Direction under section 32, Financial Management and Accountability Act 1997 – Adjustments of Appropriations on Change of Agency Functions (No. 6 of 2005-2006)

Overview

The Financial Management and Accountability Act 1997 was enacted to ensure the proper management and accountability of public funds. One of its key provisions, Section 32, addresses the issue of appropriations when there is a change in agency functions. This was introduced to address the need for clear and efficient transfer of financial resources when administrative responsibilities shift between government agencies. The enacting body for this Act is the Parliament of Australia, with the policy objective being to maintain fiscal integrity and transparency in the allocation and use of public funds. The explanatory statement pertains to a Direction issued under Section 32 on 13 September 2005, which facilitates the transfer of $183,000 from the Department of the Treasury to the Australian Competition and Consumer Commission as part of a machinery of government change. This adjustment ensures that the appropriations are correctly aligned with the new agency responsible for product safety and consumer information.

Scope and Application

The Financial Management and Accountability Act 1997 applies to appropriations and financial management within the Commonwealth of Australia, particularly in instances where functions are transferred between agencies. Section 32 of the Act specifically addresses the adjustment of appropriations when a function of one agency becomes a function of another agency, whether due to the abolition of the original agency or for other reasons. The Act empowers the Finance Minister to issue directions for the transfer of appropriated funds from the old agency to the new agency. This legislative authority has been delegated to the Chief Executive of the Department of Finance and Administration, who further delegated the power to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. In a recent application of this section, an instrument dated 13 September 2005 directed the transfer of $183,000 from the Department of the Treasury to the Australian Competition and Consumer Commission, reflecting a machinery of government change that transferred product safety and consumer information responsibilities to the latter agency. This transfer was in line with established processes and was agreed upon by the Chief Financial Officers of both agencies.

Key Provisions

The main operative sections of the instrument, particularly section 32 of the Financial Management and Accountability Act 1997 (FMA Act), mandate the transfer of appropriations when there is a change in the agency responsible for a specific function. Specifically, section 32(2)(a) empowers the Finance Minister to issue directions for transferring funds from an old agency to a new agency if the old agency is abolished or its functions are transferred for any reason. This instrument directs the transfer of $183,000 from the Department of the Treasury to the Australian Competition and Consumer Commission (ACCC) due to a change in administrative responsibilities. This transfer ensures that funding aligns with the new function holders. The obligations and requirements imposed by the Act on the parties involved include adhering to the established processes for the transfer of appropriations. The Finance Minister, or their delegates such as the Chief Executive of the Department of Finance and Administration, is responsible for issuing the necessary directions. The Chief Financial Officers of the Department of the Treasury and the ACCC must agree on the amount to be transferred, following the prescribed procedures. This ensures a systematic and agreed-upon transfer of funds that reflects the change in administrative responsibilities. Breaches of the provisions outlined in the FMA Act can lead to both civil and criminal consequences. Although the explanatory statement does not specify penalties, breaches of financial management and accountability legislation typically incur significant fines and potential imprisonment. The severity of the penalties would depend on the nature and extent of the breach, but they are intended to enforce compliance and uphold the integrity of financial management practices. Ensuring adherence to the Act is crucial for maintaining proper financial governance and accountability within the Australian public sector.