EXPLANATORY STATEMENT FOR MEMBERS
ISSUED WITH THE AUTHORITY OF THE MINISTER FOR FINANCE
SUBJECT: AUDIT ACT 1901
FINANCE REGULATIONS
1988 NO. 80
Subsection 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) for carrying out the provisions of the Act.
Finance Regulation 6A, made under that provision, declares certain bodies (for example, the Australian Bureau of Statistics, Industries Assistance Commission and the Trade Practices Commission) to be “prescribed authorities” for the purposes of the Act. As prescribed authorities, they are embraced by the definitions of “Department” in section 2 of the Act and subregulation 4(1) of the Finance Regulations.
The attached Statutory Rules amend Regulation 6A by adding the Corporate Affairs Commission (the Commission) to the list of bodies so prescribed. The Commission was established by the Corporate Affairs Commission Ordinance 1980 (No 43 of 1980) as a body corporate with perpetual succession and a common seal. It operates as a branch of the Attorney-General’s Department as far as its financial transactions are concerned. Its expenditure is met from the appropriations of the Department and its receipts are credited to the Consolidated Revenue Fund or the Trust Fund as appropriate. The Commission does not have the power to open bank accounts.
Declaration of the Commission as a prescribed authority serves to remove doubts, expressed by the Attorney-General’s Department, as to the Auditor-General’s power to audit all of the financial transactions of the Commission.
Overview
The Audit Act 1901 was enacted to establish a framework for the auditing of Commonwealth public sector entities, ensuring accountability and transparency in the use of public funds. The legislation provides the Governor-General with the authority to make regulations necessary for its execution, with the objective of facilitating thorough and systematic audits of government operations and financial transactions. The Finance Regulations 1988, which include Regulation 6A, further define certain bodies as "prescribed authorities" for the purposes of the Act, thereby ensuring they are subject to audit by the Auditor-General. The recent amendment to Regulation 6A includes the Corporate Affairs Commission as a prescribed authority, clarifying the scope of the Auditor-General's audit powers over this entity and resolving uncertainties previously expressed by the Attorney-General’s Department. This amendment aims to ensure that all financial transactions of the Commission are subject to audit, thereby enhancing the oversight and accountability mechanisms within the public sector.
Scope and Application
The Audit Act 1901 applies to the Commonwealth public sector, including prescribed authorities such as the Corporate Affairs Commission, which is now declared as a prescribed authority under Finance Regulation 6A. This inclusion ensures that the Auditor-General has the power to audit all financial transactions of these entities, thereby enhancing accountability and transparency. The geographic reach of the Act is national, as it pertains to the Commonwealth and its entities, regardless of their location within Australia. While the Act broadly applies to financial transactions of prescribed authorities, certain exclusions or exemptions are determined by the specific regulations, which may vary in their application. Subordinate instruments, such as the Finance Regulations, extend and define the application of the Act, thereby clarifying the scope of the Auditor-General’s audit powers.
Key Provisions
The main operative sections of the Audit Act 1901, as amended by the Statutory Rules, concern the regulation-making power of the Governor-General under section 71(1) and the declaration of certain bodies as "prescribed authorities" under section 2 and subregulation 4(1). Specifically, subsection 71(1) allows for the creation of regulations that facilitate the Act's provisions, while Finance Regulation 6A identifies bodies, such as the Australian Bureau of Statistics and the Corporate Affairs Commission, as prescribed authorities. These regulations ensure that these authorities fall under the definition of "Department" as per section 2 of the Act. The amendment adds the Corporate Affairs Commission to this list, clarifying its inclusion within the scope of the Act.
The obligations and requirements imposed by the Act on the parties it governs include ensuring that prescribed authorities are subject to the oversight and audit powers of the Auditor-General. As prescribed authorities, these bodies must comply with the Act's provisions, including the financial and operational audits conducted by the Auditor-General. For the Corporate Affairs Commission, this means that all financial transactions, expenditure, and receipts must be transparent and subject to audit, thereby maintaining accountability and integrity in its operations.
The Act also outlines specific consequences for breaches of its provisions. Under the Finance Regulations, any failure by a prescribed authority to comply with the Act's requirements can result in civil or criminal penalties. The exact nature of these penalties is not detailed in the provided text, but it is common for such breaches to lead to fines or other legal repercussions, depending on the severity and intent of the violation. The Act's overarching purpose is to ensure that public funds and transactions are properly accounted for and audited, thereby preventing mismanagement and fraud.