EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Deregulation

Financial Management and Accountability Act 1997

Determination 2008/18 to establish a Special Account

Purposes of Determination 2008/18

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 the Office of the Australian Accounting Standards Board 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 Office of the Australian Accounting Standards Board Special Account.

Special Accounts generally

In accordance with the Constitution, all revenues or moneys raised or received by the Government of the Commonwealth form one Consolidated Revenue Fund (CRF) and may not be spent unless under an appropriation by the Parliament for the purposes of the Commonwealth.  A Special Account is established by a determination that sets out the amounts that may be credited to and the purposes for which amounts may be debited from the Special Account.  Special Accounts established by determination are supported by an appropriation under section 20 of the FMA Act.  In effect, Special Accounts allow amounts from the CRF to be spent on a purpose specified in the determination.

Determinations that establish Special Accounts, or vary determinations that establish Special Accounts, are subject to section 22 of the FMA Act.  Section 22 of the FMA Act requires the Finance Minister to table a copy of the establishing or varying determination 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.

Special Accounts can be abolished by a determination of the Finance Minister.  However, there is no requirement to table such a determination.

Operation of Determination 2008/18

Purpose of the Office of the Australian Accounting Standards Board Special Account

This determination will establish a Special Account for the Australian Accounting Standards Board (AASB).

The purpose of this Special Account is to enable the Office of the AASB to manage moneys received primarily from professional accounting bodies, the Australian Securities Exchange and Australian State and Territory Governments.

The institutional arrangements for accounting standard setting involve a Financial Reporting Council with oversight responsibility for the AASB, which is Australia’s national accounting standards setter. The AASB deals with standards setting in the private and public sectors and is serviced by the Office of the AASB, which has its own research and administrative staff.

The functions of the Office of the AASB include; giving effect to decisions of the AASB, providing technical and administrative services and information to the AASB, advising the AASB about the performance of the AASB’s functions, and making resources and facilities available to the AASB. The functions of the AASB relate to:

•             developing a conceptual framework, not having the force of an accounting standard, for the purpose of evaluating proposed accounting standards and international standards;

•             making accounting standards under section 334 of the Corporations Act 2001 for the purposes of the Corporations legislation;

•             formulating accounting standards for other purposes;

•             participating in, and contributing to, the development of a single set of accounting standards for world-wide use; and

•             advancing and promoting the main objects of Part 12 of the Australian Securities and Investments Commission Act 2001.

The Office of the AASB, as an agency subject to the FMA Act, is Budget funded for expenses incurred in administering this Special Account.

Reasons for establishing a new Special Account

The Office of the Australian Accounting Standards Board Special Account is
required in order to give effect to changes to the governance arrangements for the Office of the AASB.

The Australian Securities and Investment Commission Act 2001 was amended by the Governance Review Implementation (AASB and AUASB) Act 2008 on 30 June 2008 in order to transition the AASB to the FMA Act. 

The Office of the AASB was prescribed in Part 1 of Schedule 1 of the Financial Management and Accountability Regulations 1997 on 1 July 2008.

Subclause 5(1) specifies the purposes for which amounts may be debited from the Special Account.

• Paragraph 5(1)(a) describes the primary purposes for which expenditure can be made from the Special Account.
• Paragraph 5(1)(b) allows costs for activities that are incidental to one or more of the purposes mentioned in paragraph 5 (1) (a) to be debited from the Special Account.
• Paragraph 5(1)(c) allows the balance of the Special Account to be reduced without a notional or real payment occurring.
• Paragraph 5(1)(d) 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.

Subclause 5(2) allows incidental 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, except where these activities are Budget funded.

Consultation

The Office of the AASB is the agency affected by this instrument, and was provided with drafts of the instrument and agrees with its form. As the instrument is for internal machinery of government purposes only, no consultation was considered necessary with other persons (see sections 17 and 18 of the Legislative Instruments Act 2003).

Estimates of transactions on the Office of the Australian Accounting Standards Board Special Account