Direction under Section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 14 of 2006-2007)

Overview

The Financial Management and Accountability Act 1997 was enacted by the Commonwealth Parliament to ensure proper financial management and accountability within government agencies. Section 32 of the Act provides a mechanism for adjusting appropriations when there is a change in the functions of an agency. This was introduced to address the need for flexibility in financial allocations when agencies undergo structural changes, either through abolition or reassignment of functions. The policy objective behind this provision is to maintain fiscal integrity and ensure that funds are appropriately allocated to the agencies responsible for the functions in question. In cases where the functions of an agency are transferred to another, the Finance Minister, or a delegate, can issue a direction to adjust the appropriations accordingly. This ensures that financial resources are aligned with the current operational needs and responsibilities of the agencies involved.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) applies to instances where a function of an agency (referred to as the old Agency) becomes a function of another agency (referred to as the new Agency), either due to the abolition of the old Agency or for any other reason. Under Section 32 of the FMA Act, the Finance Minister can issue directions to transfer some or all of the appropriated funds for the performance of the function from the old Agency to the new Agency. The authority to issue such directions has been delegated by 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 instrument in question, dated 27 April 2007, directs the transfer of specific departmental and administered appropriations from the Department of Agriculture, Fisheries and Forestry (DAFF) to the Department of the Environment and Water Resources (DEW), following changes to the Administrative Arrangements Order on 30 January 2007, which resulted in the transfer of water-related functions from DAFF to DEW. The instrument specifies the exact amounts to be transferred, which include $762,000 and $4,768,479 from Appropriation Act (No.1) 2006-2007, and $23,894,000 from Appropriation Act (No. 2) 2006-2007.

Key Provisions

Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) addresses the adjustment of appropriations when a function of an Agency (referred to as the "old Agency") is transferred to another Agency (the "new Agency"). This can occur when the old Agency is abolished or for any other reason. Specifically, subsection 32(2)(a) allows the Finance Minister to issue directions to transfer funds that have been appropriated for the performance of the function from the old Agency to the new Agency. This delegation process involves the Finance Minister delegating this authority to the Chief Executive of the Department of Finance and Administration, who then further delegates it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. The Acting Division Manager, Financial Reporting and Cash Management Division, issues the direction. The obligations imposed by this legislation on the relevant parties include ensuring that the transfer of appropriations is carried out as directed. This involves the old Agency preparing the necessary documentation and facilitating the transfer of funds, while the new Agency must accept and account for the transferred appropriations as part of its budget. Both Agencies must adhere to the directions issued by the Finance Minister through the specified delegates, and ensure that the appropriations are used in accordance with their intended purposes. The consequences of non-compliance with the provisions of the FMA Act and the directions issued under it can be significant. While the explanatory statement does not detail specific offences or penalties, breaches of legislative provisions generally can lead to administrative, civil, or criminal penalties. In the context of financial management, failure to transfer appropriations as directed could result in financial irregularities, mismanagement of public funds, and potential legal actions against the responsible officers. The penalties for such breaches can include fines, imprisonment, or other civil consequences, depending on the severity of the breach and the discretion of the relevant authorities.