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    Report on Agency compliance with NSW Government travel policies 

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    Contents

    Executive Summary - 1. Introduction 2. Findings from our audit of agency compliance with the former policy - 3. Findings from our survey of agency compliance with the new policyAppendixes 

     
     

     

    Executive summary

    Last year the NSW Government spent almost $250 million on travel. The government’s travel policies aim to help agencies make better travel decisions and reduce costs. The Department of Finance, Services and Innovation (DFSI) is responsible for the government’s travel policy and manages the government contract with an approved private sector provider to procure travel services.

    This audit assessed how effective agency processes were to ensure compliance with:

    • the ‘Policy on Official Travel within Australia and Overseas’ issued by the Department of Premier and Cabinet in Circular OFS-2014–07 ‘Official Travel in Australia and Overseas’ (the former policy)
    • the ‘NSW Government Travel and Transport Policy’ issued by DFSI (the new policy), effective from 28 September 2016.

    We examined 15 agencies from different NSW Government clusters with significant travel expenditure. For a list of participating agencies, refer to the Appendix two.

    Conclusion

    We found that overall, agencies materially complied with NSW Government travel policies. However, some agencies:

    • did not always book official travel through the approved supplier
    • had weaknesses in their travel approval processes
    • had travel policies that were inconsistent with the government policy
    • did not adequately manage their travel records.

    Self-assessments indicate agencies comply with most aspects of the new policy. Agencies also believe more guidance from DFSI about certain aspects of the policy would increase compliance.

     

    1. Findings from our audit of agency compliance with the former policy

    The new policy has only been effective since 28 September 2016. We asked agencies to self assess their compliance with the recently issued government travel policy. When agencies indicated they were not complying, we asked them to provide reasons, including any difficulties they experienced complying with the new policy.

    Self assessments show agencies believe they mostly comply with the new policy
    Nine participating agencies self assessed as being fully compliant with the new policy. A further five agencies believed they had partially implemented compliant processes. Only one agency reported not having implemented compliant processes.

    Most agencies do not believe complying with the new policy reduces travel costs
    Over half of the participating agencies do not believe quotes obtained by the government’s approved supplier are always the cheapest available. Agencies reported the approved supplier was not always able to match or better quotes from other travel providers. Getting the best possible deal is important to agencies and motivates them to use whole of government procurement contracts.
    Recommendation

    DFSI should monitor agency use of, and seek feedback about government contracts and ensure compliance does not result in higher costs.

    Agencies require clearer guidance on how they should manage airline loyalty schemes

    In accordance with the new policy, two agencies allow public officials to manage their bookings using personal airline loyalty schemes. However, only one agency believes it has processes in place to ensure airline loyalty points accrued from official travel are not used for personal benefit and private travel. No agency reported having systems and processes that ensure public officials do not retain unused airline loyalty points accrued from official travel after they leave the sector.

    Recommendation

    DFSI should set clearer expectations and guidance about the processes agencies can put in place to limit the personal benefits public officials might obtain through airline loyalty schemes.

    Most agencies are transitioning to payment of actual travel expenses

    Twelve participating agencies report having implemented, or being in the process of implementing payment of actual travel expenses rather than per diems to reduce agency travel costs. In some instances, conditions in workplace Awards and employee contracts impede progress. This is possibly the biggest single area where compliance with government policies will reduce travel costs. This will save costs, ease administration and more fairly record the travel related costs.

    Recommendation

    Agencies should work towards reform of workplace arrangements to transition to travel entitlements based on an actual rather than per diem basis.

    Agencies report having better travel management systems and information

    All participating agencies reported having:

    • implemented appropriate records management systems to comply with the new policy
    • better tracking and reporting of public official’s travel
    • appropriate controls over the booking of private travel by public officials where it is an adjunct to their official travel.

     

      
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    1. Introduction

    1.1 NSW Government travel policies

    The NSW Government travel policies that form the criteria for this audit are:

    • Policy on Official Travel within Australia and Overseas’ issued by the Department of Premier and Cabinet in Circular OFS-2014–07 ‘Official Travel in Australia and Overseas’ (the former policy)
    • ‘NSW Government Travel and Transport Policy’ issued by the Department of Finance, Services and Innovation (DFSI) (the new policy), which became effective from 28 September 2016.

    The former policy covers all official air travel by public officials using public money. The new policy is broader than the former policy, and includes similar requirements for domestic and overseas air travel. It provides agencies with an overarching framework to base development of their own policies and guide their travel and transport decision making.

    NSW Government travel policies apply to all NSW Government departments, other public sector organisations and services reporting to a minister. State owned corporations (SOCs) and Public Trading Enterprises (PTEs) are encouraged to adopt these policies.

    ‘Official travel’ refers to where a NSW public sector agency, responsible to a minister, uses public monies to pay for the travel of a public official or any other person.


    1.2 Benefits of Compliance

    The key objectives of whole of government approaches to contracting are to:

    • ensure agency spending achieves the best value for money outcomes for the State
    • promote timely and effective implementation of government policy decisions and ensure agencies and public servants are responsive to the elected government
    • deliver an expected volume of transactions to the approved supplier under their government contract. DFSI estimates savings would exceed $10.0 million per year if agencies consistently booked their official travel through the government’s approved supplier
    • provide agencies with an overarching framework to base their own policies, guide travel decisions and avoid ‘re inventing the wheel’. Whole of government policies are designed to incorporate government values into agency cultures
    • promote and maintain transparency in agency purchasing decisions and ensure official travel decisions are recorded, open and transparent, and stand up to scrutiny.

     

    1.3 Scope of audit

    The audit covered systems and processes at 15 agencies with significant travel expenditure, including DFSI, which is responsible for the administration of government travel policies and managing the contract with the approved supplier. Appendix two lists the participating agencies.

    Procedures were designed to conclude whether, in all material respects, agency processes for ensuring compliance with the NSW Government travel policies are effective.

    Our procedures included:

    • auditing agencies’ compliance with the former policy for the year ended 30 June 2016
    • analysis of agency self assessments of their compliance with the new policy, which became effective from 28 September 2016
    • enquiries and examination of evidence supplied by DFSI about their contract management of the approved supplier and their support of agencies.

    The scope of this audit did not cover the following parties not subject to the government travel policies and whose audit is outside the mandate of the Auditor General:

    • official travel by Ministers and their staff. The Ministers’ Office Handbook maintained by the Department of Premier and Cabinet guides their official travel decisions \
    • individuals or employees of organisations who provide services as contractors to a public sector organisation or service.

     

     

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    2. Findings from our audit of agency compliance with the former policy

    2.1 Some agencies did not always book official travel through the government's approved supplier

    Recommendation

    DFSI should work with agencies and clusters to overcome impediments to agency participation and maximise savings.

      
    Whole of government contracts leverage the government’s purchasing power and deliver better value for money. Success of these contracts depends on agency participation, hence agency compliance is essential.

    Section 1.1 of the former policy required agencies to book official travel through the NSW Government’s approved supplier under Contract 1008 Travel Management Services, a contract DFSI negotiated for use by all government agencies.

    We found seven participating agencies did not always use the government’s approved supplier to book official travel. We also found a further four Local Health Districts did not register with, or book any official travel through the government’s approved supplier. However, the Ministry of Health (the Ministry) advises all four Local Health Districts have now either transitioned or are in the process of transitioning to the government approved supplier.

    If agencies do not adopt the government policy and/or use other suppliers to book official travel:

    • they may not achieve the best value for money because they do not take advantage of discounted air, accommodation and car hire rates
    • whole of government procurement contracts fail to deliver planned savings to the NSW public sector as a whole and are less attractive to potential suppliers
    • agency travel policies may not align with government policy decisions, nor reflect government values.

    Use of the Government’s approved supplier

    We sampled over 240 transactions across the 15 participating agencies. All sampled transactions at the two State owned corporations (SOCs) showed consistent use of the government’s approved supplier to book official travel. Eighty eight per cent of sampled transactions at the ten Departments we audited used the approved supplier. We found only 29 per cent of sampled transactions at the three other government bodies we audited used the approved supplier.

    The graph below summarises the compliance rates of different agency types in our sample regarding the use of government’s approved supplier.

    use of government approved travel graph_Travel Policies_November2017

     

    2.2 Some agencies had control weaknesses in their travel approval processes 

    Recommendation

    The government’s newly appointed provider’s service offering includes a travel tool that automatically records key information fields and approvals. Agencies should use this tool to enhance internal processes, avoid control weaknesses and better document their travel decisions.

      

    We found issues in recording travel approvals at eight participating agencies. These included one or more of the following control deficiencies:

    • official travel was not approved by a delegated officer
    • written approval was obtained after official travel was undertaken. Sections 2.3.1 and 2.4.1 of the former policy required written approval prior to any official travel being undertaken both within Australia and internationally
    • travel approval forms were not dated, making it impossible to ascertain whether approvals were obtained prior to official travel being undertaken.

    In addition to the above, one agency did not obtain appropriate approvals where actual costs exceeded the pre approved expenses. Control deficiencies increase the risk of unauthorised travel by public officials and financial loss at agencies.


    The following graph summarises the magnitude of each travel approval issue identified in our sample.

    summary of travel approval issues chart_travel policies_November2017

    Lack of appropriate approval for travel was the most common internal control deficiency

    Lack of appropriate approval by a delegated officer for a public officials’ travel was by far the most common deficiency. Control deficiencies were most likely to be found in Departments, which accounted for the nearly all of our findings relating to internal control deficiencies. We identified no internal control deficiencies in travel approval processes at SOCs, which as noted at 2.1, were also the most compliant participants in this audit.

     

    2.3 NSW Health agencies maintain additional policies to deal with travel related employee entitlements

    Recommendation

    Agencies with policies that are inconsistent with government travel policy should address the points of difference, or obtain approval for policy departures from the relevant minister.

     

    NSW Health agencies’ policy frameworks offer special travel conditions to deal with entitlements under the Awards

    Lack of alignment between agency and government policies reduces the effectiveness of whole of government contracting and policy making. The Ministry of Health (the Ministry) maintains the following policies that deal with travel:

    • PD2016_010 ‘Official Travel’ (Official Travel policy)
    • PD2016_043 ‘Training, Education and Study Leave (TESL) for Staff Specialists’ (TESL policy).

    NSW Health agencies must comply with the Ministry’s policy directives. The Ministry’s Official Travel policy is broadly consistent with the government travel policy.

    The Official Travel policy covers sponsored travel that is paid for directly by external parties, such as universities and pharmaceutical companies. The sponsored travel is undertaken while the public official is on duty. NSW Health agencies consider the funding for this travel is outside the definition of ‘public money’ and therefore beyond the scope of the government travel policy.

    The TESL policy departs from the government travel policy in respect of staff specialists’ travel for study and educational purposes. Staff specialists’ Award conditions at NSW Health agencies contain TESL allowances, which form a significant part of their package of employment conditions. These allowances can be used for TESL related travel. Award conditions are backed by legislation and can be difficult to change.

    If the Ministry determines departure from the government policy to accommodate the TESL arrangements is unavoidable, approval should be sought from the minister responsible. Departures increase the risk the government does not maximise the benefit from central policies and does not achieve the best value for money from its travel contracts.

    The TESL policy allows Staff Specialists at NSW Health agencies to:

    • travel business class for domestic and overseas trips. Under the government travel policy, only CEOs, Senior Executive Service Officers, Statutory Officers, Senior Officers, Chairpersons of NSW Government boards and committees, and officials travelling with a minister or a government delegation may travel business class to Western Australia, the Northern Territory and overseas
    • take private leave in conjunction with TESL related travel (e.g. conference attendance). Under the government travel policy, each public official taking private leave while on official overseas travel, or extending private trips for official purposes must apply in writing to the portfolio minister. Applications will be considered individually on their merits
    • earn personal frequent flyer membership points on TESL related airfares, which are booked outside of Qantas or NSW Government travel contract. However, these points must be used for other TESL related purposes. The government travel policy also allows earning of frequent flyer membership points subject to approval of the relevant Secretary or delegate. Refer to section 3.3 for more details on airline loyalty schemes
    • submit a written quote from an alternate travel agent to book travel if the government’s approved supplier is unable to price match the alternate travel agent’s quote, or fails to respond to the alternative quote within three business days. government travel policy requires agencies to book all domestic and overseas official travel through the government’s approved supplier.

     

    2.4 Most agency records management systems did not retain adequate travel documentation

    Recommendation

    Agencies’ records management processes should ensure documentation is sought and retained to support the validity of options selected for public officials’ travel.

      

    Ten participating agencies could not provide sufficient evidence to support various aspects of public officials’ travel, including whether:

    • travel was appropriately approved before the travel was undertaken
    • the purpose of official travel was for government business
    • agencies selected the lowest logical fare and/or restrictive fare
    • the class of travel used was appropriate and in accordance with requirements
    • private leave was requested and approved as an adjunct to a public official’s overseas travel
    • travel expense claims were valid and/or correct
    • approval was granted for an exemption from using NSW Government’s approved supplier to book domestic travel.

    Without a robust travel records management process, agencies may not meet community expectations in terms of transparency, accountability and value for money in their public officials’ travel arrangements.

    The main reasons agencies could not provide documentation for travel records include:

    • agencies did not use the approved supplier’s booking tool, which automatically records required fields of information making record keeping more complete
    • DFSI transitioned to the new approved supplier in March 2016. Travel records retained by the previous approved supplier were difficult to access and retrieve
    • staffing changes at agencies
    • decentralised travel booking processes and distributed databases.

       

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    3. Findings from our survey of agency compliance with the new policy

    We asked the 15 participating agencies to complete a self assessment of the processes they have implemented to comply with the new policy. The key observations are summarised below.

    3.1 Self assessments show agencies believe they mostly comply with the new policy

    Nine participating agencies believe they have fully implemented processes to comply with the new policy. Five participating agencies have partially implemented processes to comply with the new policy. Only one agency has not implemented processes to ensure it complies.

    Agency self assessment rating chart_Travel Policies_November 2017

    Agencies self assessed as highly compliant with the new policy. The self assessment was a significant improvement over the results of our audit of their compliance with the former policy. More advanced online booking and reporting tools provided by the government’s new approved supplier may have contributed to the improved outcome.

    The government’s new approved supplier is well utilised

    All 15 participating agencies claimed they now use the new NSW Government’s approved supplier to book they official air travel. This represents a significant improvement compared to our audit of their compliance with the former policy and the use of the previous approved supplier’s services, where we found seven participating agencies did not always book official air travel through the government’s approved supplier (refer to 2.1).


    3.2 Most agencies do not believe complying with the new policy reduces travel costs

    Agencies report the approved supplier does not always get them the best deal

    Recommendation

    DFSI should monitor agency use of, and seek feedback about government contracts and ensure compliance does not result in higher costs.

     

    Getting the best possible deal is important to agencies. Cheaper prices prove the case for whole of government procurement contracts.

    Agencies and public officials are motivated to comply where they are convinced the government’s approved supplier consistently provides them with the best deal. However, agencies report the approved supplier is not always able to match or better quotes from other travel providers. In particular, if agency staff are based overseas and need to travel domestically or internationally, it is cheaper to book travel from the country of origin rather than use the approved supplier.

    Travel costs represent a relatively small portion of individual agencies’ budgets. Some agencies do not believe compliance with the new policy will result in significant cost savings.

     

    3.3 Agencies require clearer guidance on how they should manage airline loyalty schemes

    Public officials manage their bookings to change seats and flights and pre order in flight catering using their personal loyalty scheme details. However, in doing so a personal benefit (in terms of loyalty points) may accrue to individuals. The government policy requires agencies to put in place processes to prevent public officials obtaining a benefit from travel undertaken in their private capacity.

    Recommendation

    DFSI should set clearer expectations and guidance about the processes agencies can put in place to limit the personal benefits public officials might obtain through airline loyalty schemes.

     

    Only two agencies permit the use of airline loyalty schemes

    Thirteen participating agencies have not yet developed travel policies that allow public officials to accept loyalty or frequent flyer points in respect of official travel. Where public officials accrue airline loyalty points from their official travel, these points are to be used to pay for further official travel. Public officials must not use these points for personal travel or other personal benefits.

    The approved supplier’s system allows the use of airline loyalty schemes, but has limited ability to track its use

    The approved supplier’s system can only report on:

    • travellers who have a membership number loaded into the approved supplier’s system, but not the actual membership numbers
    • bookings made through the approved supplier utilising frequent flyer points
    • when frequent flyer points are used to pay for business travel.

    The approved supplier cannot report on frequent flyer points accrued or utilised for official travel. 

    Agencies find setting policy for the use of airline loyalty schemes difficult

    Only two participating agencies reported permitting the use of airline loyalty schemes. Only one agency believes it has processes in place to ensure airline loyalty points accrued from official travel are not used for personal travel or other personal benefits. This agency requires staff to maintain records of flights and points used, which are declared each year as part of the private interest declaration process. However, this agency also emphasised personal frequent flyer accounts are the private records of public officials. Frequent flyer membership is held in an individual’s name, and there is a direct relationship between the individual and the airline.

    DFSI’s Frequently Asked Questions for frequent flyer points and loyalty programs acknowledges business versus private frequent flyer point usage cannot be policed. It expects travellers will be honest in their declaration and use of points.

    Section 2.3.6.1 of the new policy requires public officials to sacrifice any points accrued from official travel when their employment is terminated or their appointment ends. No agency reports having systems and processes to deny terminated public officials the use of airline loyalty points accrued from their official travel.
    Agencies believe the administrative burden of managing their public officials’ personal scheme points would outweigh the benefit. Some agencies questioned whether the use of airline loyalty scheme will result in any saving, given the amount of travel required to generate a free flight.

    The new policy permits public officials to accept loyalty or frequent flyer points from any airline in respect of official travel, with approval of the relevant Secretary or delegate. This was not allowed under the former policy and may relieve the compliance burden, but does not address concerns about accrual of personal benefit to public officials.

     

    3.4 Agencies are transitioning to payment of actual travel expenses

    Twelve agencies are implementing payment of actual travel expenses

    Recommendation

    Agencies should work towards reform of workplace arrangements to transition to travel entitlements based on an actual rather than per diem basis.

     

    Agencies are encouraged to reimburse actual travel expenses rather than pay per diems, wherever possible. This will save costs, ease administration and more fairly record the travel related costs. Twelve participating agencies have implemented or are in the process of implementing internal policies to pay only actual travel expenses. For some agencies, including the Department of Education and Water NSW, per diem payments remain an entitlement under employee Awards. The process of changing Awards is difficult, but where implemented offers benefits including:

    • lower accommodation cost the actual cost per night is usually less than the per diem entitlement
    • GST benefits – agencies can claim input tax credits on a tax invoices, but not on a per diem payments
    • more efficient process – submitting and processing public official’s travel expense claims is time consuming. Actual expenses can be paid through agencies’ accounts payable systems
    • better duty of care – agencies can use travel itineraries to quickly locate their public officials in emergencies. This allows agencies to better attend to public officials’ needs and discharge their duty of care
    • more extensive travel reporting – agencies can now provide full transparency by reporting total actual travel costs. a

     

    3.5 Agencies report having better travel management systems and information

    Agencies report having processes to manage their travel records

    All participating agencies believe they now have systems and processes in place to ensure they properly obtain and retain supporting documentation for all travel expenses in accordance with the requirements of the new policy. This represents a significant improvement compared to our audit of agencies’ compliance with the former policy, where we identified issues with travel records management in more than half of participating agencies (refer to 2.4).

    Agencies report they are collecting and receiving better travel data

    All participating agencies have systems and processes in place or are implementing processes to collect appropriate travel data which allows ongoing analysis of whether:

    • travel expenditure is being managed appropriately
    • travel decisions meet the strategic needs of the agency.

    The approved supplier provides a Strategic Travel Management Review, which it reports to agencies on quarterly basis. This report includes useful information, such as total savings on airfares, lost savings, average hotel spending and top ten travellers by expenditure. It allows agencies to analyse their travel expenses and make better travel decisions. Agencies can also run a suite of the approved supplier’s standard reports to meet their data analysis needs.

    Agencies report they have processes to manage private travel as an adjunct to official travel


    More than half of the selected agencies allow private travel as an adjunct to official travel. Only three agencies use government’s approved supplier to book private travel. These agencies believe they have systems and processes to manage private travel booked through the approved supplier and ensure that:

    • NSW Government rates offered by the approved supplier are not applied to private travel
    • private travel is paid for separately at the time of booking from the public official’s private funds
    • the private booking is made at the same time as the booking for official travel
    • a government issued credit card or other account is not used in any circumstances.
       

     


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    Appendixes

    Appendix one: Responses from agencies

    Appendix two: List of selected agencies

      

     

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