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Financial Management (Miscellaneous
Amendments) Bill
Introduction Print
EXPLANATORY MEMORANDUM
General
This Bill amends the Financial Management Act 1994 ("the Principal Act")
in relation to budget management, powers of the Minister over Crown land
and financial regulation and direction making powers.
Clause Notes
Clause 1 states the purpose of the Bill.
Clause 2 provides for the commencement of the Bill. It will come into
operation on the day after the day on which it receives the Royal
Assent.
Clause 3 provides that the Financial Management Act 1994 is called the
Principal Act in this Bill.
Clause 4 substitutes a new section 8(1) in the Principal Act to directly
empower the Minister to give directions in writing to an
authority, a public body, an accountable officer or a chief finance
and accounting officer in relation to any of the matters for which
regulations may be made under the Act. This power previously
had to be authorised by a regulation.
Clause 4 also inserts three new sub-sections after section 8(2) of
the Principal Act that replicate provisions in the regulation-
making power--
· to ensure that directions may be of general or limited
application, may differ according to circumstances, and
may be given to specified persons or classes of persons
(sub-section (3));
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551415 BILL LA INTRODUCTION 28/3/2006
· to clarify that a direction can adopt the whole or part of
a statement of accounting standards or accounting
practice by professional or regulatory bodies specified
under section 59(3) issued before the direction is given
(sub-section (4));
· to clarify that the power to make directions extends to
directions with respect to money in a Trust Account in
the Trust Fund that is established by or under another
Act (sub-section (5)).
Clause 5 substitutes a new section 24(2)(g) in the Principal Act so that the
annual financial report, in addition to details currently provided
in respect of unused appropriation as a result of a determination
under section 32 for the preceding year, includes amounts
appropriated in respect of the next financial year.
Note: This is a consequential amendment resulting from
amendments made by clause 7 of the Bill to section 32 of
the Principal Act.
Clause 6 substitutes a new section 29 in the Principal Act. The new
section 29 is as follows--
· a new heading "Appropriation of certain revenue and
asset proceeds" to reflect a move from a cash to accrual
environment in respect of relevant items;
· new sub-section (1) states when section 29 applies to an
item in respect of a department set out in the Schedule
to an appropriation Act;
· new sub-section (2)(a) substitutes the accrual term
"revenue receivable" for the cash term "money
received" for specified items; and sub-section (2)(b)
substitutes the cash term "proceeds received from the
disposal of assets" for the cash term "money received"
in relation to assets;
· new sub-section (3) essentially replicates the current
provisions in section 29 deeming the amount that is
authorised to be retained by a department under
section 29 to have been appropriated and empowering
the Minister to issue and apply that amount accordingly.
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Section 29 currently does not reflect the move from cash to
accrual accounting principles. The proposed new section will
correct this and align the section with current practice by
introducing accrual rather than cash principles for relevant items,
being Provision of Outputs, Commonwealth Specific Purpose
Payments and Municipal Council Specific Purpose Payments.
Accrual principles, however, will not apply to proceeds from the
disposal of assets because under International Financial
Reporting Standards this could be interpreted as the net amount
(that is the difference between the carrying value and sale price
of the asset) which is not the intent of this provision. It also may
reduce the incentive for departments to use such proceeds for
managing their asset base. Using accrual rather than cash
principles for the disposal of assets could also have the
undesirable consequence of entitling departments to apply the
proceeds from disposal in the current year even where the cash
may not be realised until future years, for instance in the case of a
terms sale when part payment is made in one financial year and
the balance is received in the next or subsequent financial years.
Clause 7 repeals section 32(2) of the Principal Act thereby removing the
requirement to make a determination of unused appropriation
before the end of the financial year to which it relates. This is no
longer practicable due to the introduction of accrual rather than
cash accounting and is out of step with end of financial year
accounting and reporting processes.
Clause 7 also substitutes a new section 32(4) in the Principal Act
so that, under section 40, the annual budget estimates will be
required to contain an estimate rather than a determination of
unused appropriation. This is necessary due to the timing of
the Budget. A determination of actual amounts of unused
appropriation is no longer possible for a Budget which is
presented before the end of the financial year in May, rather
than August/September. Section 32(4) will now require that a
statement under section 40 must include the estimated amounts
for which determinations under this section may be made in
respect of unused appropriation for the preceding financial year.
Note: A consequential amendment is being made in clause 5
of the Bill to section 24(2)(g) of the Principal Act.
The amendment will require unused appropriation
amounts in respect of the next financial year to be
included in the annual financial report, thereby providing
greater transparency for these amounts.
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Clause 8 substitutes a new section 40(2) in the Principal Act to remove a
conflict with parliamentary tabling requirements. The current
wording requires the annual budget estimates to be tabled when
the appropriation Bills are before the House. The new
section 40(2) will require that they be tabled on the day on which
the second readings of the annual appropriation Bills for that year
are moved, or in the case of the Legislative Council, if the
Council is not sitting, on the next sitting day.
Clause 9 substitutes a new section 54P in the Principal Act to clarify the
Minister's authority in relation to the licensing and leasing of
surplus Crown land and buildings. Currently, the legislation
empowers the Minister to grant a lease over, or a licence to enter
and use, any building or other structure on Crown land that is no
longer required for a public purpose. It is silent about whether
this power extends to the Crown land on or around which the
building stands. The proposed amendment is intended to remove
this doubt and will clearly empower the Minister to enter into
leases or licences for any Crown land, including the Crown land
on which a building or other structure stands.
Clause 10 substitutes new paragraphs in section 59(1) of the Principal Act,
the regulation-making power, to reflect contemporary financial
management practice and the move from a cash to accrual
environment, including--
· new paragraphs (a) and (b) relating to financial
governance and oversight, financial risk management,
internal audit and structures, systems and procedures in
authorities and public bodies;
· new paragraphs (d) and (e) (which replace
paragraphs (d), (da) and (e)) to cover financial
reporting and, in particular, the form and content of
reports of operations, financial statements and
information required under Part 7 and policies and
procedures to ensure that authorities and public bodies
comply with obligations imposed by or under the
Principal Act.
Clause 10 also omits certain words in section 59(1A) of the
Principal Act that are now not necessary to give meaning to that
section.
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