EXPLANATORY STATEMENT
SUBJECT - AUDIT ACT 1901: FINANCE REGULATIONS (AMENDMENT) FINANCE (OVERSEAS) REGULATIONS (AMENDMENT)
1987 No. 168
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 Australian Parliament, provides a framework for the regulation of financial and audit processes within the Commonwealth. This Act was introduced to address inefficiencies in the auditing and certification of payments, particularly those made under certain classes of contracts and small-value supply claims. The explanatory statement accompanying Statutory Rules 1987 No. 168, which amend the Finance Regulations and Finance (Overseas) Regulations, highlights that an Efficiency Scrutiny on the Processing of Accounts had recommended reducing the number of checks on specific large volume accounts to enhance efficiency and ensure timely payments. To implement these recommendations, the regulations have been amended to prescribe two additional classes of payments that can be certified without detailed checking, aiming to achieve financial savings and improve commercial relationships with claimants.
Scope and Application
The Audit Act 1901, as amended, applies to the Commonwealth and its agencies and entities, governing the certification of payments under prescribed classes. This legislation allows for the certification of certain payments without undergoing the detailed checks that are typically required for non-prescribed claims, thereby streamlining the process and facilitating timely payments. The classes of payments eligible for this simplified certification are specified in the Finance Regulations and Finance (Overseas) Regulations, which have been amended to include two additional categories: payments under contracts where the Commonwealth can adjust subsequent payments and payments for accounts not exceeding $1000 for supplies. These amendments reflect the recommendations of an Efficiency Scrutiny on the Processing of Accounts, which identified inefficiencies in the previous checking procedures. By reducing the number of checks for these categories, the government aims to achieve financial savings and enhance commercial relationships with claimants. The changes are designed to balance the need for fiscal responsibility with the efficiency of payment processes.
Key Provisions
The main operative sections of the Audit Act 1901 (the Act) that are being amended pertain to the certification of payments (Section 34). This section allows for the certification of payments within prescribed classes, which can bypass the usual detailed checks if certain conditions are met. Finance Regulation 45A and Finance (Overseas) Regulation 13 have been updated to include two new classes of payments that can be certified more swiftly. These classes are: (a) payments made under contracts where the Commonwealth can adjust future payments based on subsequent claims; and (b) payments for accounts not exceeding $1000 for supplies.
The Act imposes certain obligations on the Certifying Officers, who must ensure that after complying with any regulations or ministerial directions, they have no reason to believe that a payment may not be properly made. The amendments to the Finance Regulations and Finance (Overseas) Regulations now require Certifying Officers to apply fewer checks to the specified classes of payments, provided all regulatory requirements and ministerial directions are followed.
The legislation does not explicitly detail offences, penalties, or civil/criminal consequences for non-compliance within the explanatory statement. However, by virtue of Section 71(1) of the Act, any failure to comply with the regulations made under it could potentially lead to legal consequences, although the specific penalties would need to be referred to the relevant legal instruments or judicial interpretations. The primary focus of these amendments is to streamline the certification process for specific classes of payments, thereby aiming to improve efficiency and reduce unnecessary costs.