Environment The The Establishment and Management of Funding Agreements

‐ ‐ ANAO Report No.10 2014–15 Administration of the Biodiversity Fund Program 89 department had a preference for 10 per cent of the project’s total to be expended in year one, 20 per cent in year two, and so on. The draft funding agreement, which was published on Environment’s website, also did not contain any guidance regarding budget profiles.

6.18 In

the Round 1 funding agreements, Environment sought to implement budget profiles for funded projects in the first three years that is 2011–12 to 2013–14 inclusive that broadly matched the overall appropriated funding profile of the Biodiversity Fund program. This meant that the budget profile that the department developed for each project and as set out in its funding agreement generally did not match the profile that grant recipients had requested in their project application although the total value was the same. Table 6.1 illustrates the total funding profile for approved projects in Round 1, and an example of how this profile was reflected in a three‐year funding agreement. Table 6.1: Budget profile for a Biodiversity Fund program Round 1 project Financial Year 11–12 12–13 13-14 14–15 15–16 16–17 Total Total funding profile for Biodiversity Fund program Round 1 approved projects 1 Total Round 1 funding per year million 31.3m 11.5 of total 21.8m 8.0 of total 100.9m 37.2 of total 46.9m 17.3 of total 38.8m 14.3 of total 31.5m 11.6 of total 271.2m 100 Example of the funding profile for a three-year project Requested funding in application 122 000 34.4 of total 113 500 32.0 of total 119 000 33.6 of total 354 500 100 Scheduled funding as per funding agreement 70 600 19.9 of total 35 300 9.9 of total 248 500 70.1 of total 354 500 100 Source: ANAO analysis of Environment information. Note 1: Figures have been rounded.

6.19 As

the example in Table 6.1 illustrates, Environment scheduled large payments in year three 2013–14 of the Biodiversity Fund program, regardless of grant recipients’ originally planned pattern of expenditure. ANAO Report No.10 2014–15 Administration of the Biodiversity Fund Program 90

6.20 In

its covering email to successful grant recipients, which included the funding agreement as an attachment, Environment advised of the changes in the project budget profiles, and more generally, recommended that recipients should consider seeking legal advice before signing the funding agreement. 125 Nonetheless, stakeholders providing feedback to the ANAO, and the ANAO’s file review of 64 Round 1 funded projects, indicated that the change in the funding profile was problematic for many but not all 126 grant recipients. For example, respondents to the ANAO’s survey of grant recipients stated: The uneven distribution of funds across the years, particularly the excessive amounts in year three made it difficult to resource the program from an organisation perspective as very large in‐kind support was required for these years to supplement the dedicated officer delivering the program. The split of funding over the 2‐3 year period made it difficult to fund some of our larger projects early, and give them enough time to occur. Over 60 per cent of our funding was provided in the last two payments, which made delivery a challenge given climatic conditions for planting.

6.21 While