Explanatory Statement
Financial Management and Accountability Act 1997, Section 32 - Adjustments of Appropriations on Change of Agency Functions
The instrument to which this explanatory statement relates
This explanatory statement relates to an instrument (the instrument) entitled “Direction under Section 32, Financial Management and Accountability Act 1997”, dated 4 May 2006 and numbered 20 of 2005-2006.
The legislative authority under which the instrument is made
Section 32 of the Financial Management and Accountability Act 1997 (the FMA Act) applies if a function of an Agency (the old Agency) becomes a function of another Agency (the new Agency), either because the old Agency is abolished or for any other reason.
Subsection 32(2)(a) of the FMA Act enables the Finance Minister to, amongst other things, issue one or more directions to transfer from the old Agency to the new Agency some or all of an amount that has been appropriated for the performance of that function by the old Agency.
As noted in the FMA Act, the Finance Minister has delegated his power under section 32 to the Chief Executive of the Department of Finance and Administration. By way of an instrument dated 30 November 2004, the Chief Executive of the Department of Finance and Administration has, in turn, delegated the power to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that departmental outputs appropriation totalling $12,000,000.00, provided to the Department of Immigration and Multicultural Affairs in Appropriation Act (No.1) 2005-06, be transferred to the Department of Families, Community Services and Indigenous Affairs under Appropriation Act (No.1) 2005-06.
Background
On 27 January 2006, the Governor-General issued an Administrative Arrangements Order, which was gazetted in Special Notices Gazette S16 on 27 January 2006, transferring responsibility for the indigenous affairs function, from the Department of Immigration and Multicultural Affairs to the Department of Families, Community Services and Indigenous Affairs.
An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Department of Immigration and Multicultural Affairs for this function is transferred to the Department of Families, Community Services and Indigenous Affairs.
The amount to be transferred has been agreed between the Chief Financial Officers of the Department of Immigration and Multicultural Affairs and the Department of Families, Community Services and Indigenous Affairs in line with established processes.
Notes on the instrument
The instrument provides that the moneys listed in column 4 of the schedule for the Department of Immigration and Multicultural Affairs item be transferred to the Department of Families, Community Services and Indigenous Affairs item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 was enacted to provide a comprehensive framework for the financial management and accountability of Commonwealth agencies. This Act was introduced to address the need for clear and effective mechanisms to manage the appropriation of funds when the functions of an agency change. Enacted by the Parliament of Australia, the policy objective of this Act is to ensure that appropriations are appropriately allocated to reflect the current functional responsibilities of agencies. Section 32 of the Act, which pertains to the adjustments of appropriations on a change of agency functions, allows for the necessary reallocation of funds when an agency's functions are transferred to another agency. This provision was implemented to maintain financial integrity and accountability in the management of public funds, ensuring that appropriations follow the functions they were intended to support.
Scope and Application
The instrument, titled “Direction under Section 32, Financial Management and Accountability Act 1997”, pertains to the transfer of appropriations from one government agency to another when there is a change in the functions of such agencies. Specifically, it applies to the transfer of $12,000,000.00 in departmental outputs appropriations from the Department of Immigration and Multicultural Affairs to the Department of Families, Community Services and Indigenous Affairs, following a change in administrative arrangements. This transfer is necessitated by the abolition or reassignment of specific functions from the former department to the latter. The instrument’s authority derives from Section 32 of the Financial Management and Accountability Act 1997, which empowers the Finance Minister to issue directions for such transfers. The Finance Minister has delegated this power to the Chief Executive of the Department of Finance and Administration, who has further delegated it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This instrument ensures the smooth reallocation of funds in line with the updated administrative structure and is made under the Commonwealth jurisdiction.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) provides a framework for adjusting appropriations when there is a change in the functions of an agency. Specifically, section 32(2)(a) allows the Finance Minister to direct the transfer of appropriations from an agency whose functions have been transferred to another agency, either due to the former agency being abolished or for other reasons. This ensures that funds allocated for specific functions continue to be appropriately allocated following a change in agency responsibilities. The instrument issued on 4 May 2006, numbered 20 of 2005-2006, directs the transfer of a departmental output appropriation of $12,000,000.00 from the Department of Immigration and Multicultural Affairs to the Department of Families, Community Services and Indigenous Affairs, as per the Appropriation Act (No.1) 2005-06.
The obligations imposed by this Act on the relevant agencies and the Chief Executive of the Department of Finance and Administration are significant. The Chief Executive, having been delegated the authority to issue such directions, must ensure that the transfer of appropriations is executed accurately and in accordance with established processes. The Department of Immigration and Multicultural Affairs and the Department of Families, Community Services and Indigenous Affairs must cooperate to agree on the amount to be transferred, reflecting the agreed-upon value of the functions being transferred. This cooperation is essential to maintain the integrity and effectiveness of the financial management process.
Failure to comply with the provisions of the FMA Act and the directions issued under section 32 can lead to serious consequences. While the explanatory statement does not detail specific offences or penalties, breaches of the Act generally may result in both civil and criminal penalties, depending on the nature and severity of the non-compliance. Civil penalties could include fines or other monetary penalties, while criminal penalties might involve imprisonment. The exact penalties would depend on the specific circumstances and the provisions of the FMA Act and any related legislation. The importance of adherence to these provisions is underscored by the potential legal and financial repercussions of non-compliance.