EXPLANATORY STATEMENT
Subject - Audit Act 1901
Finance Regulations (Amendment)
STATUTORY RULES 1986 NO 36
ISSUED ON THE AUTHORITY OF THE MINISTER FOR FINANCE
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) for carrying out the provisions of the Act. The attached Statutory Rules amend Finance Regulation 68 which was made pursuant to these provisions.
Regulation 68 prescribes, inter alia, the persons to whom payments may be made. Under the current arrangements for repetitive payments (eg salaries and pensions) payees can have entitlements paid to their bank, credit union or building society accounts. These options can be exercised by the payee lodging an appropriate authorisation, with the Commonwealth, in favour of the institution.
A new option, introduced by building societies, is a facility whereby moneys payable to a group of societies in a State may be paid to a clearing house company as agent for that group of societies. The option, for repetitive kinds of payments, has significant cost advantages over the traditional method of direct payment to each building society.
To enable its utilization by the Commonwealth, Finance Regulation 68 has been amended to prescribe that option.
The amendments inserted a hew paragraph (ca), in existing sub-regulation 68(2), which provides that payment may be made to a person authorised to receive payment by a financial institution authorised by the claimant to receive payment. The new regulation provides also for the possible future use of ‘clearing houses’ by all financial institutions, not only building societies.
The regulation also amended sub-regulation 68(3) to provide that the Secretary of the Department of Finance may give directions as to the method and circumstances under which such payments may be made.
Overview
The Audit Act 1901 was enacted to provide a framework for the conduct of audits within the Australian government. The 1986 statutory rules amendment, issued under the authority of the Minister for Finance, was introduced to address the evolving financial practices, particularly in relation to repetitive payments such as salaries and pensions. The amendments to Finance Regulation 68 aimed to update payment options to reflect modern financial services, including the newly introduced facility by building societies where payments could be made to a clearing house company as an agent. This change was intended to provide significant cost advantages over traditional direct payments to each building society. The amendments inserted a new paragraph into sub-regulation 68(2) to accommodate these new payment methods and expanded the scope to include all financial institutions, not just building societies. Additionally, sub-regulation 68(3) was updated to allow the Secretary of the Department of Finance to issue directions regarding the method and circumstances of such payments, ensuring flexibility and control over the payment process.
Scope and Application
The Audit Act 1901, as amended by the Finance Regulations (Amendment) Statutory Rules 1986 No 36, primarily applies to the Commonwealth's financial operations, ensuring that payments such as salaries and pensions are made efficiently and in accordance with statutory provisions. These regulations extend to all repetitive payments managed by the Commonwealth, which includes government employees and pensioners. The amendments to Finance Regulation 68 under the Act now allow for the payment of such entitlements to be directed to a clearing house company acting on behalf of a group of financial institutions, such as building societies, which can provide significant cost benefits. This amendment introduces a new method of payment that can be utilised by all financial institutions, not limited to building societies, by allowing payments to be made to a person authorised by a financial institution authorised by the Commonwealth. Additionally, the Secretary of the Department of Finance has been granted the authority to provide directions on the methods and circumstances under which these payments can be executed, thereby extending the regulatory reach to encompass these new payment options.
Key Provisions
The main operative sections of this amendment to the Audit Act 1901 (the Act) and Finance Regulation 68 are sections (2)(ca) and (3). Section (2)(ca) introduces a new option for repetitive payments, allowing them to be made to a clearing house company on behalf of a group of societies in a State, provided that the financial institution has been authorised by the payee. This amendment caters to a more cost-effective method of payment, replacing the traditional approach of making direct payments to each building society. Section (3) of the amended Finance Regulation 68 grants the Secretary of the Department of Finance the authority to issue directions regarding the method and circumstances under which these payments can be made.
The obligations imposed by these amendments on the parties and entities governed by the Act are twofold. Firstly, financial institutions that wish to participate in this new payment method must obtain explicit authorisation from the payee. Secondly, the Secretary of the Department of Finance is now responsible for issuing directions to govern the method and circumstances under which payments can be made using this new option. These directions are intended to ensure that the new payment system is implemented in a manner that is consistent with the overall objectives of the Act and the Finance Regulations.
There are no specific offences, penalties, or civil/criminal consequences mentioned for breaches of these amended provisions. However, any non-compliance with the Act or the Finance Regulations may result in disciplinary action or other consequences as prescribed by the relevant legislation or administrative rules. It is important for all parties involved to adhere to the provisions and any directions issued by the Secretary of the Department of Finance to ensure the smooth operation of the repetitive payment system.