Overview

The Financial Management and Accountability Act 1997 was enacted to ensure that the Commonwealth’s financial resources are managed efficiently, effectively, and in compliance with legal and regulatory requirements. The Act provides the framework for financial management and accountability in the Commonwealth public sector, aiming to ensure that public funds are used for their intended purposes and that there is transparency and accountability in the use of public money. The Act was introduced to address the need for a comprehensive legal framework that governs financial management and accountability across the Commonwealth public sector, including the establishment of special accounts to manage specific types of transactions. The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia, reflecting the legislative power vested in the Parliament under the Australian Constitution. The policy objective of the Act, as expressed in its explanatory statement, is to facilitate the effective and accountable management of Commonwealth financial resources. In 2009, the Minister for Finance and Deregulation issued Determination 2009/25 under the Financial Management and Accountability Act 1997 to establish a new Special Account, specifically the Services for Other Entities and Trust Moneys – Foreign Affairs and Trade Special Account. This Determination was made to address the need for a dedicated account to manage miscellaneous small amounts of money on behalf of persons or entities other than the Commonwealth. The Special Account allows the Department of Foreign Affairs and Trade to hold and expend these amounts, such as those received for services performed for other governments or from Comcare for workers’ compensation payments. The Determination specifies the purposes for which the Special Account can be debited, including primary expenditure purposes and other transactions permitted under the Act. The Determination was subject to parliamentary disallowance, with the Finance Minister required to table a copy in each House of the Parliament, although disallowance did not apply to the abolition of the Special Account. The Department of Foreign Affairs and Trade was consulted on the Determination and agreed with its form, and no further consultation was considered necessary as the instrument pertains to internal machinery of government purposes.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) provides the framework for the establishment of Special Accounts by the Commonwealth Government, enabling the allocation of specific funds within the Consolidated Revenue Fund (CRF) for designated purposes. Determination 2009/25 under the FMA Act establishes the Services for Other Entities and Trust Moneys – Foreign Affairs and Trade Special Account, designed to manage and allocate funds for services provided to other entities, including other governments, and trust monies related to workers’ compensation payments. This Special Account operates under the appropriation specified in the Determination and is subject to parliamentary disallowance, as required by section 22 of the FMA Act. The Department of Foreign Affairs and Trade is the primary entity affected by this instrument, which has been agreed upon by the department following consultation. The account is intended to handle miscellaneous small amounts that do not fit into other appropriations, ensuring efficient and accountable financial management within the specified scope.

Key Provisions

The main operative sections of the Determination 2009/25 establish a Special Account under the Financial Management and Accountability Act 1997 (FMA Act), specifically titled the Services for Other Entities and Trust Moneys – Foreign Affairs and Trade Special Account (section 2). This account is designed to facilitate the Department of Foreign Affairs and Trade's ability to manage and disburse funds on behalf of entities other than the Commonwealth government. The Determination outlines the permissible credits to and debits from the account (section 5). Credits can include amounts received for services rendered to non-Commonwealth entities, such as other governments, and funds received from Comcare for workers’ compensation payments (section 5(a) and (b)). Debits can be made for these primary purposes, and also to simplify accounting for transactions as permitted under section 28 of the FMA Act (section 5(c)). Additionally, the balance can be reduced without a formal payment, ensuring the account does not hold money indefinitely (section 5(d)). The obligations imposed by this Act on the Department of Foreign Affairs and Trade include managing the Special Account in accordance with the specified purposes and ensuring that all credits and debits are within the scope defined by the Determination. The Department must also ensure that the account is used exclusively for the purposes outlined, which primarily involve handling miscellaneous funds on behalf of non-Commonwealth entities. Furthermore, the account must be properly accounted for and reported in accordance with the FMA Act's financial management requirements. The Finance Minister is responsible for tabling the Determination in both Houses of Parliament, and any disallowance must occur within five sitting days of tabling (section 22). The Department is also required to consult with other agencies to ensure the efficient and proper use of the account. Breaches of the provisions set out in the Determination may lead to civil or criminal consequences, although specific offences and penalties are not detailed in the text. Generally, under the FMA Act, unauthorised expenditure or improper management of public funds can result in significant penalties. For civil penalties, the maximum financial penalty can be substantial, depending on the severity and impact of the breach. Criminal penalties may include fines or imprisonment, depending on the nature and extent of the offence. The exact penalties would be determined in the context of the breach and in accordance with relevant sections of the FMA Act and other applicable legislation.