Direction under section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 10 of 2006-2007)

Overview

The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia to ensure the effective and transparent management of public finances, particularly in relation to the transfer of appropriations when agency functions change. The Act addresses the problem of ensuring that appropriations are appropriately aligned with the functions and responsibilities of government agencies, particularly in the event of organisational changes. Section 32 of the Act allows the Finance Minister to issue directions to adjust appropriations when the functions of one agency are transferred to another, thereby maintaining financial accountability and clarity. The policy objective of this provision is to ensure that public funds are used efficiently and in accordance with the legislative intent, avoiding any financial ambiguity or mismanagement resulting from changes in agency functions.

Scope and Application

The Financial Management and Accountability Act 1997, specifically Section 32, addresses the adjustment of appropriations when there is a change in the functions of an agency. This applies to agencies where a function previously performed by one agency (the old Agency) is transferred to another (the new Agency), whether due to the abolition of the old Agency or for other reasons. The Act allows the Finance Minister to issue directions for the transfer of appropriated funds from the old Agency to the new Agency to ensure that financial resources align with the new functional responsibilities. The instrument, "Direction under Section 32, Financial Management and Accountability Act 1997", dated 4 April 2007, provides a mechanism for these transfers, with the authority delegated to the Chief Executive of the Department of Finance and Administration and further to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. The instrument concerns the transfer of departmental appropriations between the Office of Workplace Services and the Department of Employment and Workplace Relations, reflecting the shift in workplace services functions from the latter to the former. This legislative instrument operates on a national level within Australia, ensuring that financial accountability is maintained during organisational restructurings.

Key Provisions

The primary operative sections of the instrument under the Financial Management and Accountability Act 1997 (FMA Act) are section 32 and the associated delegation provisions. Section 32(2)(a) of the FMA Act allows the Finance Minister to issue directions regarding the adjustment of appropriations when there is a change in agency functions. This power has been delegated down to the Acting Division Manager, Financial Reporting and Cash Management Division, who is responsible for issuing the direction. This specific instrument directs that an appropriation of $1,226,000 be transferred from the Office of Workplace Services (OWS) to the Department of Employment and Workplace Relations (DEWR), and vice versa for the following financial year. The Act imposes certain obligations on the parties involved. The Finance Minister, through the Acting Division Manager, must ensure that the transfer of appropriations is accurately reflected in the financial records of both OWS and DEWR. The two agencies must cooperate in providing the necessary information and documentation to facilitate the transfer, such as the specific appropriation items identified in the table of the instrument. Furthermore, both agencies are obligated to ensure that the adjustments are reflected in their respective budget planning and reporting processes. Failure to comply with the directions issued under section 32 of the FMA Act may have legal consequences. While the instrument itself does not specify penalties, breaches of the Act could potentially lead to legal action for non-compliance with appropriation laws. The FMA Act provides for various offences and penalties, including fines and imprisonment, for breaches related to financial mismanagement and accountability. The maximum penalties would depend on the specific nature and severity of the breach, but they can be significant, reflecting the importance of financial integrity in government operations. The instrument also requires consultation with OWS and DEWR in its preparation, in accordance with the Legislative Instruments Act 2003. This ensures that both agencies are aware of and can respond to the changes in appropriations, thereby maintaining transparency and cooperation in financial management processes. By following the delegation chain and ensuring that the necessary consultations are held, the instrument upholds the requirements set out in the FMA Act for the adjustment of appropriations on changes of agency functions.