While grant programs cost the Commonwealth government up to $50b a year, only 57% of government agencies have risk management processes in place and almost a third do not have proper guidelines finalised prior to the grant being approved, new research reveals.
According to Protiviti managing director Mark Harrison, his organisation’s research shows that widely-reported cases of failed grants programs continue to raise concerns that effective grants administration remains a challenge for many agencies.
So what are the common challenges that these agencies face, and are they also areas of concern for your organization?
“The greatest challenges for agencies are a lack of consistent practical guidance, poor grant administration skills, relatively weak governance and quality assurance frameworks, and the absence of a single supporting IT system,” said Harrison.
“There is a strong view that a consistent ‘whole of government’ approach articulating clearer best practice models and better implementation tools for grants management would improve the quality of the process and remove inefficiencies inherent in each agency having to ‘reinvent the wheel’.
“Some of these issues can be addressed by direct agency initiatives while others call for longer-term, ‘whole-of-government’ solutions to achieve lasting results.”
The research also found that program evaluation at the end of the grant term was tokenistic, with only half of the agencies surveyed using performance measures to assess the success of grant programs.
Equally, over half of the agencies reported that checks were performed on less than 16 per cent of grant programs, indicating that grants have a relatively low priority on the agency’s risk radar.
“Agencies believe that a ‘whole-of-government’ solution coordinated by the Department of Finance & Deregulation is the answer to achieving comprehensive and lasting improvements in the grants process.
“However, this may require a shift in the Department of Finance’s philosophy which to date, has tended to devolve discretion to individual agencies, rather than impose centralised approaches. This of course won’t happen overnight, but given the considerable amounts of taxpayer funds involved, changes must happen,” said Harrison.
Practical actions agencies can take to enhance their grants management process include:
Strengthen grants risk management: Proactive risk management before the commencement of any grants program can improve its chances of success. This involves identifying and prioritising the main risks the program is likely to face throughout its lifecycle in a bid to anticipate problems and develop control strategies to mitigate or prevent them from occurring.
Improve assurance reviews: Agencies should ensure their grants initiatives receive appropriate priority in internal audit and other assurance review programs. This can help with early identification of implementation problems and control weaknesses.
Strengthen capability: Establish internal training and minimum capability descriptions for grants administration personnel.
Increase planning and focus on evaluation: as a requirement across the Australian Government, there is a requirement that focus on evaluation be increased to provide greater assurance of outcomes and lessons to be learned for future grant programs.
Options for standardising the quality of grants management include:
Establishing a more significant central grants advisory function within the Department of Finance. A suitable model may be the Office of Best Practice Regulation within the Department of Finance which promotes the Australian Government’s objective of effective legislation by advising agencies on appropriate quality control mechanisms for the development of regulatory proposals, providing relevant training and guidance to agency officials, reporting annually to the Government on compliance with quality benchmarks and the like.
Creating a dedicated grants agency responsible for all government interactions with grant applicants. This is already occurring at a ‘micro’ level within the Department of Industry, Innovation, Science, Research and Tertiary Education, which has established ‘AusIndustry’, a specialist division which delivers over $2 billion in business grants a year. AusIndustry has developed strong expertise and functions as a kind of ‘centre of excellence’ for grants administration within the department.