CHAPTER 9accountability and management

financial management

Financial performance

Revenue received from ordinary activities was $12.762 million in 2004–05.

The office received $11.480 million in appropriation revenue, amounting to $2 million more than received in 2003–04. The additional revenue was provided to strengthen the Ombudsman's capacity to:

• promote public sector accountability in relation to law enforcement legislation and in regional and rural Australia, and to improve the office's delivery of online services
  
  
• inspect surveillance records held by other agencies and to ensure their compliance with relevant legislation such as the Surveillance Devices Act 2004
  
  
• oversight compliance powers of the Building Industry Taskforce under the Workplace Relations Amendment (Codifying Contempt Offences) Act 2004
  
  
• support Australian and overseas companies and individuals accessing the Ombudsman as a free avenue for complaint or review regarding trade, tender or contract objections.

Total expenses for the office were $12.342 million leading to a surplus in 2004–05 of $0.420 million, primarily due to the delays involved in the development of additional activities above.

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Financial position

The office's total equity—that is, sum of the office's assets less its liabilities—has increased by $0.519 million, due mainly to a surplus in the 2004–05 year and an increase in the asset revaluation reserve.

Assets may be broken down into four main categories:

• cash
  
  
• infrastructure, plant and equipment
  
  
• intangibles (non-physical assets such as software)
  
  
• receivables (amounts due to be paid to the office).

'Other non-financial assets' relate to prepayments.

The office's total assets increased to $3.965 million in 2004–05 from $3.731 million in 2003–04. The increases arose primarily from the implementation of a new complaints management system and related electronic data management, and the replacement of aged desktop information technology equipment (Infrastructure, Plant and Equipment). The proportion of each type of asset held during 2004–05 is set out in Figure 9.1.

Financial assets

The Statement of Financial Position shows cash holdings of $2.157 million. This compares with the $2.477 million held in 2003–04. The decrease in cash holding is primarily due to purchases of Infrastructure, Plant and Equipment. The office also drew on its Appropriation Receivable to fund these purchases.

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Non-financial assets

The office's non-financial assets increased to $1.668 million in 2004–05 from $0.870 million in 2003–04, primarily due to purchases of Infrastructure, Plant and Equipment. The purchases were for implementing a new complaints management system and related electronic data management, and replacing aged desktop information technology equipment.

Liabilities

Total liabilities decreased by $0.285 million, to $3.193 million in 2004–05 compared to $3.477 million in 2003–04. The decrease in liabilities was primarily due to a reduction in employee accruals and creditors.

Factors affecting future performance

In the 2005–06 Budget, we received additional funding of $0.770 million over four years to:

• support Australian and overseas companies and individuals accessing the Ombudsman as a free avenue for complaint or review regarding trade, tender or contract objections (in the 2005–06 to 2008–09 years)
  
  
• establish a connection to Fedlink (a secure communication channel between the Ombudsman's office and other Australian Government agencies).

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Consulting services

The Ombudsman's office is committed to achieving the best value for money in its procurement practices. Purchasing practices and procedures are consistent with the Commonwealth Procurement Guidelines and are set out in the Ombudsman's Chief Executive Instructions. The main categories of contracts relate to information technology, financial services, human resources services, and policy, governance and legal advice.

During 2004–05, five new consultancy contracts with a value of $10,000 or more were entered into to the value of $145,936. Of this amount, $122,009 was actually expended in the reporting year. In addition, one ongoing consultancy contract was active in 2004–05, involving total actual expenditure of $990. (The total expenditure of this consultancy was $26,464.) See Appendix 4 for details of new consultancy contracts. (Details are also available at www.ombudsman.gov.au.)

Total actual expenditure for new and existing consultancies in 2003–04 was $278,565 (nine new consultancies) and in 2002–03 was $98,562 (two new consultancies).

Competitive tendering and contracting

In 2004–05, we continued to outsource activities relating to the provision of financial services and payroll and recruitment services as follows:

• DuesburysNexia
  Financial services to the value of $606,547 for the period 18 October 2000 to 30 June 2005 with net savings over a five-year period of approximately $200,000. Following market testing in 2004, we entered into a contract commencing 1 July 2005 for services to be provided for a five-year period, including a two-year option, for $756,900.
  
  
• Rel Corp Management Services Pty Ltd
  Payroll and recruitment services through the Department of the Prime Minister and Cabinet to the value of $311,687 for the period 25 August 2002 to 25 August 2005. The contract has been extended for an additional period of six months, pending the outcome of marketing testing by the department.

Contracts with DuesburysNexia and Rel Corp Management provide for the Auditor-General to have access to a contractor's premises.