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 29 June 2006 and numbered 23 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.
By way of an instrument dated 19 February 2003 made under s.62 of 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 3 April 2006 made under s.53 of the FMA Act, 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. The direction is issued by the Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that non-lapsing appropriation from prior years totalling $1,053,000 provided to the Department of Health and Ageing be transferred to non lapsing appropriation from prior years for Medicare Australia.
Background
On 6 October 2005 as per regulations made under the Medicare Australia Act 1973, the aged care payment function previously held by the Department of Health and Ageing was transferred to Medicare Australia. An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Department of Health and Ageing is transferred to Medicare Australia.
Notes on the instrument
The instrument provides that the amount set out in column 4 of the table in the instrument for non-lapsing appropriation from prior years for the Department of Health and Ageing be transferred to Medicare Australia.
Overview
The Financial Management and Accountability Act 1997 was enacted by the Australian Parliament to provide a robust framework for the management and accountability of financial resources within Commonwealth agencies. One of the key provisions of this Act is section 32, which addresses the adjustments of appropriations when there is a change in the functions of an agency. This legislative measure was introduced to ensure that there is a seamless transition of financial resources when agencies undergo restructuring or functional changes, thereby maintaining financial integrity and accountability. The explanatory statement for the instrument dated 29 June 2006, numbered 23 of 2005-2006, clarifies that this direction under section 32 facilitates the transfer of non-lapsing appropriations from the Department of Health and Ageing to Medicare Australia, following the transfer of the aged care payment function from the former to the latter on 6 October 2005. The policy objective is to ensure that the appropriation provided to the Department of Health and Ageing is appropriately transferred to Medicare Australia, reflecting the legislative intent to maintain fiscal coherence during agency functional shifts.
Scope and Application
The instrument, entitled "Direction under Section 32, Financial Management and Accountability Act 1997," dated 29 June 2006 and numbered 23 of 2005-2006, applies to the adjustment of appropriations when there is a change in the functions of government agencies. Specifically, it pertains to the transfer of appropriations from one agency to another when a function previously held by one agency is transferred to another, whether due to the abolition of the former or for any other reason. This instrument is an exercise of the authority granted under Section 32 of the Financial Management and Accountability Act 1997. The purpose of the instrument is to facilitate the transfer of non-lapsing appropriations from prior years, totalling $1,053,000, from the Department of Health and Ageing to Medicare Australia, following the transfer of the aged care payment function from the former to the latter on 6 October 2005. This transfer ensures that the appropriated funds are correctly aligned with the agency responsible for the specific function. The instrument is issued under the delegated authority of the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division, who have received the power to issue such directions from the Chief Executive of the Department of Finance and Administration, who in turn was delegated this power by the Finance Minister.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) addresses the adjustment of appropriations when there is a change in agency functions, specifically in section 32. According to subsection 32(2)(a), if a function of one agency (referred to as the old Agency) becomes a function of another agency (the new Agency), the Finance Minister can issue directions to transfer funds from the old Agency to the new Agency. This transfer is meant to ensure that the financial resources align with the new functional responsibilities. The instrument, dated 29 June 2006 and numbered 23 of 2005-2006, is an example of such a direction, transferring non-lapsing appropriations from the Department of Health and Ageing to Medicare Australia.
The obligations imposed by this Act on the relevant parties involve ensuring a smooth transition of financial resources when agency functions change. The Finance Minister, under section 32, has the authority to issue these directions. This power has been delegated by the Chief Executive of the Department of Finance and Administration to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division, who then issue the direction. This delegation ensures that the appropriate individuals with the necessary expertise are responsible for making these financial adjustments.
Failure to comply with the provisions of the FMA Act could result in significant consequences. While the explanatory statement does not explicitly detail offences or penalties, the Act's framework suggests that breaches may be subject to administrative or legal scrutiny. In broader terms, non-compliance with financial management acts can lead to civil or criminal penalties, depending on the severity and intent behind the breach. The penalties may include fines, imprisonment, or other corrective measures deemed necessary by the relevant authorities to uphold the integrity of the financial management system.