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Financial Management (Amendment) Bill
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EXPLANATORY MEMORANDUM
General
The Bill amends the Financial Management Act 1994 to provide for greater
flexibility in budgeting and reporting by the Government, and update the Act
to reflect current financial management practices.
Clause Notes
Clause 1 states the purpose of the Bill. The purpose of the Bill is to amend
the Financial Management Act 1994 with respect to
government financial reporting. The amendments will provide
for greater flexibility in budgeting and reporting by the
Government, and update the Act to reflect current financial
management practices.
Clause 2 provides the amendments made by the Bill come into operation
on the day after the day on which it receives Royal Assent.
Clause 3 provides that in the Bill the Financial Management Act 1994 is
called the Principal Act.
Clause 4 inserts an additional definition into section 3 of the Financial
Management Act 1994.
The definition of "business day" means a day other than a
Saturday, a Sunday or a public holiday appointed under the
Public Holidays Act 1993. The term is used in the substituted
section 27D.
Clause 5 substitutes a new section 23E(3)(b) in the Financial
Management Act 1994 to provide for the transmission to the
Parliament of the financial policy objectives and strategies
statement in accordance with the new tabling provisions provided
in the substituted section 27D.
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551188 BILL LA CIRCULATION 13/5/2004
Clause 6 substitutes references to the "budget sector" with "general
government sector" where occurring in sections 23I and 23J(1) of
the Financial Management Act 1994. This clarifies that
estimated financial statements are prepared in respect of the
general government sector.
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A new section 23J(3) is substituted to provide that the estimated
financial statements are to be prepared on a basis consistent with
the current financial policy objectives and strategies statement as
required by the existing provisions of section 23E, and in the
manner and form determined by the Minister, having regard to
appropriate financial reporting frameworks, similar to the
requirements of section 24(2)(a) as amended by clause 8.
Clause 7 substitutes a new section 23L(2) in the Financial Management
Act 1994 to provide for the transmission to the Parliament of the
budget update in accordance with the new tabling provisions
provided in the substituted section 27D.
Substituted section 23N(1) provides that a budget update
comprises updated estimated financial statements. The effect of
this substitution is the removal from the budget update of the
Victorian budget sector financial statements for the 4 months to
the end of October, or financial statements for a longer period if
the Minister so determines. The removal of this requirement is
due to duplication with quarterly financial reports prepared under
the existing section 26 of the Act.
A new section 23N(3) is also substituted to provide that the
budget update is to be prepared on a basis consistent with the
current financial policy objectives and strategies statement as
required by the existing provisions of section 23E, and in the
manner and form determined by the Minister, having regard to
appropriate financial reporting frameworks, similar to the
requirements of section 24(2)(a) as amended by clause 8.
Clause 8 amends section 24(2)(a) of the Financial Management Act 1994
to require regard to be had to appropriate financial reporting
frameworks in the preparation of the annual financial report.
The clause also substitutes references to the "budget sector" with
"general government sector" in section 24(2)(b). This clarifies
that the annual financial report is to be prepared in respect of the
general government sector.
The existing section 24(4) is substituted by a new section 24(4)
to provide for the transmission to the Parliament of the annual
financial report in accordance with the new tabling provisions
provided in the substituted section 27D.
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Clause 9 amends section 25(2)(a) of the Financial Management Act 1994
to require regard to be had to appropriate financial reporting
frameworks in the preparation of the mid-year report.
The clause also substitutes references to the "budget sector" with
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"general government sector" in section 25(2)(b). This clarifies
that the mid-year report is prepared in respect of the general
government sector.
The existing section 25(3) is substituted by a new section 25(3) to
provide for the transmission to Parliament of the mid-year report
in accordance with the new tabling provisions provided in the
substituted section 27D.
Clause 10 substitutes references to the "budget sector" with "general
government sector" in section 26(2) of the Financial
Management Act 1994. This clarifies that the quarterly
financial reports are prepared in respect of the general
government sector.
A new section 26(2A) is inserted to provided that a quarterly
financial report must be prepared in the manner and form
determined by the Minister, similar to the existing provisions of
section 24(2)(a), having regard to appropriate financial reporting
frameworks, similar to the requirements of section 24(2)(a) as
amended by clause 8.
New section 26(2B) provides that the quarterly report for the
quarter ending on 31 December in a financial year must include,
in addition to current requirements contained in sub-section
(2)(a) to (d) (which include statements of financial performance,
financial position, cash flows and of accounting policies the
statements are based on, for the 31 December quarter), those
statements for the period of 6 months ending on that
31 December.
Similarly, new section 26(3A) provides that the quarterly report
for the quarter ending on 30 June in a financial year must, in
addition to the requirements of sub-section (2)(a) to (d), contain
those statements for a period of 12 months ending on that
30 June.
The existing section 26(4) is substituted by a new section 26(4) to
provide for the transmission to the Parliament of quarterly
financial reports in accordance with the new tabling provisions
provided in the substituted section 27D.
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Clause 11 substitutes references to the "budget sector" with "general
government sector" in section 27B(1)(a) of the Financial
Management Act 1994. This clarifies that the pre-election
budget update is to be prepared in respect of the general
government sector.
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A new section 27B(3) is also substituted to provide that the
pre-election update is to be prepared on a basis consistent with
the current financial policy objectives and strategies statement
as required by the existing section 23E, and the most recent
estimated financial statements or budget update, whichever is
applicable. This ensures that the bases upon which these reports
are prepared are consistent to facilitate comparability.
Clause 12 substitutes a new section 27D in place of existing section 27D of
the Financial Management Act 1994.
This section establishes new procedures for the transmission and
release of the following: audited annual financial report, mid-year
report, a quarterly financial report, a budget update, and the
financial policy objectives and strategies statement prepared in
association with a budget update.
It also corrects the current anomaly contained in the existing
section which allows reports only to be tabled whilst Parliament
is sitting, or otherwise on the relevant due date, by introducing
an out of session tabling provision which allows the above
documents to be tabled whilst Parliament is in recess. The new
section provides for advance notice to be given to the Clerk of
each House of the intention to transmit a document when
Parliament is in recess, and that the Clerks must notify and
provide copies to all members of the House. The report must
also be published on an appropriate Government internet website
as soon as practicable after it has been given to the Clerks.
The insertion of the new section 27DA also provides that the
report is covered by parliamentary privilege in these
circumstances.
The reference to "release day" in the current section is amended
to "due date".
The due dates for documents are amended as follows: the audited
annual financial report for a financial year has been brought
forward from 27 October to on or before 15 October and the
quarterly financial report for the quarter ending on 30 June in a
financial year has similarly been brought forward from
27 October to on or before 15 October. The revision aligns the
quarterly financial report timelines with other significant reports
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under Part 5. It also clarifies that the quarterly financial reports
can be prepared separately.
The budget update for a financial year and the financial policy
objectives and strategies statement prepared in association with it
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has been brought forward one month from 15 January and is now
due on or before 15 December in that financial year.
Clause 13 repeals the current section 27F of the Financial Management
Act 1994. This section is no longer relevant due to the new
tabling provisions in the new sections 27D and 27DA.
Clause 14 amends section 59(3) of the Financial Management Act 1994
to update the reference to "Australian Society of Certified
Practicing Accountants" to "CPA Australia". It also removes the
reference to the "Public Sector Accounting Standards Board" and
inserts a reference to the "Australian Bureau of Statistics".
Clause 15 makes a consequential amendment to section 9A(2) of the Audit
Act 1994. This consequential amendment is to ensure
consistency in respect to the transmission of the audit opinion on
the annual financial report of the State, in accordance with the
new tabling flexibilities provided by the substituted section 27D
of the Financial Management Act 1994.
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