EXPLANATORY STATEMENT

 

Select Legislative Instrument 2009 No. 41

 

Issued by the authority of the Minister for Finance and Deregulation

 

Financial Management and Accountability Act 1997

 

Financial Management and Accountability Amendment Regulations 2009
(No. 2)

The Financial Management and Accountability Act 1997 (FMA Act) provides a framework of rules for the proper management of public money and public property by Chief Executives and officials of FMA Act agencies.

Subsection 65(1) of the FMA Act provides that the Governor-General may make regulations prescribing matters required or permitted by the FMA Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the FMA Act. Such regulations have been made and are known as the Financial Management and Accountability Regulations 1997 (Principal Regulations).

Section 63 of the FMA Act allows for the making of Finance Minister’s Orders (FMA Orders). Two sets of FMA Orders have been made under that authority: FMA Orders dealing with financial reporting, and generally updated annually; and FMA Orders dealing with miscellaneous matters. Subsequently it has become clear that the majority of the latter category could be more appropriately placed in the Principal Regulations, eventually resulting in only a single set of FMOs, dealing with financial reporting.

The Financial Framework Legislation Amendment Act 2008 (FFLA Act 2008) amends the FMA Act to replace a number of references to FMA Orders with references to regulations. As a consequence, the Principal Regulations are amended to accommodate the making of regulations on certain matters formerly dealt with in FMA Orders.

The amending Regulations:

·        insert transitional savings provisions, preserving for the time being the actions made or purported to be made under the Principal Regulations as in force before the proposed amendments;

·        relocate the substance of a number of FMA Orders into the Principal Regulations; and

·        relocate the substance of a number of the provisions in the FMA Act into the Principal Regulations.

Details of the amending Regulations are set out in the Attachment.

 

The amending Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Regulations 1, 2, 3, 4 and Schedule 1 to the amending Regulations commenced on the day after the proposed Regulations were registered on the Federal Register of Legislative Instruments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATTACHMENT

 

Details of the proposed Financial Management and Accountability Amendment Regulations 2009 (No. 2)

 

Regulation 1 sets out the name of the Regulations.

 

Regulation 2 states that the Regulations will commence on the day after they are registered.

 

Regulation 3 states that Schedule 1 amends the Financial Management and Accountability Regulations 1997 (the Principal Regulations).

 

Regulation 4 addresses transitional provisions, and preserves the operation of acts done, and instruments made, under the authority of the FMA Act, the Principal Regulations, and the FMA Orders that were in place before the commencement of Schedule 1 to the proposed Regulations.

 

Schedule 1

 

Item [1] – Regulation 3, definition of financial task

 

This item amends and clarifies the references to commitment, spending, management or control of public money, and clarifies the interaction with authorised outsiders, who are now able to potentially spend public money under section 12 of the FMA Act, due to the changes made by the Financial Framework Legislation Amendment Act 2008 (FFLA Act 2008).

 

Item [2] – Regulation 4, allocating officials to Departments

 

This item amends regulation 4 to remove the barrier to persons engaged under the Public Service Act 1999 (PS Act) being allocated to a Department of State and the barrier to persons engaged under the Parliamentary Service Act 1999 being allocated to a Department of the Parliament. This link between employment status and the FMA Act was anomalous, resulting in potentially unintended consequences (including, for example, it not being possible for employees of certain CAC Act bodies – if employed under the PS Act – to be allocated to an agency that is a Department, when performing a financial task for the agency).

 

The amendment aligns the way that officials are allocated to Departments with the way officials are already allocated to prescribed agencies. As is already the case with prescribed agencies, an official who performs a financial task for that other agency would be able to be subject to the arrangements applying in that other agency, should the two agencies decide that this is the best arrangement. In short, an official can work under the arrangements of more than one agency, to the extent that the relevant agencies have determined which arrangements apply to the relevant financial task.

 

Item [3]

 

Part 5A, Protection of public money and public property

This item renumbers both the Part and the two regulations in it, in order to accommodate the insertion of a new Part 6.

 

Former Part 6 is renumbered as Part 5A. Former regulation 19, Guidelines on fraud control, is renumbered 16A, and former regulation 20, Officials to have regard to guidelines, is be renumbered 16B.

 

Item [3] also amends Part 6, Banking of public money etc.

 

Part 6, Banking of public money etc

Item [3] also inserts new regulation 17, Prompt banking of received money, new regulation 18, Public money in non-bankable currency, new regulation 19, Withdrawals from official accounts and internal transfers between accounts, and new regulation 20, Custody etc of securities. The substance of this material has been re-located from the FMA Orders, unchanged.

 

Regulation 17 requires officials to promptly bank public money, as formerly set out in FMA Order 3.1.

 

Regulation 18 requires officials to take reasonable steps when dealing with non-bankable currency, as formerly set out in FMA Order 3.2.

 

Regulation 19 sets out the requirements for transfers of amounts within agencies where no appropriation is being debited (for example, where cash is being advanced). It also deals with an official spending an amount under an appropriation, in accordance with a valid drawing right, as formerly set out in FMA Order 3.3.

 

Regulation 20 sets out the obligations relating to custody of securities, when an official receives bonds, debentures or other securities, as formerly set out in FMA Order 4.1.

 

Item [4] – Regulation 21, Credit cards

 

This item consolidates into a single location material on credit cards that was already in the regulations, as well as formerly in the FMA Orders. Subregulation 21(1) allows for arrangements with banks to deal with the issuing of credit cards. New subregulations 21(2)‑21(5) address the use of credit cards, including coincidental private use. These latter subregulations reproduce material formerly contained in FMA Order 2.5, Use of a Commonwealth credit card for particular purposes.

 

Item [5] – Regulation 22, Investment of public money

 

This item inserts into the heading a cross reference to section 39 of the FMA Act, consistent with headings to other regulations.

 

Item [6] – Heading, Part 7A, Reporting and audit etc

 

This item amends the heading to the Part by adding “ etc”. This makes it consistent with other headings, given the addition of further subject matter beyond just reporting and audit.

 

Item [7] – New regulations 22C, Terms of reference of audit committees and 22D, Estimates

 

This item inserts new regulations 22C, Terms of reference for audit committees, and 22D, Estimates.

 

Regulation 22C reflects material formerly in FMA Order 2.1, Audit Committee. Section 46 of the FMA Act requires Chief Executives to establish and maintain an audit committee, and provides for the regulations to address its constitution. New regulation 22C requires a Chief Executive to provide terms of reference to the audit committee, and sets out the functions and responsibilities of an audit committee.

 

Regulation 22D reflects material formerly in FMA Order 2.4, Estimates. It requires a Chief Executive to prepare estimates for each financial year, to be prepared in the form specified by, and as required by, the Finance Chief Executive.

 

Item [8] – Part 8, Delegations and found property

 

This item amends the Part heading to more accurately reflect its contents.

 

Item [9] – New Part 9, Modified operation of the Act

 

This item inserts a new Part heading for those two regulations dealing with the modified operation of the FMA Act for intelligence or security agencies and law enforcement agencies, to improve the readability of the regulations.

 

Item [10] –New Part 10, Act of grace and probate payments

 

This item inserts a new Part 10, dealing with act of grace and probate payments, comprising new regulation 29, Act of grace payments and waiver of debts, and new regulation 30, Finance Minister may approve payments pending probate etc. This material was formerly in sections 33(2), 34(2), 35 and 59 of the FMA Act, which were repealed by the FFLA Act 2008.

 

New regulation 29 provides for an advisory committee to be consulted where amounts of more than $250 000 are involved in two circumstances: first, where the Finance Minister is proposing to authorise making a payment under section 33 of the FMA Act (known as an act of grace payment), and second, where the Finance Minister is proposing to deal with a debt as set out under section 34 of the FMA Act. The regulation also sets out the composition of the Advisory Committee.

 

New regulation 30 allows the Finance Minister to consider who should receive payment of an amount owed to a person at the time of their death, effectively replicating the previous section 35 of the FMA Act which was repealed by the FFLA Act 2008.