EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Administration
Financial Management and Accountability Act 1997
Determination 2005/26 to vary a Special Account
Purposes of Determination 2005/26
The attached instrument makes a determination under subsection 20 (2) of the Financial Management and Accountability Act 1997 (FMA Act) to vary a previous Special Account Determination. This variation is in relation to the Determination titled Determination 2000/13, which established the Official Administered Payment Account for Other Agencies 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 varies a Special Account. Special Accounts varied 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 2005/26
Changes required
This determination varies the Determination 2000/13, which established the Official Administered Payment Account for Other Agencies Account.
The determination is required in order to give effect to changes that are required to the Official Administered Payment Account for Other Agencies Account. The current purposes of the Special Account are:
‘…payments made overseas by DFAT overseas posts on behalf of an Agency (within the meaning of the Act), where those payments could be made from an appropriation available to the Agency, and it is intended that DFAT will be reimbursed by the Agency for the payments.’
Changes required
The changes required to the old account are set out below:
- the addition of the ability to make payments on behalf of bodies subject to the Commonwealth Authorities and Companies Act 1997;
- the ability to make payments to Australian Government entities that are received on their behalf overseas;
- changing the credit clause to only allow amounts from Australian Government entities that will form payments made overseas or amounts received overseas that will form payments made to Australian Government entities to be credited to the Special Account; and
- a change in the Special Account’s name from Official Administered Payment Account for Other Agencies Account to Administered Payments and Receipts for Other Entities Special Account, in order to better describe what the Special Account is used for.
As part of a programme to enhance the clarity of Special Account determinations and to remove any areas of doubt over the scope of the purposes of Special Accounts, the following changes are being incorporated within the determinations of all Special Accounts, where appropriate, and where the need for other variations arise:
- a provision to debit amounts relating to incidental activities. This allows administration costs, including such items as auditing, reporting, budgeting, accounting and information technology services incurred in the course of operating the Special Account, to be debited from the Special Account. The existing purpose clause would often allow the debiting of the Special Account for these costs, depending on the degree of directness of connection of the costs with other purposes of the Special Account. The inclusion of the new incidental clause removes the need to obtain legal advice on the degree of directness of connection for individual transactions;
- a capacity to return excess amounts to the Budget (that is, reduce the balance of the Special Account without a real or notional payment). This provision does not allow amounts to be transferred to another Special Account, or to be allocated for any other purpose, that is not consistent with the purposes of the Special Account;
- a clause to allow for amounts to be repaid when another Act or law allows it. This has always been permitted by section 28 of the FMA Act, but is now included in determinations to simplify accounting for these transactions; and
- notes that identify general credits and debits that can be made to Special Accounts, for information purposes, in reliance on other laws.
Effect of this determination
This determination varies Determination 2000/13 to make its purposes and appearance consistent with a new template for all Special Account determinations. The compiled determination will be in format that makes the determination as clear and informative as possible
Consultation
The Department of Foreign Affairs and Trade is the agency affected by 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 Administered Payments and Receipts for Other Entities Special Account
| Opening Balance 2006-07 2005-06 $’000 | Credits 2006-07 2005-06 $’000 | Debits 2006-07 2005-06 $’000 | Closing Balance 2006-07 2005-06 $’000 |
Administered Payments and Receipts for Other Entities Special Account | 5,000 | 230,000 | 230,000 | 5,000 |
5,000 | 230,000 | 230,000 | 5,000 |
Overview
The Financial Management and Accountability Act 1997, enacted by the Parliament of Australia, governs the financial management practices of the Commonwealth government. It was introduced to address the need for effective financial management and accountability in the use of public funds. The Act establishes a framework for the appropriation and expenditure of public money, ensuring that it is used for authorised purposes and in accordance with parliamentary approval. Determination 2005/26, issued under the authority of the Minister for Finance and Administration, varies a previous Special Account Determination in relation to the Official Administered Payment Account for Other Agencies Account. This variation aims to update the account to better reflect its current operations, including changes in the entities it serves and the scope of its activities. The determination includes provisions to clarify the account's purposes and to align it with a new template for all Special Account determinations, enhancing the clarity and consistency of financial management practices. The Finance Minister is required to table a copy of the determination in each House of Parliament, and it may be disallowed by either House within five sitting days of tabling. If not disallowed, the determination comes into effect on the day after the last possible day for disallowance.
Scope and Application
The Financial Management and Accountability Act 1997 Determination 2005/26 is a legislative instrument that varies a previous Special Account Determination, specifically the Determination 2000/13, which established the Official Administered Payment Account for Other Agencies Account. The purpose of this variation is to update the account's purposes and description to better reflect its current use and to align with a new template for all Special Account determinations. This determination applies to the Finance Minister and the Department of Foreign Affairs and Trade (DFAT), as the latter is the agency affected by this instrument. The determination alters the purposes of the Special Account to include payments made on behalf of bodies subject to the Commonwealth Authorities and Companies Act 1997, payments to Australian Government entities received overseas, and changes the credit clause to only allow amounts from Australian Government entities that will form payments made overseas or amounts received overseas that will form payments made to Australian Government entities to be credited to the Special Account. The name of the Special Account has also been changed to Administered Payments and Receipts for Other Entities Special Account. The changes are aimed at enhancing clarity and removing any doubt over the scope of the purposes of Special Accounts. The Finance Minister must table a copy of the determination in each House of Parliament, and either House may disallow it 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. The disallowance provisions under section 22 of the FMA Act are preserved by exempting Special Account determinations from subsections 57(2) and 57(5) of the Legislative Instruments Act 2003.
Key Provisions
The main operative sections of the Determination 2005/26 under the Financial Management and Accountability Act 1997 (FMA Act) are those that vary the previous Special Account Determination 2000/13 (sections 1-3). This determination changes the purposes and operational details of the Official Administered Payment Account for Other Agencies Account, now named the Administered Payments and Receipts for Other Entities Special Account. The updated account now allows for payments on behalf of bodies subject to the Commonwealth Authorities and Companies Act 1997 and Australian Government entities receiving payments overseas. Additionally, it modifies the credit clause to only permit the crediting of amounts intended for overseas payments or receipts that will form payments to Australian Government entities. The determination also incorporates general provisions applicable to all Special Accounts, such as the ability to debit incidental activities and return excess amounts to the Budget (section 4).
The Act imposes several obligations and requirements on the parties and entities it governs. Firstly, the Finance Minister must table a copy of the determination in each House of Parliament, allowing for potential disallowance within five sitting days (section 5). If the determination is not disallowed, it comes into effect on the day after the disallowance period ends. The determination also requires the Department of Foreign Affairs and Trade, the affected agency, to ensure compliance with the updated account’s purposes and operational details (section 6). The Special Account must only be used for payments and receipts as specified, and any debits or credits must align with the purposes outlined in the determination.
The Act includes provisions for offences, penalties, or civil/criminal consequences for breach. While specific penalties are not detailed in the provided text, it is clear that any misuse of the Special Account, contrary to the purposes and operational details set out in the determination, could lead to financial mismanagement and accountability issues. The Financial Management and Accountability Act 1997 likely imposes stringent penalties for such breaches, including potential criminal charges for officials involved in misusing funds. The Act's overarching objective is to ensure that all expenditures are authorised and properly accounted for, thus safeguarding the integrity of the Consolidated Revenue Fund.
The legislation also includes administrative provisions for handling excess amounts within the Special Account. The new determination allows for the return of excess amounts to the Budget without making real or notional payments, ensuring that funds are not misallocated or misused (section 7). This provision helps maintain the financial discipline and transparency required by the FMA Act. Furthermore, the inclusion of a clause for repaying amounts when permitted by other laws simplifies accounting processes and ensures compliance with broader financial regulations (section 8).
In summary, the Determination 2005/26 varies the previous Special Account Determination 2000/13 to align with a new template for all Special Account determinations, ensuring clarity and consistency. It imposes specific obligations on the Finance Minister and the Department of Foreign Affairs and Trade to manage the Administered Payments and Receipts for Other Entities Special Account according to its updated purposes and operational details. Any breach of these provisions could result in significant financial and administrative consequences, underscoring the importance of adherence to the Act's requirements.