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 3 June 2005 and numbered 40 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.
Purpose of the instrument
The instrument directs that appropriation totalling $200,000, provided to the Department of Family and Community Services in Appropriation Act (No. 1) 2004-05, be transferred to the Department of Employment and Workplace Relations.
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, transferring responsibility for income support and programmes for people of working age, and to help people with disabilities obtain employment, other than supported employment, from the Department of Family and Community Services to the Department of Employment and Workplace Relations.
This section 32 agreement is for the transfer from the Department of Family and Community Services of the Disability Employer measure from the Prime Ministers Community Business Partnership programme in Outcome 2 – Communities are Strong, Output 2.2 – Community Support to the Department of Employment and Workplace Relations as agreed between both parties on
3 May 2005.
Appropriation adjustments, pursuant to section 32 of the FMA Act, are required to ensure that appropriation provided to the Department of Family and Community Services for performance of these functions is transferred, as agreed, to the Department of Employment and Workplace Relations.
Notes on the instrument
The instrument provides that the moneys listed in column 4 of the schedule for the Department of Family and Community Services item be transferred to the Department of Employment and Workplace Relations item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia to ensure that financial resources are managed and accounted for effectively within government agencies, particularly when there is a change in the functions of those agencies. This Act aims to address the problem of ensuring that appropriations are appropriately adjusted and reallocated when responsibilities and functions are transferred between agencies, either due to the abolition of an agency or for other reasons. In line with this, section 32 of the Act enables the Finance Minister to issue directions for the transfer of appropriations from one agency to another, ensuring that funds are appropriately aligned with the current responsibilities of the agencies involved. The policy objective of this provision is to maintain fiscal integrity and ensure that government resources are utilised efficiently and effectively in accordance with the current operational mandates of agencies. In the context of the instrument dated 3 June 2005, this power has been exercised to transfer a specified appropriation from the Department of Family and Community Services to the Department of Employment and Workplace Relations, following a change in the administrative arrangements as per the Administrative Arrangements Order issued on 26 October 2004.
Scope and Application
The Financial Management and Accountability Act 1997, specifically under Section 32, addresses the adjustment of appropriations when there is a change in agency functions. This legislative provision applies when a function previously managed by one agency (referred to as the old Agency) is transferred to another agency (the new Agency), whether due to the abolition of the old Agency or for other reasons. Under this section, the Finance Minister has the authority to issue directions for the transfer of appropriations related to these functions. This authority has been delegated to the Chief Executive of the Department of Finance and Administration, and subsequently to the Division Manager, Financial Reporting and Cash Management Division. The instrument dated 3 June 2005, numbered 40 of 2004-2005, directs the transfer of an appropriation of $200,000 from the Department of Family and Community Services to the Department of Employment and Workplace Relations, reflecting a change mandated by an Administrative Arrangements Order issued on 26 October 2004. This transfer ensures the continuity of funding for the Disability Employer measure from the Prime Ministers Community Business Partnership programme, as agreed between the two departments on 3 May 2005.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) contains provisions for the transfer of appropriations when there is a change in agency functions. Specifically, section 32 (subsection 32(2)(a)) empowers the Finance Minister to issue directions for the transfer of appropriations from one agency to another if a function of one agency becomes the function of another, either due to the abolition of the former agency or for any other reason. This section ensures that the funding for the performance of specific functions is correctly aligned with the responsible agency.
Under this provision, the Finance Minister has delegated this authority to the Chief Executive of the Department of Finance and Administration, who in turn has delegated it to the Division Manager of the Financial Reporting and Cash Management Division. This delegation of authority ensures that the process for transferring appropriations is handled by individuals with the necessary expertise and oversight. The instrument issued on 3 June 2005 directs the transfer of an appropriation of $200,000 from the Department of Family and Community Services to the Department of Employment and Workplace Relations, as required by the changes in agency functions.
The obligations imposed by section 32 of the FMA Act on the relevant agencies include ensuring that the transfer of appropriations is carried out in accordance with the directions issued by the Division Manager of the Financial Reporting and Cash Management Division. This includes maintaining accurate records of the transfer and ensuring that the funds are used for the purposes for which they were appropriated. The agencies must also cooperate in the process to facilitate a smooth and accurate transfer of funds.
The consequences of failing to comply with the requirements of section 32 of the FMA Act can include both civil and criminal penalties. Civil penalties may include fines or other monetary penalties, while criminal penalties could involve imprisonment, depending on the severity and intent of the breach. The specific penalties are determined by the courts and can vary based on the circumstances of each case. Compliance with the Act is crucial to avoid these potential consequences and to ensure the proper management of public funds.