EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Deregulation

Financial Management and Accountability Act 1997

Determination 2008/20 to establish a Special Account

Purposes of Determination 2008/20

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 Auditing and Assurance 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 Auditing and Assurance 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 2008/20  

Purpose of the Office of the Auditing and Assurance Standards Board Special Account

This determination will establish a Special Account for the Auditing and Assurance Standards Board (AUASB).

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

The institutional arrangements for auditing and assurance standards setting involve a Financial Reporting Council with oversight responsibility for the AUASB, which is Australia’s national auditing and assurance standards setter.  The AUASB has the primary role in developing standards and related guidance for auditors and providers of other assurance services and is serviced by the Office of the AUASB, which has its own research and administrative staff.

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

• making auditing standards under section 336 of the Corporations Act 2001 for the purposes of the corporations legislation;
• formulating auditing and assurance standards for other purposes;
• formulating guidance on auditing and assurance matters;
• participating in, and contributing to, the development of a single set of auditing standards for world-wide use; and
• advancing and promoting the above objectives.  

The Office of the AUASB, 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 Auditing and Assurance Standards Board Special Account is required in order to give effect to changes to the governance arrangements for the Office of the AUASB.

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 AUASB to the FMA Act. 

The Office of the AUASB 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 AUASB 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 Auditing and Assurance Standards Board Special Account