EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Financial Management and Accountability Amendment Orders 2009
The Financial Management and Accountability Amendment Orders 2009 (the Amendment Orders) are Orders made by the Minister for Finance and Deregulation (the Finance Minister) pursuant to subsection 63(1) of the Financial Management and Accountability Act 1997 (the FMA Act). This subsection provides that the Finance Minister may make Orders on any matters which the Act requires or permits Orders to be made and on any matter on which regulations under the FMA Act may be made.
The FMA Act provides a framework for the proper management of public money and public property that applies to Chief Executives and officials of Agencies.
The Amendment Orders have two main effects. First, to repeal the Financial Management and Accountability Orders 2008 (the FMA Orders 2008). And second, to amend the Financial Management and Accountability Orders (Financial Statements for reporting periods ending on or after 1 July 2008) required under section 48 of the FMA Act.
The Amendment Orders are designed to streamline the legislative framework affecting FMA Act agencies. Most matters addressed in the FMA Orders 2008 are to be subsumed into the Financial Management and Accountability Regulations 1997 (FMA Regulations), while retaining the Financial Management and Accountability Orders (Financial Statements for reporting periods ending on or after 1 July 2008), to focus on the requirements for agencies’ financial statements and their accounts and records.
This will help reduce the scope for confusion that can arise between two different sets of Financial Management and Accountability Orders (FMOs), which are currently made under the same legislative authority (section 63 of the FMA Act). Accordingly, officials in FMA Act agencies will only need to have regard to the FMA Regulations and the orders on financial statements.
Order 3 of the Amendment Orders repeals the FMA Orders 2008. The substance of the previous FMA Orders have been relocated as regulations made under the Financial Management and Accountability Regulations 1997 (FMA Regulations) under the FMA Act (as a consequence of the commencement, on 20 March 2009, of the Financial Framework Legislation Amendment Act 2008). In particular, the substance of the orders has been transferred as follows:
- Order 2.1, Audit Committee (FMA Act, section 46), see regulation 22C;
- Order 2.2, Fraud control report to responsible Minister (FMA Act, section 45; FMA Regulations, regulation 19). Regulation 16A already requires Fraud Control Guidelines which sufficiently address these fraud control requirements;
- Order 2.4, Estimates, see regulation 22D;
- Order 2.5, Use of a Commonwealth credit card for particular purposes (FMA Act, section 60; FMA Regulations, regulation 21), see regulation 21;
- Order 2.6, Chief Executive may delegate powers, see regulation 26;
- Order 2.7, Finance Chief Executive may delegate powers, see regulation 25;
- Order 3.1, Prompt banking of received money (FMA Act, section 10), see regulation 17;
- Order 3.2, Public Money in non-bankable currency (FMA Act, section 10), see regulation 18;
- Order 3.3, Withdrawals from official accounts and internal transfers between accounts (FMA Act, section 13), see regulation 19;
- Order 4.1, Custody etc of securities (FMA Act, section 40), see regulation 20.
The following orders are covered in the FMA Regulations as a consequence of the Financial Management and Accountability Amendment Regulations 2009 (No 4), which commenced on 1 July 2009:
- Order 5.1, Business operation of an Agency, see regulation 5A;
- Order 6.1, Payments for leave entitlements when employees move between Agencies etc, see regulations 31 to 34.
The second effect concerns previous order 2.3 (Accounts and records (FMA Act, section 48)). This is now dealt with in order 4 of the Financial Management and Accountability Orders (Financial Statements for reporting periods ending on or after 1 July 2008).
The Amendment Orders are a disallowable legislative instrument for the purposes of the LI Act.
All affected Agencies were consulted and legal advice from the Australian Government Solicitor has confirmed the intended effect of the Amendment Orders.
The Amendment Orders commenced on the day after registration on the Federal Register of Legislative Instruments.
Overview
The Financial Management and Accountability Amendment Orders 2009 were introduced by the Minister for Finance and Deregulation under the Financial Management and Accountability Act 1997 (FMA Act). The primary aim of these Amendment Orders is to streamline the legislative framework governing financial management within FMA Act agencies. The legislative instrument consolidates and integrates various provisions previously included in the Financial Management and Accountability Orders 2008 into the Financial Management and Accountability Regulations 1997, while maintaining separate orders concerning financial statements for reporting periods starting from 1 July 2008. This consolidation is designed to reduce confusion among officials who must comply with multiple sets of orders under the same legislative authority. By relocating the substance of the repealed orders into the regulations and maintaining specific financial statement orders, the Amendment Orders ensure that officials within FMA Act agencies need only refer to the regulations and the relevant financial statement orders, thus simplifying compliance and oversight.
Scope and Application
The Financial Management and Accountability Amendment Orders 2009 apply to all agencies within the Commonwealth public sector that are subject to the Financial Management and Accountability Act 1997. These agencies include government departments, statutory authorities, and other entities that receive public funds or manage public property. The Amendment Orders are designed to streamline the legislative framework affecting these agencies, primarily by consolidating the existing Financial Management and Accountability Orders 2008 into the Financial Management and Accountability Regulations 1997. This consolidation aims to reduce confusion among officials who must adhere to the various legislative instruments. The Amendment Orders are applicable nationally across Australia as they are made under the Commonwealth legislation. They also extend to any territories or external agencies that are subject to the FMA Act. Notably, the Amendment Orders do not introduce new substantive requirements but rather reorganise and clarify the existing provisions by transferring certain matters from the Financial Management and Accountability Orders 2008 to the Financial Management and Accountability Regulations 1997. The Amendment Orders commenced on the day after their registration on the Federal Register of Legislative Instruments, effectively repealing the Financial Management and Accountability Orders 2008 and amending the Financial Management and Accountability Orders (Financial Statements for reporting periods ending on or after 1 July 2008).
Key Provisions
The Financial Management and Accountability Amendment Orders 2009 (the Amendment Orders) primarily repeal the Financial Management and Accountability Orders 2008 (the FMA Orders 2008) and amend the Financial Management and Accountability Orders (Financial Statements for reporting periods ending on or after 1 July 2008) required under section 48 of the Financial Management and Accountability Act 1997 (the FMA Act). This repeal and amendment streamline the legislative framework for FMA Act agencies, consolidating many of the requirements previously set out in the FMA Orders 2008 into the Financial Management and Accountability Regulations 1997 (FMA Regulations). The intent is to reduce confusion between two sets of Financial Management and Accountability Orders (FMOs) by centralising most provisions into the FMA Regulations, with the remaining financial statements-related requirements retained in the amended orders for financial statements.
The Amendment Orders impose obligations on FMA Act agencies to comply with the FMA Regulations and the updated Financial Management and Accountability Orders (Financial Statements). This includes adhering to provisions such as the establishment and operation of audit committees (regulation 22C), fraud control measures (regulation 16A), and the preparation and submission of estimates (regulation 22D). Agencies must also ensure proper handling of public money, including prompt banking of received funds (regulation 17) and the custody of securities (regulation 20). Furthermore, the orders mandate that agencies maintain accurate accounts and records (order 4) and comply with regulations regarding the use of Commonwealth credit cards (regulation 21) and the delegation of powers by the Chief Executive and the Finance Chief Executive (regulations 25 and 26).
Breach of the provisions outlined in the FMA Regulations or the Financial Management and Accountability Orders (Financial Statements) can lead to various civil and criminal consequences. The FMA Act provides for penalties in cases of non-compliance, including fines and, in some instances, imprisonment. For example, under section 56 of the FMA Act, individuals found guilty of misapplying public money can be subject to fines of up to $21,000 or imprisonment for up to five years, or both. Additionally, agencies may face disciplinary actions, financial penalties, and reputational damage if they fail to comply with the regulations and orders. The precise penalties depend on the nature and severity of the breach, with the FMA Act providing a framework for enforcement by relevant authorities.