EXPLANATORY STATEMENT
SUBJECT - AUDIT ACT 1901: FINANCE REGULATIONS (AMENDMENT) FINANCE (OVERSEAS) REGULATIONS (AMENDMENT)
1987 No. 169
Sub-section 71(1) of the Audit Act 1901 (the Act) provides that the Governor-General may make regulations (not inconsistent with the provisions of the Act). In the attached Statutory Rules the Finance Regulations and Finance (Overseas) Regulations, made pursuant to these provisions, have been amended.
Details of the amendments are as follows:
Section 34 of the Act, provides, inter alia, that a payment included in a prescribed class of payments may be certified if, after any requirements prescribed by the regulations or in any directions given by the Minister have been complied with, the Certifying Officer has no reason to believe that payment may not properly be made. This provision enables prescribed classes of claims to be certified without undergoing the detailed checking normally afforded claims which have not been prescribed. The classes of claims which have been prescribed, and the checks to be carried out on them, are included in Finance Regulation 45A and Finance (Overseas) Regulation 13.
An Efficiency Scrutiny on the Processing of Accounts was established by the Government to examine all aspects of the processing of accounts with the object of ensuring that the efficiency of the process is maximised and payments are made by the due date. Included in the report of the Scrutiny was a recommendation that the number of checks to be carried out on certain large volume accounts be reduced. The Scrutiny revealed that the then current procedures involved an excessive checking of accounts for correctness and that the extra costs associated with such procedures produced insufficient benefit to the Commonwealth. Moreover, it was observed that those processes often slowed down the making of payments to claimants to an unacceptable degree.
To give effect to that recommendation, Finance Regulation 45A and Finance (Overseas) Regulation 13 have been amended to prescribe two additional classes of payments. They are:
(a) payments in satisfaction of claims made under contracts under which the Commonwealth has the right to make adjustments of those payments, as necessary, on subsequent claims by those claimants; and
(b) payments in satisfaction of claims for payment of accounts not exceeding $1000 in respect of supplies.
It is anticipated that, by simplifying the certification of such claims, the amendments will result both in considerable financial savings to the Commonwealth and improved commercial relationships with claimants.
Overview
The Audit Act 1901, enacted by the Parliament of Australia, was amended by Statutory Rules 1987 No. 169 to address inefficiencies in the processing of government accounts and claims, particularly those involving large volume payments. This amendment was made to the Finance Regulations and Finance (Overseas) Regulations, which were subsequently altered to reduce the number of checks on certain classes of payments. The policy objective of these amendments was to achieve cost savings and improve efficiency in the certification process, thereby ensuring payments are made on time while maintaining the integrity of the claims process. By introducing two additional classes of payments that require fewer checks, the legislation aims to streamline the certification process, leading to financial savings and better commercial relations with claimants.
Scope and Application
The Audit Act 1901 applies to the Commonwealth's financial management and audit processes, specifically concerning the certification and payment of claims. The Act is enacted at the federal level and applies to the Commonwealth government and its entities, covering financial transactions and conduct within its jurisdiction. The Act authorises the Governor-General to make regulations, as stated in Section 71(1), to implement its provisions. The Finance Regulations and Finance (Overseas) Regulations, amended as per Statutory Rules 1987 No. 169, provide detailed procedures for certifying certain classes of payments. These regulations establish criteria and checks to be performed on claims to ensure they can be properly certified and paid without extensive verification, aiming to streamline the payment process and reduce unnecessary administrative burdens. The amendments to these regulations, as recommended by the Efficiency Scrutiny on the Processing of Accounts, include the addition of two new classes of payments to be certified with reduced checks, namely payments under contracts allowing for subsequent adjustments and payments for supplies not exceeding $1000. This amendment is intended to enhance efficiency, reduce costs, and improve payment timelines for claimants while maintaining the integrity of the certification process.
Key Provisions
The main operative sections of this legislative amendment concern the prescribed classes of payments that may be certified under the Audit Act 1901. Section 34(1) of the Act allows for the certification of payments included in a prescribed class without undergoing the detailed checking normally required for claims that have not been prescribed (section 34(1)). This certification process is facilitated by the Finance Regulations (Finance Regulation 45A) and Finance (Overseas) Regulations (Finance (Overseas) Regulation 13), which detail the specific checks to be carried out on prescribed claims. The amendment introduces two new classes of payments that can be certified with less scrutiny: (a) payments made under contracts where the Commonwealth has the right to adjust payments based on subsequent claims, and (b) payments for accounts not exceeding $1000 for supplies. These changes aim to streamline the certification process and reduce the burden on both the Commonwealth and the claimants.
The obligations and requirements imposed by these regulations focus on the certification of payments within the newly defined classes. Certifying Officers are now empowered to certify payments under these classes if they have no reason to believe that the payment may not properly be made, after complying with any requirements prescribed by the regulations or any directions given by the Minister. This streamlined approach is designed to enhance efficiency in the processing of accounts and ensure payments are made by the due date, as recommended by the Efficiency Scrutiny on the Processing of Accounts. The scrutiny found that excessive checking of accounts for correctness was not cost-effective and often delayed payments to claimants.
The legislation outlines specific consequences for breaches, although the Act itself does not detail penalties for non-compliance. However, the overarching requirement for Certifying Officers to ensure that payments are properly made means that any failure to adhere to the prescribed processes could result in significant financial losses to the Commonwealth or improper payments to claimants. While the specific penalties are not outlined in the Explanatory Statement, it is implicit that non-compliance with the certification requirements could lead to financial repercussions and potential legal consequences for the Certifying Officer and the relevant authorities involved.
In summary, the legislative amendments to the Audit Act 1901, through the Finance Regulations and Finance (Overseas) Regulations, introduce new classes of payments that can be certified with reduced scrutiny. These changes aim to improve the efficiency of the certification process, resulting in financial savings and better commercial relationships. Certifying Officers must ensure that payments within these new classes are properly made, and any failure to comply with the prescribed requirements could have financial and legal consequences.