EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Financial Management and Accountability (Establishment of SOETM Special Account – ITSA) Determination 2012/12
Purpose of the Determination
The Determination is made under subsection 20(1) of the Financial Management and Accountability Act 1997 (FMA Act) and establishes a Special Account entitled Services for Other Entities and Trust Moneys Special Account – Insolvency and Trustee Service Australia.
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 the purposes specified in the determination.
Determinations that establish Special Accounts under subsection 20(1) of the FMA Act or vary Special Accounts under subsection 20(2) of the FMA Act are subject to the tabling and disallowance procedures in section 22 of the FMA Act. Section 22 of the FMA Act requires the Finance Minister to table a copy of the determination in each House of the Parliament. Either House may pass a resolution disallowing a determination within five sitting days of tabling. If the determination is not disallowed, it comes into effect on the day immediately after the last day on which it could have been disallowed.
Subsection 20(6) of the FMA Act exempts determinations that establish Special Accounts under subsection 20(1) of the FMA Act or vary Special Accounts under subsection 20(2) of the FMA Act from the operation of Part 6 (sunsetting) of the Legislative Instruments Act 2003.
Subsection 20(7) of the FMA Act exempts determinations that abolish Special Accounts under subsection 20(3) of the FMA Act from the operation of section 42 (disallowance) and Part 6 (sunsetting) of the Legislative Instruments Act 2003.
A Statement of Compatibility with Human Rights is not required for this legislative instrument. Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires a Statement of Compatibility with Human Rights for all legislative instruments subject to disallowance under section 42 of the Legislative Instruments Act 2003. While legislative instruments made or varied under subsections 20(1) or 20(2) of the FMA Act are subject to disallowance under section 22 of the FMA Act they are not subject to disallowance under section 42 of the Legislative Instruments Act 2003. Legislative instruments made under subsection 20(3) of the FMA Act are exempt from disallowance under subsection 20(7) of the FMA Act, as such a Statement of Compatibility with Human Rights is not required.
Operation of this Determination
The Services for Other Entities and Trust Moneys Special Account – Insolvency and Trustee Service Australia (SOETM) combines the purposes of the Other Trust Moneys and the Services for Other Governments and Non-agency Bodies Special Accounts into a single standard purpose Special Account. The SOETM enables the Agency to continue to hold and expend amounts on behalf of persons or entities other than the Commonwealth. Typically the SOETM will be used to accommodate small amounts of miscellaneous moneys. For example, amounts 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.
Consultation
The Agency affected by this determination was given an opportunity to comment on the instrument.
As the instrument is for internal machinery of government purposes only, no consultation was necessary with other persons (see sections 17 and 18 of the Legislative Instruments Act 2003).
Overview
The Financial Management and Accountability (Establishment of SOETM Special Account – ITSA) Determination 2012/12 was enacted to address a need for a consolidated account for managing miscellaneous funds on behalf of entities other than Commonwealth agencies. This Determination was made under the authority of the Financial Management and Accountability Act 1997 (FMA Act) by the Minister for Finance and Deregulation. The primary objective of this Determination is to establish a Special Account, specifically the Services for Other Entities and Trust Moneys Special Account – Insolvency and Trustee Service Australia (SOETM), which amalgamates the functions previously served by the Other Trust Moneys and the Services for Other Governments and Non-agency Bodies Special Accounts into a single entity. This streamlined approach allows the Agency to manage and disburse funds for services provided to non-agency entities such as other governments, thereby ensuring efficient financial management and accountability in accordance with the FMA Act.
Scope and Application
The Financial Management and Accountability (Establishment of SOETM Special Account – ITSA) Determination 2012/12 applies to the establishment of a Special Account under the Financial Management and Accountability Act 1997, specifically for the Services for Other Entities and Trust Moneys Special Account – Insolvency and Trustee Service Australia. This account is intended to manage funds received on behalf of entities other than the Commonwealth, such as other governments and non-agency bodies, and to accommodate small amounts of miscellaneous moneys. The Determination is applicable nationally, as it pertains to the Commonwealth of Australia, and is subject to the parliamentary procedures outlined in the Financial Management and Accountability Act 1997, including the tabling and disallowance processes. The establishment of this Special Account is supported by an appropriation under the Act and is exempt from certain disallowance and sunsetting provisions under the Legislative Instruments Act 2003. This determination streamlines the management of trust moneys by consolidating the functions of the Other Trust Moneys and Services for Other Governments and Non-agency Bodies Special Accounts into a single account, facilitating more efficient financial operations for the relevant agency.
Key Provisions
The Financial Management and Accountability (Establishment of SOETM Special Account – ITSA) Determination 2012/12 establishes a Special Account named the Services for Other Entities and Trust Moneys Special Account – Insolvency and Trustee Service Australia (SOETM) (section 20(1)). This Special Account is designed to consolidate the purposes of the Other Trust Moneys and the Services for Other Governments and Non-agency Bodies Special Accounts into one standard purpose account (section 20(1)). The SOETM allows the Agency to hold and expend money on behalf of entities other than the Commonwealth, typically for small miscellaneous amounts (section 20(1)).
The obligations and requirements imposed by this Determination on the relevant parties are primarily administrative. The Special Account must be used in accordance with the purposes specified in the Determination, ensuring that amounts are only credited and debited for activities that align with the defined objectives (section 20(1)). The Agency responsible for managing the SOETM must ensure that all transactions are properly recorded and justified, adhering to the standards set forth by the Financial Management and Accountability Act 1997 (FMA Act). The Determination also necessitates that the Agency consult with the affected parties, as required by the Legislative Instruments Act 2003 (sections 17 and 18).
Breaches of the provisions outlined in the Determination can lead to various consequences. Under the FMA Act, any misuse of the Special Account funds for unauthorised purposes could be considered a breach. Such breaches may result in civil or criminal penalties, depending on the severity and intent of the violation. The FMA Act does not specify maximum penalties for breaches of Special Account regulations within its provisions, but general penalties for financial mismanagement under the FMA Act can include fines and imprisonment. Furthermore, any determination made under the FMA Act is subject to disallowance by either House of Parliament if passed within five sitting days of tabling (section 22).