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Corporate resource management

Managing our finances

Customs has a number of internal and external processes designed to ensure compliance with financial management responsibilities. These processes include the annual National Resource Assessment process, which is the foundation for internal budget allocations. The National Resource Assessment process seeks to allocate appropriation funding and other funding to the operational units of Customs. The agency has a mid-year review of allocations to adjust funding allocated after the National Resource Assessment process and re-align internal budgets based on year-to-date performance.

Customs produces several financial reports on a monthly basis to report actual results against budget. The Executive Monthly Management Report comprises a report of financial performance against internal and external budgets and a section on other performance reporting. Through the Corporate Business Intelligence system, a monthly report covers comprehensive financial and staffing data electronically distributed to Customs managers. In addition, Customs reports on a monthly basis to Government through the reporting systems administered by the Department of Finance and Administration.

A monthly report is also provided to the Department of the Prime Minister and Cabinet on CMR and a quarterly financial report resulting from the review of Customs financial health is also provided to the Minister for Justice and Customs and the Minister for Finance.

In response to the revised Commonwealth Procurement Guidelines of 1 January 2005, Customs National Procurement and Contracting section has revised internal documentation and business processes. An annual procurement plan was published on the Austender website in accordance with the requirements of the Commonwealth Procurement Guidelines.

The Financial Services Division implemented a number of process improvement projects throughout 2004–05. These include:

• an updated national uniform ordering system to improve internal processes for ordering new uniforms and to enable better stock management
• changes to the travel management system to improve functionality for users and also to enable a better interface with the general ledger.

When the imports version of the Integrated Cargo System (ICS) is implemented financial transactions from ICS will interface directly into Customs financial management system, QSP. This will enable better reporting and analysis of major revenue collections and facilitate improved debt management processes.

Purchasing

Customs successfully implemented the new Commonwealth Procurement Guidelines flowing from the Australia-United States Free Trade Agreement. Customs competitive tendering and contracting operations continue to reflect best value for money to encourage competition and produce optimal results for the agency. Core purchasing policies including the 30 Day Payment Policy, the Occupational Health and Safety Policy, and construction code policy (National Code of Practice for the Construction Industry) are monitored.

Procurement operations are devolved throughout Customs. The National Procurement and Contracting section in Central Office provides advice and assistance to the business areas of the agency. The section is responsible for assuring implementation of government purchasing policy and principles.

Information and communication technology management

Apart from the day-to-day supervision and contract management of several large outsourced arrangements, the Information and Office Technology Division has a number of critical projects underway.

IT contracts

The Information Services Agreement between Customs and EDS Australia was extended twice and is in its eighth year. The original five-year contract came into effect in March 1998 and allowed for two two-year extensions. Customs exercised the first two-year extension in June 2002 and extended the contract to March 2005. The second two–year extension was signed on 13 August 2004 and the Agreement is due to expire on 30 June 2007. Evaluations and benchmarking supported the decisions to extend the contracts as EDS provided value for money and service standards had improved over time. 

The Telecommunications Services Agreement with Telstra of September 2003 provides greater bandwidth and cheaper costs even though the overall needs have increased. As a consequence the contract value has increased.

Improved services to users and reduced call costs has resulted from wide area network and fundamental telecommunications services, and voice services using new Mitel equipment.

IT strategic planning

Customs IT Strategic Plan 2005–2010 was developed this year with a draft submitted to the Information Management Strategy Committee for review. The plan spans the full five-year spectrum to provide a flexible basis for Customs IT alignment with Customs current and future business needs. The plan addresses IT governance, information systems (applications), information management, information technology, IT security, people, and IT budget. Final endorsement is expected in 2005–06.

Small Systems Development Unit

Customs has created a Small Systems Development Unit in order to develop and maintain applications that are considered too small to outsource. Customs has had a number of successes over the past year in developing a broad range of applications such as: Customs Vetting Register, Dog Tasking System, Penalties Tracking and Recording System and the Passenger Analysis Unit Flight Scheduling Application. The Small Systems Development Unit also provides a complete hosting service for these applications. This has proven effective for many users in Customs who received a better and more responsive service.

The refresh of desktops and the replacement of printing and photocopying devices were programmed for this year. The desktop refresh was put back until the 2005–06 financial year, but with the roll out of CMR, new screens are being introduced. A printing and photocopying solution is being explored to replace these devices with multi-function devices. A pilot was run and costings explored. Further examination is being considered prior to a final decision being made.

IT security

IT security is essential to the management of the Customs IT infrastructure. In addition to ensuring that the Customs IT environment complies with Government legislation and guidelines, a consultant has been employed to assist in developing, implementing and fully testing an IT disaster recovery plan. A revised version of the Customs IT Security Policy was completed.

Authentication technologies

Customs formed part of a multi agency review assessing the effectiveness of the Government’s Gatekeeper Strategy. This review, chaired by the Department of Finance and Administration, reported its findings to the Management Advisory Board’s Information Management Strategy Committee in February 2005. Customs also played an active role in the launch of the Australian Government Authentication Framework through a presentation on 28 April 2005 of Customs experience. Through a Memorandum of Understanding with the Australian Taxation Office, Customs deployed enhanced security software into the Customs Connect Facility, the secure client gateway to the Integrated Cargo System.

Information standards and harmonisation

Australian Customs chaired the World Customs Organization data modelling sub-committee for the past three years. The committee contributes to the development of international data standards and associated proof-of-concept projects. These projects play an important role in the better management of international supply chains.

Principal outputs have been the final drafting of the Australia/Taiwan paperless trading project definition and input to information issues at the World Customs Organization, United Nationals Centre for Trade Facilitation and Electronic Business, Asia Pacific Economic Cooperation and in association with Free Trade Agreements.

Corporate Statistics

Customs Corporate Statistics section participated as part of a working group to review performance measures for the revised Portfolio Budget Statements. Several new measures have been introduced. An internal quarterly publication, called Customs Figures, provides important information for strategic and operational planning and process monitoring.

Corporate Research Environment

Customs Corporate Research Environment involves enterprise wide data warehousing, and research and reporting capability for Customs applications. Significant support was provided for CMR and other new applications.

Data Management

The Customs Data Management team supported CMR development, data governance and implementation of the recommendations of the Internal Audit ‘Managing Data’ Review. This ensures the effective delivery of all outputs through the provision of data standards and services.

Information policy

Project planning and the business case were refined for the Records and Information Management System project. Funding for 2005–06 was approved in June 2005 and work commenced in preparation for release of a request for tender in late 2005. In addition, three record keeping advices have been issued to Customs staff to assist in compliance with legislative requirements. 

Corporate Communication

Corporate Communication played a key role in enabling Customs to achieve key outputs during 2004–05. Examples included:

• Increased community awareness of Customs and its varied border protection roles through participation in the highly successful Seven Network Border Security television series
• Heightened awareness of border compliance through the publicising of major detections of narcotics, duty evasion, trademark and copyright infringements, illegal fishing apprehensions, and wildlife smuggling attempts
• Promotion of the 24 hour Customs Hotline across northern Australia encouraging remote and regional communities to act as Customs ‘eyes and ears’ for suspicious activity
• Support for the successful introduction of ICS Exports through the provision of communication services and strategies to promote industry readiness for the new system.

Integrated Solutions (Client Data Management Strategy)

Through the Client Data Management Strategy, Customs takes a strategic approach to managing client information as well as allowing for more efficient and effective business administration processes and risk assessment. From 2001, projects have consolidated client information across multiple Customs business systems. So far, the strategy has delivered:

• two releases of the examinations module (Exams 1A and 1B) to support the recording of all examinations and searches in the sea cargo and air cargo environment

• an additional release (Exams 2) to extend recording to postal and mass screening facilities and interface with the ICS

• the Licensing module to record details of all Licensed and Appointed Customs Places and licensed Customs brokers.

Consultants

Thirty five new consultancy contracts were entered into involving total actual expenditure of approximately $4.1m. In addition, 13 ongoing consultancy contracts were active during the 2004–05 year involving total actual expenditure of approximately $0.43m.

The Department of Finance and Administration’s Guidance on Identifying Consultancies for Annual Reporting Purposes (FM Guidance No. 12 July 2004) was used in preparing information on consultancies.

Selection and engagement of consultants

Consultants are selected by open tender, select tender, direct sourcing or through a pre-existing panel arrangement. The type of selection procedure will depend on the level of competition in the market and on the value of the proposed contract. Customs generally commissions consultants to:

• investigate or diagnose a defined issue or problem
• carry out defined research, reviews and evaluations
• provide independent advice, information or creative solutions
• provide specialised services, including assistance with the development and/or implementation of purpose-built IT systems and legal advice.

All selection procedures were compliant with Commonwealth policy and principles.

The main purposes for which consultants were engaged include:

• human resource and occupational health and safety advice and analysis
• security risk review and analysis services
• procurement and competitive tendering advice and assistance
• architectural and construction advice.

For a list of consultancy contracts let in 2004–05 refer to the Customs Internet site.

Competitive tendering and contracting, contract management and corporateoutsourced arrangements

Customs has outsourced arrangements for IT support, legal services, internal audit services and some recruitment services.

The majority of Customs IT support is outsourced to EDS. Customs IT Services Agreement with EDS (Australia) was extended this year to June 2007.

A consortium headed by Computer Associates provided the development and support for the Integrated Cargo System and associated systems. In addition, specialised IT services are sourced from a number of other IT providers including IBM and CPT Global.

The Customs Telecommunications Services Agreement (CTSA) between Customs and Telstra Corporation is in its second year of operation. The three-year contract came into effect in September 2003 and allows for two two-year extensions.

Telstra is contracted to provide the Wide Area Network (WAN), which includes data transmission, network redundancy and operational infrastructure for managed telecommunications services such as routed and non-routed data and ISDN switched data services. As well as the provision of WAN, Telstra also provides voice services such as mobile telephony, satellite, paging, domestic inbound voice, audio conferencing and telephone calling cards.

Customs Legal Services are outsourced to the Australian Government Solicitor. These were renegotiated in December 2004. A Customs Legal Panel supplements the core outsourced legal unit.

Customs internal audit function is co-sourced to PricewaterhouseCoopers, supported by one or two Customs officers.

Recruitment into the Customs Trainee or Customs Graduate Trainee classifications is handled under a sole provider contract arrangement with DFP Recruitment. The contract includes lodging advertisements, receiving applications and conducting assessment centres. Customs interviews candidates that are short listed from the process and makes the final selection decision.

Customs had no contracts exempt from the Gazettal requirements.

Advertising and market research

Expenditure on advertising and market research is detailed in Appendix C.

Assets management

A stocktake of Customs assets was conducted and asset management policies and procedures are continually updated.

Discretionary grants

Customs did not provide or receive any discretionary grants in 2004–05.

Events that will significantly affect operations or financial results

Adoption of international standards

In December 2002, the Financial Reporting Council announced that Australia will adopt international financial reporting standards issued by the International Accounting Standards Board by 1 January 2005, including Government. The main reason for this is to provide some uniformity in accounting standards for Australian companies operating overseas.

Further, the Australian Accounting Standards Board is also considering the harmonisation of generally accepted accounting principles with Government financial statistics.

The Australian Accounting Standards Boards issued replacement Australian Accounting Standards to apply from 2005–06. The new standards are the Australian Accounting Standards Board equivalents to international financial reporting standards issued by the International Accounting Standards Board.

The adoption of Australian Accounting Standards Board equivalents had a major impact on all government agencies. For Customs, this included ensuring current systems met the new requirements.

Customs developed a project plan that addressed the changes in systems, major accounting policies, impact on Customs, risks and key timelines. Information on the impacts on Customs financial statements from the implementation of International Financial Reporting Standards is included in the financial statements section of this report.

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