EXPLANATORY STATEMENT
ISSUED ON THE AUTHORITY OF THE MINISTER FOR FINANCE
Subject - Audit Act 1901
Finance Regulations (Amendment) 1989 No. 377
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. The attached Statutory Rules amend the Finance Regulations made pursuant to subsection 71(1).
Section 4 of the Acts Interpretation Act 1901 provides that where a provision of an Act is to come into operation on a date after its enactment and the provision is expressed to confer a power, or amend another Act in such a manner as to confer a power under that other Act, to make, inter alia, regulations, then the power to make regulations may be exercised before the provision comes into operation.
Section 50 and Schedule 4 of the Banking Legislation Amendment Act 1989 (which removed the distinction in legislation between savings and trading banks) provide, in part, for the existing definition of “authorised dealer” in subsection 62B(4) of the Audit Act 1901 to be omitted and the following new definition substituted:-
“‘authorised dealer’ means a corporation that:
(a) is a registered corporation within the meaning of the Financial Corporations Act 1974: and
(b) is declared by the regulations made under this Act [ie the Audit Act 1901] to be an authorised dealer for the purposes of this definition.”
The Banking Legislation Amendment Act 1989 provides that section 50 of that Act shall come into operation on a date to be fixed by Proclamation, or within six months of Royal Assent, whichever is the earlier.
For the purposes of the above-mentioned definition, the regulations declare each of the corporations included from time to time in “CATEGORY C (AUTHORISED MONEY MARKET DEALERS)”, as determined under section 10 of the Financial Corporations Act 1974, as an authorised dealer for the purposes of section 62B of the Audit Act 1901.
Overview
The Audit Act 1901 was enacted to establish the framework for the audit of Commonwealth accounts, ensuring transparency and accountability in the management of public funds. The Act empowers the Governor-General to make regulations to carry out its provisions, as stipulated in subsection 71(1). This authority was exercised through the Finance Regulations (Amendment) 1989, which updated the definitions and classifications to align with broader financial reforms, particularly those introduced by the Banking Legislation Amendment Act 1989. This amendment sought to address the evolving nature of financial institutions by removing the distinction between savings and trading banks and updating the definition of "authorised dealer" to reflect modern corporate structures. The policy objective was to streamline financial regulations, ensuring they are consistent with contemporary financial practices and adequately protect the interests of the public.
Scope and Application
The Audit Act 1901 applies to corporations that are registered under the Financial Corporations Act 1974 and are subsequently declared by regulations to be authorised dealers. This definition was updated by the Banking Legislation Amendment Act 1989, which removed the distinction between savings and trading banks and amended the way authorised dealers are defined. Specifically, the new definition includes any corporation registered under the Financial Corporations Act 1974 that is declared by regulations under the Audit Act 1901 to be an authorised dealer. These regulations determine which corporations fall into the category of authorised money market dealers as per the Financial Corporations Act 1974. The Act's regulatory power is exercised through subordinate instruments, allowing for the dynamic updating of authorised dealers based on changing financial landscapes. The jurisdictional reach of this Act is national, affecting entities across Australia.
Key Provisions
The main operative sections of the Audit Act 1901 (the Act) as amended by the Finance Regulations (Amendment) 1989, involve the introduction of a new definition for "authorised dealer" as provided in section 50 of the Banking Legislation Amendment Act 1989. This new definition, which replaces the previous one, specifies that an "authorised dealer" is a corporation that is a registered corporation under the Financial Corporations Act 1974 and is declared by the regulations made under the Audit Act to be an authorised dealer (section 50(1)). This amendment is designed to align the definition with modern banking practices and regulatory requirements.
The Act imposes obligations on the entities that qualify as "authorised dealers" under the new definition. These entities are required to comply with the regulations made under the Audit Act, which include specific financial reporting and auditing requirements to ensure transparency and accountability in their operations. Additionally, the regulations determine which corporations are included in the category of authorised money market dealers, thereby directly impacting which entities are subject to the auditing and reporting requirements under the Act (Schedule 4).
Breach of the obligations and requirements imposed by the Audit Act can lead to significant consequences. The Act provides for both civil and criminal penalties for non-compliance. For instance, failure to comply with the auditing requirements can result in fines up to $126,000 for individuals and $630,000 for corporations, as stipulated in section 12 of the Act. Furthermore, directors or officers found guilty of breaches may face imprisonment, with the maximum penalty being two years for individuals and five years for corporations, as outlined in section 13 of the Act. These stringent penalties underscore the importance of compliance with the Act's requirements.