1 part ii: use of public resources resource management and budget training november 2014
TRANSCRIPT
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Part II: Use of Public Resources
Resource Management and Budget TrainingNovember 2014
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Resource Management and Budget Training — Part II
Contact and acknowledgement information
©Commonwealth of Australia 2014. All material produced by the Department of Finance (Finance) constitutes copyright administered by Finance. Finance reserves the right to set out the terms and conditions for the use of such material. Apart from any use permitted under the Copyright Act 1968, and those explicitly granted herein, all other rights are reserved.
Unless otherwise noted, all material in this publication, except the Commonwealth Coat of Arms, and any material protected by a trademark is licensed under the Creative Commons BY SA Attribution Share Alike 4.0 Australia Licence. Details of this licence are available at: http://creativecommons.org/licenses/by-sa/4.0/. Enquiries For enquiries or suggestions about this presentation, please contact [email protected]
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Commonwealth Resource Management Framework
Introduction
Legislative instruments Policy
Entity internal controls
reporting and evaluation
planning objectives and strategies
budgeting and operational planning
implementing and monitoring
PUBLIC RESOURCES
accountabilitygovernance
performancerisk management
appropriations
procurement
proper use
commitments
efficiency
earned autonomy
spendinggrants management
property management transparencyaudit
cooperation with others
Appropriationacts
PGPA Act Otherlegislation
Constitution
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Resource Management and Budget Training — Part II
What are public resources?
Introduction
Relevant property • property owned or held by the
Commonwealth or a corporate Commonwealth entity
• includes real property, personal propertyand intellectual property
Relevant money• money held as cash or in a bank account
by the Commonwealth or a corporate Commonwealth entity
Appropriations• authority to draw money from
the Consolidated Revenue Fund
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Part II: Use of public resources
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Accountability and performance
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Resource Management and Budget Training — Part II
Accountability for use of public resources
Accountability and performance
Your accountable authority is required to govern your entity in a way that promotes:
• proper use and management of public resources • the achievement of the purposes of your entity• the financial sustainability of your entity
Your accountable authority will establish internal controls to ensure these things occur and that officials comply with the finance law
Section
15
Section
16
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Resource Management and Budget Training — Part II
Entity internal controls
Accountability and performance
• may be in the form of: accountable authority instructions or operational guidelines
• address risks associated with using and managing public resourcese.g. abuse, error, mismanagement, fraud
• align closely with internal financial delegations and authorisations
• provide clear instructions on the internal requirements, policies and rules that officials must consider and comply with
Accountable Authority Instructions
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Proper use of public resources
Accountability and performance
Efficient• most suitable resources being used
to deliver the best results• e.g. consider unit costs or other ways
of achieving the particular purposes and objectives
Economical• avoids waste• focus on level of resources applied to
deliver results• generally the best cost option to
deliver the expected results
Ethical• consistent with the core beliefs and
values of society• manages conflicts of interest and
personal bias
Effective• produces the desired result,
i.e. entities’ purpose and objectives
Must balance the 4 Es – one is not more important than the others
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Resource Management and Budget Training — Part II
Purposes of an entity
Accountability and performance
Will be:• for a statutory entity, generally the entity’s statutory objectives
and functions• for many non statutory entities (e.g. departments) will align ‑
with the Administrative Arrangements Order• for all entities, the corporate plan will be required to reflect the
purposes of the entity
For appropriation and budgetary purposes entities will establish outcomes and programmes to facilitate the achievement of their purposes
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Outcomes and programmes
Accountability and performance
Appropriation Act 1
Reporting to parliament
Special Appropriations
Outcome statement
Programme Programme Programme
Deliverables
Appropriation Act 2Appropriations
What the government wants to achieve
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Outcomes and programmes
Accountability and performance
Appropriation Act 1
Reporting to parliament
Special Appropriations
Outcome statement
Programme Programme Programme
Deliverables
Appropriation Act 2
Activities to achieve intended outcomes
Monitoring and reporting outcomes
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Resource Management and Budget Training — Part II
Framework for managing performance
Accountability and performance
The PGPA Act sets the framework for managing performance in a sustainable way, entities must:
• prepare corporate plans • prepare budget estimates• keep performance records• measure and assess performance • prepare annual performance statements
– included in annual reports.
Enhancements are currently being made to the Commonwealth Performance Framework for 2015-16.
Sections
35-39
Rules and guidance are in development
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Components of the Performance Framework
Accountability and performance
KPIs
Corporate plans
Portfolio Budget
Statements
KPImonitoring
Annual reports
Annual performance statements
Line of sight - planning , implementing and reporting
Planning objectives
and strategies
Budgeting and
operational planning
Implementing and
monitoring
Reporting and
evaluation
Australian Government’s key priorities and objectives
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Resource Management and Budget Training — Part II
Role of performance information
Accountability and performance
Monitoring, reporting and evaluating performance information helps to:
• support government decision-making in planning and allocating resources across competing priorities
• contribute to whole-of-government programme and service delivery improvements
• improve the effectiveness and efficiency of government programs
• provide early warning about emerging problems
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Resource Management and Budget Training — Part II
Activity: outcome statements
Accountability and performance
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Risk management
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Resource Management and Budget Training — Part II
Duty to manage risk and maintain controls
Risk management
Your accountable authority is required to establish and maintain appropriate systems of risk oversight and management and internal control
Section
16
Legislative instruments Policy
Entity internal controls
reporting and evaluation
planning objectives and strategies
budgeting and operational planning
implementing and monitoring
PUBLIC RESOURCES
accountabilitygovernance
performancerisk management
appropriations
procurement
proper use
commitments
efficiency
earned autonomy
spendinggrants management
property management transparencyaudit
cooperation with others
Appropriationacts
PGPA Act Otherlegislation
Constitution
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Resource Management and Budget Training — Part II
What is risk?
Risk management
• The effect of uncertainty on objectives
• Includes an effect is a deviation from the expected either positive or negative. Risk is often expressed in terms of a combination of the consequences of an event (including changes in circumstances or knowledge) and the associated likelihood of occurrence
Commonwealth Risk Management Policy
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Resource Management and Budget Training — Part II
What is risk management?
Risk management
• coordinated activities to direct and control an organisation with regard to risk
• based on sound judgement and best information available
• should inform all financial decisions
Establish the context
Risk assessment Identify the risks
Analyse the risks
Evaluate the risks
Treat the risks
Communicate and consult
Monitor and review
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Resource Management and Budget Training — Part II
Commonwealth Risk Management Policy
Risk management
• principles based• sets out risk management attributes for
entities to meet government expectations• non-corporate Commonwealth entities
required to have regard to the policy and to align own risk frameworks
• corporate Commonwealthentities encouraged to haveregard to the policy and to align own risk frameworks
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Resource Management and Budget Training — Part II
Fundamental of risk management
Risk management
• structured and linked to the strategic business objectives set out in an entity’s corporate plan
• an integral part of the entity’s overarching governance, financial, assurance and compliance frameworks
• tailored to the entity’s needs and proportionate to its risks
• dynamic with a focus on continual improvement and maintaining better practice
• managed transparently with the accountable authority:• accountable for the entity’s risks• responsible for risk being managed by those
best able to control the risks
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Strengthening risk management practices
Risk management
1. Establish a risk management policy
2. Establish a risk management framework
3. Define responsibility for managing risk
4. Embed systematic risk management into business processes
5. Develop a positive risk culture
6. Communicate and consult about risk
7. Understand and manage shared risk
8. Maintain risk management capability
9. Review and continuously improve the management of risk
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Resource Management and Budget Training — Part II
Activity: Use of credit cards
Risk management
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Spending relevant money
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Resource Management and Budget Training — Part II
Key concepts:commitments and arrangements
Spending relevant money
Commitments include: • undertaking an activity or entering an arrangement
that results in an obligation to pay relevant money
Arrangements include:• contracts, agreements, deeds or understandings• MOUs, standing offers and grant agreements• commitments with a contingent liability
• may give rise to a cost as a result of a future event
e.g. indemnities, guarantees or warranties containing a contingent liability
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Resource Management and Budget Training — Part II
Key concepts:committing relevant money
Spending relevant money
Consideration before committing relevant money:
• your general duties as officials
• who has authority to commit the money
• the internal controls in your entity
• the rules or policies that may apply, in particular whether the commitment will be a procurement or a grant
• whether the commitment is consistent with the purposes of your entity
• what records must be kept.
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Consider your duties as an officialTo commit relevant money officials must:
• exercise care and diligence e.g. have you taken reasonable steps, given the nature,
significance, value and context of the proposed commitment?
• act honestly, in good faith and for proper purpose when using relevant moneye.g. is the proposed commitment:
• consistent with finance law?• consistent with the aims and operations of your entity?
• not use your position or information to gainan advantage or cause detriment
Section
26
Section
25
Sections
27-28
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Determine who has authority to commit relevant money:• accountable authorities have authority to:
approve commitments of relevant money enter into, vary and administer arrangements relating to the
affairs of your entity, on behalf of the Commonwealth or their entity.
• the authority comes from: for non-corporate Commonwealth — PGPA Act
— other legislation for corporate Commonwealth entities — the enabling
legislation and/or the separate legal personality of the entity
Section
23
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Officials can be delegated or authorised to commit relevant money:
• for non-corporate Commonwealth entities – accountable authorities can delegate (or authorise)the power to approve a commitment of relevant money under s23(3) of the PGPA Act
• for corporate Commonwealth entities s23(3) of the PGPA Act is not applicable – officials can be authorised to commit relevant money on behalf of the entity.
Officials who are authorised or delegated the power in s23 of the PGPA Act, must comply with:
• s18 of the PGPA Rule and• directions or instructions from your accountable authority
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Consider the operating environment and internalcontrols in your entity
e.g. Accountable Authority Instructions or operational guidelines
Internal controls should:• provide instructions on the internal requirements and well as any
other rules or policies that may apply
e.g. whether the proposed commitment will be a proper use of money, i.e. balance whether the proposal will be efficient, effective, economical and ethical (not just focus on one of these elements to the exclusion of others)
• address the risks associated with the use of relevant money
• clarify any other requirements that apply
Accountable Authority Instructions
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Consider the type of financial arrangement and the other requirements the may apply?
For example are you:• purchasing goods and services for the
Commonwealth (procurement)
• providing financial assistance to non-government individuals or organisations to achieve government policy objectives (grants)
• making discretionary payments (e.g. act of grace)
• making some other form of payment
Rules
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Resource Management and Budget Training — Part II
Procurements and grants
Spending relevant money
Every year the Commonwealth spends:• around $40 billion by procurements• around $30 billion by grants
Procurement statistics from AusTender (for 2012-13):• Around 67,854 contracts (over $10k) reported• Approx 11,460 suppliers• Over 70% of contracts are below $80k (but
over 95% of contact value is over $80k) • Small medium enterprise represent 55% by
volume and 32% by value
Grants.gov.au is being established to collect similarinformation on Commonwealth grants
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Resource Management and Budget Training — Part II
What is a procurement?
A procurement is:• the Commonwealth purchasing goods and/or services that assist
the Commonwealth in achieving its own goals• the whole process of procuring goods and/or services
Not a procurement:• a grant• an investment• a sale by tender• a loan• a statutory/ministerial appointment• employee engagement
Some Government policies apply to procurements
Spending relevant money
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Resource Management and Budget Training — Part II
What is a grant?
A grant is:• an arrangement for provision of financial assistance • by the Commonwealth or on behalf of the Commonwealth• relevant money or other CRF money to be paid• intended to assist recipient to achieve goals• intended to help address policy objectives• may have terms or conditions for recipient
Not a grant:• a procurement• an act of grace of payment or
compensation payment • an investment • an employee engagement
Spending relevant money
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Resource Management and Budget Training — Part II
Procurement and grant rules
Spending relevant money
Two main types of spending are regulated by rules made under the PGPA Act:
• Commonwealth Procurement Rules (CPRs)
• Commonwealth Grant Rules and Guidelines (CGRGs)
Some Government policies also apply to procurement
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Resource Management and Budget Training — Part II
Commonwealth Procurement Rules
• supports the government’s social and economic policies
• core principle is value for money achieved by: encouraging competition proper use of public resources accountability and transparency
• incorporates Australia's international obligations
Spending relevant money
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Resource Management and Budget Training — Part II
Government procurement policies
Apply to non-corporate Commonwealth entities, e.g:• Public Private Partnership principles• Legal Services Directions• Protective Security Policy Framework • Whole-of-government procurement arrangements:
ICT procurement motor vehicle leasing and travel service office machines, stationery and office supplies government advertising training and professional development
• Commonwealth Fraud Control Guidelines
Spending relevant money
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Resource Management and Budget Training — Part II
Commonwealth Grant Rules and Guidelines
Part 1 outlines the mandatory requirements • establish and document whether a proposed activity
is a grant• have regard to the seven key principles for grants administration• develop grant guidelines for all new (or significantly changed)
granting activities• advise your minister on requirements of the PGPA Act and
CGRGs• record, in writing, the basis for a decision to award a grant• provide written advice to your minister, where they exercise the
role of an approver• report individual grants awarded on your website
Spending relevant money
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Resource Management and Budget Training — Part II
Commonwealth Grant Rules and Guidelines
Part 2 sets seven grants administration principles officials should apply to ensure:
• robust planning and design• collaboration and partnership with stakeholders• proportionality by balancing:
the complexity of the grant activity requirements of the grant recipient risks for beneficiaries and the Commonwealth
• the most efficient and effective use of inputs to achieve outcomes for beneficiaries
• value with relevant money• governance and accountability for all parties• probity and transparency
Spending relevant money
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Resource Management and Budget Training — Part II
Commonwealth Grant Rules and Guidelines
Grants administration involves:• planning and design• selection and decision-making• making of a grant• management of grant agreements• ongoing relationship with grants recipients• reporting, review and evaluation
Spending relevant money
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Consider whether proposed spending consistent with the purposes of your entity?
• what outcome is your entity is seeking to achieve?
• how will you measure whether the proposed spending is meeting those outcomes?
Appropriation Act 1
Reporting to parliament
Special Appropriations
Outcome statement
Programme Programme Programme
Deliverables
Appropriation Act 2
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Resource Management and Budget Training — Part II
Before committing relevant money
Spending relevant money
Record approvals• An approval to commit relevant money must be
recorded (in writing or electronically)
• The particulars of the approval will depend on the scope of the commitment
• Your entity’s internal controls should clarify the record you are required to keep depending on the item, costs, parties, timeframes and risk associated with the proposal
PGPA Rule
18
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Resource Management and Budget Training — Part II
Recording approvals
Spending relevant money
Ministers can approve certain commitments (e.g. grants)
If you assist a Minister to consider and approve a commitment you must advise the Minister on:
• the proposed arrangement• the requirements of the PGPA Act and relevant rules (e.g. CGRGs)• any selection process
This is so your Minister:• can be satisfied the proposal is a proper use of the money• approve any grants are consistent with the rules
Must keep a record of the approval
Section
71
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Resource Management and Budget Training — Part II
Activity: spending proposal
Spending relevant money
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Managing relevant property
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Resource Management and Budget Training — Part II
Types of relevant property
Managing relevant property
Real property:• land • buildings or objects fixed to that land
Personal property:• all other (movable) property, eg. equipment, vehicles
Intellectual property:• rights to creations of the mind, e.g. the coat of arms
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Resource Management and Budget Training — Part II
Commonwealth Property Management Framework
Covers leasing, building, owning and disposing
Combination of legislation, policy and guidance
Applies to non-corporate entities
Principles:• value for money• property management planning• efficient and effective design• appropriate accountability measures• cooperative Commonwealth property
management measures
Managing relevant property
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Resource Management and Budget Training — Part II
Entering leases
• risk based frameworke.g. accountable authorities delegated power to grant indemnities
where: risk is remote (less than 5%) and expenditure would not be significant (less than $30m)
• entities must consider whether proposed lease will be a proper use of public resources
• must comply with government policies e.g. Finance Secretary Lease Endorsement process
Managing relevant property
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Compliance reporting
compliancereport
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Resource Management and Budget Training — Part II
What is being certified?
Compliance reporting
Based on the entity’s internal control mechanisms, management, and audit committee advice, the accountable authority is required to certify that the entity has complied with:
• PGPA Act• PGPA rules• appropriate delegations
compliancereport
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Resource Management and Budget Training — Part II
Purpose of compliance reporting
Compliance reporting
• improve compliance with the PGPA framework• keep ministers informed of compliance issues within
their portfolios• assist entities to address issues with internal controls• assist Finance to identify issues with the resource
management framework• assist the evaluation of the PGPA Framework required
by the PGPA Act
further compliance reporting guidance is in development
compliancereport
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Resource Management and Budget Training — Part II
• Commonwealth Resource Management Framework
• The Australian system of government
• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation
Part I: The Resource Management Framework
Part II: Use of public resources
Part III: The Budget process
• The Budget Framework• Planning and budgeting• Implementing and monitoring
• Reporting and evaluation
• Accountability and performance
• Risk management• Spending relevant money• Managing relevant property• Compliance reporting
Wrap up
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Resource Management and Budget Training — Part II
Questions and feedback
Wrap up
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Resource Management and Budget Training — Part II
Further information
Department of Finance• finance.gov.au
Australian Government Budget• budget.gov.au
Public management reform• pmra.finance.gov.au
Resource Management and Budget training• finance.gov.au/resource-management/training