Explanatory Statement
Financial Management and Accountability Act 1997, Section 32 - Adjustment 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 29 February 2008 and numbered 7 of 2007-2008.
The legislative authority under which the instrument is made
Note: the Financial Management and Accountability Act 1997 (‘the FMA Act’) was amended by the Financial Framework Legislation Amendment Act (No. 1) 2007 (FFLA) Act. Amendments to section 32 of the FMA Act took effect on 25 September 2007. As this transfer of functions took place prior to 25 September 2007, under item 17 of the FFLA Act, this transfer is made under section 32 as it applied at that time.
Section 32 of 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.
By way of an instrument effective from 1 July 2007 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 Deregulation. By way of an instrument effective from 1 July 2007 made under section 53 of the FMA Act, the Chief Executive of the Department of Finance and Deregulation 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 part of the departmental items, being an amount of $472,000.00 under Appropriation Act (No. 1) 2004-2005 and $46,774.67 under Appropriation Act (No. 1) 2006-2007 provided to the Office of Film and Literature Classification (OFLC) be transferred to the Attorney-General’s Department (AGD).
Background
On 23 February 2006, the Attorney-General announced that the policy and administrative functions previously held by the OFLC would be folded into the AGD. This direction completes the transfer of functions from OFLC to AGD.
Transfers were previously made in an instrument entitled “Direction under Section 32, Financial Management and Accountability Act 1997”, dated 9 August 2007 and numbered 3 of 2007-2008.
Notes on the instrument
The instrument provides that the amounts set out in column 4 of the table for the appropriation items in column 1 for OFLC be transferred to AGD.
In accordance with the Legislative Instruments Act 2003, AGD was consulted in the preparation of this instrument.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted to ensure robust financial management practices across Commonwealth agencies and address deficiencies in financial reporting, accountability, and appropriation control. The Act, passed by the Australian Parliament, aims to enhance transparency and efficiency in the allocation and use of public funds. Section 32 of the FMA Act specifically addresses the adjustment of appropriations when there is a change in agency functions, either due to the abolition of an agency or a reassignment of duties to another agency. This legislative provision allows the Finance Minister to issue directions for the transfer of appropriations to ensure continuity in funding for the transferred functions. The 2008 instrument, which directs the transfer of specific appropriations from the Office of Film and Literature Classification to the Attorney-General's Department, exemplifies the application of these provisions to facilitate smooth transitions in governmental functions and maintain fiscal integrity.
Scope and Application
The instrument, “Direction under Section 32, Financial Management and Accountability Act 1997” dated 29 February 2008, applies to the transfer of appropriations associated with the functions of the Office of Film and Literature Classification (OFLC) to the Attorney-General’s Department (AGD). This transfer arises from the reassignment of policy and administrative functions from the OFLC to the AGD, as announced on 23 February 2006. The instrument is a legislative instrument under section 62 of the Financial Management and Accountability Act 1997 (FMA Act), with the authority to direct the transfer of appropriations delegated by the Finance Minister to the Chief Executive of the Department of Finance and Deregulation, and further delegated to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This instrument complements the earlier direction issued on 9 August 2007, completing the transfer of specified departmental items, namely $472,000.00 under the Appropriation Act (No. 1) 2004-2005 and $46,774.67 under the Appropriation Act (No. 1) 2006-2007. The instrument follows the legislative process and ensures the smooth transition of financial responsibilities from OFLC to AGD.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) addresses the adjustment of appropriations when an agency's functions are transferred to another agency. Specifically, section 32(2)(a) allows the Finance Minister to issue directions for the transfer of appropriated amounts related to these functions. This transfer becomes necessary when an agency is abolished or its functions are otherwise reallocated. The instrument dated 29 February 2008, numbered 7 of 2007-2008, is an example of such a direction. It outlines the transfer of specific appropriations from the Office of Film and Literature Classification (OFLC) to the Attorney-General's Department (AGD) following the transfer of functions announced on 23 February 2006.
The obligations imposed by this Act primarily involve ensuring that the appropriated funds are correctly reallocated to reflect the change in agency functions. The Finance Minister, through delegation, authorises these transfers, ensuring that the new agency receives the necessary funding to perform its new functions. The delegation process involves the Chief Executive of the Department of Finance and Deregulation and, subsequently, the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division, who issue the direction. The act also mandates consultation with the affected departments, as seen in the involvement of AGD in the preparation of this instrument.
Under the FMA Act, failure to comply with the provisions related to the adjustment of appropriations could lead to administrative or legal consequences. While the specific penalties for non-compliance are not detailed in the instrument, breaches of financial management legislation generally could result in civil or criminal penalties. These could include fines or other sanctions, depending on the severity and intent behind the breach. The Act ensures that the financial management of government agencies remains transparent and accountable, safeguarding public funds and ensuring they are used effectively for their intended purposes.