Annual performance statements for Commonwealth entities

Resource Management Guide No. 134

July 2017

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© Commonwealth of Australia 2017

ISBN: 978-925205-15-2 (Online)

With the exception of the Commonwealth Coat of Arms and where otherwise noted, all

material presented in this document is provided under a Creative Commons Attribution 3.0

Australia (http://creativecommons.org/licenses/by/3.0/au) licence.

The details of the relevant licence conditions are available on the Creative Commons website

(accessible using the links provided) as is the full legal code for the CC BY 3 AU licence.

Use of the Coat of Arms

The terms under which the Coat of Arms can be used are detailed on the following website:

www.dpmc.gov.au/government/its-honour.

Contact us

Please direct questions or comments about the guide to:

Public Governance, Performance and Accountability Governance and APS Transformation Department of Finance 1 Canberra Avenue Forrest ACT 2603

Email: pmra@finance.gov.au

Internet: www.finance.gov.au/resource-management/pmra/

The words ‘must’, ‘required’, ‘requires’ and ‘requiring’ denote mandatory compliance by

accountable authorities/officials. The use of the words ‘could’, ‘may’, ‘encouraged’ or

‘consider’ convey non-mandatory guidance. The guidance to which these words relate may

or may not be applied by accountable authorities/officials in their approach to resource

management, depending on the operating circumstances of the entity and its appetite for

risk.

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Contents Audience 4

Key points 4

Resources 4

Part 1 – Introduction 5

Portfolio Budget Statements 6

Commonwealth companies 6

Part 2 – The role of annual performance statements in the enhanced Commonwealth performance framework 7

Part 3 – Suggested format for annual performance statements 8

Part 4 – Minimum requirements of the annual performance statements 9

Statements (of preparation) 11

Results 13

Activity title or description 16

Performance measurement methodology 17

Targets, goals and measures 18

Results achieved 19

Analysis 21

Part 5 – Regulator Performance Framework 23

Part 6 – Tabling and publication requirements 25

Part 7 – Sensitive information 25

Intelligence, security or listed law enforcement entities 25

Part 8 – Entities with enabling legislation 26

Part 9 – Audit of annual performance statements 26

Part 10 – The role of audit committees 26

Appendix A – Performance maturity model 28

Appendix B – Quick Reference Guide 30

Appendix C – Suggested Format for Annual Performance Statements 31

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Audience

This guide is for the officials of Commonwealth entities who are responsible for assisting their

accountable authority to prepare annual performance statements. The guide also supports

officials who manage the activities of entities.

Key points

This guide:

provides guidance on the obligations of accountable authorities under section 39 of

the Public Governance Performance and Accountability Act 2013 (PGPA Act) to

prepare annual performance statements for their entities

outlines the minimum requirements, prescribed by the Public Governance,

Performance and Accountability Rule 2014 (PGPA Rule) in section 16F, for entities

producing annual performance statements.

This guide applies to annual performance statements that begin on or after 1 July 2015.

Resources

This guide is available on the Department of Finance website at www.finance.gov.au

together with related guidance on the enhanced Commonwealth performance framework:

Resource Management Guide No. 130 Developing good performance information

Resource Management Guide No. 131 Corporate plans for Commonwealth entities

Resource Management Guide No. 132 Corporate plans for Commonwealth

companies

Resource Management Guide No. 133 Annual performance statements for

Commonwealth entities

Resource Management Guide No. 135 Annual reports for non-corporate

Commonwealth entities

Resource Management Guide No. 136 Annual reports for corporate Commonwealth

entities

Resource Management Guide No. 137 Annual reports for Commonwealth

companies

2015-16 Annual performance statements lesson learned paper

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Part 1 – Introduction

1. An objective of the PGPA Act is to establish a performance framework across

Commonwealth entities that provides meaningful information to parliament and the

public.

2. Section 39 of the PGPA Act requires Commonwealth entities to prepare annual

performance statements and include those statements in their annual reports. This

requirement took effect on 1 July 2015.

3. Commonwealth entities will report, through the annual performance statements, to what

extent they have fulfilled their purpose(s) as articulated at the beginning of a reporting

year in their corporate plans. This includes reporting on non-financial performance

criteria in both their corporate plans and in any Portfolio Budget Statement, Portfolio

Additional Estimates Statement or other portfolio estimates statement.

4. The requirements for annual performance statements are designed to provide a

consistent approach to performance reporting. The statements consolidate relevant

performance. The aims are to improve the readability of this information and to provide a

clear line of sight between planned performance for the reporting period as outlined in

the corporate plan, Portfolio Budget Statements and Portfolio Additional Estimates

Statements of an entity over the reporting period.

5. Under previous arrangements, entities’ reporting of performance, through the publication

of annual reports, varied significantly in quality and structure. This has limited the ability

to clearly ascertain the scope, nature and success of an entity’s performance and to

what extent the entity has achieved its purposes.

6. It is fundamental to the objectives of the PGPA Act that the presentation of entities’

performance to the public and the parliament is meaningful and improves public

accountability. The annual performance statements replace the previous annual report

non-financial performance reporting requirements (for non-corporate Commonwealth

entities) creating a clear, concise and consistent approach to performance reporting

across all Commonwealth entities.

7. It is understood that the development of improved performance information and reporting

frameworks will evolve over the initial reporting cycles under the new arrangements. To

help entities assess their progress Finance has published a performance maturity model

(provided at Appendix A).

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Portfolio Budget Statements

8. The majority of Commonwealth non-corporate and corporate entities receive some level

of appropriation funding. As a result, key strategic information relevant to entities

appears in their responsible Minister’s Portfolio Budget Statements that accompany the

annual Appropriation Acts.

9. Portfolio Budget Statements are publications presented to parliament by the responsible

portfolio minister. They describe, at a strategic level, what is intended to be achieved

with money appropriated by parliament. The Portfolio Budget Statements explain the

estimates for the purposes of the Budget Appropriation Bills and informs Senators and

Members of Parliament of changes in the proposed allocation of resources to entities

within the portfolio.1

10. The Portfolio Budget Statements are formal ministerial documents. Together with the

Budget Papers, Portfolio Budget Statements they represent a package of documents

tabled in Parliament on Budget night, which explain the Government’s budget decisions.

11. A Finance Secretary direction under section 36(3) of PGPA Act sets out the

requirements for performance information to be included in Portfolio Budget Statements.

This includes a strategically focused set of high-level performance information for

existing programs and detailed information for new or materially changed programs. This

performance information must be reported against in annual performance statements at

the end of that year, along with the performance information from corporate plans.

12. Note that the annual performance statements report on the performance of the entity in

fulfilling its purpose(s) during the reporting period, by acquitting the performance

information published in both the entity’s corporate plan and the relevant Portfolio

Budget Statements for the reporting period.

13. To demonstrate the achievement of its purpose(s) entities will need to clearly map (or

attribute) the performance information from the Portfolio Budget Statements to the

entities’ purpose(s). This mapping will serve to establish a clear read between the

entity’s corporate plan, relevant Portfolio Budget Statements, annual performance

statements and the annual report, and ensure it is clear how (and how well) the entity is

fulfilling its purposes.

Commonwealth companies

14. Under the PGPA Act, Commonwealth companies are not required to produce annual

performance statements. This guidance therefore does not apply to Commonwealth

companies.

15. However, under section 27A of the PGPA Rule, companies are still required to report, in

their annual reports, on the actual performance results achieved against the

performance information outlined in their corporate plans.

1 A Portfolio Budget Statement is produced for every appropriation bill where a Commonwealth entity within a portfolio is appropriated an amount

by the parliament.

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Part 2 – The role of annual performance statements in the enhanced Commonwealth performance framework

16. The enhanced Commonwealth performance framework builds on three main concepts:

entity, purpose and activity. At its most basic, the framework is focused on each entity

covered by the PGPA Act. Each entity is required to identify its purposes, which include

its objectives, functions or role. Lastly, the framework focuses on the activities of the

entity, which are its core areas of effort and the actions that it undertakes to pursue and

fulfil its purposes. More information on how an entity can identify and define its purposes

and significant activities are in RMG 132 – Corporate plans for Commonwealth entities.

17. Key to the annual performance statements is the presentation of good performance

information that tells a cohesive performance story demonstrating the extent to which a

Commonwealth entity is meeting its purposes through the activities it undertakes.

Guidance on the development of good performance information is available in

RMG-131 – developing good performance information (summarised at Appendix B).

18. The corporate plan, Portfolio Budget Statements, and the annual performance

statements are the core elements of the enhanced Commonwealth performance

framework. The corporate plan is developed at the beginning of the reporting cycle and

sets out an entity’s strategies for achieving its purposes and how success will be

measured.

19. The Portfolio Budget Statements sets out the funding for the entity and how the impact

of that expenditure will be measured. Annual performance statements, which are

included as part of the entity’s annual report, are produced at the end of the reporting

cycle and provide an assessment of the extent to which an entity has succeeded in

achieving its purposes. Figure 1 shows the main components of the framework and the

annual cycle.

Figure 1: The enhanced Commonwealth performance framework

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20. Many of the minimum content requirements for entities’ annual performance statements

are linked to content requirements for their corporate plans (see PGPA Rule section 16E

and RMG – 132 Corporate plans for Commonwealth entities). This alignment recognises

the close relationship between the two elements of the framework. The annual

performance statements (which are to be included in each entity’s annual report)

complete the annual reporting cycle.

21. Commonwealth entities will report, through the annual performance statements, on the

results actually achieved against the measures set out in their corporate plan and

Portfolio Budget Statements, and on the basis of any review and evaluations they have

committed to undertaking to demonstrate their performance in achieving their purposes.

The statements will present the performance of the significant activities for which the

entity is responsible at the end of each reporting period, by reporting against the targets,

goals and measures that the entity established at the beginning of a reporting year.

22. The level of reporting detail will typically be commensurate with the size, nature and

complexity of the activity in question. The aim is to have good quality, comprehensive

and accurate information that provides a clear and complete picture of how an entity has

performed.

Part 3 – Suggested format for annual performance statements

23. One purpose of annual performance statements is to support consistent performance

reporting by all entities. If needed, an entity may expand on, or add additional

information, beyond the suggested structure if needed.

24. Further information on the suggested format of the annual performance statement is

provided at Appendix C.

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Part 4 – Minimum requirements of the annual performance statements

25. Subsection 39(1) of the PGPA Act requires the accountable authority of a

Commonwealth entity to include annual performance statements in its annual report

(unless otherwise prescribed in the entity’s enabling legislation). Annual performance

must comply with requirements for publication and content prescribed by the PGPA

Rule.

26. Section 16F of the PGPA Rule sets out the matters that entities must include in their

statements. There are three core minimum requirements for annual performance

statements:

Statements (of preparation)

Results

Analysis.

27. Annual performance statements are intended to be the key location for all public data on

the actual performance of an entity in a reporting period. They will directly reflect the

actual results achieved against the performance information as set out in their corporate

plans and Portfolio Budget Statements (see Figure 2).

Figure 2: Corporate plans to annual performance statements – flow and core elements

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Example 1

Mapping performance information across an entity’s corporate plan, Portfolio Budget Statements

and annual performance statements

The Australian Trade and Investment Commission (Austrade) 2015-16 annual performance

statements included a graphic to explain the relationship between its three key performance

documents – the corporate plan, Portfolio Budget Statements and annual performance statements.

The graphic enhances the annual performance statements’ clear read and illustrates the alignment

between purposes in the corporate plan and outcomes and programs in Portfolio Budget

Statements.

The following excerpt is taken from p. 20 of the Austrade 2015-16 annual report.

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28. Annual performance statements must be easy to locate within an entity’s annual report.

Better practice is to identify annual performance statements as a separate chapter or

section with the heading ‘Annual Performance Statements’. A reference to this chapter

or section in a table contents is also preferable.

Example 2

Readily identified annual performance statements in an entity’s annual report

The Department of Environment and Energy 2015-16 annual report clearly identifies the

entity’s annual performance statements at p.18 in the table of contents (see excerpt below)

Statements (of preparation)

29. Section 16F of the Rule requires annual performance statements to include a statement

to be endorsed by the accountable authority. The statement must specify that the annual

performance statements have been prepared for paragraph 39(1)(a) of the PGPA Act

and any other legislation applicable to the preparation of annual performance statements

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of the entity. The statement must specify the reporting period which the performance

statements cover and provide an assurance by the accountable authority that the annual

performance statements accurately reflects the entity’s performance in the reporting

period.

30. Entities are required to provide a statement that they have complied with subsection

39(2) of the PGPA Act. Subsection 39(2) requires the annual performance statements

provide information about the entity’s performance in achieving its purposes, and also

that it complies with any requirements of the PGPA Rule. Please see Example 3 for an

introductory statement for a Department of State, Parliamentary Department, or listed

entity.

31. This statement is to perform a similar purpose to the statements by accountable

authorities for their annual financial statements which is to provide assurance regarding

quality of the preparation and information included in the annual performance

statements.

Example 3

Introductory statement for a Department of State, Parliamentary Department or listed entity.

The excerpt following is taken from p. 27 of the Department of Defence 2015-16 annual report.

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Example 4

Introductory statement for a body corporate

The following excerpt is taken from p.126 of the Australian Broadcasting Commission (ABC)

2015-16 annual report.

Results

32. Subsections 16F(1) and 16F(2) of the PGPA Rule have the combined effect of requiring

the accountable authority of a Commonwealth entity to report results in the entity’s

annual performance statements. These results must demonstrate the entity’s

performance in achieving the entity’s purposes in the relevant reporting period, and in

accordance with the methods of measuring and assessing set out in the entity’s

corporate plan, Portfolio Budget Statements and Portfolio Additional Estimates

Statements (or other portfolio estimates statement) for that reporting period.

33. The core requirement of the annual performance statements is for entities to report on

the achievement of their purpose(s) during the reporting period. This can be achieved

through reporting on the actual performance results they achieved in the reporting period

against the performance information published at the beginning of the reporting period in

their corporate plans and Portfolio Budget Statements.

34. The information must be presented in a way that is easily linked to the information

presented in the entity’s corporate plan and Portfolio Budget Statements for the relevant

period, to allow for a clear read across the three documents. In practice this will require

entities to clearly map (or attribute) the performance criteria from the Portfolio Budget

Statements to the entity’s purpose(s), showing how each performance criterion

demonstrates, or goes to demonstrate, the entity’s fulfilment of its purpose(s). This

mapping will serve to establish a clear read between the entity’s corporate plan, relevant

Portfolio Budget Statements, annual performance statements and the annual report, and

ensure it is clear how (and how well) the entity is fulfilling its purpose(s).

All performance criteria published in corporate plans and Portfolio Budget Statements

must be attributed to a purpose(s) and reported against in the annual performance

statement.

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Example 5

Presentation of performance results in achieving an entity’s purpose

The Australian National Audit Office (ANAO) 2015-16 annual performance statements linked

analysis of results to the achievement of its purpose. This approach was used consistently

throughout the annual performance statements when presenting results. Supplementary

information about the data sources used was also consistently provided.

The following excerpt is taken from p. 45 of the 2015-16 ANAO annual report.

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Example 6

Mapping results to achievement of an entity’s purpose

The Department of Parliamentary Services (DPS) 2015-16 annual performance statements clearly

identified its purpose in the annual performance statements. It also a diagrammatic overview of how

its performance criteria related to demonstrating its effectiveness in achieving its purpose. A

consistent focus on the purpose continued in the results and analysis sections that followed.

The following excerpt is taken from p. 18 of the DPS 2015-16 annual report

35. When reporting actual performance, an entity may consider providing the following

information for each activity identified in its corporate plan – noting that it is for each

entity to structure and present results that best demonstrate performance in its specific

circumstances.

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Activity title or description

36. Entities can identify the significant activities or key activity areas that were identified for

measurement and assessment in their corporate plan at the beginning of the reporting

period. Each significant activity can be identified by the title or description used for the

activity in the entity’s corporate plan to ensure consistency between its planned

performance information and performance results.

Example 7

Reporting of results against high level strategic activities

The Civil Aviation Safety Authority (CASA) 2015-16 annual performance statement maps results to

three high level activity areas expressed as ‘portfolio deliverable/corporate plans’. These high-level

activities provide a framework that help demonstrate how performance measures (or criteria)

combine to demonstrate achievement of CASA’s purpose.

The following excerpt is taken from p. 27 from the CASA 2015-16 annual report.

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Performance measurement methodology

For each significant activity or key activities identified, entities can briefly describe the

performance measurement methodology that has been applied to assess the activity’s

performance. Entity’s will need to explain if the performance measurement methodology

used differs from the performance measurement methodology set out in the planned

performance information section of the entity’s corporate plan at the beginning of the

reporting period.

Example 8

Explanation of performance methodology associated with specific performance information

The Department of Parliamentary Services 2015-16 annual performance statements explained the

methodology used to assess results. This included explaining changes in the methodology used

between reporting periods.

The following excerpt is taken from p. 20 of the Department of Parliamentary Services 2015-16

annual report.

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Targets, goals and measures

37. For each significant activity or key activities areas identified, entities can provide any

targets, goals and measures that were to be pursued or measured against in the

reporting period. Entity’s will need to explain if the targets, goals and measures differ

from the targets, goals and measures set out in the corporate plan and Portfolio Budget

Statements at the beginning of the reporting period.

Example 9

Use of targets to demonstrate performance against benchmarks

The Australian Fisheries Management Authority (AFMA) 2015-16 annual performance statements

reported performance information against targets that provide standards against which to assess

the contribution of specific activities to achieving the AFMA’s purposes.

The following excerpt is taken from p. 26 of AFMA’s 2015-16 annual report.

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Example 10

Explanation of changes to targets

The Department of Human Services (DHS) 2015-16 annual performance statements provide clear

explanations of any changes to targets, specifying where the changes were documented and why

the changes were made.

The following excerpt is taken from p. 22 of the DHS 2015-16 annual report.

Results achieved

For each significant activity or key activities identified, entities can report the actual

performance results achieved in the period. These results are expected to be derived using

the prescribed performance measurement methodology and specifically address any targets,

goals and measures.

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Example 11

Acquitting performance results against discrete criteria identified in an entity’s corporate plan

and Portfolio Budget Statements

The Department of Defence (Defence) 2015-16 annual performance statements provides clear

coordinates to the source (document and page numbers) to the source of performance information

being reported on. This helps navigate the volume of information produced by an entity of the size

and complexity of Defence.

The following example is an expert from Defence’s annual performance statements included taken

from p. 33 of its 2015-16 annual report.

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Analysis

38. Section 16F of the PGPA Rule requires an entity’s annual performance statements to

include an analysis of the factors that contributed to its performance in achieving its

purposes. Such analysis is intended to provide context to the entity’s performance over

the reporting period. This requirement may be addressed through an entity-wide

overview of performance or, where relevant, an entity may discuss specific issues on a

case-by-case basis. For example, the analysis section may address how a change to

either its purposes, activities, organisational capability or operating environment had a

significant impact on its performance during the reporting period.

39. The analysis can include a relevant context to the performance results reported, and

provide an analysis of the factors that have contributed to, or restricted, the delivery of its

purposes within the reporting period.

40. For example, this guide recognises that there may have been events or external factors

that affected an entity’s ability to deliver on the intended results set out in its corporate

plan or Portfolio Budget Statements. The entity may wish to discuss how such events or

factors contributed to, or restricted, its performance in the reporting period.

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Example 12

Analysis that references the influence of external factors on performance

The 2015-16 annual performance statements published by the Department of Finance (Finance)

includes an analysis section following the presentation of detailed results. The analysis included a

high-level discussion that helps provides an understanding of how Finance’s operational context

influenced its performance in achieving its purposes.

The following excerpt is taken from p. 43 of the Finance 2015-16 annual report.

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Part 5 – Regulator Performance Framework

41. The Commonwealth Government’s Regulator Performance Framework (RPF)

establishes a uniform set of performance measures for assessing regulator

performance. The framework is administered by the Department of the Prime Minister

and Cabinet and requires all Commonwealth regulators to be assessed and report

against six key performance indicators: reducing regulatory burden, communications,

risk‐based and proportionate approaches, efficient and coordinated monitoring,

transparency, and continuous improvement.

42. Entities may use the reporting requirements of the enhanced Commonwealth

performance framework (the corporate plan, Portfolio Budget Statements and annual

performance statements) to address the reporting requirements of the RPF. If a

regulatory function forms a significant activity of an entity, the entity can consider

including the key performance indicators and evidence that addresses the requirements

of the RPF in its corporate plans, Portfolio Budget Statements and annual performance

statements. However, note that addressing the requirements of the RPF will not fulfil the

minimum requirements for corporate plans under the PGPA Rule.

43. The key performance indicators in the RPF address the administrative efficiency and

effectiveness of a regulatory function, which constitute one aspect of the purposes of an

entity. To fully address the minimum requirements of the PGPA Rule (i.e. presenting

results and analysis that demonstrate whether the entity has achieved its purposes), an

entity will need to provide a more comprehensive report on its performance in order to

tell a meaningful story through the annual performance statements.

44. For further information and guidance on entities’ responsibilities under the RPF, see

https://docs.jobs.gov.au/documents/regulator-performance-framework.

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Example 13

Drawing relevant links to the Regulator Performance Framework

The 2015-16 annual performance statements published by the National Offshore Petroleum Safety

and Environmental Management Authority (NOPSEMA) includes reporting on specific measures

that draw on its reporting under the Regulator Performance Framework (where relevant).

The following excerpt is taken from p. 26 of the NOPSEMA 2015-16 annual report.

Note:

CP – refers to NOPSEMA’s 2015-16 corporate plan

PBS – refers to the 2015-16 Industry and Science Portfolio Budget Statements

RPF – refers to NOPSEMA reporting under the Regulator Performance Framework

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Part 6 – Tabling and publication requirements

45. Section 46 of the PGPA Act requires the accountable authority of each Commonwealth

entity, after the end of each reporting period, to provide a copy of an annual report to the

entity’s responsible minister2. The annual performance statements are to replace the

non-financial performance section in the annual report.

46. Under section 46 of the PGPA Act, the annual report must be given to the responsible

minister by the 15th day of the fourth month after the end of the reporting period for the

entity, for subsequent tabling by the minister in parliament.3

47. As a matter of good practice, entities are also expected to publish their annual report on

their websites.

Part 7 – Sensitive information

48. Under subsection 16E(4) of the PGPA Rule, if the accountable authority considers that

the corporate plan contains commercially confidential, sensitive information or, sensitive

information on national security matters that if published could prejudice the national

security interest of the Commonwealth, a supplementary corporate plan may be

prepared for publication on the entity’s website that excludes such matters.

49. If an entity has produced a supplementary corporate plan to exclude matters under

subsection 16E(4) of the PGPA Rule, it will need to produce an annual performance

statement that is a direct acquittal of the performance measurement and reporting

intentions identified in its published corporate plan.

50. This process for dealing with sensitive information also applies to government business

enterprises that, under subsection 16E(4), have prepared and published a statement of

corporate intent in place of a full corporate plan. That is, the annual performance

statement will need to be acquitted against the published version of the corporate plan.

Intelligence, security or listed law enforcement entities

51. Intelligence, security or listed law enforcement entities covered by the PGPA Act may

seek exemption from the annual performance statements requirements. Under

section 105D(3)(a) of the PGPA Act the Minister for Finance is able to, by written

instrument, modify requirements of the PGPA Act for intelligence, security or listed law

enforcement agencies in relation to preparing and publishing annual performance

statements under section 39 of the PGPA Act. The responsible minister needs write to

the Minister for Finance seeking such a modification.

2 Sections 63(2) and 70(2) of the Public Service Act 1999 (PS Act) and other enabling legislation also require certain entities to

produce annual reports.

3 The timeframe for the tabling of an entity’s annual report may vary according to the legislation the entity is subject to.

For example, entities subject to the Public Service Act 1999 are currently required to present their annual report on or before

31 October in the year in which the report is given. Other entities may have annual report tabling requirements in their

enabling legislation.

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Part 8 – Entities with enabling legislation

52. The PGPA Act does not alter the operational independence of entities as set out in their

enabling legislation. A number of entities are subject to legislative requirements for the

preparation of their annual reports under their enabling legislation. This guidance

provides the minimum requirements for matters to be included in the annual

performance statements prepared under section 39 of the PGPA Act and recognises

that relevant entities will also include those matters prescribed by their enabling

legislation.

Part 9 – Audit of annual performance statements

53. Annual performance statements can be scrutinised through the following means:

Under section 40 of the PGPA Act, the responsible minister or the Minister for

Finance may request the Auditor-General to audit an entity’s annual performance

statements.

The Australian National Audit Office can audit annual performance statements at its

own discretion, in accordance with division 2 part 4 of the Auditor-General Act 1997.

Section 82 of the PGPA Act provides authority for the sharing of information with

other jurisdictions and section 83 allows for state and territory auditors-general to

conduct audits of entities where there has been a state or territory contribution.

Under paragraph 17(2)(b) of the PGPA Rule, the functions of the audit committee of

a Commonwealth entity must include reviewing the appropriateness of the

accountable authority’s performance reporting.

Part 10 – The role of audit committees

54. The role of an audit committee is to provide independent advice and assurance to the

entity’s accountable authority. It is a requirement of subsection 17(2) of the PGPA Rule

that the functions of an audit committee must include reviewing the appropriateness of

the accountable authority’s financial reporting, performance reporting, system of risk

oversight and management, and system of internal control, for the entity. The PGPA

Rule requires that the accountable authority must, by written charter, determine the

functions of the audit committee (subsection 17(1) of the PGPA Rule). This charter must

include the requirements of subsection 17(2) of the PGPA Rule, including the

requirement in subsection 17(2)(b) that functions of the audit committee must include

reviewing the appropriateness of the accountable authority’s performance reporting. This

is summarised by Appendix B.

55. “Appropriateness” has its ordinary meaning of ‘suitable or fit for purpose’. This would

involve an audit committee reviewing the systems and framework that underpin the

performance reporting of an entity to give a level of assurance to the accountable

authority that is comparable to the level of assurance that the audit committee gives in

relation to financial reporting, risk and internal controls.

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56. Where there are formal standards in relation to a matter listed in subsection 17(2) of the

PGPA Rule, an audit committee “appropriateness” would be reached with reference to

the requirements of these standards of rules. Where no mandated standards are

provided, please refer to guidance material issued by the Department of Finance

supporting the performance framework, and the periodic reports on compliance made by

the Australian National Audit Office.

57. In the Quick Reference Guide - RMG 131 – Developing Good Performance Information

(at Attachment A) issued by Finance in September 2016, good performance information

(the bedrock of the performance reporting framework), is characterised as being

relevant, reliable and complete.

Relevant performance information should clearly state who benefits and how they

benefit from an entity’s activities.

Reliable performance information should use information sources and

methodologies that are fit-for-purpose and verifiable.

Complete performance information, when read as a whole, should articulate

whether the purposes of an entity are being achieved.

58. This Quick Reference Guide can be used to assist in determining the appropriateness of

performance reporting. The Australian National Audit Office Implementation of the

Annual Performance Statements Requirements 2015–16) may also provide a useful

reference point for audit committees reviewing the appropriateness of an entity’s

performance reporting.

59. Those responsible for compiling annual performance statements should include audit

committee clearance in their timeframes, and provide the audit committee with any

required supporting documentation.

60. Further information on the role of audit committees and the enhanced commonwealth

performance framework can be found in the paper entitled Function of audit committees:

Reviewing the appropriateness of performance reporting, including the 2016-17 annual

performance statements.

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Appendix A – Performance maturity model

Dimension Sub-dimension Maturity level

Beginning Developing Mature

STRATEGY

Purpose

Strategic purposes are

ambiguous and not

linked to expected

measurable results (i.e.

unclear purposes

impedes overall

assessment of an entity’s

performance)

There is some reference to

strategic purposes and links

to expected measurable

results

Entities’ long term strategic

purposes are expressed

clearly and link directly to

expected measurable results

Capability

Resource management

planning is not clearly

linked to an entity’s

ability to achieve its

purposes

There are some links

between resource

management planning and

an entity’s ability to achieve

its purposes

Resource management

planning is clearly linked to

an entity’s ability to achieve

its purposes

Environment Impacts of factors in the

operating environment,

on an entity’s ability to

achieve its purposes are

unclear

Impacts of factors in the

operating environment on

an entity’s ability to achieve

its purposes are identified

but not clearly linked to

impacts on achieving

purposes

Impacts of factors in the

operating environment on an

entity’s ability to achieve its

purposes are clear

CULTURE

Leadership

Producing strategic

performance

information is generally

viewed as a compliance

exercise. There is limited

engagement by senior

leadership in its

development and use

The benefits of developing

and using strategic

performance information,

are highlighted by senior

leadership

Senior leaders value, and are

engaged in, driving the

development and use of high

quality strategic

performance information

Capacity

The skills of, and

relationships between,

corporate and program

areas to establish and

maintain robust entity

performance

frameworks and

meaningful performance

measures, are limited,

despite pockets of

expertise

The skills of, and

relationships between,

corporate and program

areas to establish and

maintain robust entity

performance frameworks

and meaningful

performance measures, are

beginning to be widespread

The skills of, and

relationships between,

corporate and program areas

to establish and maintain

robust entity performance

frameworks and meaningful

performance measures, are

widespread. The entity is

recognised for its

performance frameworks

and performance measures

Risk

Entities provide limited

insight into how risk

management underpins

their approach to

achieving their purposes.

There is generally a risk

averse culture

Entities provide a broad

insight into how risk

management underpins

their approach to achieving

their purposes.

There is a culture where the

occasional failure is

accepted, expected and

valued

Entities clearly outline how

risk management underpins

their approach to achieving

their purposes. All

performance information is

highly valued

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RMG-134: Annual performance statements for entities

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Dimension Sub-dimension Maturity level

Beginning Developing Mature

PERFORMANCE

INFORMATION

Meaningful

performance

information

Measures are output

focused. Understanding

of meaningful

performance measures

is low. Annual,

quantitative KPIs are the

main tool used

Developing meaningful

performance measures is an

integral component of policy

and program development

and a wider mix of

appropriate measures are

beginning to be used

There is an appropriate mix

of short and longer-term

quantitative and qualitative

performance measures,

which support an

assessment of an entity

achieving its purposes and

an evidence based

performance story

Tiered structure No formal system and

planning process that

links the different levels

of performance

information within an

entity

A system and planning

process is being developed

that links different levels of

performance information

within an entity

There is a system and

planning process that links

the different levels of

performance information

clear within an entity

Use Performance

information is not used

widely to drive better

performance and assess

achievement of

purposes

Performance information is

used sporadically to drive

better performance and

assess achievement of

purposes.

Performance information is

used widely to drive better

performance and assess

achievement of purposes

* The performance maturity model is a self-assessment tool for entities – it will not be used by the Department of

Finance to assess entities’ performance maturity.

Also available: http://finance.gov.au/resource-management/pmra/performance.

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Appendix B – Quick Reference Guide

RMG 131 DEVELOPING GOOD PERFORMANCE INFORMATION

(Also available at: www.finance.gov.au/resource-management/pmra/performance)

CHARACTERISTICS OF GOOD

PERFORMANCE INFORMATION

DEVELOPING GOOD PERFORMANCE INFORMATION

RELEVANT

Performance information

should clearly state who

benefits and how they benefit

from the entity’s activities.

RMG 131 – Developing Good Performance Information

outlines the issues to consider when developing good

performance information.

A concise and measurable statement of the purposes of an

entity underpins a robust performance reporting framework.

Good performance information should enable stakeholders to

assess how an entity’s activities support the achievement of its

purposes, and if there has been a proper use of public

resources in undertaking these activities.

The questions below, drawn from RMG 131 (page references

noted), will help entities develop good performance

information.

Does the performance information:

1. Draw on qualitative and quantitative information to

demonstrate the extent to which the purpose is being

achieved through the activities being undertaken?

(Pages 2-10,15-18,23,24,29,41)

2. Demonstrate who is benefiting, and how they benefit from

the activities being undertaken, including how the activities

contribute to achieving a purpose?

(Pages 15,16,19,20,25,26)

3. Enable an assessment of public resources being used

effectively, efficiently, economically and ethically in striving

to achieve the purpose? (Pages 4,11,20,27,28,41)

4. Report against appropriate baseline information and short,

medium and long term qualitative and quantitative

measures? (Pages 14,21,29,31,42)

5. Use appropriate qualitative and quantitative methodologies

that are accurate and verifiable to support a rich

performance story? (Pages 24,31,32)

6. Use all relevant data sources? (Pages 22,23,32)

7. Get published at an appropriate time and frequency to

inform decision making and report short, medium and long

term results of an activity? (Pages 4,11,31,41)

8. Reflect the joined-up nature of an activity? (Pages 24,25)

9. Enable comparisons across relevant entities and

jurisdictions? (Pages 14,28,36)

10. Drive continuous performance improvement throughout the

implementation of an activity? (Page 11)

RELIABLE

Performance information

should use information

sources and methodologies

that are fit-for-purpose and

verifiable

COMPLETE

Performance information

should help stakeholders

judge whether the purposes of

an entity are being achieved.

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Appendix C – Suggested Format for Annual Performance Statements

The annual performance statement is the key non-financial reporting mechanism for all

public data on the actual performance of a corporate Commonwealth entity in a reporting

period.

It reports on the non-financial performance of the entity in fulfilling its purpose(s) during the

reporting period. This can be achieved by an entity acquitting the performance criteria as

published in both their corporate plan and the relevant Portfolio Budget Statements for the

reporting period. To demonstrate the fulfilment of their purpose(s), entities can map (or

attribute) each performance criterion to their purpose(s).

The diagram below provides the suggested presentation structure for the annual

performance statements. The use of this format is encouraged to enable presentation in a

consistent form by entities.

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It is suggested that annual performance statements produced by entities contain:

1. an introduction statement (as required by section 16F(2), item 1 of the PGPA Rule)

2. a clear statement detailing the entity’s purpose(s), including reference to outcome

numbers from the relevant Portfolio Budget Statements

3. results that demonstrate the entity’s performance against its purpose(s) as measured

by relevant performance criteria. The results should include the following elements:

a. the name and description of the performance criterion being reported on,

as published in the entity’s corporate plan and/or relevant Portfolio Budget Statements. All performance criteria published in the entity’s corporate

plan and/or relevant Portfolio Budget Statements for the reporting period

are expected to be attributed to a purpose or purposes

b. source – details of where the performance criterion, attributed to the purpose,

was originally published or sourced from. This is limited to the corporate plan

prepared for the reporting period or the relevant Portfolio Budget Statements

for the reporting period. If a performance criterion is sourced from both the

corporate plan and Portfolio Budget Statements, it is appropriate to state both

as the source

c. results against the performance criterion – the actual results achieved by

the entity in the reporting period against the performance criterion that are

attributed to the purpose. This could also include contextual analysis of the

result.

4. an analysis of the factors that contributed to the entity’s performance in achieving its

purposes (e.g. changes to purposes, changes to organisational capability and

variations in the entity’s operating environment).

Entities with more than a single purpose can consider repeating this structure (excluding the

introduction statement) for each and every purpose. Additionally, all performance criteria

published in the entity’s corporate plan and/or relevant Portfolio Budget Statements

for the reporting period are expected be attributed to a purpose or purposes.