EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Administration
Financial Management and Accountability Act 1997
Determination 2005/10 to establish a Special Account
Purposes of Determination 2005/10
The attached instrument makes a determination under subsection 20 (1) of the Financial Management and Accountability Act 1997 (FMA Act) to establish a Special Account entitled Other Trust Moneys - Defence Materiel Organisation Special Account. It also specifies the nature of amounts that may be credited to, and the purposes for which amounts may be debited from, the Other Trust Moneys - Defence Materiel Organisation Special Account.
Special Accounts Generally
In accordance with the Constitution, all revenues or moneys raised or received by the Executive Government of the Commonwealth form one Consolidated Revenue Fund (CRF) and may not be used unless in accordance with an appropriation by the Parliament for the purposes of the Commonwealth. This determination establishes a Special Account, and sets out the amounts that may be credited to the Account and the purposes for which it may be debited. Special Accounts established by determination are supported by an appropriation under section 20 of the FMA Act. In effect, Special Accounts allow specified amounts from the CRF to be expended for a particular specified purpose.
The Finance Minister must table a copy of a determination relating to a Special Account in each House of Parliament. Either House may disallow a determination within five sitting days of tabling. If the determination is not disallowed, it comes into effect on the calendar day after the last day on which it could have been disallowed. Regulation 10 of the Legislative Instruments Regulations 2004 preserves the disallowance provisions under section 22 of the FMA Act by exempting Special Account determinations from subsections 57(2) and 57(5) of the Legislative Instruments Act 2003.
The notes to the determination identify legislation and other laws that allow or require amounts to be credited to, or debited from, the Special Account.
Operation of the Determination 2005/10
Purpose of the Other Trust Moneys - Defence Materiel Organisation Special Account
The determination is required in order to establish a Special Account, to enable the Defence Materiel Organisation to temporarily hold amounts on behalf of persons or entities that are not subject to the FMA Act.
At the commencement of the FMA Act on 1 January 1998 a determination of the Finance Minister created Other Trust Moneys Special Accounts for all agencies that existed at that time. The Defence Materiel Organisation will commence operations on 1 July 2005 and therefore requires its own Other Trust Moneys Special Account.
Other Trust Moneys Special Accounts provide agencies with an ability to hold amounts on behalf of others and the appropriation to expend these amounts. Typically these amounts are used to accommodate small amounts of miscellaneous moneys that the agency is holding on behalf others. For example the Other Trust Moneys Account may be used to provide an appropriation to allow moneys found by Commonwealth officials to be paid to their rightful owner once the owner has been identified. It may also be used to hold amounts received from Comcare in relation to employees entitled to receive workers’ compensation payments.
Should the Defence Materiel Organisation change its name, due to a change in legislation or for some other reason, it is intended that the Special Account be retained by the successor agency. This will enable the amounts in the Special Account at that time to remain with the relevant agency.
Clause 6 specifies the purposes for which a Special Account can be debited.
- Paragraph 6(a) describes the primary purpose for expenditure of amounts from the Special Account.
- Paragraph 6(b) allows the Special Account to be debited, in a manner that would otherwise be permitted by section 28 of the FMA Act. It is included to simplify accounting for these transactions.
Consultation
The Defence Materiel Organisation, which will commence operations on 1 July 2005, is the agency affected by this instrument. The Department of Defence is the agency that has been consulted on in the preparation of this instrument. The agency was provided with drafts of the instrument before it was finalised and agree with the form of the instrument. No community consultation was carried out as the instrument is for machinery of government purposes only (see sections 17 and 18 of the Legislative Instruments Act 2003).
Estimates of transactions on the Other Trust Moneys - Defence Materiel Organisation Special Account
| Opening Balance 2005-06 2004-05 $’000 | Credits 2005-06 2004-05 $’000 | Debits 2005-06 2004-05 $’000 | Closing Balance 2005-06 2004-05 $’000 |
Other Trust Moneys - Defence Materiel Organisation Special Account | 0 | 1,200 | 1,000 | 200 |
0 | 0 | 0 | 0 |
Overview
The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia to ensure the responsible management and accountability of Commonwealth finances. The Act provides a framework for the management of financial resources and sets out the roles and responsibilities of various entities within the Commonwealth. The 2005 determination under this Act was made to address the specific need for a Special Account for the Defence Materiel Organisation (DMO), which was set to commence operations on 1 July 2005. This determination was introduced to facilitate the temporary holding of funds by the DMO on behalf of persons or entities that are not subject to the Act, thereby ensuring that the DMO could manage miscellaneous moneys appropriately. The policy objective behind this determination was to provide the DMO with the necessary financial infrastructure to operate effectively, including the ability to credit and debit funds for specific purposes, and to maintain continuity should the DMO's name or role change in the future. The determination specifies the types of transactions that can be credited to and debited from the Special Account, ensuring compliance with existing financial management legislation.
Scope and Application
The Financial Management and Accountability Act 1997 Determination 2005/10 applies to the establishment of a Special Account, specifically the Other Trust Moneys - Defence Materiel Organisation Special Account. This account is established to enable the Defence Materiel Organisation to temporarily hold funds on behalf of individuals or entities not subject to the FMA Act, particularly for small miscellaneous moneys. The legislation applies at a Commonwealth level and is designed to facilitate the proper management of funds that need to be held temporarily until their rightful owners can be identified or other specific purposes are fulfilled, such as payments from Comcare for workers’ compensation claims. The account is supported by an appropriation under section 20 of the FMA Act and must be tabled in Parliament, with the possibility of disallowance by either House within five sitting days. The determination exempts these Special Account determinations from certain legislative instrument provisions, preserving the disallowance process. Any changes to the Defence Materiel Organisation's name will not affect the continuity of this Special Account, ensuring that the funds remain appropriately allocated.
Key Provisions
The key provisions of Determination 2005/10 under the Financial Management and Accountability Act 1997 (FMA Act) establish a Special Account titled "Other Trust Moneys - Defence Materiel Organisation Special Account" (subsection 20(1)). This Special Account allows the Defence Materiel Organisation (DMO) to temporarily hold moneys on behalf of persons or entities that are not subject to the FMA Act (Clause 6(a)). The primary purpose of debiting the Special Account is to facilitate these transactions, while Clause 6(b) permits additional debits in a manner consistent with section 28 of the FMA Act, ensuring streamlined accounting. The Finance Minister must table a copy of this determination in each House of Parliament, and it can be disallowed within five sitting days if either House chooses to do so (section 22 of the FMA Act). If not disallowed, the determination takes effect on the calendar day after the disallowance period concludes.
The obligations and requirements imposed by this Act on the parties it governs include the necessity for the Finance Minister to table a copy of the determination in each House of Parliament, allowing for potential disallowance within a specified timeframe. The DMO must adhere to the purposes outlined in Clause 6, ensuring that any amounts debited from the Special Account align with the established guidelines for holding and expending trust monies. The Special Account itself serves as a mechanism for the DMO to manage and disburse funds that are held on behalf of others, in accordance with the legislative requirements and any relevant appropriations. Additionally, the determination is designed to facilitate the DMO’s operational needs as it commences activities on 1 July 2005, providing a structured approach to financial management for these specific trust moneys.
The Act outlines potential consequences for non-compliance or breaches. Should any party fail to adhere to the provisions of the determination, they could be subject to civil or criminal penalties, depending on the nature and severity of the breach. While the specific penalties are not detailed in the provided text, the general legislative framework suggests that breaches of financial management and accountability legislation can lead to significant consequences, including fines and potential criminal charges. The disallowance process provides a formal mechanism for addressing non-compliance, ensuring that any deviations from the legislative intent are subject to parliamentary scrutiny and potential corrective action. The intent is to maintain the integrity and accountability of financial transactions within the Commonwealth.