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 Special Account for IP Australia) Determination 2011/11
Purpose of the Determination
The instrument is made under subsection 20 (1) of the Financial Management and Accountability Act 1997 (FMA Act) and establishes a Special Account entitled the Services for Other Entities and Trust Moneys - IP Australia 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 - IP Australia 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 the 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 this Determination
Reasons for establishing a new SOETM 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 IP Australia to continue 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 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.
Clause 6 of the Determination specifies the purposes for which the Special Account can be debited.
- Subclauses 6 (a) and (b) describe the primary purposes for expenditure of amounts from the Special Account.
- Subclause 6 (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 6 (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
IP Australia is the Agency affected by this determination and was provided with an opportunity to comment on a draft of this instrument and to supply data for the “Estimates of Transactions Table”. 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 Special Account
The table below outlines the estimated movement of appropriations within the Special Account.
| ($’000) |
Opening Balance | Credits(1) | Debits(2) | Closing Balance |
Services for Other Entities and Trust Moneys - IP Australia Special Account | 2010-2011 | 0 | 8,017 | 0 | 8,107 |
2011-2012 | 8,107 | 7,586 | 7,586 | 8,107 |
Note: these figures are estimates for the 2010-2011 and the 2011-12 Financial Years provided by the responsible Agency.
(1) Reflects the anticipated amounts credited to the Special Account.
(2) Reflects the anticipated amounts debited from the Special Account.
Overview
The Financial Management and Accountability (Establishment of Special Account for IP Australia) Determination 2011/11, made under the Financial Management and Accountability Act 1997, establishes a Special Account to manage trust and service-related funds on behalf of entities other than the Commonwealth, specifically for IP Australia. This determination aims to address the need for a dedicated account to handle miscellaneous financial transactions that do not fall under the general appropriation of the Consolidated Revenue Fund. By creating the Services for Other Entities and Trust Moneys - IP Australia Special Account, the determination allows IP Australia to manage and expend these funds while complying with the requirements set out in the Financial Management and Accountability Act. The establishment of this Special Account ensures that such funds are appropriately accounted for and utilised within the constraints of the Act, thereby enhancing financial management and accountability for these specific transactions.
Scope and Application
The Financial Management and Accountability (Establishment of Special Account for IP Australia) Determination 2011/11 applies specifically to the creation and management of a new Special Account within the Financial Management and Accountability Act 1997 framework. This Special Account, titled the Services for Other Entities and Trust Moneys - IP Australia Special Account, is established to cater to the unique financial needs of IP Australia, allowing it to manage funds received on behalf of entities other than the Commonwealth, such as other governments and private entities. This account is supported by an appropriation under section 20 of the FMA Act and allows for the specified credits and debits as outlined in the determination. The geographic scope of this legislation is limited to the Commonwealth of Australia, as it pertains to the management of funds within the Australian government's financial system. The determination also outlines the procedures for tabling and disallowance in Parliament, ensuring compliance with section 22 of the FMA Act. It is important to note that while the determination establishes the account, it can be abolished by a subsequent determination of the Finance Minister without the need for parliamentary disallowance.
Key Provisions
The main operative sections of the Financial Management and Accountability (Establishment of Special Account for IP Australia) Determination 2011/11 include the establishment of a Special Account for IP Australia, which is titled the Services for Other Entities and Trust Moneys - IP Australia Special Account (Clause 1). This account is intended to facilitate the holding and expenditure of amounts on behalf of entities other than the Commonwealth, typically for small, miscellaneous transactions (Clause 2). The primary purposes for which the Special Account can be debited are specified in Clause 6, which include payments for services rendered to other entities, including other governments, and any other debits permitted by section 28 of the Financial Management and Accountability Act 1997 (FMA Act). Clause 6 also allows for the reduction of the account balance without a real or notional payment occurring, to prevent indefinite setting aside of funds.
The obligations imposed on IP Australia under this Determination include the management of the Special Account in accordance with the specifications outlined in the determination. This involves ensuring that only the permitted transactions, as outlined in Clause 6, are debited from the account. IP Australia must also ensure that all amounts credited to the account are appropriately recorded and managed. The agency is responsible for providing accurate estimates of transactions within the account, which are to be tabled in each House of the Parliament as required by section 22 of the FMA Act. These estimates are intended to provide transparency and accountability in the use of the Special Account.
The Determination does not explicitly outline offences or penalties for breaches of its provisions. However, breaches of the Financial Management and Accountability Act 1997, under which this Determination is made, may result in civil or criminal consequences. Under section 27 of the FMA Act, any person who knowingly authorises an unauthorised payment or expenditure commits an offence and may be subject to a penalty. For individuals, the penalty is imprisonment for up to five years or a fine of up to 300 penalty units, or both. For bodies corporate, the penalty is a fine of up to 1500 penalty units. These penalties reflect the serious nature of financial mismanagement and the importance of adhering to the legislative framework governing the use of Commonwealth funds.