Victorian Minister for Finance Robin Scott has issued new rules to protect against fraud and corruption and improve financial management.
As financial management sophistication has improved in the Victorian public service since the last update in 2003, the new rules are less detailed and prescriptive, more focused on outcomes and principles, and place greater requirements on boards, CEOs and chief financial officers.
Under the new standing directions, which take effect from July 1, CEOs and CFOs will be held personally accountable for strong financial management.
The changes represent the first major update to the rules in 13 years. The old system, under which the VPS will continue to operate until the end of this financial year, was seen to be somewhat out of date. It draws on reforms in other jurisdictions, such as the accountabilities for CFOs set down in Western Australia and Queensland, but places Victoria ahead of other states in some areas.
In a departure from the 2003 rules, the new regime is designed to be “tailored” to the size of different Victorian departments and around 250 agencies, in some places replacing prescriptive “how to” guidelines with a focus on outcomes required. Agencies are required to plan and manage their performance to improve financial sustainability.
The 2003 directions included detailed requirements to report thefts and losses that met a certain threshold, but were silent on broader issues such as corruption. In place of the old system of annual reporting to the minister for finance on all thefts and losses, government bodies will now be required to immediately report significant and systemic incidents to the portfolio department or the Department of Treasury and Finance. Incidents of fraud, and plans to remedy it, will need to be be reported both internally (to an audit committee) and to government (the minister, department and the auditor-general).
Updated requirements for public reporting will improve transparency. Under the 2003 directions, agencies made an annual certification of compliance that was internal to government. There was also public attestation for risk and insurance compliance. The revised directions require a public attestation in annual reports in relation to all requirements in the directions. But this is subject to a transitional period, so for most agencies the first attestation would take place in around 2018.
Treasury and Finance has also made an effort to make the directions more user-friendly, dividing the rules up into directions (mandatory fundamental requirements), instructions (mandatory detailed requirements for specific areas of risk) and guidance (non-mandatory supporting information).