Direction under section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 8 of 2005-2006)

Overview

The Financial Management and Accountability Act 1997 was enacted to provide a framework for financial management and accountability within the Australian Government. The Act addresses the problem of ensuring that appropriations are properly managed when there is a change in the functions of an agency. This includes situations where an agency is abolished or its functions are transferred to another agency. The Act was enacted by the Parliament of Australia and aims to ensure that financial resources are appropriately allocated and managed within the government, maintaining transparency and accountability. One of the mechanisms provided by the Act is the ability of the Finance Minister to issue directions for the transfer of appropriations when there is a change in agency functions, as outlined in section 32 of the Act. This ensures that the financial resources follow the functions they were intended to support, maintaining the integrity of the budget and the accountability of the agencies involved.

Scope and Application

The Financial Management and Accountability Act 1997, specifically Section 32, pertains to the adjustment of appropriations when there is a change in the functions of an agency. This provision applies to agencies where a function that was previously managed by one agency (referred to as the old Agency) is transferred to another agency (the new Agency) due to the abolition of the old Agency or any other reason. The Act allows the Finance Minister to issue directions to facilitate the transfer of funds that were appropriated for the performance of the function by the old Agency to the new Agency. The Finance Minister has delegated this power to the Chief Executive of the Department of Finance and Administration, who has further delegated it to the Division Manager, Financial Reporting and Cash Management Division. This legislative framework ensures that financial resources are appropriately allocated to reflect changes in agency responsibilities. The instrument, dated 18 October 2005, directs the transfer of $39,000 in administered expenses appropriation from the Department of Family and Community Services to the Department of Employment and Workplace Relations, reflecting an administrative rearrangement approved by the Governor-General's Administrative Arrangements Order on 26 October 2004.

Key Provisions

The Financial Management and Accountability Act 1997 (FMA Act) includes Section 32, which addresses adjustments to appropriations when agency functions change. Under Section 32(2)(a), the Finance Minister can issue directions to transfer funds from an old agency to a new agency if the old agency's function is transferred or abolished. This section ensures that financial resources align with the new responsibilities of the agencies involved. The obligations imposed by Section 32 require the Finance Minister to make these adjustments when there is a transfer of functions between agencies. This process must be carried out in accordance with the established procedures and agreements between the relevant Chief Financial Officers. The Chief Executive of the Department of Finance and Administration has the delegated authority to issue these directions, and this power has been further delegated to the Division Manager, Financial Reporting and Cash Management Division. The instrument dated 18 October 2005, numbered 8 of 2005-06, provides a specific example of these provisions in action. It directs the transfer of $39,000 in administered expenses appropriation from the Department of Family and Community Services to the Department of Employment and Workplace Relations. This transfer aligns with the Administrative Arrangements Order issued on 26 October 2004, which moved certain responsibilities from the former department to the latter. There are no specific offences, penalties, or civil/criminal consequences mentioned in the Act or the instrument for breaches of these provisions. However, failure to comply with these adjustments could lead to financial mismanagement and accountability issues, potentially resulting in broader administrative or financial repercussions. The primary focus is on ensuring that funds are correctly allocated to match the agencies' new functions, thereby maintaining fiscal integrity and proper resource management.