The Department of Defence’s processes for granting public service employees’ travel allowances are ineffective, according to the national Auditor-General, prompting the creation of a Travel Board.
The latest audit from the Australian National Audit Office assessed the effectiveness of Defence’s administration of travel allowances paid to its APS employees. It focused on three types of travel -allowance payments made between 1 July 2016 and 30 June 2018: meals and incidentals, motor vehicle, and part-day travel.
Several factors prompted the audit. Defence had previously identified fraudulent use of credit cards, and past ANAO audits of Defence’s financial statements found non-compliance with regard to travel allowance payment approvals. A 2016 audit of Defence’s management of transaction cards found a lack of controls in place to manage the use of credit and transaction cards. The Parliament’s Foreign Affairs, Defence and Trade References Committee suggested this be followed up.
Defence’s current policy for giving employees a business-related travel allowance aims to cover “reasonable” costs via a Defence Travel Card (DTC), the department’s payroll system or its financial-management information system.
The department spent roughly $93 million in 2017-18 and $90 million in 2016-17 on allowances paid to Australian Defence Force personnel and APS employees travelling on official business. Of these amounts, approximately 20% is claimed by APS employees.
Their travel-allowance arrangements for employees “exhibit shortcomings”, the audit found, citing “failure to consistently reflect policy requirements in guidance and supporting tools”, “division of policy and administrative responsibility” and ineffective detective controls for credit cards as the main issues.
“Defence’s collection of policies, procedures and guidance on travel allowances is fragmented and spread across multiple documents, tools and intranet pages,” ANAO said.
The audit found “a number of instances” where Defence exaggerated improvements to the management of travel and credit cards, including giving false advice on residual risk and claiming recommendations from past reviews and audits had been addressed, when they had not.
“A key feature of this audit has been that Defence’s senior committees have been provided with advice that overstates the progress of activities intended to improve the administration of travel allowances and credit cards. Inaccurate performance reporting reduces accountability and senior leaders’ ability to assess risks and consider the need for remediation strategies,” ANAO said.
Defence failed to provide ANAO with documented approvals for 21% of the sample travel allowance transactions reviewed as part of the audit.
The audit recommended Defence review its travel guidance material to eliminate inconsistencies and promote compliance with relevant policies and processes, as well as implement a process that ensures policy is accurately reflected in guidance material and tools, which Defence accepted.
Secretary of Defence, Greg Moriarty, and Chief of the Defence Force, Angus Campbell, said Defence has made “significant progress” to improve administration of travel allowances over the last six months.
“Some improvement initiatives were delayed pending the introduction of the travel requisition and expense management system project that was being relied upon to introduce a range of new controls. Following testing, this project has now ceased,” they said in a joint response.
“Defence commenced the implementation of a system that would support the administration of travel including the requisition, approval and acquittal of travel. Defence envisaged that this replacement system would also undertake the calculation and authorisation of travel allowances.
“It became apparent through the implementation project that the varied and complex nature of some of the travel allowances paid to Australian Defence Force and Australian Public Service officials would make the use of an off the shelf commercial software system difficult at this time. Defence will implement further controls and processes for travel administration whilst meeting the business requirements of the organisation. Principles underpinning this work will focus on making it easier for staff to comply, moving to electronic approvals by supervisors and improved management reporting.”
The 2015 Review of Red Tape in Defence found similar problems and made similar recommendations, the Auditor-General noted.
“Defence reported internally that it had addressed this recommendation, when it had not,” the audit pointed out.
“Another agreed recommendation to give overarching policy and administrative responsibility to one Defence group, has not yet been implemented.”
While Defence advised it had established a board to govern travel policy, controls, processes and compliance in May, “it is too early to establish whether this arrangement will address the intent of the 2015 Review of Red Tape in Defence recommendations”, ANAO said.
Moriarty and Campbell said the Travel Board will report to the organisation’s Enterprise Business Committee and Defence Committee on progress made in improving travel administration, compliance and performance across the business.
The performance report gave three key messages that could be applied to other Commonwealth entities:
- Informed decision-making by senior leaders and governance committees relies on accurate and timely advice and management reporting.
- Risk-based controls and testing can help provide assurance that departmental requirements have been complied with and payments are accurate.
- Clear alignment between policy, guidance and administrative systems facilitates compliance with policy and process requirements.