Direction under section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 10 of 2005-2006)

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to establish a framework for the financial management and accountability of Commonwealth agencies. The Act aims to ensure that public money is managed efficiently, effectively, and economically. Section 32 of the Act, which addresses adjustments of appropriations on a change of agency functions, was introduced to resolve the issue of transferring funds when an agency's responsibilities are altered, either through abolition or other reasons. The instrument, "Direction under Section 32, Financial Management and Accountability Act 1997", dated 15 November 2005, was created under the authority of the FMA Act and enables the transfer of appropriations from one agency to another. The instrument directs the transfer of non-lapsing appropriations from the Department of Family and Community Services to the Department of Education, Science and Training, following a change in agency functions as per an Administrative Arrangements Order issued by the Governor-General on 26 October 2004. The policy objective of this instrument is to facilitate the smooth transition of funds to ensure continued provision of services in accordance with the agreed arrangements.

Scope and Application

The Financial Management and Accountability Act 1997, specifically section 32, governs the adjustments of appropriations when there is a change in agency functions, whether due to the abolition of an agency or for any other reason. This Act applies to any situation where a function of an existing agency (referred to as the old Agency) is transferred to another agency (referred to as the new Agency). The Act mandates that appropriations previously allocated for the performance of the function by the old Agency be transferred to the new Agency, enabling the seamless continuation of services and programs. The Finance Minister is empowered to issue directions for such transfers, a power that has been delegated to the Chief Executive of the Department of Finance and Administration, who has further delegated this responsibility to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This legislative framework ensures that the financial management of government functions remains orderly and transparent during organisational changes. The instrument in question, dated 15 November 2005, specifically directs the transfer of non-lapsing appropriations amounting to $103,174.94 from the Department of Family and Community Services to the Department of Education, Science and Training, following an administrative arrangement order that reassigned certain responsibilities from the former to the latter department. This transfer was agreed upon by the Chief Financial Officers of both departments, in accordance with established processes, ensuring the appropriations are realigned with the new functional responsibilities.

Key Provisions

The main operative sections of the instrument are found in section 32 of the Financial Management and Accountability Act 1997 (FMA Act). This section provides the framework for adjustments to appropriations when the functions of an agency are transferred to another agency. Specifically, section 32(2)(a) allows the Finance Minister to issue directions for the transfer of funds from the old agency to the new agency, which has been exercised in this instance to transfer funds from the Department of Family and Community Services to the Department of Education, Science and Training. This section is crucial for ensuring that financial resources are appropriately allocated following a change in agency responsibilities. The obligations and requirements imposed by the Act on the parties involved include the need for the Finance Minister, or a delegate, to issue directions for the transfer of funds. In this case, the Chief Executive of the Department of Finance and Administration has delegated this responsibility to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This delegation ensures that the transfer of funds is carried out in accordance with the provisions of the FMA Act. The process also requires the agreement between the Chief Financial Officers of the involved departments, ensuring that the transfer amount is appropriate and in line with established processes. Failure to comply with the requirements set out in the Act may lead to various civil and criminal consequences. Although the explanatory statement does not specify particular offences or penalties, breaches of financial management regulations can generally result in legal action, including fines and other penalties as prescribed by law. The severity of these penalties can vary depending on the nature and extent of the breach. It is essential for all parties to adhere to the provisions of the FMA Act to avoid any potential legal repercussions.