What are the Standing Directions 2018?
The Standing Directions 2018 under the Financial Management Act 1994 were established by the Minister of Finance under the Department of Treasury and Finance. The Directions set financial management standards and associated rules that Victorian Government agencies must comply with. Financial management relates to planning, directing, monitoring, organisation and controlling an entity’s financial resources in an efficient and effective manner. The Directions cover various key finance related activities including roles and responsibilities, governance structures, delivering services, compliance monitoring and reporting.
Is your organisation subject to the Standing Directions 2018?
The Directions are applicable to all “Agencies” as defined within the Directions. This includes:
- Public Bodies (public statutory authority, State Business Corporation or State body, Court Services Victoria, a body, office or trust body); or
- Departments (department within the meaning of Public Administration Act 2004, or an office or body within the s.16(1) of the Financial Management Act 1994).
Annual Compliance Reporting and Attestation requirements
The Accountable Officer of a Portfolio Agency must provide a compliance report to the Portfolio Department annually, which must include relevant information drawn from the annual assessment of financial management compliance against the Standing Directions.
There is also a requirement for the Responsible Body, or a member of the Responsible Body, in the agencies’ Annual Report, in relation to the relevant financial year, to attest compliance with applicable requirements in the Financial Management Act 1994, the Directions and disclose any material Compliance Deficiencies.
The compliance report and attestation must relate to compliance for the entire period of the relevant financial year.
The compliance report and attestations must be reviewed by the respective organisation’s Audit Committee.
What are the key changes to Standing Directions 2018 impacting Government organisations?
In December 2018, the Standing Directions were revised and enhanced to provide more detailed mandatory requirements, processes and procedures designed for specific risk areas. Key changes and enhancements to the revised Standing Direction requirements were mainly made across the following areas:
- Introduction and implementation of a central banking system;
- The need for organisations to ensure that they apply the Ministerial Directions for Public Construction Procurement in Victoria. These support efficient, economical and effective delivery of public construction procurement in line with key principles;
- Transitional attestation provisions for 2018-19;
- Stronger accountability for agency boards, Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs);
- Enhancement in controls against fraud and corruption;
- Better planning, and public attestation in agencies’ reports;
- References to “Minister of Finance” revised to reflect administration of relevant sections by the “Assistant Treasurer”, except where reference is historical;
- References to departments revised to accommodate Machinery of Government changes. For any references prior to this date, existing departmental names are to be used; and
- Provisions relating to Portfolio Department CFOs revised to incorporate implementation of Government Policy (effective March 2019).
It is imperative that organisations must have robust financial management practices, to facilitate in key decision making processes in order to achieve its business objectives, whilst minimising key finance related risks (governance, fraud, performance monitoring and reporting etc.).
This article was co-authored by Kundai Mtsambiwa – HLB Mann Judd Melbourne.