12.1 Granting activities (including grant programs) should be underpinned by solid governance structures and clear accountability for all parties involved in grants administration.
12.2 Accountability involves ensuring individuals and organisations are answerable for their plans, decisions, actions and results. Accountability arrangements in grants administration relate to both the process of grants administration, including the grants allocation processes and ongoing grants management, and the achievement of government objectives. Ministers, Chief Executives, agency staff and grant recipients all have their respective roles to play in achieving the applicable government objectives and should be held accountable for the ways in which they fulfill their roles.
12.3 Agency staff should clearly define the roles and responsibilities of all parties involved in grants administration. Agency staff are encouraged to develop a robust governance framework, which clearly defines the roles and responsibilities of the various parties, as this will facilitate accountability.
Any grants governance framework must be underpinned by the mandatory requirements in Part 1 of the CGGs, such as the need for Chief Executives and agency staff to ensure that grants administration, including decision-making,g is consistent with the requirements of the FMA Act and FMA Regulations and that Ministers are advised of their requirements under the CGGs.
Any grants governance framework should also clearly outline the role of grant recipients in the administration of a grant and the role of third parties, such as, advisory panels or entities that may manage grants on behalf of the Government.
12.4 Agency staff should develop policies, procedures and documentation necessary for the effective and efficient governance and accountability of granting activities. This should include the development of grant guidelines and associated operational guidance for administering the grants on an ongoing basis. It is particularly important that such guidance clearly sets out who are the decision makers for different activities involving grants administration. Agency staff must ensure the development of such guidance is consistent with the CGGs.[63]
12.5 Agency staff involved in developing and/or managing granting activities should have the necessary grants management, stakeholder liaison and financial management skills. Agency staff involved in assessing applications should be appropriately skilled and have access to procedural instructions and/or training before processing grant applications.
These safeguards are particularly important if grants administration is devolved to regional offices or across multiple agencies, or involves different levels of government or individuals and organisations external to the Commonwealth.
Care should be exercised to ensure that the competing demands on staff time and scarcity of expertise do not lead to variations in the standards of appraisal and administration.
12.6 Accountability is dependent on the proper maintenance, awareness and availability of appropriate grants administration documentation and processes. Record keeping is therefore a key component of good grants governance and accountability. Good record keeping by agency staff will assist in meeting accountability obligations, demonstrate compliance with the CGGs and the financial management framework, and show that due process has been followed in actions and decisions.
Agency staff should have regard to grants-specific record keeping requirements relating to FMA Regulation 12 and the implications for record keeping of the grants-specific mandatory requirements in Part 1 relating to requirements for Ministers and agency staff and web-based reporting obligations.
12.7 Good record keeping assists agency performance by better informing decision-making. For example:
where agency staff can identify previous and current grant recipients and their performance they will be better able to assess risks;
approvers should document the reasons for decisions in awarding grants (and where appropriate not awarding grants) as this will assist equitable application of the assessment criteria, in particular, when selection processes are conducted over an extended period of time. This helps to ensure that grant money is awarded to those projects or activities that best satisfy the objectives of the granting activity; and
where it is proposed to use a method other than a competitive, merit based selection process, agency staff should document why this approach has been used.[64]
12.8 Agency staff should ensure that grant agreements are well drafted and are fit-for-purpose, as this will contribute to good governance and accountability. Grant agreements are an opportunity to clearly document the expectations of all parties in relation to the grant. Both agency staff and grant recipients should clearly understand conditions in the grant agreement. The use of plain English facilitates this. A well-drafted grant agreement is one that provides for:
a clear understanding between the parties on required outcomes, prior to the commencement of grant funding;
appropriate accountability for public money, which is informed by risk analysis;
agreed terms and conditions in regards to the use of the grant, including any access requirements; and
the performance information and other data that the recipient may be required to collect as well as the criteria that will be used to evaluate the grant, the grant recipient’s compliance and performance.
12.9 There is no form of grant agreement that is right for all grants. Unless legislation or policy mandates the form of an agreement, agency staff should choose the appropriate form of agreement, based on:
an analysis of the risks;
consideration of proportionality;
the context in which the grant is made (for example, the nature of the recipient, relevant applicable legislation, and relevant policy directions);
guidance material, templates and tools provided by Finance;
agency staff and the recipient working collaboratively;
the best way to resolve issues that may arise;
agency templates and guidance; and
legal advice, where appropriate.
12.10 Agency staff should ensure that the chosen form of grant agreement supports public money being used for the intended purpose. The grant agreement should, at a minimum, define project deliverables, schedule payments (according to progress), specify reporting requirements and acquittal procedures (if required) which are proportional to the risks involved.
A grant recipient’s own policies and procedures should support the grant agreement and ensure the effective and efficient governance and accountability for the grant money they receive.
12.11 Where legislation, regulation, government policy or Ministerial direction imposes specific requirements such as how, to whom and in what form a grant is made and specifies particular terms and conditions, agency staff should meet those requirements.
For example, a grant agreement must be consistent with the terms of the approval given under FMA Regulation 9, including any conditions on the approval.
An Australian Industry Participation (AIP) Plan may be required where a grant is $20 million or more and use of grant money may involve the acquisition of goods or services that can be purchased internationally.[65]
12.12 A well-drafted grant agreement alone is not sufficient to ensure the objectives of the grant are met. Agency staff should ensure that grant agreements are supported by ongoing communication, active grants management and performance monitoring requirements, which are proportional to the risks involved.
Performance and financial monitoring provide useful information on which to assess the extent that objectives have been achieved.
The monitoring of payments and progress are integral to good governance and risk management and provide a measure of assurance that public money allocated to grant recipients has been spent for its intended purposes.
Adequate and well-documented arrangements to ensure financial accountability are the basis of effective grant acquittal. Reliable, timely and adequate evidence is required to demonstrate that grant money has been expended in accordance with the terms and conditions of the grant agreement. The stringency of acquittal procedures should be balanced against the level of risk and take into account the cost of compliance. Active risk engagement and management strategies will help achieve this balance.