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Navigation: Previous Page | Contents Appendix C – Department of Finance and Deregulation response to Recommendations 1 to 3 of JCPAA Report 430Received 5 Feb 2013 Executive Minute on Joint Committee of Public Accounts and Audit Report No 430 Review of Auditor-General's Reports Nos. 47 (2010-11) to 9 (2011-12) and Reports
Nos. 10 to 23 (2011-12) Agency name - Department of Finance and Deregulation
General comments The Department of Finance and Deregulation (Finance) is responsible for issuing and maintaining the Commonwealth policy for the development and reporting of nonfinancial
performance information including Key Performance Indicators (KPls). The
current version of this policy is titled Performance Information and Indicators
Guidance (October 201 0). The policy includes discussion about developing different
types of performance indicators for different types of programs, and lists factors that
agencies should consider when developing KPis including focusing on results, clearly
defining data requirements, ensuring accountability, appropriately engaging senior
management, and periodically reviewing and validating data and KPis. Finance acknowledges that both the policy and the guidance need to be updated to
ensure that a sufficiently high and consistent quality of program-level KPis are
established, and reported against, by government agencies. There are no quick or easy solutions to addressing the current shortcomings in the quality of performance information available about Commonwealth programs - it will take time to establish robust and comprehensive KPls for many programs, and in some cases judgements about usefulness can only be made once a set of longitudinal data is establ ished. Recommendation 1 Agree There are various methodologies for developing KPis and key desirable characteristics
of non-financial performance measures. In revising the Commonwealth policy for the
development and reporting of non-financial performance information covering programlevel
KPls, Finance will look to emphasise the inclusion of practical, user-based
materials, which outline a clear approach for the construction of KPis. The issue of whether a single methodology is promoted for constructing program-level
KPls that suits all Commonwealth agencies, across their varying functions and
responsibilities, will be reviewed. Finance's preference is not for crude prescription in
this area. Informed by relevant international literature, the focus will be on developing
policy and guidance materials that meaningfull y and usefully assist agencies in their
work to monitor and measure their performance. Finance will ensure that the revised policy and guidance materials include references to
appropriate resource materials and where appropriate, links to information developed by
the Australian National Audit Office. We would seek to brief the Joint Committee of
Public Accounts and Audit on this work after the 2013-14 Budget. Recommendation 2 Noted Going forward, the Department of Finance and Deregulation (Finance) will work directly with agencies to develop and review their program-level Key Performance Indicators (KPis). Further, with the release of the revised Commonwealth policy for the development and management of KPis, which will incorporate a practical user guide, the methodology for the construction of program-level KPis will be clearer. Finance has consulted with the Department of the Prime Minister and Cabinet (PM&C)
on the issue of requiring agencies to state their program-level KPI methodology in their
Annual Reports. The proposed revised Commonwealth policy for the development and management of KPis will set the standards for developing KPls, therefore this information will be available in the policy. KPls are hard to implement and there are particular problems in trying to measure all public activities in a meaningful way because the achievement of most outcomes in the public domain inevitably extends beyond the boundaries of an individual body. Further, the multi-level nature of government complicates an analysis of performance because so many areas of public activity take place at several levels of government simultaneously. The limitations of KPls need to be understood. KPis are, at best, pointers of good or bad performance only; they do not measure performance precisely or provide a substitute for detailed eval uation. Performance measurement and its wider use in performance management, is worthwhile as long as it is done in full knowledge of its limitations within the context of broader performance-related reporting. Agree Since early 2012, the Department of Finance and Deregulation (Finance) has worked with the Australian National Audit Office (ANAO) to improve the reporting of program-level Key Performance Indicators (KPis) at the Commonwealth level in Australia. This has included ongoing meetings between senior officers in the two agencies. As agencies, we have agreed to: To identify the best options for improving the development and integration of KPis and the reporting of performance information, Finance has undertaken several discrete pieces of work: Building on the work undertaken to-date, Finance will continue to work with agencies to improve the quality of performance information available at the Commonwealth level, including through the revised Commonwealth policy for the development and management of KPls. Finance is concerned to ensure that work to improve the quality and availability of\ program-level performance information provides asound basis for the ANAO in auditing the appropriateness of agency performance indicators and the completeness and accuracy of agency performance reporting. While Finance will work to drive improvements in the performance measurement and reporting of Commonwealth agencies, changes will only become apparent over a several-year period. Yours sincerely
David Tune
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