Direction under section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 12 of 2006-2007)

Overview

The Financial Management and Accountability Act 1997 was enacted to provide a framework for the financial management and accountability of Commonwealth agencies. The Act aims to ensure that public funds are managed efficiently and effectively, promoting transparency and responsibility in the use of public resources. The problem or gap the Act addresses is the need for a cohesive legal framework governing the financial practices of various Commonwealth entities, ensuring consistency and accountability across the public sector. Enacted by the Parliament of Australia, the Act includes provisions that allow for the adjustment of appropriations when there are changes in the functions of agencies. This ensures that financial resources are allocated in accordance with the current operational needs and responsibilities of agencies. The policy objective of the Act is to enhance the financial management practices of Commonwealth agencies, thereby improving the overall efficiency and accountability of public expenditure.

Scope and Application

The "Direction under Section 32, Financial Management and Accountability Act 1997" instrument pertains to the Financial Management and Accountability Act 1997, specifically addressing the transfer of appropriations between agencies when there is a change in their functions. This instrument applies to instances where a function of an agency (referred to as the "old Agency") becomes the responsibility of another agency (the "new Agency"), whether due to the abolition of the old Agency or other reasons. Section 32 of the Act empowers the Finance Minister to issue directions to transfer appropriations from the old Agency to the new Agency. This delegation of power has been further assigned to the Chief Executive of the Department of Finance and Administration, and subsequently to the General Manager of the Financial Management Group and the Division Manager of the Financial Reporting and Cash Management Division. This particular instrument directs the transfer of specific departmental appropriations from the Department of the Prime Minister and Cabinet to the Department of the Environment and Water Resources, following the transfer of the Office of Water Resources as per the Administrative Arrangements Order of 30 January 2007. The instrument specifies the exact amounts to be transferred, aligning with the legislative requirement to consult relevant departments during the preparation of such instruments.

Key Provisions

The key operative sections of this instrument are Section 32 of the Financial Management and Accountability Act 1997, which is empowered to adjust appropriations when an agency's functions are transferred to another agency. Specifically, subsection 32(2)(a) allows the Finance Minister to issue directions for the transfer of funds from the old agency to the new agency. In this instance, the direction issued under Section 32 is that a specified amount of departmental appropriation from the Department of the Prime Minister and Cabinet (PM&C) be transferred to the Department of the Environment and Water Resources (DEW). This directive is facilitated by the delegation of authority from the Finance Minister to the Chief Executive of the Department of Finance and Administration, and subsequently to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. The obligations and requirements imposed by this Act on the entities it governs include ensuring that any transfer of functions is accompanied by a corresponding transfer of the appropriated funds to maintain financial accountability and integrity. The Act mandates that the relevant authorities consult with the affected departments, such as the DEW in this case, before issuing any directions to ensure that the transfer of funds is accurately reflected in the new agency's appropriation. The instrument also ensures that these transfers are recorded and managed within the approved financial frameworks, maintaining transparency and compliance with financial regulations. The Act does not explicitly state offences, penalties, or civil/criminal consequences for breaches in this specific context. However, non-compliance with financial management directives can generally lead to serious administrative and financial repercussions, including potential audits, financial discrepancies, and legal actions. The overall framework of the Financial Management and Accountability Act 1997, which governs this directive, ensures that any breaches of financial regulations could result in disciplinary actions, financial penalties, or other administrative consequences as prescribed by the relevant authorities.