Department of Finance

RMG-134: Annual performance statements for entities

Annual performance statements for

Commonwealth entities

Resource Management Guide No. 134

July 2017

© Commonwealth of Australia 2017

ISBN: 978-925205-15-2(Online)

With the exception of the Commonwealth Coat of Arms and where otherwise noted, all material presented in this document is provided under a Creative Commons Attribution 3.0 Australia () licence.

The details of the relevant licence conditions are available on the Creative Commons website (accessible using the links provided) as is the full legal code for the CC BY 3 AU licence.

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Contact us

Please direct questions or comments about the guide to:

Public Governance, Performance and Accountability

Governance and APS Transformation

Department of Finance

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The words ‘must’, ‘required’, ‘requires’ and ‘requiring’ denote mandatory compliance by accountable authorities/officials. The use of the words ‘could’, ‘may’, ‘encouraged’ or ‘consider’ convey non-mandatory guidance. The guidance to which these words relate may or may not be applied by accountable authorities/officials in their approach to resource management, depending on the operating circumstances of the entity and its appetite for risk.

Contents

Audience

Key points

Resources

Part 1 – Introduction

Portfolio Budget Statements

Commonwealth companies

Part 2 – The role of annual performance statements in the enhanced Commonwealth performance framework

Part 3 – Suggested format for annual performance statements

Part 4 – Minimum requirements of the annual performance statements

Statements (of preparation)

Results

Activity title or description

Performance measurement methodology

Targets, goals and measures

Results achieved

Analysis

Part 5 – Regulator Performance Framework

Part 6 – Tabling and publication requirements

Part 7 – Sensitive information

Intelligence, security or listed law enforcement entities

Part 8 – Entities with enabling legislation

Part 9 – Audit of annual performance statements

Part 10 – The role of audit committees

Appendix A – Performance maturity model

Appendix B – Quick Reference Guide

Appendix C – Suggested Format for Annual Performance Statements

Audience

This guide is for the officials of Commonwealth entities who are responsible for assisting their accountable authority toprepare annual performance statements.The guide also supports officials who manage the activities of entities.

Key points

This guide:

  • provides guidance on the obligations of accountable authorities under section 39 of the PublicGovernance Performance and Accountability Act 2013 (PGPA Act) to prepare annual performance statements for their entities
  • outlines the minimum requirements, prescribed by the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) in section 16F, for entities producing annual performance statements.

This guide applies to annual performance statements that begin on or after 1July 2015.

Resources

This guide is available on the Department of Finance website at together with relatedguidance on the enhanced Commonwealth performance framework:

  • Resource Management Guide No. 130 Developing good performance information
  • Resource Management Guide No. 131 Corporate plans for Commonwealth entities
  • Resource Management Guide No. 132 Corporate plans for Commonwealth companies
  • Resource Management Guide No. 133 Annual performance statements for Commonwealth entities
  • Resource Management Guide No. 135 Annual reports for non-corporate Commonwealth entities
  • Resource Management Guide No. 136 Annual reports for corporate Commonwealth entities
  • Resource Management Guide No. 137 Annual reports for Commonwealth companies
  • 2015-16 Annual performance statements lesson learned paper

Part 1 – Introduction

  1. An objective of the PGPA Act is to establish a performance framework across Commonwealth entities that provides meaningful information to parliament and the public.
  2. Section 39 of the PGPA Act requires Commonwealth entities to prepare annual performance statements and include those statements in their annual reports. This requirement took effect on 1 July 2015.
  3. Commonwealth entities will report, through the annual performance statements, to what extent they have fulfilled their purpose(s) as articulated at the beginning of a reporting year in their corporate plans. This includes reporting on non-financial performance criteria in both their corporate plans and in any Portfolio Budget Statement, Portfolio Additional Estimates Statement or other portfolio estimates statement.
  4. The requirements for annual performance statementsare designed to provide a consistent approach to performance reporting. The statements consolidate relevant performance. The aims are to improve the readability of this information and to provide a clear line of sight between planned performance for the reporting period as outlined in the corporate plan, Portfolio Budget Statements and Portfolio Additional Estimates Statements of an entity over the reporting period.
  5. Under previous arrangements, entities’ reporting of performance, through the publication of annual reports, varied significantly in quality and structure. This has limited the ability to clearly ascertain the scope, nature and success of an entity’s performance and to what extent the entity has achieved its purposes.
  6. It is fundamental to the objectives of the PGPA Act that the presentation of entities’ performance to the public and the parliament is meaningful and improves public accountability. The annual performance statements replace the previous annual report non-financial performance reporting requirements (for non-corporate Commonwealth entities) creating a clear, concise and consistent approach to performance reporting across all Commonwealth entities.
  7. It is understood that the development of improved performance information and reporting frameworks will evolve over the initial reporting cycles under the new arrangements. To help entities assess their progress Finance has published a performance maturity model (provided at Appendix A).

Portfolio Budget Statements

  1. The majority of Commonwealth non-corporate and corporate entities receive some level of appropriation funding. As a result, key strategic information relevant to entities appears in their responsible Minister’s Portfolio Budget Statements that accompany the annual Appropriation Acts.
  2. Portfolio Budget Statements are publications presented to parliament by the responsible portfolio minister. They describe, at a strategic level, what is intended to be achieved with money appropriated by parliament. The Portfolio Budget Statements explain the estimates for the purposes of the Budget Appropriation Bills and informs Senators and Members of Parliament of changes in the proposed allocation of resources to entities within the portfolio.[1]
  3. The Portfolio Budget Statements are formal ministerial documents. Together with the Budget Papers, Portfolio Budget Statements they represent a package of documents tabled in Parliament on Budget night, which explain the Government’s budget decisions.
  4. A Finance Secretary direction under section 36(3) of PGPA Act sets out the requirements for performance information to be included in Portfolio Budget Statements.This includes a strategically focusedset of high-level performance information for existing programs and detailed informationfor new ormaterially changed programs. This performance information must be reported against in annual performance statements at the end of that year, along with the performance information from corporate plans.
  5. Note that the annual performance statements report on the performance of the entity in fulfilling its purpose(s) during the reporting period, by acquitting the performance information published in both the entity’s corporate plan and the relevant Portfolio Budget Statements for the reporting period.
  6. To demonstrate the achievement of its purpose(s) entities will need to clearly map (or attribute) the performance information from the Portfolio Budget Statements to the entities’ purpose(s). This mapping will serve to establish a clear read between the entity’s corporate plan, relevant Portfolio Budget Statements, annual performance statements and the annual report, and ensure it is clear how (and how well) the entity is fulfilling its purposes.

Commonwealth companies

  1. Under the PGPA Act, Commonwealth companies are not required to produce annual performance statements. This guidance therefore does not apply to Commonwealth companies.
  2. However, under section 27A of the PGPA Rule, companies are stillrequired to report, in their annual reports, on the actual performance results achieved against the performance information outlined in their corporate plans.

Part 2 – The role of annual performance statements in the enhanced Commonwealth performance framework

  1. The enhanced Commonwealth performance framework builds on three main concepts: entity, purpose and activity. At its most basic, the framework is focused on each entity covered by the PGPA Act. Each entity is required to identify its purposes, which include its objectives, functions or role. Lastly, the framework focuses on the activities of theentity, which are its core areas of effort and the actions that it undertakes to pursue and fulfil its purposes. More information on how an entity can identify and define its purposes and significant activities are in RMG132 – Corporate plans for Commonwealth entities.
  2. Key to the annual performance statements is the presentation of good performance information that tells a cohesive performance story demonstrating the extent to which a Commonwealth entity is meeting its purposes through the activities it undertakes. Guidance on the development of good performance information is available in
    RMG-131 – developing good performance information (summarised at Appendix B).
  3. The corporate plan, Portfolio Budget Statements, and the annual performance statements are the core elements of the enhanced Commonwealth performance framework. The corporate plan is developed at the beginning of the reporting cycle and sets out an entity’s strategies for achieving its purposes and how success will be measured.
  4. The Portfolio Budget Statements sets out the funding for the entity and how the impact of that expenditure will be measured. Annual performance statements, which are included as part of the entity’s annual report, are produced at the end of the reporting cycle and provide an assessment of the extent to which an entity has succeeded in achieving its purposes. Figure1 shows the main components of the framework and the annual cycle.

Figure 1: The enhanced Commonwealth performance framework

  1. Many of the minimum content requirements for entities’ annual performance statements are linked to content requirements for their corporate plans (see PGPA Rule section 16Eand RMG – 132 Corporate plans for Commonwealth entities). This alignment recognises the close relationship between the two elements of the framework. The annual performance statements (which are to be included in each entity’s annual report) complete the annual reporting cycle.
  2. Commonwealth entities will report, through the annual performance statements, on the results actually achieved against the measures set out in their corporate plan and Portfolio Budget Statements, and on the basis of any review and evaluations they have committed to undertaking to demonstrate their performance in achieving their purposes. The statements will present the performance of the significant activities for which the entity is responsible at the end of each reporting period, by reporting against the targets, goals and measures that the entity established at the beginning of a reporting year.
  3. The level of reporting detail will typically be commensurate with the size, nature and complexity of the activity in question. The aim is to have good quality, comprehensive and accurate information that provides a clear and complete picture of how an entity has performed.

Part 3 – Suggested format for annual performance statements

  1. One purpose of annual performance statements is to support consistent performance reporting by all entities. If needed, an entity may expand on, or add additional information, beyond the suggested structure if needed.
  2. Further information on the suggested format of the annual performance statement is provided at Appendix C.

Part 4 – Minimum requirements of the annual performance statements

  1. Subsection 39(1) of the PGPA Act requires the accountable authority of a Commonwealth entity to include annual performance statements in its annual report (unless otherwise prescribed in the entity’s enabling legislation). Annual performance must comply with requirements for publication and content prescribed by the PGPA Rule.
  2. Section 16F of the PGPA Rulesets out the matters that entities must include in their statements. There are three core minimum requirements for annual performance statements:
  3. Statements(of preparation)
  4. Results
  5. Analysis.
  6. Annual performance statements are intended to be the key location for all public data on the actual performance of an entity in a reporting period.They will directly reflect the actual results achieved against the performance information as set out in their corporate plans and Portfolio Budget Statements (see Figure 2).

Figure 2: Corporate plans to annual performance statements – flow and core elements

Example 1
Mapping performance information across an entity’s corporate plan, Portfolio Budget Statements and annual performance statements
The Australian Trade and Investment Commission (Austrade) 2015-16 annual performance statements included a graphic to explain the relationship between its three key performance documents – the corporate plan, Portfolio Budget Statements and annual performance statements. The graphicenhances the annual performance statements’ clear read and illustrates the alignment between purposes in the corporate plan and outcomes and programs in Portfolio Budget Statements.
The following excerpt is taken from p.20of the Austrade 2015-16 annual report.

  1. Annual performance statements must be easy to locate within an entity’s annual report. Better practice is to identify annual performance statements as a separate chapter or section with the heading ‘Annual Performance Statements’. A reference to this chapter or section in a table contents is also preferable.

Example 2
Readily identified annual performance statements in an entity’s annual report
The Department of Environment and Energy 2015-16 annual report clearly identifies the entity’s annual performance statements at p.18 in the table of contents (see excerpt below)

Statements (of preparation)

  1. Section 16F of the Rule requires annual performance statementsto include a statement to be endorsed by the accountable authority. The statement must specify that the annual performance statements have been prepared forparagraph 39(1)(a) of the PGPA Act and any other legislation applicable to the preparation of annual performance statements of the entity. The statement must specify the reporting period which the performance statements cover and provide an assurance by the accountable authority that the annual performance statements accurately reflects the entity’s performance in the reporting period.
  2. Entities are required to provide a statement that they have complied with subsection 39(2) of the PGPA Act. Subsection 39(2) requires the annual performance statements provide information about the entity’s performance in achieving its purposes, and also that it complies with any requirements of the PGPA Rule. Please see Example 3 for an introductory statement for a Department of State, Parliamentary Department, or listed entity.
  3. This statement is to perform a similar purpose to the statements by accountable authorities for their annual financial statements which is to provide assurance regarding quality of the preparation and information included in the annual performance statements.

Example 3
Introductory statement for a Department of State, Parliamentary Department or listed entity.
The excerpt following is taken from p.27 of the Department of Defence 2015-16 annual report.

Example 4
Introductory statement for a body corporate
The following excerpt is taken from p.126 of the Australian Broadcasting Commission (ABC) 2015-16 annual report.

Results

  1. Subsections 16F(1) and 16F(2) of the PGPA Rule have the combined effect of requiring the accountable authority of a Commonwealth entity to report results in the entity’s annual performance statements. These results must demonstrate the entity’s performance in achieving the entity’s purposes in the relevant reporting period, and in accordance with the methods of measuring and assessing set out in the entity’s corporate plan, Portfolio Budget Statements and Portfolio Additional Estimates Statements (or other portfolio estimates statement) for that reporting period.
  2. The core requirement of the annual performance statements is for entities to report onthe achievement of their purpose(s) during the reporting period. This can be achieved through reporting on the actual performance results they achieved in the reporting periodagainst the performance information published at the beginning of the reporting period in their corporate plans and Portfolio Budget Statements.
  3. The information must be presented in a way that is easily linked to the information presented in the entity’s corporate plan and Portfolio Budget Statements for the relevant period, to allow for a clear read across the three documents. In practice this will require entities to clearly map (or attribute) the performance criteria from the Portfolio Budget Statements to the entity’s purpose(s), showing how each performance criterion demonstrates, or goes to demonstrate, the entity’s fulfilment of its purpose(s). This mapping will serve to establish a clear read between the entity’s corporate plan, relevant Portfolio Budget Statements, annual performance statements and the annual report, and ensure it is clear how (and how well) the entity is fulfilling its purpose(s).

All performance criteria published in corporate plansand Portfolio Budget Statements must be attributed to a purpose(s) and reported against in the annual performance statement.

Example 5
Presentation of performance results in achieving an entity’s purpose
The Australian National Audit Office (ANAO) 2015-16 annual performance statements linked analysis of results to the achievement of its purpose. This approach was used consistently throughout the annual performance statements when presenting results. Supplementary information about the data sources used was also consistently provided.
The following excerpt is taken from p. 45 of the 2015-16 ANAO annual report.

Example 6
Mapping results to achievement of an entity’s purpose
The Department of Parliamentary Services (DPS) 2015-16 annual performance statements clearly identified its purpose in the annual performance statements. It also a diagrammatic overview of how its performance criteria related to demonstrating its effectiveness in achieving its purpose. A consistent focus on the purpose continued in the results and analysis sections that followed.
The following excerpt is taken from p. 18 of the DPS 2015-16 annual report

  1. When reporting actual performance, an entity may consider providing the following information for each activity identified in its corporate plan – noting that it is for each entity to structure and present results that best demonstrate performance in its specific circumstances.

Activity title or description

  1. Entities can identify thesignificant activities or key activity areasthat were identified for measurement and assessment in their corporate planat the beginning of the reporting period. Eachsignificant activitycan be identified by the title or description used for the activity in the entity’scorporate plan to ensure consistencybetween its planned performance information and performance results.

Example 7
Reporting of results against high level strategic activities
The Civil Aviation Safety Authority (CASA) 2015-16 annual performance statement maps results to three high level activity areas expressed as ‘portfolio deliverable/corporate plans’. These high-level activities provide a framework that help demonstrate how performance measures (or criteria) combine to demonstrate achievement of CASA’s purpose.
The following excerpt is taken from p. 27 from the CASA 2015-16 annual report.

Performance measurement methodology

For each significant activity or key activities identified, entities can brieflydescribe the performance measurement methodology that has been applied to assessthe activity’s performance. Entity’s will need to explain if the performance measurement methodology used differs from the performance measurement methodologyset out in theplanned performance information sectionof the entity’s corporate plan at the beginning of the reporting period.