Direction under section 32, Financial Management and Accountability Act 1997 – Adjustments of Appropriations on Change of Agency Functions (No. 16 of 2006-2007)

Overview

The Financial Management and Accountability Act 1997 was enacted by the Australian Parliament to ensure that public money is managed effectively and that accountability is maintained in the management of public funds. The Act provides a framework for the financial management of Commonwealth entities, including the adjustment of appropriations when the functions of an agency change. Specifically, section 32 of the Act allows for the transfer of appropriations when an agency’s functions are assumed by another agency, either through abolition or otherwise. The policy objective is to ensure that financial resources follow the functions they support, thereby maintaining efficient and effective public administration. The instrument in question, dated 22 June 2007, directs the transfer of specified 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. This adjustment is made in accordance with the delegations of authority under the FMA Act, ensuring that financial management remains consistent with the legislative intent.

Scope and Application

The Financial Management and Accountability Act 1997 applies to various agencies within the Commonwealth of Australia, particularly those that undergo a change in functions, whether due to abolition or other reasons. Specifically, section 32 of the Act addresses the adjustment of appropriations when the functions of one agency are transferred to another. This section empowers the Finance Minister to issue directions for the transfer of appropriated funds from the agency whose functions are being altered (the old Agency) to the agency that is assuming those functions (the new Agency). This legislative provision ensures that financial resources are correctly aligned with the functions being performed by the relevant agencies. The scope of the Act is reinforced through delegations of authority, with the power to issue such directions being 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. In practice, the Acting Division Manager, Financial Reporting and Cash Management Division, issues the specific directions as outlined in the instrument. The application of this Act is national, impacting all federal agencies subject to changes in their functional responsibilities, ensuring fiscal accountability and alignment of budgetary allocations with the operational mandates of the agencies involved.

Key Provisions

The instrument (F2007L01937), titled "Direction under Section 32, Financial Management and Accountability Act 1997," dated 22 June 2007, addresses the transfer of appropriations when there is a change in the functions of an agency. Under section 32 of the Financial Management and Accountability Act 1997 (FMA Act), if a function of an agency (the old agency) becomes a function of another agency (the new agency), the Finance Minister can issue directions to transfer some or all of the appropriated funds from the old agency to the new agency. This directive is particularly relevant when the old agency is abolished or if its functions are re-allocated for other reasons. The directive empowers the Finance Minister to transfer the funds to ensure continuity and accountability in financial management. Section 32(2)(a) of the FMA Act allows for this transfer, and the power to issue such directions has been delegated by the Finance Minister to the Chief Executive of the Department of Finance and Administration, and further delegated 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, issued the specific direction to transfer funds from the Department of the Prime Minister and Cabinet (PM&C) to the Department of the Environment and Water Resources (DEW). This transfer follows the administrative changes that moved the Office of Water Resources from PM&C to DEW on 30 January 2007, as outlined in the Administrative Arrangements Order. The obligations under this Act include ensuring that any changes in agency functions are accompanied by a corresponding transfer of appropriations to maintain financial integrity and compliance. The relevant departments, PM&C and DEW, were consulted in the preparation of the instrument, as required by the Legislative Instruments Act 2003. The obligation to consult ensures that all parties are informed and can agree on the financial implications of the transfer. Failure to comply with the directions issued under this Act may result in legal and financial consequences. While the specific penalties for breach are not detailed in the explanatory statement, breaches of financial management directives under the FMA Act can generally lead to civil or criminal penalties, depending on the nature and severity of the breach. Civil penalties can include fines, while criminal penalties can include imprisonment. The exact penalties would be determined based on the specific circumstances of the breach and applicable laws.