EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Determination 2009/19 to establish a Special Account
Purposes of Determination 2009/19
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 Services for Other Entities and 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 Services for Other Entities and Trust Moneys – Defence Materiel Organisation 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 may be established by a determination that sets out the amounts that may be credited 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 amounts from the CRF to be spent on purposes 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 the 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, such a determination is not subject to parliamentary disallowance.
Operation of Determination 2009/19
Reasons for establishing a new Special Account
Most agencies under the FMA Act administer either a Services for Other Entities and Trust Moneys (SOETM) Special Account or other Special Accounts that together encompass the purposes of a SOETM Special Account.
The SOETM Special Account will enable Defence Materiel Organisation to hold and expend amounts on behalf of persons or entities other than the Commonwealth.
Typically the SOETM Special Account will be used to accommodate small amounts of miscellaneous moneys. For example, the SOETM Special Account may be used to hold amounts (a) received in connection with services performed for or on behalf of any persons or entities that are not Agencies as prescribed under the FMA Act, such as other governments; and (b) received from Comcare in relation to employees entitled to receive workers’ compensation payments.
Clause 5 of the Determination specifies the purposes for which the Special Account can be debited.
- Subclauses 5 (a) and (b) describe the primary purposes for expenditure of amounts from the Special Account.
- Subclause 5 (c) allows the Special Account to the 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 (d) allows the balance of the Special Account to be reduced without a real or notional payment occurring. It is included to ensure that these amounts are not set aside indefinitely.
Consultation
The Defence Materiel Organisation is the agency affected by this instrument. The agency was provided with drafts of the instrument and agrees with the form of the instrument. 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 Services for Other Entities and Trust Moneys – Defence Materiel Organisation Special Account
| ($’000) |
Opening Balance | Credits | Debits | Closing Balance |
Services for Other Entities and Trust Moneys – Defence Materiel Organisation Special Account | 2008-09 | 0 | 364 | 0 | 364 |
2009-10 | 364 | 380 | 744 | 0 |
Overview
The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia to provide a framework for the financial management and accountability of Commonwealth entities. It aimed to address issues related to the proper control, management, and accountability of public funds. Determination 2009/19 was issued under subsection 20(1) of the Act to establish a Special Account specifically for the Defence Materiel Organisation, named the Services for Other Entities and Trust Moneys – Defence Materiel Organisation Special Account. This Special Account is intended to manage funds on behalf of persons or entities other than the Commonwealth, such as other governments and workers’ compensation payments. The establishment of this Special Account aims to streamline financial transactions and ensure proper accountability for these specific types of funds within the Defence Materiel Organisation. The determination was made by the Minister for Finance and Deregulation and is subject to parliamentary disallowance, as required by section 22 of the FMA Act.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to various entities and individuals within the Australian government, including Defence Materiel Organisation (DMO) which is responsible for managing financial transactions as outlined in the Act. Determination 2009/19, made under subsection 20(1) of the FMA Act, establishes a Special Account specifically for the DMO, named the Services for Other Entities and Trust Moneys – Defence Materiel Organisation Special Account. This account is designed to facilitate the holding and expenditure of funds on behalf of entities other than the Commonwealth, such as other governments and Comcare for workers’ compensation payments. The account is subject to appropriation under section 20 of the FMA Act and its establishment requires tabling in both Houses of Parliament, with potential disallowance within five sitting days. The scope of the account is limited to the purposes specified in the determination, including services performed for non-Commonwealth entities and workers’ compensation payments. Subordinate instruments may further extend or specify the application of this account as necessary.
Key Provisions
The main operative sections of the Determination 2009/19 (section references in parentheses) establish a Special Account for the Defence Materiel Organisation (DMO) under the Financial Management and Accountability Act 1997 (FMA Act). Section 2 of the determination creates the Services for Other Entities and Trust Moneys – Defence Materiel Organisation Special Account, which is intended to handle funds received for services rendered to non-Commonwealth entities and to manage trust moneys. Section 5 of the determination specifies the purposes for which the Special Account can be debited, including payments for services rendered to non-Commonwealth entities, compensation payments, and other expenditures permitted by the FMA Act. These sections provide a legal framework for the DMO to manage these funds effectively and in compliance with legislative requirements.
The obligations and requirements imposed by the Act on the parties it governs are primarily centred around the proper management and accounting of the Special Account. The DMO is required to ensure that all credits and debits to the account are made in accordance with the purposes specified in section 5 of the determination. This means that the DMO must maintain accurate records of all transactions and ensure that funds are only used for the specified purposes. Additionally, the determination requires the Finance Minister to table the establishing or varying determination in each House of the Parliament, and allows either House to 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, as per section 22 of the FMA Act.
The Act also outlines the consequences for breaches of the provisions, including potential offences and penalties. Although the Explanatory Statement does not detail specific offences or penalties, breaches of the FMA Act generally could result in civil or criminal penalties. For instance, misuse of public funds or improper accounting practices could lead to criminal charges and penalties under Australian law. The severity of the penalties can vary depending on the nature and extent of the breach, but they may include fines or imprisonment. The Act ensures that the DMO and other relevant entities comply with the requirements by imposing these potential consequences for non-compliance.