Direction under section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 11 of 2006-2007)

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to address the need for effective financial management and accountability within Australian government agencies. It provides a framework for the appropriation of funds and the management of financial resources by these entities, ensuring transparency and efficiency. The Act was introduced by the Parliament of Australia to rectify issues related to the allocation, control, and reporting of public funds. One of its key objectives is to facilitate the orderly transfer of appropriations when there is a change in agency functions, as detailed in section 32. This section specifically empowers the Finance Minister to issue directions for the adjustment of appropriations when a function is transferred from one agency to another, ensuring that financial resources are appropriately aligned with the new responsibilities of the agencies involved. The Act thus plays a crucial role in maintaining the integrity of financial management practices across the government.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) applies to any situation where a function of an existing agency (the old Agency) is transferred to a new agency (the new Agency), either due to the abolition of the old Agency or for any other reason. Specifically, section 32 of the FMA Act provides the legislative authority for the adjustment of appropriations in such circumstances. This section allows the Finance Minister to issue directions, through subordinate instruments, to transfer amounts that have been appropriated for the performance of a particular function from the old Agency to the new Agency. The instrument, "Direction under Section 32, Financial Management and Accountability Act 1997", dated 4 April 2007, is an example of such a direction, authorising the transfer of $292,618 from the Department of Industry, Tourism and Resources (DITR) to the Department of Agriculture, Fisheries and Forestry (DAFF). This transfer was necessitated by the decision to move the Produce and Grocery Industry Code of Conduct function from DITR to DAFF on 19 September 2006. The authority to issue such directions has been delegated down from the Finance Minister to the Acting Division Manager, Financial Reporting and Cash Management Division, via the Chief Executive of the Department of Finance and Administration and the General Manager, Financial Management Group, and Division Manager, Financial Reporting and Cash Management Division. This process ensures that the transfer of appropriations is managed efficiently and in accordance with the legislative requirements.

Key Provisions

The main operative sections of the instrument concern the transfer of appropriations between government agencies when there is a change in the functions of those agencies. Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) specifically addresses the situation where a function of one agency (referred to as the old Agency) becomes the function of another agency (the new Agency). Under subsection 32(2)(a), the Finance Minister is empowered to issue a direction for the transfer of some or all of the appropriated amount intended for the function from the old Agency to the new Agency. This directive, dated 4 April 2007, specifies the transfer of $292,618 from the Department of Industry, Tourism and Resources (DITR) to the Department of Agriculture, Fisheries and Forestry (DAFF). The Act imposes certain obligations and requirements on the parties involved. The Finance Minister, or an officer delegated by the Minister under section 32, must issue a direction that specifies the appropriation items to be transferred, as detailed in the instrument. The delegation of this authority has been further delegated down to the Acting Division Manager, Financial Reporting and Cash Management Division, who issued this specific direction. The instrument further specifies that DAFF was consulted in the preparation of this instrument, indicating a procedural requirement to ensure that all relevant parties are informed and agree to the transfer. Additionally, the Legislative Instruments Act 2003 mandates that such instruments be prepared in accordance with its provisions, ensuring transparency and legal compliance in the process. The Act does not explicitly state the penalties or consequences for non-compliance with the directions issued under section 32. However, failure to comply with the Financial Management and Accountability Act 1997, in general, could lead to various civil or criminal liabilities depending on the nature and extent of the breach. The Act encompasses broader provisions that may carry penalties for mismanagement of public funds or non-compliance with financial directives, which could include fines or other sanctions as determined by relevant authorities. The specifics of penalties would be guided by the broader legal framework within which the FMA Act operates, including other relevant financial management legislation and common law principles.