Financial Management and Accountability Determination 2008/16 - Special Accounts Abolition

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to enhance the management and accountability of Commonwealth finances, providing a framework for financial reporting and ensuring that public funds are used efficiently and effectively. Determination 2008/16, issued under section 20 of the FMA Act, was introduced by the Minister for Finance and Deregulation to address the need for simplifying the financial framework within the Commonwealth by abolishing six redundant Special Accounts. These Special Accounts, established to manage specific financial transactions for certain departments, were deemed unnecessary due to their redundancy and the establishment of a new Special Account that encompasses their combined purposes. The objective of this determination is to streamline the financial management processes by reducing the number of Special Accounts and thus improving the efficiency and clarity of financial operations within the government. The Financial Management and Accountability Amendment (Abolishing Special Accounts) Determination 2008/16 was enacted by the Minister for Finance and Deregulation to abolish the Other Trust Moneys (OTM) and Services for other Governments and Non-Agency Bodies (SOG) Special Accounts for three specific departments: the Department of the Prime Minister and Cabinet, the Department of Education, Science and Training, and the Department of Employment and Workplace Relations. This decision was made in line with the broader policy objective of simplifying the Commonwealth's financial management framework. The affected departments were consulted on the draft instrument and agreed with its form. The abolition of these Special Accounts is intended to consolidate their functions into a new Services for Other Entities and Trust Moneys (SOETM) Special Account, thereby eliminating redundancy and enhancing the overall efficiency of financial management within the government.

Scope and Application

The Determination 2008/16 made under section 20 of the Financial Management and Accountability Act 1997 (FMA Act) abolishes six Special Accounts, specifically the Other Trust Moneys (OTM) and Services for other Governments and Non-Agency Bodies (SOG) Special Accounts for the Department of the Prime Minister and Cabinet, the Department of Education, Science and Training, and the Department of Employment and Workplace Relations. This determination aims to simplify the financial framework by combining the functions of the OTM and SOG Special Accounts into a single Services for Other Entities and Trust Moneys (SOETM) Special Account. The balances of the OTM and SOG Accounts will be transferred to the SOETM Account, rendering the original accounts redundant. The effect of this determination is that each of the six Special Accounts will be abolished from the time the balance of each account reaches zero. As these accounts are part of the Consolidated Revenue Fund and require an appropriation by the Parliament for spending, their establishment and variation are governed by section 20 of the FMA Act, with the Finance Minister required to table a copy of any establishing or varying Determination in each House of the Parliament, subject to disallowance provisions. This determination, however, does not need to be tabled in Parliament.

Key Provisions

The main operative sections of Determination 2008/16 under the Financial Management and Accountability Act 1997 (FMA Act) pertain to the abolition of six Special Accounts (section 20). Specifically, the Other Trust Moneys (OTM) Special Account and the Services for other Governments and Non-Agency Bodies (SOG) Special Account for the Department of the Prime Minister and Cabinet (PM&C), the Department of Education, Science and Training (DEST), and the Department of Employment and Workplace Relations (DEWR) are to be abolished. This determination aims to streamline the financial management framework by combining the purposes of these accounts into a single Services for Other Entities and Trust Moneys (SOETM) Special Account. The abolition of these accounts is to occur once their respective balances reach zero, and any remaining balances will be transferred to the new account. The obligations and requirements imposed by the Act on the parties governed by this determination include ensuring that all transactions involving the Special Accounts are managed in accordance with the provisions of the FMA Act. The Finance Minister is required to table a copy of the establishing or varying Determination in each House of the Parliament (section 22). Either House may disallow the Determination within five sitting days of tabling. If not disallowed, the determination comes into effect on the calendar day after the last day on which it could have been disallowed. The relevant departments must ensure that their balances are appropriately managed and transferred to the new SOETM Special Account to avoid any operational disruptions. There are no specific offences or penalties outlined in this Determination for failing to comply with its provisions. However, non-compliance with the FMA Act generally could result in civil or criminal consequences, depending on the nature and severity of the breach. For example, section 40 of the FMA Act allows for a penalty of up to two years imprisonment or a fine of up to 120 penalty units (approximately AUD 22,000 as of 2023) for breaches related to the misuse of public money. Similarly, section 41 imposes penalties of up to five years imprisonment or a fine of up to 540 penalty units (approximately AUD 99,000) for more serious offences such as fraud or misconduct in office. The Financial Management and Accountability Act 1997 provides a framework for ensuring that public funds are managed properly and that accountability is maintained within the government.