Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1996
THE
PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
AUDIT
(TRANSITIONAL AND MISCELLANEOUS) AMENDMENT BILL
1996
EXPLANATORY
MEMORANDUM
(Circulated by Authority
of the Minister for Finance,
the Honourable John
Fahey, MP)
AUDIT (TRANSITIONAL AND MISCELLANEOUS) AMENDMENT BILL
1996
OUTLINE
1. This
Bill (in Schedule 1) proposes the repeal of the Audit Act 1901 and deals,
in Schedules 2, 3 and 4 with the transitional and consequential matters arising
from the repeal of that Act and the enactment of replacement legislation,
namely, the Auditor-General Act 1996, the Financial Management and
Accountability Act 1996 and the Commonwealth Authorities and Companies
Act 1996.
2. The Audit Act 1901 is a
pervasive, operational Act that gives flesh to certain basic Constitutional
requirements for the raising and spending of money by the Commonwealth; and, to
that end, provides a procedural framework for day-to-day financial
administration and audit across the whole spectrum of Commonwealth activities.
Its repeal and replacement, therefore, has an extensive impact. This Bill
enables an orderly transition to the new
framework.
3. The Bill's extensive impact can
be seen in Schedule 2 to the Bill - in the proposed consequential amendments to
the relevant provisions of the numerous other Acts which refer in specific ways
to the current Audit Act 1901. The proposed amendments will replace
those Acts' "Audit Act 1901" references with provisions that
appropriately link them to the framework of the new financial legislation. This
Schedule also specifies consequential amendments to the enabling legislation of
Commonwealth Authorities so as to link those authorities to the proposed
Commonwealth Authorities and Companies Act 1996.
4. Schedule 3 to the Bill deals
with amendments to a small number of Acts which already incorporate references
to the replacement legislation. Those references are updated to reflect minor
changes which have occurred in the drafting of the replacement
Bills.
5. Schedule
4 to the Bill provides for the formal transfer, as appropriations, of balances
from the Audit Act's existing Fund accounting structure to the new structure
established by the proposed Financial Management and Accountability Act
1996; the continuation of the appointment of the Auditor-General in office
as at 30 June 1997 for a period not exceeding 10 years from the date of his
appointment under the Audit Act; the continuation of the existing arrangements
for the position of Independent Auditor as auditor of the Australian National
Audit Office; the continuation for the time being (until regulations under the
replacement legislation come into effective operation) of the current
safeguards, as agreed by Parliament, under section 70D of the Audit Act
1901, in relation to the nature of audit and financial reporting
disclosures for the security and intelligence agencies; and the making of
regulations to cover situations, at a procedural level, that might need to
demonstrate legal certainty to support their smooth transition to the new
legislative framework - eg, the continuation of the myriad contractual and other
arrangements entered into under the authority of the repealed Act, such as
operating bank accounts, contracts, audits in progress, debtors' repayments by
instalments etc.
FINANCIAL IMPACT
STATEMENT
6. The proposed amendments have
no financial impact.
NOTES ON
CLAUSES
Clause 1 - Short
title
Clause 2 -
Commencement
Clause 3 -
Schedules
1. These clauses are largely
self-explanatory. Schedules 1, 2 and 4 to this Bill come into operation on the
same day as the Financial Management and Accountability Act 1996.
Schedule 3 comes into operation on the dates specified in subclause
3(3).
Clause 4 - Some amendments in Schedule
2 may not take effect or may take effect with
modifications
2. The purpose of this
clause is take into account legislation which may be amended separately and
which, if so, would negate the need for amendments, or modify such amendments in
this Bill, depending on the commencement
dates.
SCHEDULE 1 - REPEAL OF THE
AUDIT ACT 1901
Clause 1 - The whole
of the Act
3. This clause is
self-explanatory.
SCHEDULE 2 -
CONSEQUENTIAL AMENDMENTS OF
ACTS
AMENDMENTS OF ACTS CONSEQUENTIAL
UPON THE COMMENCEMENT OF THE FINANCIAL MANAGEMENT AND ACCOUNTABILITY ACT
1996, THE AUDITOR-GENERAL ACT 1996, AND THE COMMONWEALTH
AUTHORITIES AND COMPANIES ACT 1996
4. In
relation to the proposed Financial Management and Accountability Act 1996
and the Auditor-General Act 1996 - the amendments
involve:
• the creation of components of
the Reserved Money Fund to replace existing "Trust Accounts" and "Funds"
established for the purposes of sections 60 or 62A of the Audit Act 1901
- replacement components are renamed
"Reserves";
• the clarification of provisions
requiring money to be credited to reserves - that no money is directly credited
to a reserve, but that money is transferred to the reserve from the Consolidated
Revenue Fund;
• repeal of standing
appropriations in Acts that authorise the transfer of amounts from the
Consolidated Revenue Fund to reserves - subsection 20(7) of the proposed
Financial Management and Accountability Act 1996 is to provide a standing
appropriation for the transfers to be made and will make redundant the standing
appropriations in other Acts for such
transfers;
• the repeal of provisions that
place responsibilities on the Auditor-General in regard to the audit of
agencies' financial statements, accounts or records - section 57 of the proposed
Financial Management and Accountability Act 1996 and the
Auditor-General Act 1996 will provide the necessary authority for the
Auditor-General to audit financial statements, accounts and records of
agencies;
• the repeal of provisions
requiring the keeping of accounts and records of agencies - section 48 of the
proposed Financial Management and Accountability Act 1996 will provide
sufficient authority for the proper keeping of agencies' accounts and
records;
• the repeal of references to
Audit Act 1901 and their replacement with references to equivalent
provisions in the proposed Financial Management and Accountability Act
1996 and Auditor-General Act
1996;
• a rewording of provisions to
bring them into line with the basic principles of the proposed Financial
Management and Accountability Bill
1996.
5. The Commonwealth
Authorities and Companies Bill 1996 (the CAC Bill) provides for the
establishment of a streamlined financial, accountability and corporate
governance framework for Commonwealth authorities and companies. Many of its
requirements are modelled on comparable areas of the Corporations Law as well as
current best practice. Furthermore, it establishes a single set of core
requirements that will replace the myriad requirements currently scattered
throughout Part XI of the Audit Act, the enabling legislation of
Commonwealth authorities and the memoranda and articles of association of
Commonwealth companies.
6. The Audit
(Transitional and Miscellaneous Amendments) Bill 1996 (this Bill) proposes
consequential amendments to provisions in the enabling legislation where those
provisions:
-- refer to, or rely on, the
repealed Part XI of the Audit Act 1901;
or
-- overlap with corresponding provisions in the
CAC Bill.
7. Typically, the proposed amendments
repeal provisions in the enabling legislation where their subject matter is
intended to be covered by the CAC Bill, so as to avoid ambiguity and unintended
effects. In a small number of instances, specialised requirements have been
preserved, either to operate in conjunction with the CAC Bill, or to exclude the
application of a particular provision in the CAC Bill that may be inappropriate
to the circumstances of a particular body.
8. The repeal of duplicated requirements is
intended to allow Parliament to focus on a single set of requirements in the CAC
Bill in any future reviews. In the case of a very few authorities, the
application of the CAC Bill has been
excluded.
9. Amendments to the Public
Accounts Committee Act 1951 contained in this Schedule create a significantly
enhanced role for the Committee. It is proposed that the Committee become the
Joint Committee of Public Accounts and Audit and function as the Audit Committee
of the Parliament. The Act will be amended to reflect this new role by
expanding the duties of the Committee to include consideration of the operations
and resources of the Australian National Audit Office (ANAO) and to report on
matters arising out of those considerations; to examine the draft estimates of
the ANAO and to make recommendations to both Houses of the Parliament and the
responsible Minister on those estimates; to determine the audit priorities of
the Parliament and to advise the Auditor-General of those priorities. The Act
will also be amended to reflect the Committee's role, as provided in the
Auditor-General Bill 1996, in approving recommendations to the
Governor-General for appointments to the Office of
Auditor-General.
SCHEDULE 3 - AMENDMENTS
OF ACTS TO UPDATE REFERENCES AND
MAKE OTHER CHANGES
10. This
Schedule is largely self-explanatory. It amends a small number of Acts which
contain refererences to the replacement legislation, by updating those
references and making some minor changes to reflect drafting changes which have
occurred. The Schedule also takes the opportunity to make minor amendments to
the Australian Maritime Safety Authority Act 1990, the Civil Aviation
Legislation Amendment Act 1995 and the Commonwealth Funds Management
Limited Act 1990.
SCHEDULE 4 -
TRANSITIONAL MATTERS AND
REGULATIONS
Clause 1 - This Schedule
binds the Crown
Clause 2 - This Schedule
extends to things outside Australia
Clause 3
- Interpretation
11. These clauses
are self-explanatory.
Clause 4 - Transfers
from old Funds to new Funds
12. The
purpose of this clause is to provide, upon commencement of this Act,
for:
• money
in the Loan Fund established under the Audit Act 1901 to be transferred
to the Loan Fund established under the Financial Management and
Accountability Bill 1996; and
• money
in the Trust Fund to be transferred to components of the Reserved Money Fund and
the Commercial Activities Fund established under or for the purposes of clauses
20 and 21 of the Financial Management and Accountability Bill 1996.
13. Existing Trust Accounts and Heads of Trust
are established either by a Commonwealth Act or under the Audit Act 1901.
For each Commonwealth Act establishing an account/head in operation at
commencement date of the new financial framework, the Schedule to this Bill is
to amend that Act to create a replacement component of the Reserved Money Fund.
14. For accounts/heads established under the
Audit Act 1901, the Minister for Finance would make determinations in
accordance with subclauses 20(2) and 21(2) of the Financial Management and
Accountability Bill 1996 to establish replacement components. Determinations
for the purpose of the transfer would, as far as practicable, replicate the
funding arrangements and purposes clauses of Trust Accounts and Heads of Trust
in operation at commencement. The 'transfer' determinations would be tabled in
Parliament, but because they would be repeating and continuing approved
arrangements, the disallowance rules set out in subclause 22(3) of the
Financial Management and Accountability Bill 1996 would not
apply.
Clause 5 -
Auditor-General
15. This clause provides
for an incumbent Auditor-General as at 30 June 1997 to remain in office for
remainder of the period of 10 years commencing from the date on which the
original appointment under Audit Act 1901 was made. The rules in the
Auditor-General Bill 1996 on remuneration, recreation leave, resignation,
and removal from office apply in the same way as if he or she were appointed
under the Auditor-General Bill
1996.
Clause 6 - Independent
Auditor
16. This clause provides for the
current arrangements for the position of Independent Auditor to continue as if
the arrangements had been made under the Auditor-General Bill
1996.
Clause 7 - Exempt
accounts
17. The special financial
management and auditing arrangements for security and intelligence agencies are
complex. Developing new, simplified arrangements for these agencies is expected
to require great care; there is a possibility, at least, that the new
arrangements may not be completed by the time this Act commences. To avoid any
hiatus, this clause provides for the "exempt account" arrangements under section
70D of the Audit Act 1901, which are current and working, to continue for
the period until the foreshadowed new regulations for these agencies under the
three principal proposed financial Acts become operational - that is, the
section 70D arrangements would cease in favour of new regulations from the date
on which the new regulations are first made. However, should any of the new
regulations be subsequently disallowed, the section 70D arrangements would
re-activate and apply until the new regulations are remade and pass the period
of disallowance.
Clause 8 -
Regulations
18. This clause provides for
regulations to be made for the transition of various matters. Reliance on
regulations is considered appropriate and practicable in this context, given the
extensiveness of the changes from the Audit Act 1901 to the new
legislative framework. For example, the regulations would be able to deal
with:
• the fact that existing official
bank accounts would not comply, in the short term, with the new account naming
rules under clause 9 of the Financial Management and Accountability Bill
1996;
• the continuation of
appointments made under section 11 of the Audit Act
1901;
• the continuation of audits,
in particular audits of the 1996/1997 financial
statements;
• the continuation of
financial statements guidelines made under section 50AA of the Audit Act
1901, in particular guidelines for the 1996/1997 financial statements.