Section 3 - Management & Accountability (continued)

Finance

The Mint implemented several measures designed to strengthen its working capital by aligning the Mint’s operational and production activities better with the changing coinage requirements of the Australian community. This includes the establishment of a buffer stock, and redefining the basis for circulating coin revenue recognition from time of sale to time of production.

These measures were incorporated in the Mint’s new Memorandum of Understanding (MOU) with Treasury that took effect from 1 January 2008.

As a result of applying the Finance Minister’s Orders and applicable Australian Accounting Standards to these initiatives, the Mint reported an after tax operating surplus of $31 million in 2007–08. This is represented by:

the one off payment of $20 million towards the establishment of a circulating coin buffer stock and
$11 million increase due to the change in the circulating coin revenue recognition.

The Mint’s operating surplus was derived from gross income of $112 million—an increase of $51.2 million over 2006–07. This increase can be attributed to the 20 per cent ($29 million) growth in circulating coin sales to the Reserve Bank of Australia. There was a corresponding increase in departmental expense (cost of goods sold) as a result of the additional sales.

The Mint’s net assets increased from $65 million at the end of 2006–07 to $125 million at 30 June 2008. This increase is mainly attributable to:

$18 million in appropriation receivable being the capital appropriation not drawn down for major capital and
payment of $43 million seigniorage to the Official Public Account.

The Mint received audit clearance of its 2007–08 financial statements from the Australian National Audit Office (ANAO). The ANAO has again issued an unqualified audit report as shown in Appendix A.

The Commonwealth Certificate of Compliance requirements for 2007–08 were successfully met by the Mint. For the financial year 2007–08, the Mint introduced a bi-annual compliance sign-off, i.e. period ending 31 December 2007 and 30 June 2008. The overall outcome improved following delivery of training to staff.

Challenges for the future include management of risks associated with larger than normal inventory; securing implementation of major projects within budget and on time; and delivering efficient and effective management of the Mint’s fixed assets during and after the execution of major projects.

Procurement

The Mint is committed to continual improvement of its internal policies and procedures for the procurement of all goods and services. This is consistent with the Mint’s Chief Executive’s Instructions (CEIs) and the Commonwealth Procurement Guidelines (CPGs).

During the 2007–08 year, the Mint’s procurement unit provided support by ongoing review of templates used for procurement; and guidance and advice on procedures for requests for tender including:

coin blanks
loose furniture
ERP – Enterprise Resource Planning software and
material handling and warehousing system.

The Mint’s procurement unit has expanded its staff to facilitate training and support for other areas of the Mint that are purchasing goods and services of high value and where contract negotiations are complex.

Staff attended training and workshops about the new procurement guidelines run by the Department of Finance and Deregulation.

The main priority for the procurement unit in the coming year is to implement a contracts register database for the monitoring and reviewing of all contracts.

Consultancies

Consistent with the CPGs Instructions the Mint engages consultants on the basis of:

value for money
open and effective competition
ethics and fair dealing
accountability and reporting
national competitiveness and industry development and
support for other Australian Government policies.

Typically, consultants are engaged to investigate or diagnose a defined issue or problem; carry out defined research, reviews or evaluations; provide independent advice and information or creative solutions to assist the Mint manage their decision making. The most common reasons for the engagement of consultancy services are:

unavailability of specialist in-house resources in the short timeframe allowed
the need for an independent study or review and
specialist skills and knowledge not available in-house.

The selection methods used for consultancies are categorised in Table A.

During 2007–08, one new consultancy contract valued at $10,000 and over was entered into involving total expenditure of $76,182. In addition, two ongoing consultancy contracts valued at $10,000 and over were active during the year involving total actual expenditure of $528,807. Information on expenditure on contracts and consultancies is also available on the AusTender website www.tenders.gov.au

Table A – Consultancies valued at and over $10,000 in 2007–08

Consultant Name	Description	Contract Price ($)	Selection Process(1)	Justification(2)
Acumen Alliance (ACT) Pty Ltd	IT Business Systems Consultancy	399,000	Open Tender	b
Lange Consulting and Software	Consultancy Services for Development of RFT for IT Systems Upgrade	53,625	Direct Source	b
Grosvenor Management Consulting	Transformation Management	76,182	Select Tender	b
Total consultancies over $10,000		528,807

Select Tender: A procurement procedure in which the procuring agency selects which potential suppliers are invited to submit tenders. Tenders are invited from a short list of competent suppliers.

Direct Sourcing: A form of restricted tendering, available only under certain defined circumstances, with a single potential supplier or suppliers being invited to bid because of their unique expertise and/or their special ability to supply the goods and/or services sought.

Skills currently unavailable within agency
Need for specialised or professional skills
Need for independent research or assessment

Assets management

The Mint manages both current and non-current assets in accordance with guidelines set out in the CEIs and Australian Accounting Standards.

The Mint’s non-current assets are subject to an annual stocktake to ensure accuracy of records. The Mint’s asset revaluation strategy, applied with sufficient frequency, ensures correctness of the carrying fair value amount at reporting date. In 2007–08, the Australian Valuation Office conducted a desktop revaluation of the Mint’s coin collection, plant and equipment and leasehold improvements.

The Mint manages four types of fixed asset classes: plant and equipment, leasehold improvements, intangibles and the National Coin Collection. These assets have a total net value of $32 million, including $7 million work in progress associated with the Mint building refurbishment project.

All assets were assessed for impairment at the reporting date.

During 2007–08 the Capital Management Planning Group (CMPG) was established to assess, prioritise and identify funding sources for capital spends. The CMPG is responsible for the management of the Mint’s Capital Management Plan (CMP) which was designed to ensure compliance to accounting standards and best practice including depreciation, funding, asset management; and to provide assurance that the Mint is meeting its obligations under the financial management framework and the Commonwealth Procurement Guidelines. Both the CMP and the CMPG provide an improved framework for capital purchases and funding that meet the Mint’s business objective of ensuring that the Mint’s assets fully support the business aims.

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