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 14 January 2005 and numbered 27 of 2004-2005.
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.
In an instrument dated 12 February 2003, the Finance Minister has authorised the person holding the position of SES Band 2, Financial Reporting and Cash Management Division, in the Department of Finance and Administration to exercise the power provided for under subsection 32(2)(a) of the FMA Act.
Purpose of the instrument
The instrument, made by an authorised person in the Department of Finance and Administration, directs that departmental appropriation totalling $757,404, provided to the Department of the Treasury in Appropriation Act (No. 1) 2004-05 and prior years, be transferred to the Australian Competition and Consumer Commission.
Background
In the context of a review of administrative arrangements in October 2004, the Prime Minister agreed to a machinery of government change transferring responsibility for the administration of product safety and consumer information from the Department of the Treasury to the Australian Competition and Consumer Commission.
An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Department of the Treasury for performance of the functions is transferred to the Australian Competition and Consumer Commission. The amount to be transferred has been agreed between the Chief Financial Officers of the Department of the Treasury and the Australian Competition and Consumer Commission in line with established process.
Notes on the instrument
The instrument provides that the moneys listed in column 4 of the schedule for the Department of the Treasury item be transferred to the Australian Competition and Consumer Commission item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 was enacted by the Commonwealth Parliament to ensure proper financial management and accountability within Commonwealth agencies. It aims to provide a framework for the allocation, management, and reporting of public money, thereby safeguarding public funds and ensuring transparency. Section 32 of the Act addresses the adjustments of appropriations when there is a change in agency functions, either due to the abolition of an agency or other reasons. The policy objective is to ensure that funds appropriated for specific functions are appropriately transferred to the agency that assumes those functions, maintaining financial continuity and accountability. An instrument dated 14 January 2005, made under section 32 of the Act, directs the transfer of a departmental appropriation from the Department of the Treasury to the Australian Competition and Consumer Commission following a machinery of government change. This transfer of $757,404 ensures that the appropriation for product safety and consumer information functions is correctly aligned with the agency responsible for those functions.
Scope and Application
The Financial Management and Accountability Act 1997 applies to agencies within the Commonwealth government that undergo a change in their functions, whether due to abolition or other reasons. Specifically, Section 32 of the Act deals with the adjustments of appropriations when an agency’s functions are transferred to another agency. This legislation mandates the Finance Minister to issue directions for the transfer of appropriations from the old agency to the new agency. In this case, the instrument directs the transfer of $757,404 in departmental appropriation from the Department of the Treasury to the Australian Competition and Consumer Commission following a machinery of government change. The geographic and jurisdictional reach of this Act is limited to Commonwealth agencies, and it operates on a national level. The Act does not specify exclusions or exemptions, but it does allow for adjustments through subordinate instruments, such as the direction issued under Section 32. This direction was authorised by the Finance Minister and is executed by a designated officer within the Department of Finance and Administration.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) includes a provision that allows for the adjustment of appropriations when the functions of one agency are transferred to another. Specifically, section 32 (subsection 32(2)(a)) of the Act empowers the Finance Minister to issue directions for the transfer of appropriated funds from an agency whose functions are being transferred to another agency, whether due to abolition or other reasons. This ensures that the financial resources previously allocated for specific functions are appropriately redirected to support the new agency's responsibilities.
The obligations imposed by section 32 on the entities involved include the requirement for the Finance Minister to issue a direction detailing the transfer of funds. This obligation ensures that the financial implications of a change in agency functions are addressed promptly and accurately. The authorised person within the Department of Finance and Administration, as specified in a 2003 instrument, must execute the direction issued by the Finance Minister. Additionally, the Chief Financial Officers of the affected agencies must collaborate to determine the specific amount to be transferred, adhering to established processes.
Breaching the provisions of section 32, or failing to comply with the directions issued under it, could lead to significant consequences. While the Act does not explicitly state penalties for non-compliance, any failure to properly adjust and transfer appropriations as required could result in financial mismanagement and accountability issues. Such breaches may be subject to broader administrative and legal scrutiny, potentially leading to civil or criminal liabilities depending on the severity and impact of the non-compliance. The exact nature and extent of penalties would depend on the specific circumstances and relevant legal frameworks.