4.1 CORPORATE GOVERNANCE

In accordance with section 10 of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule), the ARC CEO must take all reasonable measures to prevent, detect and deal with fraud relating to the agency. No instances of fraud were identified in 2018–19.

The ARC recognises the need for a sound and robust financial framework based on legal and ethical decision-making. Management has a key responsibility to ensure that the ARC's assets are safeguarded against loss by fraud or negligence. ARC staff are required to implement and adhere to fraud control procedures and report all instances of suspected fraud.

The ARC Fraud Control Plan complies with the Australian/New Zealand Standard for Risk Management (AS/NZS ISO 31000: 2009) and the Commonwealth Fraud Control Framework 2014. The plan was reviewed and updated in April 2018 and is due to be reviewed again in 2020. All potential fraud incidents are followed through until a resolution is achieved. The Chief Financial Officer reports all potential fraud incidents or changes to fraud risk at each ARC Audit Committee meeting.

Senior executive and their responsibilities

At 30 June 2019 the ARC had eight senior executive staff: the CEO; Executive General Manager; Branch Manager, Policy and Strategy; Branch Manager, Corporate Services; Branch Manager, Research Excellence; and three Executive Directors. Executive Directors are academics drawn from the higher education and research sectors usually for a period of between three and five years.

In addition to the senior executive staff, the ARC had three senior staff at 30 June 2019—the Chief Information Officer, Chief Financial Officer and Acting Chief Program Officer.

There were three significant changes to the ARC's senior executive over the 2018–19 period. Ms Leanne Harvey ended her term as Executive General Manager on 3 December 2018. Dr Tony Willis commenced on 11 February 2019 as the new Executive General Manager. Professor Stephen Buckman ended his second term as an Executive Director on 24 June 2019.

Responsibilities

ARC committees and their roles

The ARC's committees support activities across four key areas:

• governance
• administration of the NCGP
• administration of ERA and the EI assessment
• research integrity matters arising from ARC-funded research.

Governance

Senior Management Group

The Senior Management Group (SMG) supports the CEO to deliver her responsibilities under the ARC Act, the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Service Act 1999. It oversees management of the ARC, monitors and reviews the agency's operations and ensures effective communication of the ARC's priorities to all business areas.

The SMG generally meets every two weeks and consists of: the CEO; Executive General Manager; Branch Manager, Policy and Strategy; Branch Manager, Corporate Services; Branch Manager, Research Excellence; Chief Information Officer; Chief Financial Officer; Chief Program Officer; and Director, People and Services.

During the year, the following management committees reported through the SMG to the CEO:

• Business Continuity Plan Committee, which ensures that the Business Continuity Plan (BCP) remains current and practical, and is tested on a scheduled basis to minimise the likelihood and/or consequence of any potential risk exposure to the ARC's core business processes
• Delta Project Board, which provides oversight in relation to scope, budget, risk management and scheduling for ICT work packages
• Diversity Working Group, which integrates diversity and equity matters into workplace practice
• ICT Change Control Committee, which approves changes to ICT applications and infrastructure, and coordinates the release of these changes
• ICT Technology Governance Committee, which reviews the ARC's ICT service requirements, and provides recommendations on priorities for the ICT Services Branch
• Information Governance Committee, which ensures a consistent, systematic and whole-of-agency approach to managing information
• People Management and Development Committee, which provides a forum for the ARC to consult with employees and their representatives about workplace issues
• Planning and Reporting Committee, which provides advice on all elements of the ARC's planning and reporting framework
• Program, Strategy and Executive Committee, which provides advice and recommendations on policy and programs as they relate to the NCGP
• Research Integrity Review Committee, which considers and makes recommendations on precautionary and consequential actions taken under the ARC's Research Integrity Policy
• Security Committee, which oversees adherence to physical, personal and Information Technology (IT) security measures
• Work Health and Safety Committee, which develops and promotes initiatives to protect the health and safety of employees, contractors and visitors through the implementation and review of the ARC's work health and safety policies and practices.

Audit Committee

The Audit Committee provides the CEO with assurance by independently reviewing the ARC's financial and performance reporting responsibilities, systems for internal control, risk management and corporate governance.

The Audit Committee is established by the CEO in compliance with the PGPA Act and PGPA Rule (section 17). Its functions and responsibilities are detailed in the ARC Audit Committee Charter, which is reviewed annually or as required. Members are a mix of internal and external appointments who collectively possess a broad range of skills and experience relevant to the operations of the ARC (Table 2). During 2018–19 the Audit Committee held five meetings.

ARC Advisory Council

The ARC Advisory Council provides strategic advice to the CEO on issues relating to the purpose of the ARC. This includes feedback on: strategic planning; policy matters relating to innovation, research and research training; and the evaluation of the quality and outcomes of research and research training in an international context.

The Advisory Council is chaired by the CEO and comprises up to nine additional members appointed by the CEO on the basis of their distinguished academic research records or achievements in business research and development (Table 3). Seven new members of the Advisory Council commenced their appointment on 1 July 2018. The Advisory Council met twice in 2018–2019, on 6 November 2018 and 13 March 2019.

Administration of the National Competitive Grants Program

ARC College of Experts

The ARC College of Experts (College) plays a key role in identifying research excellence, moderating external assessments of grant applications and recommending projects to be funded. The College is comprised of a diverse, experienced and highly qualified membership of international standing, drawn from academia, industry and public sector research organisations. New members are announced annually for terms of up to three years, ensuring a consistent source of expertise. At the discretion of the ARC, extensions of up to one year may be offered to ensure that available expertise reflects the range of applications being submitted.

The College comprised 194 members in 2019. On 26 October 2018 the ARC announced 78 new members of the College for 2019, where strong emphasis was placed on interdisciplinary expertise, as well as the representation of a wide range of research areas. This year, to ensure that the available expertise reflects the range of applications received by the ARC, three existing members received extensions to continue as members of the College. A list of members is on the ARC website, www.arc.gov.au > About > ARC Profile > ARC Committees > ARC College of Experts.

Selection Advisory Committees

Selection Advisory Committees (SACs) recommend to the CEO which applications should be funded, and how much funding successful applications should receive. The size and structure of each SAC is influenced by the nature of the grant opportunity and the volume of applications. SACs may comprise College members and/or other distinguished academic researchers and members from end-user communities. The membership of each SAC remains confidential until funding outcomes are announced.

For most schemes, the SAC will be divided into three, four or five broad disciplinary panels. For specialist or highly prestigious schemes such as the Australian Laureate Fellowships, Linkage Infrastructure, Equipment and Facilities, Industrial Transformation Training Centres, Industrial Transformation Research Hubs and ARC Centres of Excellence (CoE) schemes, the SAC consists of a single interdisciplinary panel.

National Competitive Grants Program Appeals Committee

The NCGP Appeals Committee considers appeals submitted to the ARC in relation to the NCGP and makes recommendations to the CEO about whether appeals should be upheld or dismissed. This committee also provides general advice to the ARC about modifications and improvements to the ARC's administrative processes. It consists of external members appointed by the CEO. The 2018 members were Emeritus Professor A Cheetham (Chair), Emeritus Professor H Bachor and Professor L Johnson. In 2019 the members were Dr K Anderson, Emeritus Professor H Bachor, Ms E Carroll and Emeritus Professor B Lohmann. The NCGP Appeals Committee met three times in 2018–19.

National Competitive Grants Program Eligibility Committee

The NCGP Eligibility Committee considers all eligibility issues identified for applications submitted under the NCGP. The committee—comprising ARC Executive Directors and the Branch Manager, Policy and Strategy—provides eligibility recommendations to the CEO based on the eligibility criteria set out in the relevant Grant Guidelines.

National Competitive Grants Program Scrutiny Committee

The NCGP Scrutiny Committee examines the probity of ARC assessment processes for applications submitted by SAC members and/or ARC staff. This committee comprises members appointed by the CEO. In 2018 the members were Professor A Wells (Chair), Professor D Sharma, Professor D Siddle and Mr J Withers. In 2019 the members were Professor J Fitness, Professor D Sharma, Professor D Siddle and Mr J Withers. The NCGP Scrutiny Committee met twice in 2018–19.

Medical Research Advisory Group

The Medical Research Advisory Group (MRAG) is responsible for providing additional technical advice regarding medical eligibility for selected applications under consideration by the NCGP Eligibility Committee. Where the NCGP Eligibility Committee considers that additional expertise is required to determine eligibility, the application is referred to MRAG members for written advice. Once this technical advice has been received, the NCGP Eligibility Committee determines medical research eligibility recommendations.

MRAG members may be individuals from current or past ARC Colleges of Experts or candidates with sufficient seniority to have broad overview of the research sector, with expertise in relevant Fields of Research (FoR) codes, notably (but not exclusively) biological sciences (FoR 06), medical and health sciences (FoR 11) and psychology and cognitive sciences (FoR 17).

Administration of Excellence in Research for Australia and the Engagement and Impact assessment

ERA 2018 Research Evaluation Committees

Evaluations in ERA were undertaken by Research Evaluation Committees (RECs) comprising Australian and international researchers. There were eight RECs for ERA 2018, the chairs and members of which were appointed in 2017–18. Their appointments concluded in 2018–19.

EI 2018 Assessment Panels

The assessments for EI 2018 were undertaken by panels comprising a mix of distinguished academic researchers and highly experienced research end-users. There were five assessment panels for EI 2018. Chairs for the EI 2018 panels were appointed in 2017–18, and their appointments concluded in 2018–19. EI 2018 Assessment Panel members were announced in August 2018.

ERA 2018 Scrutiny Committee

The ERA Scrutiny Committee reviewed the ERA 2018 outcomes for Units of Evaluation which could be considered to have a clearly identifiable connection with members of the ERA 2018 RECs. All Scrutiny Committee members had previously been engaged with ERA as REC members. Their appointments concluded in 2018–19.

Australian Research Integrity Committee

The Australian Research Integrity Committee (ARIC) comprises eight expert members (Table 4) and reports to both the ARC and the NHMRC. During 2018–19 the ARIC-ARC secretariat received three requests for review. It also continued consideration of four cases related to requests for review that were received in 2017–18. In relation to the seven ARIC-ARC matters active in 2018–19:

• two reviews that commenced prior to 1 July 2018 were finalised and the outcomes were communicated to the relevant parties by the ARC
• two requests for review were determined to be within the scope of ARIC. One of these reviews was finalised and the outcomes were communicated to the relevant parties by the ARC, and the other review was ongoing as at 30 June 2019
• two requests for review were determined to be outside the scope of ARIC
• one request for review was closed as other institutional processes were undertaken.

Planning and reporting arrangements

The ARC's performance measurement framework is consistent with the requirements of the PGPA Act and the enhanced Commonwealth performance framework.

The ARC's performance measurement framework ensures there is a clear line of sight between the performance criteria published in the ARC's PBS and Corporate Plan, and the performance outcomes documented in the Annual Performance Statement. Together, these documents provide the ARC's complete performance story (Figure 9).

In addition to published performance information, the ARC's performance measurement framework is supported by internal operational planning, monitoring and reporting processes.

Figure 9: External planning and reporting framework

During 2018–19 the ARC:

• published the ARC Annual Report 2017–18
• published the ARC Corporate Plan 2018–19.

Internal audit arrangements and risk management

Internal audit

An integral part of the ARC's corporate governance framework is the ARC's internal audit function. Internal audit provides an independent and objective review and advisory service, giving the CEO assurance that the ARC's financial and operational controls, designed to manage the entity's risk and achieve the ARC's objectives, are operating in an efficient, effective, economical and ethical manner. Internal audit also assists management in improving the ARC's business performance.

The ARC's internal audit function is managed by the Head, Internal Audit, who is the Branch Manager, Policy and Strategy. In 2018–19 the ARC's internal auditor was McGrathNicol Advisory Partnership.

McGrathNicol assisted in the development of an annual internal audit work plan and undertook the following audits during 2018–19:

• Timekeeping
• Protective Security: Physical and Personnel
• Protective Security: Cyber
• Recruitment and Selection for the College of Experts, Selection Advisory Committees, Excellence in Research for Australia Research Evaluation Committees and Engagement and Impact Assessment Panels.

Risk

Framework

The ARC manages risk in accordance with the PGPA Act and the Commonwealth Risk Management Policy. The ARC's Risk Management Framework is underpinned by five key components—a policy, a plan and toolkit, an operational risk register, a strategic risk register and a network of risk champions. The framework is reviewed annually by the SMG to facilitate continual improvement.

Results from the 2019 Comcover Risk Management Benchmarking Program found that the ARC continued to achieve an overall risk maturity level of Advanced. The benchmarking program concluded that the ARC had a well-established approach to managing risk, that risk management was effectively embedded into business processes and that there was a positive risk culture at the ARC.

Contribution of risk management to achieving objectives

The ARC's Risk Management Framework is designed to minimise the possibility of loss or damage to operations, staff, property, reputation and assets, while recognising opportunities to meet the stated objectives of the entity within a good corporate governance framework.

In January 2019 the SMG reviewed the ARC's strategic risks for 2018–19 to ensure that they remained relevant, and that the controls for each risk were still effective and appropriate. Following consultation with senior staff across the agency, and in parallel with strategic and corporate planning activities, the SMG finalised its strategic risks for 2019–20 in May 2019.

The ARC reviewed its operational risks in September 2018 and March 2019. This biannual activity assisted business areas to plan and deliver against the activities outlined in the Corporate Plan and the Operational Plan.

Business continuity and disaster recovery

The ARC's BCP sets out controls and contingencies to minimise the likelihood and/or consequence of any potential risk exposure to the core business processes of the ARC. It includes the ARC's ICT Disaster Recovery Plan (DRP), which is designed to safeguard and recover critical ICT systems.

In 2018–19 the ARC:

• updated the BCP
• conducted disaster recovery testing in accordance with the DRP
• enhanced data protection capabilities
• held three meetings of the BCP Committee.

Ethical standards

As a public service agency

The ARC is committed to high ethical standards. This commitment is promoted through:

• the ARC's guiding principles, which include 'accountability through transparent, efficient and effective processes and adherence to ethical standards'⁴
• the incorporation of ethical standards into ARC governance policies and guidelines
• the incorporation of ARC values into performance agreements
• an Ethics, Integrity and Fraud page on the ARC intranet site, as well as the Australian Public Service Commission (APSC) Ethics Advisory Service, www.apsc.gov.au > Working in the APS > Integrity > Ethics Advisory Service
• an ARC Ethics Contact Officer.

The ARC includes an overview and discussion of the APS Values and Code of Conduct as part of induction training for new appointees. Regular individual performance reviews provide ongoing opportunities for staff and supervisors to address ethical issues.

Data collected for the State of the Service Report Census, conducted by the APSC in 2018, showed that 77 per cent of ARC staff believed that ARC senior executives act in accordance with the APS values, compared to 71 per cent APS-wide.

The ARC is committed to preserving public confidence in the integrity, legitimacy, impartiality and fairness of its business. ARC committee members and assessors, as well as any other people undertaking ARC business, must comply with the ARC Conflict of Interest and Confidentiality Policy, which is available on the ARC website, www.arc.gov.au > Policies & Strategies > Policy > ARC Conflict of Interest and Confidentiality Policy.

As a research funding agency

ARC Research Integrity Policy

To safeguard the integrity of the ARC's processes, the ARC Research Integrity Policy requires organisations, and in some circumstances individuals, engaged in ARC business to report to the ARC on research integrity matters. This policy outlines actions the ARC may take in response to breaches of the Australian Code for the Responsible Conduct of Research (the Code). It also describes how potential breaches of the Code can be referred to institutions for investigation. The ARC Research Integrity Policy is available on the ARC website, www.arc.gov.au > Policies & Strategies > Research Integrity > ARC Research Integrity Policy.

In 2018–19 the ARC revised the ARC Research Integrity Policy to ensure its alignment to the revised Code and the Guide to Managing and Investigating Potential Breaches of the Australian Code for the Responsible Conduct of Research, 2018 (the Investigation Guide).

The ARC was notified of, or identified, 35 new matters relating to actual or potential breaches of the Code, or research misconduct in 2018–19. This included matters reported by institutions, as well as concerns identified through ARC business or by members of the public. In addition, 12 matters reported or identified prior to 1 July 2018 were still active in 2018–19.

Of the 47 matters that were active in 2018–19, 28 were finalised as at 30 June 2019. This included:

• ten matters where institutions reported breaches of the Code and the ARC took action in response
• one matter where an institution reported a breach of the Code and the ARC determined that no ARC action was required as the breach was minor and the action taken by the institution was considered sufficient to address the matter
• eight matters that were dismissed following institutional preliminary assessments or investigations
• nine matters where preliminary assessments by the relevant institutions were not required. The matters were not within the scope of the policy, or insufficient information was available to provide grounds for preliminary assessments to be undertaken.

As at 30 June 2019 the ARC was awaiting preliminary assessments or investigations in relation to the outcomes of 19 matters.

National codes and statements on research ethics

All ARC-funded research projects must adhere to the Code. In June 2018 the ARC, the NHMRC and Universities Australia (UA) released a revised version of the Code and the Investigation Guide. In 2018–19 the ARC has worked closely with the NHMRC and UA to promote the revised version of the Code and the Investigation Guide. Supplementary guidance documents have been developed to support implementation of the principles and responsibilities in the 2018 Code.

From 1 July 2019 all institutions are required to comply with the expectations of the 2018 Code. Where applicable, ARC-funded research projects must also comply with:

• the National Statement on Ethical Conduct in Human Research (2007)
• Ethical Conduct in Research with Aboriginal and Torres Strait Islander Peoples and Communities (2018)
• The Australia Council for the Arts, Indigenous Cultural Protocols for Producing Indigenous Australian Music, Writing, Visual Arts, Media Arts and Performing Arts (2007)
• Australian Institute of Aboriginal and Torres Strait Islander Studies Guidelines for Ethical Research in Australian Indigenous Studies (2012)
• Australian Code for the Care and Use of Animals for Scientific Purposes (2013).

Service delivery and complaints handling

The ARC sets out the standards of service clients should expect from the ARC in the ARC Client Service Charter.

The ARC Complaints Handling and Appeals Policy assists clients to make a general complaint about the ARC or submit an appeal about the administrative processes of the NCGP. In 2018–19 the ARC received:

• one general complaint about the ability to link information into the ARC's Research Management System (RMS)
• three general complaints about the accessibility of information on the ARC website
• twenty-seven appeals relating to applications submitted for funding under the NCGP, five of which were upheld.

The ARC did not report any significant issues to the Minister under paragraph 19(1)(e) of the PGPA Act that relates to non-compliance with finance law.

Footnote

⁴ ARC Corporate Plan 2018–19, page 4