Financial Management and Accountability (Financial Statements 2001-2002) Amendment Orders

Overview

The Financial Management and Accountability (Financial Statements 2001-2002) Amendment Orders were enacted in 2002 under the authority of the Financial Management and Accountability Act 1997. These legislative instruments were introduced by Nick Minchin, the Minister for Finance and Administration, to address the need for amendments to the preparation of annual financial statements for financial years ending on or after 30 June 2002. The primary objective of these Orders is to ensure uniformity in financial reporting across the Commonwealth public sector, facilitating the preparation of annual financial statements by the Finance Minister as required by the Act. The Orders came into effect upon gazettal and include specific amendments to the valuation basis for various asset classes, transitioning from deprival to fair value for certain assets starting from the financial year ending on 30 June 2002.

Scope and Application

The Financial Management and Accountability (Financial Statements 2001-2002) Amendment Orders, made by the Minister for Finance and Administration under subsection 63(1) of the Financial Management and Accountability Act 1997, apply to Commonwealth authorities and agencies and govern the preparation of annual financial statements for financial years ending on or after 30 June 2002. These Orders are designed to achieve uniformity in financial reporting across the Commonwealth public sector, ensuring that the Finance Minister can effectively prepare annual financial statements for the Commonwealth in accordance with section 55 of the Act. The amendments primarily focus on the valuation of non-current assets, including land, buildings, infrastructure, plant and equipment, and heritage and cultural assets, by specifying the valuation basis to be used. For financial years ending on or before 30 June 2002, assets must be revalued using the deprival value, while for financial periods starting on or after 1 July 2002, the fair value basis must be applied, except for specialist military equipment, which requires the cost basis. These Orders ensure compliance with Australian Accounting Standards and facilitate consistent financial reporting practices across the Commonwealth public sector.

Key Provisions

The Financial Management and Accountability (Financial Statements 2001-2002) Amendment Orders, made under subsection 63(1) of the Financial Management and Accountability Act 1997, introduce changes to the preparation of annual financial statements for financial years ending on or after 30 June 2002. These Orders, which commence on the date of their gazettal, aim to ensure uniformity in financial reporting across the Commonwealth public sector. Specifically, Schedule 1 to these Orders amends the requirements for the preparation of financial statements for the financial year ending on 30 June 2002 or any subsequent financial year ending before 30 June 2003. The amendments outlined in the Orders require that, subject to Policy 7 (Restructuring), land, buildings, infrastructure, plant and equipment (excluding those held as investment properties) must initially be recorded at the cost of acquisition, in accordance with Australian Accounting Standard 21 (AAS 21). For financial years ending on or before 30 June 2002, entities must continue to revalue these assets at their deprival value, in line with Australian Accounting Standard 38. For financial periods beginning on or after 1 July 2002, the fair value basis must be applied to revaluations of land, buildings, infrastructure, plant and equipment, and heritage and cultural assets, in accordance with Australian Accounting Standard AASB 1041. The cost basis must be applied to specialist military equipment assets for financial periods beginning on or after 1 July 2001. The Orders impose specific obligations on the agencies and authorities governed by them. These entities are required to adhere to the prescribed accounting standards and valuation methods for their assets. They must record land, buildings, infrastructure, plant and equipment (excluding investment properties) at the cost of acquisition, using the deprival value for revaluation until 30 June 2002, and thereafter applying the fair value basis. For specialist military equipment, the cost basis must be used from 1 July 2001 onwards. Failure to comply with these requirements could lead to inaccurate financial reporting and potential non-compliance with the Act. Failure to comply with the provisions of these Orders could result in civil or criminal consequences. Under the Financial Management and Accountability Act 1997, there are penalties for non-compliance with financial reporting requirements. While the specific penalties are not detailed within the text of these Orders, they could potentially include fines or other sanctions for both individuals and entities found to be in breach of the Act. The maximum penalties could vary depending on the nature and severity of the breach, as well as any applicable provisions within the broader legislative framework.