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 25 August 2006 and numbered 5 of 2006-2007.
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.
Paragraph 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 section 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 section 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 departmental appropriation totalling $4,918,000 provided to the Migration Review Tribunal in Appropriation Act (No. 1) 2005-2006, be transferred to the Migration Review Tribunal and Refugee Review Tribunal (the MRT-RRT).
Background
On 30 June 2006 the Migration Review Tribunal was abolished. On 1 July 2006, the MRT-RRT became a prescribed agency. The functions which were previously performed by the Migration Review Tribunal will from 1 July 2006 be performed by the MRT-RRT. An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Migration Review Tribunal is transferred to the MRT-RRT.
Notes on the instrument
The instrument provides that the amount set out in column 4 of the table in the instrument for the departmental item in Appropriation Act (No. 1) 2005-2006 be transferred to the MRT-RRT.
In accordance with the Legislative Instruments Act 2003 the MRT-RRT was consulted in preparation of this instrument.
Overview
The Financial Management and Accountability Act 1997 was enacted to provide a framework for the financial management and accountability of Commonwealth agencies. Section 32 of the Act addresses the adjustment of appropriations when the functions of an agency change, either due to the agency's abolition or for other reasons. This legislative provision ensures that appropriations are appropriately reallocated to maintain financial integrity and continuity of service. The Act was introduced to address the need for clear guidelines on the transfer of appropriations between agencies to prevent financial mismanagement and ensure that public funds are used effectively. The instrument, dated 25 August 2006, under section 32 of the FMA Act, was issued by the Division Manager, Financial Reporting and Cash Management Division, following the abolition of the Migration Review Tribunal and the establishment of the Migration Review Tribunal and Refugee Review Tribunal on 1 July 2006. The instrument directs the transfer of $4,918,000 from the abolished Migration Review Tribunal to the newly formed MRT-RRT, ensuring a seamless transition of financial responsibility and maintaining the intended use of public funds.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to appropriations of funds allocated to government agencies, and its provisions are triggered when there is a change in the functions of an agency, such as the abolition or restructuring of an agency. Specifically, section 32 of the Act pertains to the adjustments of appropriations when a function of an agency (referred to as the "old Agency") is transferred to another agency (the "new Agency"). This may occur due to the abolition of the old Agency or for other reasons. The Act allows the Finance Minister to issue directions to transfer appropriated funds from the old Agency to the new Agency, ensuring continuity in financial management and accountability. The instrument, titled "Direction under Section 32, Financial Management and Accountability Act 1997," dated 25 August 2006, directs the transfer of $4,918,000 from the Migration Review Tribunal to the newly formed Migration Review Tribunal and Refugee Review Tribunal (MRT-RRT), following the abolition of the former on 30 June 2006. The instrument reflects the delegation of authority from the Finance Minister to the Chief Executive of the Department of Finance and Administration, and further to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division, who issued the direction. The instrument also ensures consultation with the MRT-RRT, as mandated by the Legislative Instruments Act 2003, prior to its preparation.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) provides for the adjustment of appropriations when a function of an agency is transferred to another agency, either due to the abolition of the former agency or for other reasons. Under this section, the Finance Minister can issue directions to transfer appropriated amounts from the old agency to the new agency performing the function. This particular instrument, dated 25 August 2006, directs the transfer of $4,918,000 from the abolished Migration Review Tribunal to the newly established Migration Review Tribunal and Refugee Review Tribunal (MRT-RRT) as of 1 July 2006. The authority to issue such directions has been delegated by the Finance Minister to the Chief Executive of the Department of Finance and Administration, and further delegated to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division.
The obligations and requirements imposed by this Act include ensuring that any appropriations previously allocated to the old agency are appropriately transferred to the new agency to avoid any disruption in the performance of functions. In this case, the obligation is to transfer the specified departmental appropriation from the Migration Review Tribunal to the MRT-RRT. The Act mandates consultation with the relevant entities, which in this instance involved consulting the MRT-RRT, ensuring transparency and cooperation in the appropriation adjustment process.
The Act does not explicitly outline offences or penalties for non-compliance with the appropriation adjustment provisions. However, failure to properly adjust appropriations in line with the Act could potentially result in financial mismanagement or legal challenges, as it may lead to a lack of funds for the new agency to perform its functions effectively. The consequences of such failures are not explicitly stated but could involve administrative reviews or legal actions aimed at rectifying the financial discrepancies.