Enterprise Resource Planning (ERP) Finance Standard

Enterprise Resource Planning (ERP) Finance capability is enabled by the Financial Management Information System (FMIS); and refers to software and systems that streamline financial operations within an entity’s broader ERP system. ERP Finance enables two key corporate value streams:

• Budget to Report (B2R): Manages an entity’s financial lifecycle from budgeting to financial statement release covering external and internal budgeting, ledger aggregation, consolidate, closure, and reporting.
• Revenue to Bank (R2B): Handles revenue generation operations to banking and treasury functions including agreement proposals, formalisation, service delivery, invoicing, receipt management, and reporting.

ERP Finance capability is vital for effective stewardship of public funds, transparency, and alignment with government priorities.

The ERP Finance capability within Commonwealth entities covers the tools and functions for:

• Compliance with Government Financial Regulations: Ensuring adherence to government financial regulations, policies, and guidelines governing budgeting, accounting, procurement, and reporting. This includes adherence to frameworks such as the Commonwealth Financial Management Framework (CFMF) and the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
• Budgeting and Appropriation Management: Supporting budget preparation, allocation, and monitoring to align with government priorities and track expenditure against budget allocations to comply with fiscal constraints.
• Financial Reporting and Accountability: Generate accurate financial reports for internal management, parliamentary reporting, and public transparency to aid accountability and decision-making.
• Internal Controls and Auditability: Incorporating controls and audit trails to ensure data integrity and compliance with audit requirements.
• Integration with Government Financial Systems: Exchanging data with central government systems like the Central Commonwealth Budget Management System (CBMS) for reporting and alignment with government frameworks.
• Governance and Oversight: Establishing mechanisms for financial management oversight, risk management, and performance improvement.
• Training and Capacity Building: Providing training to finance staff and stakeholders to enhance their skills in using financial management systems.
• Continuous Improvement and Innovation: Promoting innovation and process optimisation to improve efficiency and accountability.

A Financial Management Information System (FMIS) can be implemented through a number of commercial platform solutions. These platforms are currently accessible via: BuyICT; Whole-of-Australian-Government contracts; and entity-implemented solutions underpinned by platforms.

Budget to Report (B2R) value stream

The Budget to Report (B2R) value stream is realised through the following capabilities:

Cost Management

The process of planning and controlling the budget at cost centre level (or relevant cost management structure) within an entity.

Processes and Definitions

• Maintain Cost Management Master Data includes creation, change and block/deletion of Cost Management/Controlling Master Data.
• Perform Cost Planning including allocating budget to cost centres and periods.
• Capture Actual Costs through either statistical or real postings, manually or automated. Maintenance of activity-based costing/full costing models for Benchmarking/cost control.
• Distribute Costs including allocate and distribute overheads from one object to one or many others (including cost centres, profit centres).
• Maintain Plan Data includes maintenance of activity planning, cost centre planning etc.
• Execute Cost Management Reports includes a variety of regular and ad-hoc internal and external reports, reporting of activity-based costing/full costing models for Benchmarking/ cost control.

General Ledger

A general ledger (GL) is a record-keeping system of entities financial data. The GL serves as a central repository for all financial transactions and data transferred from all sub-ledgers, such as accounts payable, accounts receivable, cash management, fixed assets, purchasing and projects.

Processes and Definitions

• Maintain Finance Master Data includes creation, change and block/deletion of General Ledger Master Data.
• Manage GL Journal Entries including scheduling recurring entries, scheduling accrual reversal jobs etc.
• Perform GL Clearing including manual or automated clearing as per defined entity rules/configuration.
• Process GL Documents includes preparing, parking, posting, reversing and deleting journal and accrual entries. This also incorporates posting from interfaces (e.g. edge systems, payroll and external systems: grants, Payment Utility, Revenue Receipting, Border Receipting).
• Perform Exchange Rate Processing including the posting of exchange gains/losses.
• Perform GL Reconciliations including the reconciliation of accounts to the sub-ledgers, reports on variances, etc.
• Manage Financial Reporting Period including rollover of GL balances and close and open financial reporting periods

Budgeting & Planning

Planning outlines the entity's financial direction and expectations for the budget period. Budgeting documents how the overall plan will be executed month to month, specifying expenditures.

Processes and Definitions

• Manage Budgeting Master Data includes creation, change and block/deletion of Budget and Planning Master Data.
• Manage External Budget including operational and capital budgets, management of activity-based costing/full costing models for external budgeting e.g. Visa Funding models etc.
• Manage Internal Budget including operational and capital budgets, management of activity-based costing/full costing models for internal budgeting e.g. shared services models, capability allocation/CAPF, etc.
• Manage Forecast including forecasts for operational and capital budgets.
• Report of Financial Results includes the reporting of actual results against budgets (internal and external, operational and capital), including the identification of variances.
• Analyse Financial Results including manual and automated analysing of budgeting and actual data

Funds Management

Support entities in managing their appropriation funding and reporting requirements including Special Accounts, Departmental, Administered Funds, Outcome, Program and Appropriation types. Funds Management (FM) integrates to all other financial components and allows for the concurrent budgeting, funding, management and tracking of funds-relevant items and structures. Financial processes are aligned in FM with concepts relating to the source of funds, budgets, how funds relate to areas of responsibility and usage of the funds.

Processes and Definitions

• Manage Funds Master Data includes creation, change and block/deletion of Funds Management Master Data.
• Manage Appropriation Funding includes the allocation of appropriation balances to funds, transfer of budgets, supplement and return budgets, maintain earmarked funds, etc.
• Manage Availability Control includes activation and management of limits.

Lease Accounting

A lease is a contract, or part of a contract, which conveys the right to control the use of an identified asset for a period of time, in exchange for consideration. Entities entered into leases are required to recognise those leases on the balance sheet through a lease liability and corresponding Right of Use

Processes and Definitions

• Manage Lease Master Data includes creation, change and block/deletion of Lease Master Data.
• Manage Lease Contract includes creation and change of Lease Contracts data.
• Perform Valuations or Adjustments to Lease Contract includes valuations as per lease negotiations etc.
• Perform Posting for Lease Contract includes posting to the Assets Sub-Ledger or the General Ledger.
• Close Contract includes cessation of lease contract data including interface to asset sub-ledger to de-recognise the Right of Use asset.

Project Accounting

Primarily focuses on the financial transactions relating to managing a project. This includes initiating, planning, budgeting and monitoring costs and revenue of a project. It also provides project cost collector tool through the work-breakdown structure (WBS) to support the overview management of a project.

Processes and Definitions

• Manage Project Master Data includes creation, change and block/ deletion of Project Accounting Master Data (including maintenance of settlement rules).
• Plan Project Budget including allocation of budget to WBS elements within a project, and phasing across financial planning periods.
• Capture Project Costs including through manual and automated postings, and directly or via interfaces (e.g. contractor management edge solution).
• Settle project individually or in bulk, manually or automated on schedules.
• Close Project including Lock/Block of individual WBS elements or Projects.
• Report on Project includes various internal and external reporting.

Tax Management

Capture, integration, management and reporting of tax obligations and posting according to federal legislation and regulation. Tax management integrates into Financial Accounting to provide straight-through tax data management and submission.

Processes and Definitions

• Conduct Taxation Accounting includes capture, integration and management of tax obligations and posting according to federal legislation and regulation.
• Execute Compliance Reporting includes reporting to meet tax obligations such as Business Activity Statements, Taxable Payments Annual Report, etc.

Inventory Accounting

Manage the valuation and accounting for changes in inventoried assets.

Processes and Definitions

• Manage Inventory Valuation includes annual or periodic revaluations, write downs, etc.
• Conduct Inventory Accounting including posting from WIP accounts.
• Conduct Stocktake including reporting on existing inventory/assets, found, lost etc.

Asset Accounting

Manage the non-financial (fixed) asset lifecycle from acquisition through to retirement, including management of assets under construction, assets transfers, revaluations, disposals, and reporting.

Processes and Definitions

• Maintain Asset Master Data includes creation, change and block/deletion of Asset Master Data.
• Acquire Assets includes acquisition from cost centres, projects and/or purchasing, etc.
• Value Assets includes annual or periodic revaluations/ impairments etc. of tangible, intangible and Right Of Use assets.
• Retire Assets includes retirements/write offs/disposals, etc.
• Perform end of reporting period processing includes activities like depreciation runs, etc.
• Report on Fixed Assets includes various internal and external reporting, including Senate Estimates Briefs, Questions on Notice, and Ad-hoc reporting.

Commonwealth Reporting

The ability for entities to comply with mandatory reporting to the Australian Government and other accountable authorities within government.

Processes and Definitions

• Prepare Commonwealth Reports includes mandatory and ad-hoc Commonwealth reports.

Management Reporting

Reports that support executives in the management of the day-to-day operation of the entity, including supporting strategic directions and monitoring progress.

Processes and Definitions

• Prepare Management Reports, includes Internal Executive reports, ad-hoc management reporting etc.

Statutory Reporting

Mandatory reporting requirements from entities, e.g. Financial Statements, Annual Reports etc.

Processes and Definitions

• Prepare Statutory Reports, includes Mandatory reporting to meet statutory requirements.

Revenue to Bank (R2B) value stream

The Revenue to Bank (R2B) value stream is realised through the following enterprise functional capabilities:

Accounts Receivable

Manage and record accounting data relating to all customers. It handles customer invoices, approvals, payments and other related activities. Enables the sending of E-Invoices according to mandated standards.

Processes and Definitions

• Manage AR Master Data includes creating, changing, and blocking Accounts Receivable Master Data.
• Manage AR Invoices includes creating, changing, and deleting accounts receivable invoices. This function enables the sending of E-Invoices according to mandated standards.
• Manage Receipts may include automated or manual assignment of receipts to accounts receivable invoices (including interfaces), including partial receipts.
• Conduct AR Clearing may include automated, or manual clearing where tolerance levels for clearance of invoices have/have not been defined.
• Manage Customer Debt write-off/Waiver and Disputes includes cancellation of accounts receivable invoices.
• Manage Credit Notes, Chargebacks and Refunds may include manual or automated assignment or matching of credit notes/ chargebacks/ refunds to invoices or customer accounts.
• Perform AR Periodic Activities includes ageing of accounts receivable invoices.
• Perform Collection Activities includes the transfer of accounts receivable invoice or customer balances to a debt collection agency.
• Conduct AR Reporting Activities for Management and Statutory Bodies includes various internal and external reporting, including Senate Estimates Briefs, Questions on Notice, and ad-hoc reporting.

Banking & Cash Management

Manage accounting transactions that interact with the bank. It includes the management of bank master data, cash balance management and the creation and processing of incoming and outgoing payments.

Processes and Definitions

• Manage Banking Master Data includes the creation, change and block of Banking and Cash Master Data.
• Manage Drawdowns and Deposit Receipts includes creation of entries to recognise incoming payments. May be automated via bank statement or other interface/s or manual through journals.
• Maintain, void & re-issue payments include creation of entries to recognise outgoing payments. May be automated via payment runs, bank statements (e.g. bank fees) or other interface/s or manual through journals.
• Reconcile Bank Accounts includes management of clearing accounts, management of open items, etc.
• Inter-agency, Departmental & Administered Transfers may include inter-entity bank transfers.
• Banking and Treasury Reports includes various internal and external reporting, including Senate Estimates Briefs, Questions on Notice, and ad-hoc reporting.

Sales Management

Manage sales processes of an entity, from selling a product/service to recording of billings. This includes core sales processes, shipping/delivery services and billing creations.

Processes and Definitions

• Manage Sales Master Data includes creation, change and block/deletion of Sales Master Data.
• Manage Sales Contracts includes the management of Sales Document Types/ Contracts.
• Manage Sales Orders includes creation, change and block/deletion of sales orders.
• Supply Goods and/or Services manage core sales processes, shipping/delivery services and billing creations.
• Prepare Sales Reports includes various internal and external reporting, including Senate Estimates Briefs, Questions on Notice, and ad-hoc reporting.

Purpose

The ERP Finance capability realises several critical functions and value propositions for Commonwealth entities through:

• Financial Reporting: Enabling entities to meet their internal and external reporting obligations, such as those required under the accounting standards.
• Budget and appropriation management: Tracking the inflows and outflows of public monies.
• Streamlining Processes: Reducing redundancy and enhancing operational efficiency.
• Enabling Informed Decisions: Providing timely financial insights empowering informed decisions making regarding resource allocation and strategic planning.
• Ensuring Compliance: Adhering to government regulations, fostering a culture of compliance and accountability within APS entities.
• Promoting Transparency: Centralising financial data for easier tracking of expenditures and enhancing auditability.
• Driving Cost Savings: Through process optimisation, minimising operational expenses and mitigating the risk of financial errors.
• Offering Data-Driven Insights: Identifying trends and improvement areas by providing actionable insights into financial performance.
• Facilitating Interoperability: Supporting seamless data exchange.
• Fostering Capacity Building: Enhancing staff proficiency.

Finance architecture underpins financial management, leading Commonwealth entities to improve service delivery while enabling informed decision-making and resource optimisation.

Objective

Following the AGA's ERP Finance capability guidance is expected to yield several specific outcomes and benefits for Commonwealth entities:

• Improved Financial Transparency: Enhanced visibility into financial data and processes, leading to greater accountability and transparency in government financial management.
• Streamlined Processes: Automation and standardisation of financial processes, reducing manual efforts, streamlining workflows, and minimising errors.
• Better Decision-Making: Access to timely and accurate financial information for informed decision-making, budget planning, and resource allocation.
• Compliance Adherence: Alignment with Australian Government financial regulations and standards, ensuring compliance with the Public Governance, Performance and Accountability Act (PGPA Act) and other relevant guidelines.
• Cost Savings: Efficiency gains, reduced administrative costs, and optimised resource utilisation leading to cost savings across Commonwealth entities.
• Enhanced Reporting: Improved reporting capabilities, enabling entities to generate comprehensive financial reports for internal management, oversight bodies, and external stakeholders.
• Interoperability: Seamless integration with other government systems, facilitating data exchange and interoperability to support cross-entity collaboration and information sharing.
• Risk Management: Identification and mitigation of financial risks through improved data accuracy, security measures, and internal controls.
• Capacity Building: Development of staff skills and capabilities in using ERP FMIS systems, enhancing workforce proficiency and effectiveness in financial management practices.
• Modernisation and Innovation: Adoption of modern technologies and best practices in financial management, driving innovation and digital transformation within Commonwealth entities.

Whole of Australian Government Applicability

The Australian Government's ERP Finance capability guidance significantly contributes to, and fast-tracks the Australian Public Service (APS) digital future, by:

• Streamlining Operations: Standardising financial processes and integrating systems streamline operations, fostering agility and efficiency in a digital environment.
• Enhancing Data Accessibility: Centralising financial data and providing intuitive interfaces improve access to information, supporting digital workflows and data-driven decision-making.
• Common Data Standards: Establishing common data standards across the APS to standardise the ingest, input and output of data.
• Enabling Automation: Implementation of reusable components and automation tools reduces manual tasks, enabling APS entities to leverage technology for increased productivity and responsiveness.
• Fostering Innovation: By minimising implementation risks and leveraging existing investments, APS entities can allocate resources towards innovation, driving digital transformation initiatives forward.
• Promoting Collaboration: User-friendly dashboards and reporting tools facilitate collaboration among stakeholders, promoting a culture of innovation and digital engagement across the APS.
• Ensuring Compliance and Security: Adhering to procurement best practices and regulatory requirements ensures that digital solutions are implemented securely and compliantly, safeguarding against risks and vulnerabilities in the digital landscape.

Following this guidance, Commonwealth entities can speed up their digital journey, enhancing efficiency and value for employees and customers.