The latest iteration of the Grants Administration Better Practice Guide was released on 6 December 2013. It provides timely reminders and best practice tips, highlights new priorities for the Australian Government and addresses the ANAO audit reports that have been released since the 2010 version of the Guide was published.
The new 2013 Guide emphasises three new priorities for agencies: risk management, simplification and the achievement of outcomes.
Managing risk is emphasised as part of each stage of the grants process, from programme design through to post-completion evaluation. Key issues to be aware of include:
- moving away from a "set and forget" approach to risk assessments
- the role of proportionality in risk management, that is, the greater the risk of project failure, the more framework and oversight you need around it
- seeking an appropriate level of verification and due diligence around claims—at the application stage this may include requiring written evidence of partner support, while during the life of the project it may require sighting invoices, seeking independent reports or conducting site visits to ensure milestones are being met, and
- identifying high risk projects early, through proper monitoring, so that management strategies can be put in place before risks escalate.
An "outcomes focus"
There is a renewed focus on whether, and to what extent, grants programmes actually achieve their objectives. Agencies should ensure that the desired outcomes are front of mind when designing a programme and ask questions such as
- Who is best placed to bring about the desired results?
- Is a grant the best way to encourage this activity, or are there other options?
- Are the evaluation criteria designed to ensure that the projects giving maximum benefit against the objectives are the ones that will be funded?
This focus on outcomes should continue throughout the monitoring and administration of grants, ensuring that real progress is made at each stage of a project. At the conclusion of a project, the tangible results should be verified before the final payment is made.
Agencies are being encouraged to streamline their procedures to reduce the administrative burden of granting activities, both for grant recipients and the Australian Government.
In particular, there is a focus on reducing duplication of information and agencies should not request any information from a grant recipient that it could obtain via other means (for instance, from the ACNC in the case of not-for-profit entities)
Similarly, agencies should seek to leverage reports and other documents that grant recipients are already required to prepare (for instance, to meet their own internal governance requirements), rather than insisting that the information be submitted in a particular format or template document.
Simplification is likely to be an ongoing process, with the ANAO foreshadowing future reforms in coming years.
To maximise compliance, the ANAO has sought to respond to some recent judicial developments and recurring themes arising in ANAO audit reports.
Recognising the increasingly common use of external panels of subject matter experts to evaluate grant applications, agencies should:
- include proper training to external assessors on the requirements of the Commonwealth Grant Guidelines (noting that where the experts are assessing individual applications, rather than providing general or overarching advice, they are likely to be performing a financial task for the purposes of the Financial Management and Accountability Act
- ensure all meetings are minuted and that appropriate secretariat support is provided to external panels, and
- provide proper probity guidance throughout the proceedings to ensure the defensibility of the panel's decision-making.
Source of authority
Since the High Court's decision in Williams v Commonwealth  HCA 23, it is clear that most grants will require a legislative basis. Agencies should ensure they identify the legislative source of the authority to conduct a programme at the outset.
The source of authority will also impact on the review mechanisms available to unsuccessful applicants: where the basis is legislative, judicial review can be sought under the Administrative Decisions (Judicial Review) Act. Where the basis is executive power, this mechanism will not be available.
Stick to the guidelines
Although it may sound like common-sense, a number of recent audits have identified problems arising because agencies have departed from the procedures set down in the published programme guidelines. This can seriously impact on the defensibility of a grants process and, in some cases, could form the basis for an applicant challenging a funding decision.
The release of the new Grant Administration Better Practice Guide presents an ideal opportunity for agencies to evaluate their current funding processes against the new priority areas, and consider where improvements could be made.