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 21 January 2005 and numbered 28 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.
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 Division Manager, Financial Reporting and Cash Management Division, Financial Management Group.
Purpose of the instrument
The instrument directs that departmental outputs appropriation of $117,000, provided to the Department of Education, Science and Training in Appropriation Act (No. 1) 2004-05, be transferred to the Department of Human Services.
Background
On 26 October 2004, the Governor-General issued an Administrative Arrangements Order which was gazetted in Special Notices Gazette S427 of 27 October 2004, making the Department of Human Services responsible for, amongst other things, monitoring and management of service delivery and purchaser/provider relationships involving Centrelink, the Health Insurance Commission, the Child Support Agency, Australian Hearing, Health Services Australia and CRS Australia.
One of the implications of this is that the Department of Human Services has assumed responsibility for managing Centrelink’s delivery of a number of Department of Education, Science and Training programmes from the latter department.
An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Department of Education, Science and Training for performance of the function is transferred to the Department of Human Services.
Notes on the instrument
The instrument provides that the moneys listed in column 4 of the schedule for the Department of Education, Science and Training item be transferred to the Department of Human Services item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted to establish a framework for the financial management and accountability of Commonwealth entities, ensuring that public funds are used efficiently, effectively and economically. This Act aims to address the need for a robust system to oversee the appropriation and expenditure of public money. The FMA Act was introduced by the Parliament of Australia to provide a legislative foundation that supports good governance and fiscal responsibility in the management of public resources. The instrument detailed in this explanatory statement, specifically the Direction under Section 32 issued on 21 January 2005, exemplifies the application of the FMA Act in reallocating appropriations due to a change in agency functions. In this case, the direction facilitates the transfer of a departmental outputs appropriation from the Department of Education, Science and Training to the Department of Human Services, aligning with the policy objective of ensuring that funds are appropriately directed to support the new functions assumed by the latter department.
Scope and Application
The instrument outlined in the explanatory statement pertains to a Direction issued under section 32 of the Financial Management and Accountability Act 1997 (FMA Act) concerning the transfer of appropriations when functions are reassigned between agencies. This instrument applies specifically to the scenario where the Department of Human Services assumes the responsibility of managing Centrelink’s delivery of certain Department of Education, Science and Training programmes, as mandated by an Administrative Arrangements Order issued by the Governor-General on 26 October 2004. The Direction facilitates the transfer of a departmental outputs appropriation of $117,000 from the Department of Education, Science and Training to the Department of Human Services, ensuring that financial resources are appropriately aligned with the new functional responsibilities. The power to issue such directions is delegated from the Finance Minister to the Chief Executive of the Department of Finance and Administration and further to the Division Manager, Financial Reporting and Cash Management Division, Financial Management Group, allowing for detailed and specific financial adjustments in line with agency function changes.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) includes specific provisions for adjusting appropriations when agency functions are transferred or altered. Section 32(2)(a) of the FMA Act allows the Finance Minister to issue directions to transfer appropriations from one agency to another when the functions of the original agency are assumed by a different agency, either due to the abolition of the original agency or for other reasons. This direction mechanism ensures that the financial resources allocated for specific functions are appropriately reallocated to the agency that now bears responsibility for those functions.
The obligations under the Act require the Finance Minister, or the delegate, to carefully consider and issue a direction when a change in agency functions occurs. This process is formalised in the instrument, which specifies the exact appropriation amounts to be transferred from the Department of Education, Science and Training to the Department of Human Services. The instrument dated 21 January 2005, numbered 28 of 2004-2005, details the transfer of a departmental output appropriation of $117,000 from the Department of Education, Science and Training to the Department of Human Services, as mandated by the FMA Act.
Furthermore, the Act does not explicitly outline specific offences, penalties, or civil/criminal consequences for non-compliance with these appropriation adjustments. However, the importance of adhering to these provisions is underscored by the necessity to maintain accurate and lawful financial management practices. Failure to appropriately adjust appropriations when agency functions change could lead to financial mismanagement and legal scrutiny, as the Act aims to ensure that funds are used effectively and in accordance with the intended purposes for which they were allocated.