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Corporate governance

Customs corporate governance arrangements seek to:

• maximise organisational performance
• comply with the law, regulations, published standards and community expectations for probity, accountability and transparency
• support staff in carrying out their responsibilities.

Governance arrangements are based on these principles:

• clear lines of decision-making and authority through management rules
• strong leadership provided through the Executive Group and other internal committees
• strong relationships and consultation processes with external stakeholders, including consultative bodies such as the Customs National Consultative Committee and the National Passenger Processing Committee
• well-defined corporate planning and performance reporting processes
• benchmarked human resource policies and strategies
• personal responsibility, with Australian Public Service values and code of conduct clearly identified and reinforced and a good staff awareness of probity issues
• disciplined budget processes and financial management
• risk management policies and application
• regular reporting to the executive
• internal reviews and learning from past experience
• a service delivery charter and monitoring of performance
• sustainability of policies and practices.

Policies on delegations and business continuity were updated as were the management rules. A new process on Business Practice Networks was finalised to provide a forum for sharing experience, promoting consistency and good practice. The Business Practice Networks process is now included in the Management Rules.

Organisational structure

Customs organisational arrangements were altered in 2004–05. The Office of Business Systems, the division tasked with the introduction of Cargo Management. Reengineering (CMR), was phased out following the implementation of the export component of the Integrated Cargo System (ICS).

Responsibilities for CMR development and implementation were split between the Cargo and Trade Division and the Information and Office Technology Division. Customs is now organised into six national divisions:

• Cargo and Trade
• Border Intelligence and Passengers
• Border Compliance and Enforcement
• Coastwatch
• Information and Office Technology
• Financial Services.

Divisions are supported by four non-aligned Branches or units:

• Planning and International
• Staffing
• Customs Legal Unit
• Internal Affairs Unit

Customs operates a matrix management system in which regional structures deliver services in States and Territories.

Customs also uses competitive tendering and contracting arrangements to supplement the core business skills. Major outsourced functions include IT support, legal services, logistics arrangements for container examination facilities, and internal audit. Customs also contracts some recruitment and selection services. More information can be found in the Corporate Resource Management section.

International support is provided through permanent representation at overseas posts in Bangkok, Beijing, Brussels, Jakarta, Tokyo and Washington. The locations of offices in Australia is illustrated in Figure 43.

Figure 43: Locations of Customs offices in Australia

Senior executive and their responsibilities

Figure 44: Organisational chart (June 2005)

Senior management committees and their roles

Committees play an important role in consultation and informed decision making. The key management committees in Customs are the Executive Group, the Audit Committee and the Senior Executive Service Conference. Other key committees in Customs include:

• Business Continuity Planning Steering Committee
• Customs Security Committee
• Flexible Delivery Steering Committee (training)
• Information Management Project Committee
• Information Management Strategy Committee
• Integrated Cargo Steering Committee
• National Priorities Committee.

Regional committees are established when necessary.

The key methods of internal communication with staff include management briefs, ‘all staff’ messages circulated by email, weekly section meetings, the Customs intranet for corporate information such as legislation, policies, procedures, guidelines and advices, a weekly bulletin and a staff newspaper, Customs News.

Executive Group

The Executive Group is a corporate forum that meets weekly to discuss major policy and management issues. This group comprises the CEO, Deputy CEOs, the Chief Information Officer, the Chief Financial Officer, National Directors, Regional Directors New South Wales and Victoria and National Manager Planning and International.

Once a month the meeting is attended by all Senior Executive Service and Regional Directors, the latter attending by videoconference link.

Audit Committee

The Audit Committee advises the CEO on audit, evaluation, fraud and risk-management issues. The committee comprises the Deputy CEOs who chair the Committee on rotation, two National Directors, a Regional Director with the Chief Financial Officer as an observer, National Manager Planning and International and an external member on contract. Partners of Customs audit process also attend with the Australian National Audit Office (ANAO).

In February 2005, the ANAO published a Better Practice Guide on Public Sector Audit Committees. This guide was presented to the Audit Committee, with a summary of relevant points. The Audit Committee examined these documents and incorporated changes.

Senior Executive Service/Regional Directors Conference (SES/RDs)

Customs Senior Executives from all branches and regions meet face-to-face biannually to discuss strategic management issues and future directions. SES/RDs Conferences were held in November 2004 and May 2005. Items discussed included the management rules, strengthening the planning and performance framework, formation of a recruitment taskforce to examine resource issues and standing items of budget, human resources and information technology.

External consultative mechanisms

Customs National Consultative Committee (CNCC)

The CNCC meets quarterly. It provides a forum for the discussion of Customs policy and procedural issues relevant to the international trading community, business and Customs specialists. Membership of the Committee is drawn from Customs agent associations, the Customs Brokers and Fowarders Council of Australia, the Australian Federation of International Fowarders, the Law Council, Customs consultants and importer representatives. Discussion included CMR, Container Examination Facilities and Supply Chain Security. Minutes from CNCC meetings are posted on the Customs Internet site.

Customs, Immigration, Quarantine and Transport Committee (CIQT)

The CIQT Committee ensures coordinated progress of border management policy and related issues across these key agencies. Membership comprises agency heads from Customs, the Department of Immigration and Multicultural and Indigenous Affairs, the Department of Agriculture, Fisheries and Forestry Australia, the Department of Transport and Regional Services and a Deputy from each department or agency.

Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA)

HOCOLEA is the broad consultative mechanism for Commonwealth law enforcement policy. HOCOLEA is a forum for agency heads from 11 Commonwealth law enforcement and regulatory departments and agencies. Customs provides secretariat support.

Customs participates in several HOCOLEA working groups, including the Working Group on Corruption which is chaired by Customs. This Working Group was established in late 2004 to enhance anti-corruption programs. Working Group members share information on training regimes, and are currently exploring the production of a better practice guide.

Australian Crime Commission Board

The CEO of Customs contributes to the development of national criminal intelligence priorities and the strategic direction of the Australian Crime Commission through membership of the Australian Crime Commission Board.

The Board membership enables Customs strategic issues to be incorporated into the broader law enforcement agenda. In return, Customs is able to contribute resources and ideas to enable the objective management of the Australian Crime Commission’s agenda.

Enhancing coordination, communication and cooperation with key international stakeholders

Customs, by its nature, has a large international agenda. Bilateral intelligence cooperation with other customs administrations is managed largely through Memoranda of Understanding or the World Customs Organization (WCO) Regional processes and the Liaison Office hosted by China.

Customs also exchanges regional intelligence, operational information and other organisational information. Two new Memoranda were signed, one with Papua New Guinea and the other with Fiji. The Asia-Pacific region is an important one for Customs and most capacity building effort is directed to the region. Such cooperation assists Customs administrations to improve security and facilitation.

Notable achievements in international cooperation in 2004–05 include:

• establishment of new posts in Beijing and Jakarta
• formal bilateral talks with the customs administrations of Hong Kong, China (November 2004), Papua New Guinea (April 2005), Malaysia (May 2005) and Indonesia (May 2005)
• Customs reform and modernisation capacity building activities in Papua New Guinea, Indonesia and Solomon Islands
• hosting several senior delegations including South Africa (October 2004), China (August and December 2004), Fiji (February 2005) New Zealand (February 2005), United Arab Emirates (May 2005) and Zambia (May 2005).

Customs is active in a number of international forums, including the Asia Pacific Economic Cooperation (APEC), the WCO, the Oceania Customs Organisation (OCO) and ASEAN. With the participation of the CEO for the first time at the Customs Heads meeting, Customs commenced closer dialogue with ASEAN.

As a member of the WCO Policy Commission for 2004–05, Australia contributed to debate on strategic directions for international customs practices including the supply chain security agenda, trade facilitation, improved governance and capacity building.

Customs participated actively in the APEC Sub-committee on Customs Procedures in 2004–05 including chairing the Trade Facilitation Working Group and supporting the Sub-committee’s activity to promote integrity measures in member administrations.

In September 2004, Australia as chair of the WCO data model working group, encouraged the Sub-Committee on Customs Procedures to accept data harmonisation and make further progress towards a single window of e-commerce.

Other key APEC initiatives Customs supported were:

• the Framework of Standards for securing the supply chain and facilitating trade as a new agenda item
• further time release surveys for trade procedures.

The OCO reviewed its charter through an Australia/New Zealand/OCO secretariat working group. The OCO work program expanded considerably and a new set of governance arrangements were agreed at the Guam Annual Conference in March 2005. The future location of the secretariat was discussed and the period for finding a new location was agreed. Australia will be the facilitator for a capacity building working group.

A significant program of capacity building activity was progressed in Papua New Guinea, Indonesia and Solomon Islands. Another capacity building program will commence in August 2005 in Tonga.

A wide ranging and comprehensive diagnostic of Papua New Guinea Customs was undertaken. A work program has been devised and four officers assigned to positions in Papua New Guinea Customs to deliver the reform and modernisation program. Funding has been provided under the AusAID Enhanced Cooperation Package.

The first placements cover passenger processing at Jacksons Airfield, intelligence development, cargo policy and practique and border enforcement.

Cooperation between officials from Customs, the Department of Immigration and Multicultural and Indigenous Affairs and the Department of Transport and Regional Services working in Papua New Guinea is improving border security, particularly at Papua New Guinea’s main international airport and at seaports.

A package of support is being provided to Indonesian Customs under the Special Travel Security Fund aimed at enhancing border security. Project planning was undertaken and a highly successful ship search training program organised. Intelligence analyst training and technological support initiatives are to be progressed in 2005–06.

The Solomon Islands Division of Customs and Excise received two Customs officers to review and deliver a program of support in cargo management. AusAID provided funding under a Pacific Governance program.

In delivering these capacity building programs, Customs works closely with the Department of Foreign Affairs and Trade, the Australian Agency for International Development (AusAID) and other participating agencies.

Customs hosted the 16th Customs International Executive Management Program during September and October 2004. The program develops management skills and promotes international customs cooperation. It also provides a great opportunity for networking within the Asia-Pacific region. Nineteen participants from different customs administrations attended for six weeks of intensive Customs management training. Many alumni have gone on to very senior roles in their organisations.

Corporate planning

The Planning and Performance Framework was strengthened with the introduction of mid-cycle and end-of-cycle reporting against National Business Plans and Work Area Plans. These reports indicate levels of work area compliance against corporate and Commonwealth policies and guidelines.

Corporate Priorities for 2004–05 were developed after an assessment of strategic risks. The priorities are listed under Overview of Customs. Work areas implement relevant priorities through their business plans and work area plans.

Customs developed a revised Outcome and Outputs structure for the 2005–06 Portfolio Budget Statement. The Outputs reflect the organisational structure, provide better transparency for the allocation of financial resources and support revised performance measures. Development of a new Corporate Plan was held over pending finalisation of the Outcome and Outputs structure.

As a result of recommendations by the Australian National Audit Office, Customs has agreed to reflect services provided to and from Commonwealth and State agencies. Recognition of key agencies has been identified in this report under Outcome performance reporting.

Risk management

Customs integrates risk management into business planning and project implementation to:

• improve decision making
• minimise impact of risk events on operational activities
• direct resources into areas of greatest risk.

For business planning, Customs developed a strategic risk assessment which underpins development of annual corporate priorities.

Risk management policy is described in the Chief Executive Instruction, a corporate policy and guidance from the revised Australian Standard for Risk Management AS 4360:2004.

Customs was assessed at four stars out of five in an annual risk-management benchmarking survey conducted by ComCover. One area of weakness was training and awareness. A project has been set up to make improvements in this area in the coming year.

Internal audit

Customs Internal Audit Unit facilitates a strong control environment through reviews of high-risk areas, as well as regular audits of Customs functions. Internal Audit reports provide assurance to senior management on the quality of internal controls and procedures. It also helps to improve business practices by providing recommendations to the areas audited.

The audit plan is developed and updated annually. It is a risk-based program, in line with each branches business plan. This is to ensure that the branches core priorities and risks are addressed, and these are then mapped against corporate priorities and strategic risks. The plan is endorsed annually by the Executive and the Audit Committee.

Internal Audit reviews included Cargo Management Reengineering financial management, and management of information and information technology.

A total of 26 internal audits and reviews were scheduled and completed during 2004–05, one more than in 2003–04. Eighty-five per cent of audits were a combination of performance, compliance, financial and IT audits with the remaining 15 per cent being system-under-development reviews.

Business continuity

A new framework was developed covering principles, roles, responsibilities and testing requirements for internal business owners. It allows Customs to assign a priority order to the recovery of critical business functions in emergency events. The framework recognises that continuity of Customs activities are essential for the economic and social well-being of Australia.

Certification of fraud measures

Customs fraud risk assessment and fraud control plan was updated on 14 June 2005 and Customs complies with the Commonwealth Fraud Control Guidelines. The new fraud control plan encompasses a summary of risks identified in fraud risk assessment and details of strategies to address risk. Appropriate fraud prevention, detection, investigation and reporting procedures and processes are in place and data collected and reported complies with the Commonwealth Fraud Control Guidelines.

 

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