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Accrual Accounting:
the system of accounting in which items are brought to account as they are earned or incurred (and not necessarily as money is received or paid) and included in the financial statements for the accounting periods to which they are related.
Additional Estimates:
a Government process to update the annual Budget for the Department for issues which have emerged since it brought down the Budget.
Administered Appropriation:
revenues, expenses, assets and liabilities administered by an agency for the Commonwealth generally (such as taxes, benefits payments and public debt) which are not concerned with running the agency or its commercial activities.
Administered Items:
resources administered on behalf of the Commonwealth, including grants, subsidies and benefits. Such resources may be used by third party organisations.
assets, liabilities, revenues and expenses which are controlled by Defence or a subsidiary. Includes officials allocated to the department.
is an authorisation by Parliament to spend money from the Consolidated Revenue Fund.
future economic benefits controlled by Defence as a result of past transactions or other past events. Physical assets are initially recognised at the cost of acquisition. They are periodically revalued on the basis of their written-down current replacement cost.
Australian Accounting Standard (AAS):
Australian Accounting Standards specify techniques of accounting practice and the method of presenting financial information about a reporting entity.
Balanced Scorecard:
an approach to performance measurement that translates an organisation's strategic objectives into a useful set of performance measurements. It supplements the traditional financial measures with information on three additional perspectives of organisational performance: customer satisfaction, internal business processes, and innovation and learning. The Defence version is known as Defence Matters.
Business Plan:
the operational plan for the organisation which sets in place the specific strategies and action plans which will enable the organisation to achieve its overall corporate plan targets.
Capital Budget:
all proposed capital expenditure funded by appropriation for outputs, by equity injections or loans and/or appropriations for administered capital, or by other sources.
Capital Use Charge:
the Government's required return, or dividend, on its capital investment in departments. The objective of this charge is to better reflect the true costs of outputs and to encourage good asset management practices. The Capital Use Charge is imposed by multiplying the closing net assets (ie. total assets minus total liabilities) of Defence by the Government-specified rate of 12 per cent, based on the long-term bond rate (currently around 6 per cent) plus a margin of risk (6 per cent). The charge ceased on 30 June 2003.
Chief Executive Instruction:
instructions issued by the Chief Executive of Defence for the administration of the department. These instructions are issued under the authority of the Financial Management and Accountability Act 1997 and carry the force of the law.
Chief of the Defence Force's Preparedness Directive:
see Preparedness Concepts and Planning.
Combined Exercise:
an exercise/activity involving one or more Services of the ADF with the forces of other countries.
Customer-Supplier Arrangement:
an agreement between internal customers and suppliers for the supply of a service at an agreed quantity, standard and price.
Defence Assistance to the Civil Community:
is a program which provides Defence resources, in exceptional circumstances, for the performance of emergency or non-emergency tasks which are the responsibility primarily of the civil community. While a high priority is given to civil emergencies and natural disasters where lives or property are at risk, other tasks include flyovers and displays at significant public events and various support tasks for local authorities and charitable organisations around Australia.
Defence Matters scorecard:
see Balanced Scorecard.
Defence Management and Finance Plan:
this is extracted from the Defence Plan and will form part of the Portfolio Budget submission to Government.
Defence Plan:
Defence's principal internal planning document which satisfies whole-of-Government budget requirements. It provides a 'whole-of-business' focus with important links between the strategic resource and capability planning.
Departmental Items:
resources directly controlled by Defence including salaries, allowances, military equipment and costs associated with the Defence organisation. Such resources, including outsourced activities funded and controlled by Defence, are used to produce outputs for the Government.
any Australian Public Service (APS) officer of Defence or serving Defence force member who receives a salary or wage, along with other benefits, for the provision of services whether on a full-time, part-time, permanent, casual or temporary basis.
Equity Injection:
an additional contribution to Defence by the Commonwealth as owner. It is determined on the basis of the amount additional to the departmental output appropriation required to fund Defence up to the Government-agreed level of global funding. Within Defence's global flexibilities, the injection can be used for any purpose that increases the net assets of Defence. The injection is not tied to any specific capital projects.
consumptions or losses of future economic benefits, in the form of reductions in assets or increases in liabilities of Defence, other than those relating to distributions to the Commonwealth, that result in a decrease in equity during the reporting period.
Financial Management and Accountability Act 1997:
the Act replaced the Audit Act on 1 January 1998. It establishes the regulatory framework for financial management within Defence and other public sector agencies. Agencies are agents of the Commonwealth, in that they do not own monies or assets separately from the Commonwealth.
Force Element:
a component of a unit, a unit or an association of units having common prime objectives and activities.
Force Element Group:
a grouping of force elements with an appropriate command and control structure for a specified role or roles.
Force Structure:
see Preparedness Concepts and Planning.
Forward Estimates:
the level of proposed expenditure for future years (based on relevant demographic, economic and other future forecasting assumptions). The Government requires forward estimates for the following three financial years to be published in each annual Budget paper.
an organisational grouping of functions and activities used by the Defence Executive as its primary management grouping.
ancillary items owned, leased or otherwise under the control of Defence in support of activities on land and within buildings. Infrastructure includes items such as runways, roads, car parks, parade grounds, ovals, lighting, water, sewerage and other general service related items. It does not include land upon which, or within which, it is constructed or those fixed items integral to, and under buildings.
the ability of systems, units or forces to provide the services to, and accept services from, other systems, units or forces and to use the services so exchanged to enable them to operate effectively together.
Joint Exercise:
an exercise/activity involving two or more Services of the ADF.
sacrifices of future economic benefits that Defence is presently obliged to make to other entities as a result of past transactions or other past events.
Military Capability:
see Preparedness Concepts and Planning.
Other Property, Plant and Equipment:
comprises the following sub classes; Administrative Assets, Commercial Vehicles, General Military Assets, Heritage Assets and Other (includes all items not specific to one of the classes or sub-classes referred to above and can include testing equipment and non-specific non rotable spares.)
the result, impact or consequence of actions by the Australian Government for the Australian community, including for the Government, in return for appropriations to deliver outputs.
the product or service produced by Defence.
Portfolio Additional Estimates Statements:
similar to the Portfolio Budget Statements and prepared at Additional Estimates time to support an update on the Government's original annual Budget for the Department.
Portfolio Budget Statement:
a document presented by the Minister to Parliament to inform Senators and Members of the basis for the Defence Budget appropriations in support of the provisions in Appropriation Bills 1 and 2. The statements summarise the Defence Budget and provides detail of Output performance forecasts and resources in order to justify expenditure for Defence.
Preparedness Concepts and Planning:
Military capability is achieved by developing a force structure appropriately prepared for operations. Preparedness is a measure of how ready (readiness) and how sustainable (sustainability) the ADF is to undertake military operations. Preparedness, therefore, is of fundamental importance to Defence, which must be able to manage it effectively and communicate its status to the Government.
Directed Level of Capability (DLOC):
the funded level of capability maintained during a specified budget period. DLOC is formally agreed in organisational performance agreements between the Chief of the Defence Force/Secretary of Defence and each of Defence's six Output Executives. DLOC captures the levels of capability to be maintained to meet preparedness, ongoing operations, and known national task requirements.
Force Structure:
the type of force required - personnel, equipment, facilities and military doctrine - to achieve the operational level of capability necessary to conduct operations effectively.
In the medium to long term, military capability will vary due to changes in force structure generated by the capability development process. In the short term, force structure is the more constant component of military capability and the level of capability available for operations is determined by Defence's management of preparedness of the current force.
Changes to force structure usually affect on the preparedness of the associated forces. For example, the introduction of a new platform, retirement of an old platform or capability enhancement will have a direct impact on the resource, training and facility requirements of the forces involved.
Military Capability:
the two levels of military capability specified for forces within the ADF are derived from the concept of maintaining forces at an appropriate minimum level of capability (or MLOC) in peacetime to ensure that those forces are ready to work up to an appropriate higher level of task-specific capability (or operational level of capability - OLOC), within a given time, in order to conduct operations effectively.
The maintenance of a force at a higher level of preparedness or at an operational level of capability for a prolonged period is resource intensive. Defence balances the mix of capabilities, or outputs, from within its budget to meet Government tasking priorities.
Preparedness Planning:
the preparedness planning process begins with a strategic appreciation involving an analysis of the national security objectives which are specified in Government guidance. These objectives are considered against current strategic circumstances and defence policy. In the light of this appreciation, military strategies are developed or refined to achieve the objectives. Military strategic objectives and military response options are then derived from the military strategies and are used to provide preparedness planning guidance.
the readiness of forces to be committed to operations within a specified time, dependent on the availability and proficiency of personnel, equipment, facilities and consumables.
the ability to provide personnel, equipment, facilities and consumables to enable a force to complete the needed period of operations.
The Chief of the Defence Force's Preparedness Directive:
a principal strategic-level directive containing strategic planning guidance. It lists military response options and sets preparedness requirements. It informs all subordinate preparedness directives at the operational level, which set specified levels of preparedness and contain the capability standards against which force units measure and report.
The implementation of preparedness involves the allocation of resources to the current force to ensure that preparedness objectives can be met and managed properly. The evaluation and reporting of preparedness ensure that there is regular feedback in the process and that objectives and resource allocations are refined as necessary.
Qualifying Assets:
assets under construction.
see Preparedness Concepts and Planning.
inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of Defence, other than those relating to contributions by the Commonwealth, that result in an increase in equity during the reporting period.
Risk Management:
at the highest level, it involves the identification and mitigation of those risks that have the potential to affect adversely the achievement of agreed output performance at the agreed output price.
Specialist Military Equipment:
items of a specific military nature and that are not available though the normal external market in their current form to other than government military purchasers. It includes the prime military equipment plus the direct support items associated with the equipment.
see Preparedness Concepts and Planning.
the area in which military operations/activities take place.
Write Offs:
the recording in the accounting records of losses of public moneys, irrecoverable and uneconomic to recover debts, overpayments and revenues and losses of public property.