4.1 Corporate governance

Fraud management

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.

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. This plan was reviewed and updated in April 2018 and is due to be reviewed in 2020. The Chief Financial Officer reports at each ARC Audit Committee meeting on potential fraud incidents or changes to fraud risk.

Corporate governance structures and processes

Senior executive and their responsibilities

At 30 June 2018 the ARC had nine senior executive staff: the CEO; Executive General Manager; Branch Manager Policy and Strategy; Acting Branch Manager Corporate Services; Branch Manager Research Excellence; and four 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 other senior staff at 30 June 2018—the Chief Information Officer, Acting Chief Financial Officer, and Chief Program Officer.

There were three significant changes to the ARC’s senior executive over the 2017–18 period. Dr Robert Mun joined the ARC on 7 May 2018 as an Executive Director, Professor Stephen Buckman ended his term as an Executive Director on 31 May 2018, and Dr Fiona Cameron ended her term as an Executive Director on 30 June 2018.

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

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

SMG generally meets every two weeks and consists of the CEO, Executive General Manager, Branch Manager Policy and Strategy, Acting 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 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 and operational management for work packages within Project Delta surrounding scope, budget, risk management and scheduling
• Diversity Working Group, which integrates diversity and equity matters into workplace practice
• Information and Communications Technology (ICT) Change Control Committee, which approves changes to ICT applications and infrastructure, and coordinates the release of these changes
• ICT Governance Committee, which reviews the ICT services requirements for the ARC, and provides recommendations on priorities for the ICT Services Branch
• Information Governance Committee, which ensures that there is 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 planning and reporting framework
• Program, Strategy and Executive Committee, which provides advice and recommendations on policy and programs as they relate to the NCGP
• Security Committee, which oversees adherence to physical, personal and 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 (the Committee) provides the CEO with independent assurance by reviewing the ARC’s financial and performance reporting responsibilities, systems for internal control, risk management and corporate governance.

The 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 1). During 2017–18 the ARC Audit Committee held five meetings.

Table 1 Membership of the ARC Audit Committee, 2017–18

Member	Date of appointment	Expiry of appointment
Mr P Kennedy, External member (Chair)	01/01/2010	30/09/2018
Dr E Arthur, External member	01/11/2013	31/10/2017
Dr J Baker, Internal member	01/03/2016	03/04/2018
Ms S Howard, Internal member	01/10/2014	30/09/2017
Mr G Rankin, External member	01/11/2013	31/10/2018
Ms J Satrapa, Internal member	01/06/2018	30/05/2021
Mrs K Toole, External member	15/03/2017	31/03/2019
Mr J Withers, Internal member	01/10/2017	30/09/2020

Advisory Council

The ARC Advisory Council provides strategic advice to the CEO on issues relating to the purpose of the ARC. This includes: advice on strategic planning; policy matters relating to innovation, research and research training; and matters relating to 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 and/or achievements in business and/or research (Table 2). There were no meetings of the Advisory Council in 2017–18. Seven new members of the ARC Advisory Council were appointed in 2017–18 with a commencement date of 1 July 2018. It is expected that the Council will meet in the first half of 2018–2019.

Table 2 Membership of the ARC Advisory Council, 2017–18

Member, Institution	Date of appointment	Expiry of appointment
Professor S Thomas, ARC (Chair)	03/07/2017	30/07/2022
Professor K Hall, The University of Newcastle	01/07/2018	30/06/2019
Professor D Ivison, The University of Sydney	01/07/2018	30/06/2019
Professor D Lloyd, University of South Australia	01/07/2018	30/06/2019
Ms L Marshall, Museums Victoria	01/07/2018	30/06/2019
Mr M McKenzie, Council of Small Business Australia	01/07/2018	30/06/2019
Emeritus Professor C Shannon, Shannon Consulting	01/07/2018	30/06/2019
Professor D Terry, Curtin University	01/07/2018	30/06/2019

Administration of the National Competitive Grants Program

ARC College of Experts

The ARC College of Experts plays a key role in identifying research excellence, moderating external assessments of grant applications and recommending projects to be funded. The College comprises a wide range of experienced and highly qualified people of international standing, drawn from across academia, industry and public sector research organisations. Members are appointed for up to three years and are announced annually, ensuring a constant source of expertise. At the discretion of the ARC, extensions of up to one year may be offered to ensure the availability of expertise across the range of proposals being submitted.

The College comprised 195 members in 2018. On 23 October 2017 the ARC announced 47 new members of the College for 2018. In the 2018 nomination round, strong emphasis was placed on interdisciplinary expertise, as well as interest in a wide range of research areas. This year, to assist with the continuous application and assessment process implemented under the Linkage Projects scheme, two existing members received extensions to continue as members of the College. In support of the ARC’s Reconciliation Action Plan April 2018–March 2019, an additional 10 Aboriginal and Torres Strait Islander members were appointed to the College, nominated by Indigenous Groups and recruited for the Discovery Indigenous Selection Advisory Committee. A list of members is on the ARC website.

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 each appeal should be upheld or dismissed. This committee also provides general advice to the ARC about how administrative processes could be modified or improved. The committee consists of external members appointed by the CEO. The 2017–18 members were Emeritus Professor A Cheetham (Chair), Professor H Bachor, and Professor L Johnson. The NCGP Appeals Committee met three times in 2017–18.

National Competitive Grants Program Eligibility Committee

The NCGP Eligibility Committee considers eligibility issues under the funding schemes of the NCGP. This committee, comprising Executive Directors and the Branch Manager Policy and Strategy, provides recommendations to the CEO.

National Competitive Grants Program Scrutiny Committee

The NCGP Scrutiny Committee scrutinises the probity of ARC assessment processes in relation to funding proposals involving members of the ARC College of Experts and/or ARC staff. This committee comprises three members appointed by the CEO. In 2017, the members were Professor R Fitzgerald (Chair), Ms V Hart and Mr S Sedgley. In 2018, the members were Professor A Wells (Chair), Professor D Sharma, Professor D Siddle and Mr J Withers. The NCGP Scrutiny Committee met four times in 2017–18.

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

EI Steering Committee

The EI Steering Committee, which included higher education and industry leaders, helped to develop an assessment framework with transparent indicators of non-academic impact, and industry and end-user engagement, to assess Australia’s university research performance and inform future funding structures. Members of the Steering Committee were appointed for a term of two years.

EI Technical Working Group

The role of the Technical Working Group was to provide expert advice on the development of indicators to support a national EI assessment. This included providing advice regarding development of an appropriate methodology; assessment requirements for different disciplines and incorporating interactions with a range of end-user groups; along with the development of appropriate indicators of research engagement and research impact.

EI Performance and Incentives Working Group

The role of the Performance and Incentives Working Group was to provide advice to the ARC about the potential incentive effects of the preferred model for EI. This included identifying how the process and measures in the preferred model might influence the decisions of universities about the focus of their research activities.

EI Pilot Assessment and Review Panels

The assessments for the EI pilot were undertaken by five panels each comprised of academic researchers and research end-users. A review panel was also established to examine pilot material and assessments, and provide advice to the ARC on the EI pilot methodology.

EI 2018 Assessment Panels

The assessments for EI 2018 will be undertaken by panels comprising a mix of distinguished academic researchers and highly experienced research end-users. There are five assessment panels for EI 2018. Chairs for the EI 2018 panels were appointed in 2017–18. They are Professor R Dunford, Professor G Goggin, Professor J Grundy, Professor T Nolan and Professor M Walter.

ERA 2018 Research Evaluation Committees

Evaluations in ERA are undertaken by Research Evaluation Committees (RECs) comprising Australian and international researchers. The committee members are drawn from nominations submitted to the ARC from the sector. There are eight RECs for ERA 2018. Chairs and members for the ERA 2018 RECs were appointed in 2017–18.

Australian Research Integrity Committee

The ARC and the National Health and Medical Research Council (NHMRC) jointly established the Australian Research Integrity Committee (ARIC) in February 2011.

On request, ARIC reviews whether an institution’s response to an allegation of research misconduct is consistent with the Australian Code for the Responsible Conduct of Research, and the institution’s own policies and procedures.

ARIC comprises eight expert members (Table 3) and reports to both the ARC and the NHMRC. During 2017–18, the ARIC-ARC secretariat received five requests for review. It also continued consideration of two requests for review that were received in 2016–17. In relation to the seven ARIC-ARC matters active in 2017–18:

• Four requests for review were determined to be within the scope of ARIC. Of these, one review was finalised and the outcomes were communicated to the relevant parties by the ARC. Two reviews commenced and were ongoing, and the other was yet to commence, as at 30 June 2018.
• Two requests for review were outside the scope of ARIC and the complainants were notified.
• One request for review was under consideration as at 30 June 2018 to determine whether it was within the scope of ARIC.

Table 3 Membership of the Australian Research Integrity Committee, 2017–18

Member	Year of current appointment	Expiry of current appointment
Mr R Brent (Chair)	January 2017	December 2019
Dr K Breen	January 2017	December 2019
Ms J Hamblin	January 2017	December 2019
Emeritus Professor S Shaver	January 2017	December 2019
Mr M Chilcott	May 2017	December 2019
Emeritus Professor A Lawson	May 2017	December 2019
Professor M Otlowski	May 2017	December 2019
Emeritus Professor J Reid	May 2017	December 2019

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 framework ensures there is a clear line of sight between the performance criteria published in the ARC’s Portfolio Budget Statements (PBS) and Corporate Plan, and the performance information published in the Annual Performance Statement in the Annual Report. Together, these documents aim to 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.

 

During 2017–18 the ARC:

• prepared the ARC Annual Report 2016–17, which was tabled in both Houses of Parliament on 31 October 2017
• published the ARC Corporate Plan 2017–18, as required by the PGPA Act
• prepared the ARC Corporate Plan 2018–19, as required by the PGPA Act
• developed the ARC operational plan for 2017–18 following the publication of the ARC Corporate Plan. The operational plan allowed ARC business areas to track the progress of their key activities in the Corporate Plan, and report on this progress to the SMG biannually
• enhanced the ARC’s performance planning and reporting capabilities through the internal Planning and Reporting Committee
• prepared the 2018–19 PBS in accordance with Department of Finance guidance. The 2018–19 PBS was tabled in Parliament on 8 May 2018 as part of the Education and Training PBS
• continued to review its performance measurement framework in preparation for drafting of the Corporate Plan 2018–19
• participated in Community of Practice meetings organised by the Department of Finance to share experiences and information about new planning and reporting requirements.

Internal audit arrangements including risk

Internal audit

An integral part of the ARC’s corporate governance framework is the ARC’s internal audit function, which provides an independent, objective review and advisory service. It gives 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. The internal auditor role is outsourced to an independent service provider and reports to the Audit Committee through the Head, Internal Audit. In 2017–18, 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 2017–18:

• Annual Performance Statements
• IT General Controls
• Post-award Grant Management
• Research Misconduct and Integrity.

Risk

Framework

The ARC manages risk in accordance with the PGPA Act, the Commonwealth Risk Management Policy and the Australian/New Zealand Standard for Risk Management (AS/NZS ISO 31000: 2009). 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 2018 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 risk management framework and policy, risk management was well 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 framework.

In January 2018 the SMG reviewed the ARC’s strategic risks for 2017–18 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 2018–19 in June 2018.

The ARC reviewed its operational risks in October 2017 and March 2018. This biannual activity helped ensure that business areas were able to properly plan and deliver against the key activities outlined in the ARC’s operational plan.

Business continuity and disaster recovery

The ARC’s BCP sets out the 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, which is designed to safeguard and recover critical ICT systems.

In 2017–18, the ARC:

• reviewed and updated the BCP
• held two meetings of the Business Continuity Plan 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’
• the incorporation of ethical standards into ARC governance policies and guidelines
• the incorporation of the ARC values into performance agreements
• an Ethics, Integrity and Fraud page on the ARC intranet site and the Australian Public Service Commission (APSC) Ethics Advisory Service
• an ARC Ethics Contact Officer.

The ARC includes an overview and discussion of the Australian Public Service (APS) Values and Code of Conduct as part of induction training for new appointees. Biannual 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 2017 showed that 79 per cent of ARC staff believed that ARC senior executives act in accordance with the APS values, compared to 72 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.

As a research funding agency

ARC Research Integrity and Research Misconduct Policy

To safeguard the integrity of the ARC’s processes, the ARC Research Integrity and Research Misconduct 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 pathways through which potential breaches of the Code can be referred to institutions for investigation. The ARC Research Integrity and Research Misconduct Policy is available on the ARC website.

In 2017–18, the ARC was notified of, or identified, 33 new matters relating to actual or potential breaches of the Code or research misconduct. This included matters reported by institutions as well as concerns identified through ARC business or members of the public. In addition, 19 matters reported or identified prior to 1 July 2017 were still active in 2017–18.

Of the 52 matters that were active in 2017–18, 40 were finalised as at 30 June 2018. This included:

• thirteen matters where institutional investigations found breaches of the Code with the ARC taking action in response
• eleven matters where institutional investigations found breaches of the Code and the ARC determined that no ARC action was required as the breaches were minor and/or the action taken by the institution was considered sufficient to address the matter
• five matters that were dismissed following institutional investigations
• eleven matters where investigation was not required as the matters were not within the scope
  of the policy or insufficient information was available to provide grounds for investigation.

As at 30 June 2018 there were 12 active matters under consideration by the ARC or investigation
by institutions.

National codes and statements on research ethics

All ARC-funded research projects must adhere to the Australian Code for the Responsible Conduct of Research. In June 2018 the ARC, the NHMRC and Universities Australia released a revised version of the Code 2018 and the Guide to Managing and Investigating Potential Breaches of the Australian Code for the Responsible Conduct of Research, 2018.

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)
• 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).

The principles and responsibilities outlined in the 2018 Code will promote greater consistency across the research sector and build upon the foundation laid by the 2007 Code. The 2018 Code will provide assurance that the Australian research effort continues to be underpinned by honesty, rigour, transparency and accountability, and that researchers treat each other fairly and show respect for the people, communities and environments impacted by their research. It will help to ensure that Australian research continues to be held in the highest regard internationally, and provides all Australians with confidence in publicly funded research.

The 2018 Code and investigation guide are the result of an extensive review and consultation process. The Code presents eight principles of responsible research and 29 key responsibilities for researchers and institutions. The supporting investigation guide describes the processes for managing and investigating potential breaches of the Code. The Code can be applied to the range of research contexts in Australia—from small medical institutions to large universities, and across all research disciplines. It aims to ensure procedural fairness for all parties.

Supplementary guidance documents are being developed to support implementation of the principles and responsibilities in the 2018 Code. The ARC is revising its Research Integrity and Research Misconduct Policy and, in conjunction with the NHMRC, the Australian Research Integrity Committee Framework. This will ensure these documents are aligned to the 2018 Code and investigation guide.

It is expected that all institutions will meet the requirements of the 2018 Code by 1 July 2019.

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 2017–18, the ARC received:

• two general complaints about the accessibility of information on the ARC website
• one complaint about the management by the ARC of a grant assessment provided by an
  ARC assessor
• one complaint about the ARC’s lack of involvement in the management of a university PhD student who was working on an ARC grant while not part of the research team
• five appeals relating to proposals submitted for funding under the NCGP. Of these, two were upheld by the NCGP Appeals Committee. Further information on the NCGP Appeals Committee is provided on page 64.

Senior Executive Service remuneration

Terms and conditions for ARC Senior Executive Service (SES) staff are set out by common law contracts. As at 30 June 2018 there were four common law contracts in place for ARC SES staff.

Remuneration is reviewed annually taking into account the individual’s personal skills, knowledge, experience and capabilities as well as achievements against goals set in the preceding performance cycle.

At 30 June 2018 the notional salary range for SES Band 1 and Band 2 officers was between $170,000 and $296,000. Further information about senior executive remuneration is available on the ARC website.

Non-compliance with Finance law

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.