retirement and Death Benefits Authority Defence Housing Authority Defence Materiel Organisation Department of Defence Department of Veterans' Affairs, Repatriation Commission and the National Treatment Monitoring Committee Military Rehabilitation and Compensation Commission Military Superannuation and Benefits Board of Trustees Repatriation Medical Authority Veterans' Review Board.

Foreign Affairs and Trade portfolio

Australian Agency for International Aid Development (AusAID) Australian Safeguards and Non–Proliferation Office (ASNO) Australian Trade Commission (Austrade) Department of Foreign Affairs and Trade, and Export Finance and Insurance Corporation (EFIC).

General comments on the annual reports Timeliness in tabling reports 8. A table detailing the dates relating to the timeliness of presentation is at Appendix 2.

Comments made in the Senate 9. The committee is obliged, under Senate Standing Order 25(20)(d) to consider any remarks made about these reports in the Senate. There were no comments in the Senate on any of these reports. 4 Preface

Matters of significance 10. In accordance with SO25, the committee is to note any significant matters relating to the operations and performance of the bodies presenting their annual report. The committee found no matters of significance relating to the operations and performance of the bodies presenting their report. It did, however, note Defence's financial statements which are considered in the following chapter.

Bodies not presenting annual reports to the Senate 11. The committee is required to report to the Senate each year on whether there are any bodies that do not present annual reports to the Senate and which should present such reports. The committee is satisfied that there are no bodies, within these portfolios, which do not meet their reporting requirements to the Senate.

Standard of reports 13. The committee found all reports to be generally of a high standard. They effectively described the function, activities and financial positions of the various departments and agencies. The committee therefore finds all of the annual reports to be 'apparently satisfactory'. Chapter 1 Annual reports of departments

Department of Defence 1.1 The Defence Annual Report 2006–2007 was presented on 31 October 2007 and tabled in the Senate on 12 February 2008.

Military justice system 1.2 The committee draws attention to the chapter in Defence's annual report devoted to justice and fairness in Defence, particularly the section on military justice reforms. It notes the statement by Defence that significant progress has been made in the first eighteen months of the two–year implementation period of 'enhancements to the military justice system'. The changes are in response to the Senate Standing Committee on Foreign Affairs, Defence and Trade's 2005 Report into the Effectiveness of Australia's Military Justice System.

1.3 The two year implementation period sets out to deliver impartial, rigorous and fair outcomes through better oversight, greater transparency and improved timeliness. According to the Annual Report:

At 30 June 2007, 21 of the 30 agreed recommendations from the Committee's report had been completed. Action in respect of the remaining recommendations is well under way.

…

Work remains to be done to embed the changes, but the substantial progress achieved to date provides a strong base for making further reforms. Progress is being reviewed monthly by the Chiefs of Service Committee and reported six–monthly to the Senate Standing Committee on Foreign Affairs, Defence and Trade.1

Significant matters relating to the operations and performance of the department

Defence's financial statements

1.4 The committee is required to note any significant matters relating to the operations and performance of the bodies presenting their annual reports. The committee draws attention to the department's financial statements.

1.5 It is mandatory under section 57 of the Financial Management and Accountability Act 1997 for the annual report to include a copy of the audited financial

1 Department of Defence Annual Report 2006–2007, p. 153. 6 Chapter 1—Annual reports of departments statements and the Auditor–General's report thereon. Over recent years, Defence's financial statements have shown significant deficiencies.

A history of qualified financial statements

1.6 In 2001, the ANAO found that there were significant internal control issues which cast doubt on the accuracy of Defence's financial statements for the year ending June 2001. For the years ending June 2002, 2003 and 2004, the ANAO similarly reported that the Department's financial statements had significant internal control issues and contained qualifications. The Secretary and the Chief Finance Officer of Defence were not able to meet the financial reporting requirements of the Finance Minister's Orders in 2003–04.

1.7 In its review of the 2003–04 Defence annual report, the committee noted, with regard to the financial statements, that 'Defence and ANAO have accepted that while some of the problems might be quickly solved, others are more deeply entrenched and will take some years to resolve'.2

1.8 For the financial year 2004–05, the Secretary and the Chief Finance Officer of Defence were again not able to meet the financial reporting requirements of the Finance Minister's Orders. In their review, the Secretary and CDF stated that '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'.3

1.9 Defence reported that it had resolved some audit findings in 2004–05, but enduring improvements may take some years.4 The 2004–2005 report stated that the Defence Financial Controls Framework Project was set to a five year time frame which reflected 'the fundamental nature of the changes to be put in place'.5

1.10 The committee, in its report on annual reports no 1 of 2006, stated:

The committee appreciates that the Department needs time to redress the problems identified in its financial management and business systems and processes as well as the need for 'significant cultural and behavioural change' for staff working in these areas. Even so, the committee expects to see marked improvement recorded in next year's annual report. It urges

2 Department of Defence Annual Report 2003–2004, p. 20. 3 Department of Defence Annual Report 2004–2005, p. 5. 4 Two strategies have been added since the publishing of the Portfolio Budget Statements 2005– 06 (S12—Provisions for Contaminated or Potentially Contaminated Land, Buildings and Infrastructure and S13—Commitments and Accounting for Leases). 5 Department of Defence Annual Report 2004–2005, p. 40. Chapter 1—Annual reports of departments 7

Defence not to relax its endeavours to address the problems identified by ANAO.6

1.11 In their joint review of the year 2005–2006, Mr Warner, and Air Chief Marshal Angus Houston noted that they were pleased to be able to sign this year's financial statements on an 'except for' basis:

After two years of being unable to form an opinion, it is pleasing to see the significant effort and focus on financial management delivering a tangible result. Improving Defence's financial management has been a high priority for the organisation and we have made significant progress this year.

The 2005–2006 financial year represented a complex and extremely challenging year for Defence. Not only has there been extensive remediation work but the additional activity of the DMO demerger, and the introduction of the Australian equivalents to International Financial Reporting Standards (AIFRS) has seen Defence experience the most complex financial year in its history. 7

1.12 The Secretary went on to explain that, with regard to Defence's accounts, the remediation work has delivered significant improvements in four key areas. He reported that improvements had been made in the reporting of military and civilian leave liabilities, the valuation and reporting of explosive ordnance, the introduction of a more rigorous asset capitalisation approach and, the completion of asset valuation work in information and communication technology.8

Financial statements for year ending 2006–2007

1.13 On 17 October 2007, the Auditor–General issued a qualified opinion on Defence's financial statements. The opinion stated that Defence's financial statements were true and fair with the exception of Inventories–General.

…due to pricing and system related issues there is uncertainty in relation to the reported balance of Inventories–General of $1.974 billion (2005–2006 $1.797 billion). Inventories–General is a component of the reported balance of Inventories totalling $4.702 billion (2005–2006 $4.017 billion). Consequently, I have not been able to obtain all the information necessary to be satisfied as to the balance of Inventories–General… This constitutes a limitation on the scope of the audit.9

6 Senate Standing Committee on Foreign Affairs, Defence and Trade, Report on Annual Reports No 1 of 2006, p. 9. 7 Department of Defence Annual Report 2005–2006, p. 6. 8 Department of Defence Annual Report 2005–2006, p. 6. 9 Australian National Audit Office, Independent Auditor's Report, Department of Defence Annual Report 2006–2007, p. 285. 8 Chapter 1—Annual reports of departments

1.14 The ANAO's results of the Audits of Financial Statements supported the views expressed in the 2006-07 annual report. In the 'financial overview' section, the report concluded:

Defence's financial management continues to meet improvement targets and significant progress has been made in financial reporting and financial controls management.

The financial statements are once again signed off on a 'true and fair except for' basis. The level of uncertainty surrounding the financial statements balances is now contained to $1,974m of general stores inventory. During the year, uncertainty around repairable items and not–in–catalogue issues was removed. Plans are now in place to deal with the remaining uncertainty surrounding general stores inventory.

The financial controls framework is now fully established and has allowed Defence's Chief Financial Officer (CFO) to be able to attest that a sound and effective system of internal control exists across all significant financial areas…The financial reform agenda achieved positive results during the year and Defence is now within striking distance of producing unqualified financial statements.10

Summary

1.15 The committee was pleased to note the department's progress outlined in the section entitled 'financial overview'. The section provides the reader with an excellent overview of the department's financial operating environment without requiring any technical expertise.11

1.16 This annual report presents the activities of the Department in a clear, concise manner, which helps the reader to locate any issue or subject of interest with a minimum of effort. The committee finds Defence's annual report to be both an informative and a well produced account of the Department's activities over the past year and that it meets all the requirements for departmental annual reports.

Department of Foreign Affairs 1.17 The Department of Foreign Affairs and Trade Annual Report 2006–2007 was presented on 31 October 2007 and tabled in the Senate on 12 February 2008.

1.18 In the Secretary's review, Mr Michael L'Estrange stated that 'in 2006–2007 the department advanced Australia's interests against the background of a fluid and challenging international environment':

10 Department of Defence Annual Report 2006–2007, p. 32. 11 Department of Defence Annual Report 2006–2007, pp. 32–42. Chapter 1—Annual reports of departments 9

…We contributed significantly to whole of government efforts to strengthen bilateral relations with key partners, promote regional and global cooperation, enhance Australia's security, strengthen Australia's economic prosperity, respond expeditiously to crises involving Australians, and project Australia and its values internationally.12

1.19 The Secretary stated that DFAT's international agenda was broad and complex, and cited as examples the Government's objectives in international counter– terrorism and security and good governance in our region:

We advanced the Government's international counter–terrorism objectives by implementing well–targeted and effective activities focusing on regional initiatives to address the ideological dimensions of terrorism and preventing access by terrorists to chemical, biological, radiological and nuclear weapons. To this end, we hosted the Asia–Pacific Seminar on Combating Nuclear Terrorism. We also accorded priority to Australia's counter– proliferation efforts, including by managing Australia's policy response to the proliferation challenges of Iran and North Korea.

…

We promoted security and good governance in our region by coordinating the Government's response to the situation in East Timor. We led international initiatives promoting good governance and sustainable development in the South Pacific, with particular focus on Solomon Islands, Papua New Guinea, Fiji and Tonga. Our contributions in this context were concentrated on Solomon Islands, through the Regional Assistance Mission to Solomon Islands, and Fiji in response to the military coup, and Tonga in the aftermath of civil unrest in 2006.13

1.20 The committee notes that the department continued to respond to 'the shifting demands of its operating environment' and the need for 'innovative and flexible staffing arrangements, underpinned by sound management and corporate governance structures'.

…The skills of our staff and our adaptable structures enabled us to establish discrete taskforces to address priority and emerging issues such as consular crises. In 2006–2007 we created a temporary Fiji task force (in response to the military coup) and the Japan Free Trade Agreement Task Force to advance bilateral FTA negotiations. In July 2006 the department reshaped its internal structure by creating new divisions to sharpen the focus on key policy, advocacy and service functions and to ensure greater alignment with the Government's foreign and trade policy priorities.14

12 Department of Foreign Affairs and Trade Annual Report 2006–2007, p. 3. 13 Department of Foreign Affairs and Trade Annual Report 2006–2007, p. 3. 14 Department of Foreign Affairs and Trade Annual Report 2006–2007, p. 10 10 Chapter 1—Annual reports of departments

1.21 Finally, the report noted that DFAT, in conjunction with the Australia– Indonesia Institute, will sponsor the establishment of the Elizabeth O'Neill Journalism Award. It will be an annual award to sponsor two journalists—one Australian, one Indonesian, to provide them with opportunities for cross–cultural visits. The aim is to help foster a stronger appreciation of contemporary issues facing each society.

1.22 The award honours the memory of Elizabeth O'Neill, OAM, Counsellor (Public Affairs), from the Embassy in Jakarta, who died in the crash of Garuda Airlines jet at Yogyakarta airport in Indonesia in March 2007.

Elizabeth O'Neill was a respected and admired diplomat. She served with distinction in Indonesia and built bridges of understanding between the two countries. She rose to the often imposing challenges asked of her, responding magnificently and selflessly to the aftermath of both Bali bombings, the Jakarta Embassy bombing, the helicopter crash on the island of Nias and the Indian Ocean tsunami. …DFAT is immensely proud of her contribution.15

1.23 Once again, for ease of reporting, the report of the Department of Foreign Affairs and Trade (DFAT) has been divided into two volumes. Volume 1, which is examined in this chapter deals with the Department of Foreign Affairs and Trade, while volume 2 reports on the Australian Agency for International Development (AusAID).

Reporting public diplomacy

1.24 The Department has produced a report that presents its activities in a clear, concise manner allowing the reader to locate almost all issues or subjects of interest with a minimum of effort. The committee notes, however, that some witnesses to the committee's inquiry into Australia's public diplomacy raised concerns about the quality of reporting on DFAT's public diplomacy programs. Based on the committee's reading of DFAT's annual reports up to 2005–2006 and the comments by a number of witnesses, it found that DFAT's annual report:

…does not provide the information required to actually measure the effectiveness of its public diplomacy programs. In most cases, the report lists and describes activities without providing any indication of the direct outcomes from these activities. There appears to be an untested assumption that these activities produce positive outcomes. There is no indication in the Annual Report that DFAT measures the immediate effect of its public diplomacy programs or the long-term contribution they make to the department's foreign policy objectives.16

15 Department of Foreign Affairs and Trade Annual Report 2006–2007, p. xi 16 Standing Committee on Foreign Affairs, Defence and Trade, Australia's public diplomacy: building our image, August 2007, paragraph 13.18. Chapter 1—Annual reports of departments 11

1.25 The committee understands that its report on public diplomacy, tabled in August 2007, was produced too late to offer any guidance to DFAT in preparing their current Annual Report. Furthermore, the committee has not received the government's response to the committee's findings. Nonetheless, the committee takes this opportunity to remind DFAT of criticism of its Annual Report and of the committee's findings about inadequate information in its Annual Report on DFAT's public diplomacy programs.

Summary

1.26 Overall, the committee finds that the report has been prepared in accordance with the guidelines and finds that DFAT has met the reporting requirements for a departmental report.

Department of Veterans' Affairs (DVA) 1.27 The Department of Veterans' Affairs Annual Report 2006–2007 was presented on 22 October 2007 and tabled in the Senate on 12 February 2008.

1.28 The annual report for Department of Veterans' Affairs also includes the annual reports of the Repatriation Commission, the Military Rehabilitation and Compensation Commission (MRCC); and the National Treatment Monitoring Committee (NTMC). The Secretary of the Department is also the President of the Repatriation Commission and Chair of both the MRCC and the NTMC.17

1.29 In the President/Secretary's overview, Mr Mark Sullivan stated that 2006– 2007 was another year of both internal and external challenges. Focusing on the department, Mr Sullivan commented that…

2006–2007 was the first full year of oneDVA, the department's reorganisation that replaced state office divisions with a national model organised by function. I am pleased to report that the veteran and defence force communities have not noticed any changes in the way the department interacts with them. Indeed, in many important areas, DVA has been able to improve the level of services it has provided its clients, much to the credit of its staff.

The department, nevertheless, continues to face significant challenges, including the need to decrease the department's size commensurate with the decline in the veteran population and the workloads they generate whilst at the same time ensuring that service levels do not fall. 18

17 Department of Veterans' Affairs Annual Report 2006–2007; see pp. 10–15 for the portfolio entities covered by this report, their roles, and their enabling legislation. 18 Department of Veterans' Affairs Annual Report 2006–2007, p. 2. 12 Chapter 1—Annual reports of departments

1.30 The committee notes that in the year under review, the department has improved much of its delivery of services, doubling its range of contracted private hospitals, and extending the services provided under its transport, rehabilitation appliances, preventative health and optical programs.19

1.31 In previous reports on annual reports, the committee has taken an interest in DVA's efforts to streamline and improve its information technology infrastructure. The committee notes the department's telephone service is undergoing reform.

Over the last ten years, the telephone has become the most common method for contacting the department among the veteran community: nearly three– quarters of the four million calls DVA receives each year are from veterans or their families. To ensure that the department continues to provide an accurate, comprehensive telephone service, DVA has introduced the veterans service centre, a telephone handling service operated by staff with the skills and experience to answer most calls as they arrive. Where these calls cannot be answered immediately, they are transferred to the relevant business area.20

1.32 The government's introduction of a new health and social services access card is of particular interest to the committee. The Secretary explained that the access card 'is another important project for the department, particularly to ensure that veterans' needs are taken into account in its development'.

DVA is working with the Department of Human Services to ensure the implementation of the access card will not affect DVA's standards of service delivery to the veteran community.21

1.33 In conclusion, the committee finds that the Department of Veterans' Affairs has submitted a comprehensive and well designed annual report that meets all the reporting requirements for a Commonwealth department.

19 Department of Veterans' Affairs Annual Report 2006–2007, p. 2. 20 Department of Veterans' Affairs Annual Report 2006–2007, p. 3. 21 Department of Veterans' Affairs Annual Report 2006–2007, p. 4. Chapter 2 Annual reports of statutory and non–statutory authorities and government companies

Defence portfolio

The Army and Air Force Canteen Service [trading as Frontline Defence Services]

2.1 The Army and Air Force Canteen Service Annual Report 2006–2007 was presented on 17 October 2006 and tabled in the Senate on 12 February 2008.

2.2 The report is tabled in accordance with section 9 of the Commonwealth Authorities and Companies Act 1997.

2.3 The Army and Air Force Canteen Service (AAFCANS) was established as a statutory authority under the Army and Air Force Canteen Service Regulations 1959. It was formed to provide goods, facilities and services to, or for the entertainment and recreation of, designated members of the 'Defence family'.

2.4 The Board adopted the trade name 'Frontline Defence Services' ('Frontline') in 1997 as part of a major business realignment.1 Under the regulations, Frontline returns its profits or surplus to bases for the provision or improvement of welfare and amenities for Defence personnel.2

2.5 The report stated that the 2006–2007 financial year had been a busy and challenging one for 'Frontline', during which time it recorded revenue of $16.5 million and a net operating deficit of $1.27 million. In recent times, there has been a considerable amount of change in Frontline's trading environment…generational shifts in customer attitudes…the reduction in base populations…limited on–base accommodation… and, the encroachment of civilian population and commercial centres around bases. … Despite these market limitations, the existing infrastructure of the Frontline organisation ensures that with some modification, it remains able to provide goods and services to its customer base more efficiently and cost effectively than can an external contractor. However, to continue to offer the level of service required by the regulations and one which is acceptable to

1 Army and Air Force Canteen Service Annual Report 2002–2003, pp. 2, 4, 24. 2 Army and Air Force Canteen Service Annual Report 2002–2003, p. 1; and Army and Air Force Canteen Service Annual Report 2003–2004, p. 4. 14 Chapter 2—Annual reports of statutory and non–statutory authorities and government companies

customers and stakeholders, Frontline requires a level of financial support from its owners.3

2.6 In December 2006, the Commonwealth through Defence entered into an agreement with Frontline for the provision of canteen services to Army and Air Force installations. Commencing in July 2006, the two–year agreement sets out the services that are to be delivered by Frontline, the required standards, the key performance indicators to be met and the payments that the Commonwealth will make to Frontline for the provision of these services which remain unprofitable. In turn, Frontline agreed to re–structure its business and to return Frontline to a profitable situation.4

2.7 Following the findings of the Uhrig report and the Acumen Due Diligence and Business Review, the recommendations of the Canberra Working Group and the ratification of the Defence Agreement, the main focus for the financial year was to restructure the organisation to meet directed outcomes. The objective was to ensure that Frontline would be in a position to return to profitability and self sufficiency by 30 June 2008.

2.8 The report stated that the focus of this restructure was in four key areas: • a decrease in the size of the head office and a reduction in overheads and costs; • a review of canteen operations and their transition to an optimum mix of directly operated, profit share or License to Trade outlets; • preparation for the transition of tavern operations to Garrison support contracts managed by the Defence Support Group (DSG); and 5 • development of the Frontline Strategic Plan 2008–2012.

2.9 The section in the report entitled 'results and review of operations', describes the implementation and outcomes of the restructure plan.6

2.10 The 2006–2007 report is an informative account of the operations and performance of Frontline Defence Services. The committee finds that this report fulfils all requirements outlined in the guidelines for statutory bodies.

3 Army and Air Force Canteen Service Annual Report 2006–2007, p. 7. 4 Army and Air Force Canteen Service Annual Report 2006–2007, p. 7. 5 Army and Air Force Canteen Service Annual Report 2006–2007, p. 12. 6 Army and Air Force Canteen Service Annual Report 2006–2007, p. 12. Chapter 2—Annual reports of statutory and non–statutory authorities and government companies 15

Australian War Memorial

2.11 The Australian War Memorial Annual Report 2006–2007 was tabled in the Senate on 19 September 2007. The Australian War Memorial (AWM) is a statutory authority within the Veterans' Affairs portfolio and functions in accordance with the requirements of the Australian War Memorial Act 1980 and the Commonwealth Authorities and Companies (CAC) Act 1997.7

2.12 The purpose of the Australian War Memorial is 'to commemorate the sacrifice of those Australians who have died in war'.8

2.13 In the Chairman's report, Mr Adrian Clunies–Ross reported that the major focus for the Australian War Memorial's Council and staff has been to oversee the development of the Post–1945 Conflicts galleries. This project was approved in 2004, with the first phase being the construction of the C E W Bean building, which now accommodates staff and collection.9

2.14 In the design of the galleries, Council asked that special attention be given to reinvigorating the diorama tradition; to giving the galleries a sense of location; to using multimedia techniques to produce engaging major experiences; and to attract the widest possible demographic, especially children. Particular attention has been given during the entire process to stakeholder consultation.10 The Annual Report noted that there have been some minor hold-ups: While the construction work for the Post–1945 Conflicts galleries has progressed satisfactorily, numerous latent conditions have caused delays which have been largely overcome by competent management by memorial staff and rescheduling of secondary and tertiary works. Council has been impressed by the flexibility and foresight of the Director and those staff directly involved in solving difficult engineering problems while substantially maintaining schedules.11

2.15 The Chairman stated that during the year, the Memorial implemented recommendations made in the Uhrig report (2003), relating to corporate governance of statutory authorities and officer holders. The Chairman further stated that 'Council considers the outcome satisfactory, particularly as existing strong relationships have not been disturbed. 12

7 Australian War Memorial Annual Report 2006–2007, p. 9. 8 Australian War Memorial Annual Report 2006–2007, p. 9. 9 Australian War Memorial Annual Report 2006–2007, p. 1. 10 Australian War Memorial Annual Report 2006–2007, p. 1. 11 Australian War Memorial Annual Report 2006–2007, p. 1. 12 Australian War Memorial Annual Report 2006–2007, pp. 1–2. 16 Chapter 2—Annual reports of statutory and non–statutory authorities and government companies

2.16 The committee finds that the War Memorial's Annual Report provides a comprehensive coverage of the organisation's activities during 2006–2007. It is an informative and well produced document, which allows the reader to access information easily. The committee concludes that this report complies with all reporting requirements for statutory authorities.

Other reports

2.17 Other Defence portfolio authorities, agencies and/or companies which had their annual reports examined by the committee, but were not otherwise commented upon in this edition, include: • ASC Limited • Australian Strategic Policy Institute • Defence Force Retirement and Death Benefits Authority • Defence Housing Authority • Defence Materiel Organisation • Military Rehabilitation and Compensation Commission • Military Superannuation and Benefits Board • Repatriation Medical Authority • Veterans' Review Board.

2.18 The committee considers that all the annual reports of the above–mentioned organisations fully met their respective reporting requirements.

Foreign Affairs and Trade portfolio

Australian Agency for International Development (AusAID)

2.19 The Australian Agency for International Development Annual Report 2006– 2007 was presented on 31 October 2006, and tabled in the Senate on 12 February 2008.

2.20 AusAID administers Australia's overseas aid program. According to the annual report, the objective of the aid program is to advance the national interest 'by assistance to developing countries to reduce poverty and achieve sustainable development'.13

2.21 AusAID advises the government on development policy and manages Australian development cooperation programs focused on achieving broad–based

13 Australian Agency for International Development Annual Report 2006–2007, p. 9. Chapter 2—Annual reports of statutory and non–statutory authorities and government companies 17 growth, stability and effective governance, particularly in our region. In this way, AusAID contributes to the formulation and implementation of Australia's broader foreign policy framework. It is an administratively autonomous agency within the Foreign Affairs and Trade portfolio. The Director General reports directly to the Minister for Foreign Affairs and the Parliamentary Secretary on all aspects of aid policy and operations.14

2.22 In the Director General's review, Mr Bruce Davis stated that 2006–2007 had been another significant year for the Australian aid program, a period characterised by growth and transformation in the program and made particularly exciting by new and emerging opportunities. He also stated that the year was touched by tragedy, with the crash of Garuda Flight 200 in Yogyakarta in March 2007, in which five Australians died including AusAID officer Allison Sudradjat.15

2.23 Allison was the head of AusAID's operations in Indonesia… She had worked with AusAID for 18 years, playing a leading role in responding to some of the region's worst disasters, from droughts to tsunamis through to superbly managing Australia's $1 billion development assistance package in Indonesia… Allison was an extraordinarily gifted and committed humanitarian worker…a remarkable person, someone who touched the lives of so many people, both within AusAID and Australia, and in the developing world where she loved to live and work.16

2.24 On 31 May 2007, the then Minister for Foreign Affairs, the Hon Alexander Downer MP, announced the creation of the annual Allison Sudradjat Awards. The awards will be presented to four of the top post graduate students from Indonesia and two from Papua New Guinea who are recipients of Australian Leadership Awards.17 They will provide gifted young people from the region with an invaluable professional personal experience. As well as the entitlements they receive under the leadership awards, these scholars will receive additional benefits such as attachments with Australian Government departments, education and research institutions.

2.25 In the section entitled 'report on performance', AusAID stated that the 2006– 2007 annual report …employs a new performance assessment framework, which was developed to reflect the Australian Government's White Paper on the overseas aid program, Australian aid: promoting growth and stability.

14 AusAID Annual Report 2006–2007, pp. 6–7. 15 AusAID Annual Report 2006–2007, p. 2. 16 AusAID Annual Report 2006–2007, p. 2. 17 AusAID Annual Report 2006–2007, pp. 2–3. 18 Chapter 2—Annual reports of statutory and non–statutory authorities and government companies

…2006–07 has been a year of transition for performance measurement and management of the overseas aid program. The Office of Development Effectiveness, established by the Australian Government in the White Paper developed an enhanced performance assessment framework during the year. … the enhanced performance assessment framework will provide program managers with better data about performance and will supply external stakeholders with information on the results achieved with Australian funds. The enhanced framework was trialled in 2006–07 across seven countries, Papua New Guinea, Indonesia, Solomon Islands, Vietnam, Philippines, Vanuatu and Fiji, that represent some two thirds of Australia's aid allocated by country. Lessons from these early adopters are now being used to refine the enhanced framework before it is rolled out across the program in 2007–08.18

2.26 The report further states that the challenge of generating robust performance information on the impact and effectiveness of aid should not be underestimated. The framework will be subject to continuous review and enhancement. The enhanced framework will better reflect the complexity of the development process.19

2.27 The committee finds that AusAID's annual report provides a comprehensive coverage of the organisation's activities during 2006–2007. As usual the committee considers it to be of high quality: it is informative and well produced. The committee concludes that this report complies with all reporting requirements for non–statutory authorities.

18 AusAID Annual Report 2006–2007, p. 14. 19 AusAID Annual Report 2006–2007, p. 14. Chapter 2—Annual reports of statutory and non–statutory authorities and government companies 19

Australian Trade Commission (Austrade) 2.28 The Australian Trade Commission Annual Report 2006–2007 was presented on 16 October 2007 and tabled in the Senate on 12 February 2008.

2.29 The Australian Trade Commission is a statutory authority responsible to the Minister for Trade and the Australian Government. Until 30 June 2006, Austrade operated under the Australian Trade Commission Act 1985, Commonwealth Authorities and Companies Act 1997, and the Export Market Development Grants Act 1997. It was governed by a Board whose members were drawn from business and government.

2.30 On 1 July 2006, following amendments to the Australian Trade Commission Act 1985, and the Export Market Development Grants Act 1997, Austrade became an agency under the Financial Management and Accountability Act 1997 and the Public Service Act 1999, and managed by a Chief Executive Officer.20

2.31 The annual report states that Austrade's mission is 'to contribute to community wealth by helping more Australians succeed in export and international business'.21

2.32 As reported in his Managing Director's report last year, Mr Peter O'Byrne outlined the changes made to Austrade's corporate governance: This year Austrade implemented changes to its governance arrangements, in line with the Government's response to the Uhrig review. Austrade transitioned from a statutory authority with a board of directors to a statutory agency with an executive management structure, reporting directly to the Minister for Trade. These changes were completed successfully while maintaining effective delivery of Austrade services to Australian businesses and growing the value of our contribution to the exporter market.22

2.33 Mr O'Byrne also noted that Austrade achieved a continuing strong performance in providing support to the international business effort of Australian enterprises.

2.34 Some highlights for the year included: • Austrade worked with 15,000 Australian companies in 2006–2007, assisting 5417 businesses to achieve export success. This is an increase of six percent on the number assisted in 2005–2006. • The dollar value of export successes achieved by Austrade's clients, with acknowledged assistance by Austrade, totalled $22.4 billion.

20 Australian Trade Commission Annual Report 2006–2007, p. 75. 21 Australian Trade Commission Annual Report 2006–2007, p. 6. 22 Australian Trade Commission Annual Report 2006–2007, p. 3 20 Chapter 2—Annual reports of statutory and non–statutory authorities and government companies

• Utsav Australia (Celebrate Australia) was launched in India. This three year sustained and comprehensive promotion of Australian capabilities and business opportunities aims to raise awareness and expand commercial engagement for Australian companies in India. th th • Austrade hosted the 20 anniversary Asian trade Promotion Forum and the 19 APEC Working group on Trade Promotion.23

2.35 The committee is satisfied with Austrade's tables which describe its performance and outcomes for the year and its descriptions of accountability and corporate governance requirements.24

2.36 The committee finds that Austrade's annual report provides a comprehensive coverage of the organisation's activities during 2006–2007. In keeping with previous examinations, the committee considers this annual report to be informative and produced in a manner that allows the reader easy access to information. The committee concludes that this report complies with all reporting requirements for statutory authorities.

Other reports 2.37 Other Foreign Affairs and Trade portfolio authorities and/or agencies which had their annual reports examined by the committee but were otherwise not commented upon in this edition, include: • Australian Safeguards and Non–Proliferation Office Annual Report 2006–2007 and • Export Finance and Insurance Corporation Annual Report 2006–2007.

2.38 The committee considers that all the annual reports of the abovementioned organisations fully met their respective reporting requirements.

23 Australian Trade Commission Annual Report 2006–2007, pp. 2 and 5. 24 Australian Trade Commission Annual Report 2006–2007, pp. 16, 40–64.

Appendix 1

Annual reports referred to the Committee

Defence portfolio Departments

Department of Defence Department of Veterans' Affairs, Repatriation Commission and the National Treatment Monitoring Committee (NATMOC)

Statutory authorities

Army and Air Force Canteen Service Board of Management Australian Military Forces Relief Trust Fund Australian Strategic Policy Institute Limited Australian War Memorial Commonwealth Ombudsman and Defence Force Ombudsman Defence Force Remuneration Tribunal Defence Force Retirement and Death Benefits Authority Defence Housing Authority (DHA) Judge Advocate General Office of the Inspector–General of Intelligence and Security (not tabled) Military Superannuation and Benefits Board of Trustees No 1 Repatriation Medical Authority (RMA) Royal Australian Air Force Veterans' Residences Trust Fund Royal Australian Navy Relief Trust Fund Veterans' Review Board (VRB)

Non–statutory authorities and government companies

ASC Pty Ltd, formerly known as Australian Submarine Corporation Pty Limited

22 Appendix 1—Annual reports referred to the Committee

Foreign Affairs and Trade portfolio Department

Department of Foreign Affairs and Trade

Statutory authorities

Australia–Indonesia Institute Australia–Japan Foundation Australian Centre for International Agricultural Research (ACIAR) Australian Safeguards and Non–Proliferation Office Australian Trade Commission (Austrade) Export Finance and Insurance Corporation (EFIC)

Non–statutory authorities and government companies

Australia–China Council Australia–India Council Australia–Korea Foundation Australian Agency for International Development (AusAID)

Appendix 2 Compliance table of the annual reports referred to the Committee for scrutiny for the period 2006–2007

Scrutiny of reports tabled by 31 October 2007

@ Date report * Date report submitted to Enabling legislation presented to Date on letter minister (if President and known) Department/agency of transmittal # Date tabled in % Date report timeliness the Senate received by minister (if ^ Date tabled in known) H/Representatives Departments

Defence Public Service Act 1999, 23 Oct 07 @ 15 Oct 07 * 31 Oct 07 s63 (1). % 22 Oct 07 # 12 Feb08 To be tabled by

31 October.

1 Defence Materiel Prescribed agency 23 Oct 07 @ 15 Oct 07 * 31 Oct 07 Organisation under the Financial [Defence Management and report % 22 Oct 07 # 12 Feb08 Accountability Act 1997, volume 2] and the Public Service Act 1999, s63 (1).

To be tabled by 31 October.

1 A prescribed agency is an agency established by regulation under the Financial Management and Accountability Act 1997. It provides financial management authority to, and required accountability by, the chief Executive of an agency. An agency can be prescribed but not be an independent entity under the Public Service Act 1999. This is the case for the DMO, which is prescribed and so independent under the FMA Act but is part of the Department of Defence for the purposes of the Public Service Act 1999, Defence Materiel Organisation Annual Report, 2005–2006, p. 186. 24 Appendix 2—Scrutiny of reports tabled by 31 October 2007

Scrutiny of reports tabled by 31 October 2007

Foreign Affairs and Public Service Act 1999, 17 Oct 07 * 31 Oct 07 Trade s63 (1). To be tabled by # 12 Feb 08 31 October.

Veterans' Affairs Public Service Act 1999, 29 Aug 07 @ 15 Oct 07 * 22 Oct 07 s63 (1) and (2); Financial Management % 15 Oct 07 # 12 Feb 08 and Accountability Act 1997, s45 and s57(7); Defence Service Homes Act 1918, s50B; War Graves Act 1980, s13(1)

To be tabled by

31 October.

Incorporating the reports of …

Repatriation Veterans' Entitlement Commission Act 1986, s215 and

The National Veterans' Entitlement Treatment Act 1986, s90A Monitoring Committee [Both reports to be (NATMOC) tabled by 31 October.]

Appendix 2—Scrutiny of reports tabled by 31 October 2007 25

Scrutiny of reports tabled by 31 October 2006

@ Date report * Date report submitted to Enabling legislation presented to Date on letter minister (if President and known) Department/agency of transmittal # Date tabled in the % Date report timeliness Senate received by minister (if ^ Date tabled in known) H/Representatives Defence—statutory authorities

Army and Air Established by No letter of @ 11 Oct 07 * 17 Oct 07 Force Canteen regulations under the transmittal. Service, trading as Defence Force Act 1903; % 15 Oct 07 # 12 Feb 08 Frontline Defence and, Commonwealth Services Authorities and Companies Act 1997, s9. Minister to table within 15 days of receiving report (by 31 Oct).

Australian Strategic Commonwealth 10 Sep 07 @ 22 Oct 07 * 30 Oct 07 Policy Institute Authorities and Companies Act 1997, % 25 Oct 07 # 12 Feb 08 s36. Minister to table within 15 days of receiving report (by 31 Oct).

Australian War Commonwealth September # 19 Sep 07 Memorial Authorities and 2007 Companies Act 1997, s9. Minister to table within 15 days of receiving report (by 31 Oct).

Defence Force Defence Force 13 Sep 07 @ 13 Sep 07 * 17 Oct 07 Retirement and Retirement and Death Death Benefits Benefits Act 1973, % 19 Sep 07 # 12 Feb 08 Authority s16(2). To be tabled by minister as soon as practicable (by 31 Oct). 26 Appendix 2—Scrutiny of reports tabled by 31 October 2007

Scrutiny of reports tabled by 31 October 2006

Defence Housing Defence Housing 15 Oct 07 @ 12 Oct 07 * 31 Oct 07 Authority Authority Act 1987; and, the Commonwealth % 23 Oct 07 # 12 Feb 08 Authorities and Companies Act 1997, s9. Minister to table within 15 days of receiving report (by 31 Oct).

Military Military Rehabilitation 31 Aug 07 @ 15 Oct 07 * 22 Oct 07 Rehabilitation and and Compensation Act Compensation 2004, s385; Safety % 15 Oct 07 # 12 Feb 08 Commission Rehabilitation and Compensation Act 1988, s161.

Military Military Superannuation Letter of @ 21 Sep 07 * 25 Oct 07 Superannuation and and Benefits Act 1991, transmission Benefits Board of s26(3). Minister to table not dated % 25 Sep 07 # 12 Feb 08 Trustees 15 days after receiving report (by 31 Oct).

Repatriation Veterans' Entitlement 05 Sep 07 @ 05 Sep 07 * 22 Oct 07 Medical Authority Act 1986, s196B (RMA) To be tabled by % 06 Sep 07 #12 Feb 08 31 October.

Royal Australian Royal Australian Air No letter of @ 05 Nov 07 * 13 Nov 07 Air Force Veterans' Force Veterans' transmittal Residence Trust Residence Act 1953, % 10 Nov 07 # 12 Feb 08 Fund s10. to be tabled by 31 October.

Veterans' Review Veterans' Entitlement 18 Sep 07 @ 25 sep 07 * 19 Oct 07 Board Act 1986, subsection 215(4). To be tabled by % 26 Sep 07 # 12 Feb 08 31 October.

Appendix 2—Scrutiny of reports tabled by 31 October 2007 27

Scrutiny of reports tabled by 31 October 2006

Australian Centre Australian Centre for @ 02 Oct 07 * 02 Nov 07 for International International Agriculture Agriculture Research % 02 Oct 07 # 12 Feb 08 Research (ACAIR) Act 1982, s39. To be tabled by 31 October.

Australian Nuclear Non– 16 Oct 07 @ 23 Oct 07 * 30 Oct 07 Safeguards and Proliferation Non–Proliferation (Safeguards) Act 1987, % 23 Oct 07 # 12 Feb 08 Office s51; Chemical Weapons (Prohibition) Act 1994, s96; Comprehensive Nuclear–Test–Ban Treaty Act 1998, s71. To be tabled by 31 October.

Australian Trade Australian Trade 20 Sep 07 @ 20 Sep 07 * 16 Oct 07 Commission Commission Act 1985, (Austrade) s92; the Financial % 20 Sep 07 # 12 Feb 08 Management and Accountability Act 1997, and the Public Service Act 1999 To be tabled by 31 October.

Export Finance and Commonwealth No letter of @ 09 Sep 07 * 18 Oct 07 Insurance Authorities and transmittal Corporation (EFIC) Companies Act 1997, s9. % 09 Sep 07 # 12 Feb 08 Minister to table within 15 days of receiving report (by 31 Oct).

28 Appendix 2—Scrutiny of reports tabled by 31 October 2007

Scrutiny of reports tabled by 31 October 2006

Defence and FA&T—Non–statutory authorities and government companies

Australian Agency Public Service Act 1999, 17 Oct 07 @ 05 Oct 07 * 31 Oct 07 for International s63. [DFAT report Development To be tabled by volume 2] % 06 Oct 07 # 12 Feb 08 (AusAID) [FA&T] 31 October.

ASC Pty Ltd Commonwealth 20 Sep 07 * 17 Oct 07 Formerly known as Authorities and Australian Submarine Companies Act 1997, s9. # 12 Feb 08 Corporation Pty Minister to table within Limited [DEF]. 15 days of receiving report (by 31 Oct). On 11 June 2004, ASC was proclaimed as a government business enterprise under the CAC Act.

Appendix 3 Reporting requirements and guidelines

Departmental reports1 Authority for requirements

These annual report requirements are prepared pursuant to subsections 63(2) and 70(2) of the Public Service Act 1999 and were approved by the Joint Committee of Public Accounts and Audit on 13 June 2007.

Commencement and reporting period

The requirements apply for annual reports for financial years ending on or after 30 June 2007.

Application

(1) The requirements apply to annual reports for departments of state pursuant to subsection 63(2) and for executive agencies pursuant to subsection 70(2) of the Public Service Act 1999. As a matter of policy, they also apply to prescribed agencies under section 5 of the Financial Management and Accountability Act 1997 (FMA Act).

(2) In most cases the term 'department' is used in these Requirements to refer to all departments and agencies that will be preparing annual reports under these requirements. Similarly, 'secretary' is used to refer to a departmental secretary or to an agency head of one of those other bodies.

(3) In the case of an agency (including an executive agency established under section 61 of the Public Service Act 1999) that is neither prescribed under the FMA Act nor comes with the Commonwealth Authorities and Companies Act 1997 (CAC Act), these Requirements may be used to the extent that they are consistent with any reporting requirements contained in the agency's own legislation (if any).

(4) In cases of machinery of government change during the reporting period, where functions or offices are gained or lost, the established practice is that the gaining department must report on that function or office for the entirety of the reporting period, whether or not the losing department continues to exist. However, in relation to financial statements, the general rules is that

1 Excerpt from the Requirements for annual reports for departments, executive agencies and FMA Act bodies, Department of Prime Minister and Cabinet, June 2007, pp. 1, 2.

30 Appendix 3—Reporting requirements and guidelines

each Chief Executive who had responsibility for a function must sign off on financial statements relating to the period of their individual responsibility and include them in their own annual reports. If, for any reason, the losing department does not produce an annual report that covers the period it had the function, the financial statements from the earlier period must be published in the gaining departmen's annual report.

Timetable

A copy of the annual report is to be laid before each House of the Parliament on or before 31 October in the year in which the report is given.

The provisions of subsections 34C(4)–(7) of the Acts Interpretation Act 1901 apply in relation to an application for extension of the period.

Where an agency's own legislation provides a timeframe for its annual report, for example 'within six months' or 'as soon as practicable after 30 June in each year', that timeframe applies. An extension under the Act Interpretation Act would need be sought only should a specified timeframe not be met.

However, it remains the Government's policy that all annual reports should be tabled by 31 October.

Commonwealth authorities and companies The Commonwealth Authorities and Companies Act 1997 (the CAC Act) contains detailed rules about reporting and accountability for Commonwealth authorities and Commonwealth companies. Commonwealth companies also must meet other reporting requirements as set out in Corporations Law.

The Commonwealth Authorities and Companies (Report of Operations) Orders 2002, made under section 48 of the CAC Act, enables organisations to comply with the specific requirements for tabling reports.

The notes from the Commonwealth Authorities and Companies (Report of Operations) Orders 2002 are set out below.

• Basis for annual report: Section 9 of the CAC Act requires directors of a Commonwealth authority to prepare an annual report in accordance with Schedule 1 of the CAC Act. • Report of operations requirement: The annual report must include a report of operations prepared by the directors in accordance with Finance Minister's Orders (clause 1 of Schedule 1 of the CAC Act). • Financial statements requirement: The annual report must include financial statements prepared by the directors (clause 2 of Schedule 1 of the CAC Act) and the Auditor–General's report on those financial statements.

Appendix 3—Reporting requirements and guidelines 31

• Tabling requirements: Section 9 of the CAC Act provides that the directors must give the annual report to the responsible Minister by the 15th day of the 4th month after the end of the Commonwealth authority's financial year. Where a Commonwealth authority's financial year ends on 30 June, this means that the annual report must be given to the responsible Minister by 15 October. The responsible Minister must in turn table the annual report in both Houses of the Parliament 'as as soon as practicable'. Under subsection 34C(3) of the Acts Interpretation Act 1901, this means within 15 sitting days.

Non–statutory bodies The annual report of a non–statutory body shall contain the following information (after Senate Hansard, 8 December 1987, pp. 2643–2645):

• The annual report shall show the date of establishment of each new non–statutory body (NSB) and, in relation to each existing NSB, information regarding the date if its establishment in as much detail as is available. • The annual report shall contain a statement of each NSB's objectives and functions. • The annual report shall contain an account of each NSB's significant activities during the year. • The annual report shall contain an indication that the creation or continued existence of each NSB, its functions and its organisation have received Ministerial approval. • The annual report shall show the date in which each NSB will cease to exist or before which it will be reviewed (whichever is the earlier). • In the case of any NSB whose continued existence, functions and organisation have been reviewed and whose continued existence has been approved by the Minister, the annual report shall show a summary of the outcome of the review. • The annual report will contain a list of any positions provided for ex–officio government members on each NSB and of any positions provided for representatives nominated by particular non–government organisations. • The annual report shall show the maximum term of appointment of each on an NSB. • Except in cases where there may be little or no continuity of membership from one meeting to the next, the annual report will show the names of individual members of each NSB, and their terms of appointment. • The report will show the manner in which the level of remuneration paid (if any) to members of each NSB is determined. • The report will show the manner in which each NSB is funded. • The report will show a summary of any other financial arrangements such as the kinds of expenditure that can be made from the funds provided, and the nature of secretariat services provided and the way in which these are funded. • In respect of each NSB, the annual report shall indicate whether one of its functions is to distribute funds to other organisations or individuals.

32 Appendix 3—Reporting requirements and guidelines

• AN NSB with its own accounting system shall provide an audited financial statement. • When an NSB operates through its parent body accounts, the NSB shall provide an account of receipts and expenditure on a program basis. It will also show: • the NSB's work reflected in the parent body's published program structure, • performance related to objectives and measured in terms of stated criteria, in accordance with standard program budgeting techniques, and • the amounts of any grants made by each NSB.