Australian Government
Department of Finance and Deregulation
Finance Circular
No. 2009/07
To all agencies under the Financial Management and Accountability
Act 1997 (FMA Act)
Issuing and Exercising Drawing Rights
Purpose
The purpose of this Circular is to help FMA Act agencies understand and comply with the
legislative requirements relating to drawing rights. It also provides guidance on when
drawing rights are needed and how to issue, or delegate the power to issue drawing rights.
This Circular replaces Finance Circular 2006/09: Drawing Rights: Payments and Debiting
Appropriations.
Target Audience
This Circular is relevant for Chief Executives, Chief Financial Officers and FMA Act
officials who are involved in making payments, managing appropriations and issuing or
updating drawing rights instruments or delegation instruments. This Circular is also
relevant for officials who may advise Ministers on their ability to make payments of public
money.
Key Points
1.
Drawing rights are a statutory mechanism for the management of agency
appropriations. They provide controls around the payment of public money and the use of
appropriations.
2.
Section 26 of the FMA Act provides that an official or Minister must not make a
payment of public money, request a debit to an appropriation, or debit an appropriation,
unless authorised by a valid drawing right. Performing any of these actions without a valid
drawing right is a breach of section 26 of the FMA Act.
3.
Section 27 of the FMA Act provides that the Minister for Finance and Deregulation
(Finance Minister) may issue, revoke or amend a drawing right. This power has been
delegated to agency Chief Executives under section 62 of the FMA Act.
4.
Conditions and limits may be set by the Finance Minister, or the Finance Minister’s
delegate, in relation to the payment of public money and/or debiting of an appropriation.
These conditions or limits should be included in any written instrument or electronic
document issuing drawing rights.
Page 1 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
Public Money
5.
Section 5 of the FMA Act defines public money as “(a) money in the custody or
under the control of the Commonwealth; or (b) money in the custody or under the control
of any person acting for or on behalf of the Commonwealth in respect of the custody or
control of the money; including such money that is held on trust for, or otherwise for the
benefit of, a person other than the Commonwealth”.
6.
The expenditure of public money can only occur under the authority of an
appropriation. This is a requirement of section 83 of the Constitution, which provides that
“No money shall be drawn from the Treasury of the Commonwealth except under
appropriation made by law”1.
Drawing Rights
7.
Section 26 of the FMA Act provides that “an official or Minister must not do any of
the following except as authorised by a valid drawing right:
(a) make a payment of public money;
(b) request that an amount be debited against an appropriation;
(c) debit an amount against an appropriation”.
8.
Section 27 (5) of the FMA Act provides that “a drawing right has no effect to the
extent that it claims to authorise the application of public money in a way that is not
authorised by an appropriation”. Before making a payment of public money, and exercising
a drawing right, officials must therefore ensure that any public money intended to be spent
will be spent for a purpose for which it is appropriated. They must also ensure that there is
sufficient available appropriation to cover the proposed payment2.
The Finance Minister’s powers
9.
Section 27 of the FMA Act allows the Finance Minister to issue drawing rights to
officials to make payments, request debits or debit appropriations. Section 27 also requires
the Finance Minister to issue sufficient drawing rights to make payments where a law
requires that payment and there is an available appropriation for that payment. A full
extract of the legislative provisions relating to drawing rights is at Attachment A.
10.
Section 27 (1) of the FMA Act provides that the Finance Minister may issue
drawing rights to an official or Minister authorising them to make a payment of public
money, request the debiting of an appropriation, or debit an appropriation.
11.
The Finance Minister may also, at any time, revoke or amend a drawing right, even
if the drawing right has been issued by a Chief Executive, or another delegate in an agency,
under the powers delegated by the Finance Minister under section 62 of the FMA Act.
12.
If the terms of a law require the payment of public money (for example, the
Social Security Act 1991, where people must be paid benefits if certain criteria are met),
section 27 (2) of the FMA Act provides that the Finance Minister, or the Finance Minister’s
1
Refer to Finance Circular 2004/16: Appropriation Management: Responsibilities of Agencies for further
information.
2
Officials must ensure that their agency’s accounts and records accurately reflect this payment, as set out in
section 48 of the FMA Act.
Page 2 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
delegate, must issue the necessary drawing rights to allow the amount to be paid in full. In
addition, the recipient of such drawing rights must exercise the rights in full.
Delegation to officials
13.
The Finance Minister has delegated to Chief Executives of FMA Act agencies the
power, under section 27 of the FMA Act3, to issue, revoke or amend drawing rights as
necessary to enable them to manage the appropriations they are responsible for. This power
can be used to issue drawing rights to themselves and other officials with, or without, limits
and directions.
14.
Unless specifically delegated the power to issue drawing rights in relation to
another agency’s appropriation, Chief Executives can only issue, revoke and amend
drawing rights in respect of appropriations for which they are responsible. Chief Executives
can issue drawing rights to the extent of the authority set out in the annual
Appropriation Acts and the standing appropriations under sections 20, 21 and 28 of the
FMA Act.
15.
Chief Executives can sub-delegate their power to issue drawing rights. However,
officials who are sub-delegated this power can only issue drawing rights to themselves and
other officials – they cannot further delegate the power to issue drawing rights.
16.
The power to issue drawing rights should not be delegated to any person outside the
Commonwealth.
17.
Any sub-delegation by a Chief Executive will potentially become invalid if the
Finance Minister’s delegation is changed or revoked. Accordingly, a Chief Executive must
reissue sub-delegations, including in relation to the power to issue, amend and revoke
drawing rights, if the Finance Minister’s delegation is invalidated or revoked4.
When are drawing rights required?
18.
Drawing rights are required whenever an official or Minister makes a payment of
public money, requests the debiting of an appropriation, or debits an appropriation.
Drawing rights are required to make any type of payment, or to debit any type of
appropriation, whether an annual appropriation or a special appropriation (including a
Special Account).
19.
Drawing rights are a legal control over the payment of public money and the
debiting of appropriations. However, drawing rights generally operate in an accounting
environment where accounting controls may also be important. Officials should therefore
clearly identify which controls are being exercised for a particular activity. For example,
drawing rights are generally only exercised when money leaves the Consolidated Revenue
Fund (CRF), or when a notional payment has been made, not when accruing an expense or
generating a purchase order.
3
At the time this Circular was issued, the relevant delegation was the Financial Management and Accountability
(Finance Minister to Chief Executives) Delegation 2009.
4
In some instances, transitional provisions in the Finance Minister’s delegation may provide for a period of time
before new delegations need to be updated.
Page 3 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
Making a payment of public money
20.
Money leaving the CRF5, or a notional payment, constitutes the making of a
payment of public money for the purposes of section 26 of the FMA Act. Examples of
‘making a payment’ include the execution of a cheque (or its mechanical generation) and
its subsequent issue, the handing over of cash, the issuing of instructions to process
Electronic Funds Transfers (EFT), or the use of a debit card. Further examples of common
transactions requiring a drawing right can be found at Attachment B.
Making payments from petty cash floats
21.
Regulation 19 of the Financial Management and Accountability Regulations 1997
(FMA Regulations) allows officials to withdraw amounts from an official bank account to
establish a cash advance, which is sometimes called a petty cash float. If an official uses a
debit card to withdraw money to establish a petty cash float, they do not require a drawing
right as the appropriation is not being debited and the money remains in the CRF.
However, if the official makes a payment from that petty cash float, they will require a
valid drawing right, as this involves money leaving the CRF and the debiting of an
appropriation.
Notional payments
22.
The Commonwealth is a single legal entity. Normally a payment from one part of a
legal entity to another part of that same entity would not have any legal effect. However,
section 6 of the FMA Act requires agencies to treat notional payments as if they were real
payments. It provides that:
 if an agency makes a notional payment to another agency (for example, a
payment for services provided by one agency to another under a Memorandum
of Understanding (MOU)); or
 if one part of an agency makes a notional payment to another part of that agency
(for example, a payment from a departmental appropriation to a Special
Account); and
the transaction would involve the debiting of an appropriation if the notional payment were
a real payment, then such payments are to be treated as ‘real’ payments.
23.
The effect of section 6 of the FMA Act is that drawing rights are required for all
notional payments that involve the debiting of an appropriation as if it were a real payment,
despite the fact that public money does not leave the CRF.
Debiting an appropriation
24.
Drawing rights are required when an official debits an amount against an
appropriation. The debiting of an appropriation generally occurs when an official records a
debit in the ledger entry of an agency’s Financial Management Information System (FMIS)
to reflect the point in time at which money is leaving the CRF. The official who makes this
entry will often be different to the official who actually makes the payment.
25.
An appropriation is not debited when an official draws down in the Appropriations
and Cash Management Module of the Central Budget Management System, as the money
is simply moved from the Official Public Account to an agency’s official bank account.
The money remains within the CRF for as long as it remains in the agency’s bank account.
5
The CRF consists of all money in the custody or control of the Commonwealth, or a person acting on behalf of the
Commonwealth, including all money in Commonwealth bank accounts and agency petty cash floats.
Page 4 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
Similarly, if an agency transfers money between its official bank accounts, the money
remains in the CRF and no appropriation is debited.
26.
An appropriation is only debited when money leaves the CRF or in the case of a
notional payment, when money actually leaves one agency to go to another, or one part of
an agency to go to another. That is, amounts are debited when the money is spent, not when
the expense is merely accrued in agencies’ FMIS.
Requesting a debit
27.
Drawing rights are also required when an official or Minister requests that an
amount be debited against an appropriation. This situation does not generally occur within
an agency. However, there may be specific agreements or arrangements between agencies
where one agency, authorised under the agreement or arrangement, will request another to
debit an appropriation. In these cases, the person who makes the request will need to be
issued with a valid drawing right authorising them to request the debiting of an amount
against an appropriation.
28.
One instance where there may be a need to issue drawing rights to allow for
requesting a debit to an appropriation is where two agencies sign an MOU. For example,
where one agency is responsible for an appropriation and another agency has agreed to
make payments on their behalf6.
Repayments under the FMA Act
29.
If an agency is permitted or required to make a repayment of public money, and
there is no other available appropriation for that repayment, section 28 of the FMA Act
provides that the CRF is appropriated for the repayment. If an official makes a repayment
under section 28, they will require a drawing right under section 27 (1) (a). An official who
debits the appropriation under section 28 will need a drawing right under section 27 (1) (c)
of the FMA Act.
How to issue drawing rights
30.
Any person who controls the making of payments of public money must be issued
with a drawing right under section 27 (1) (a) of the FMA Act. This will include officials
who have the authority to direct staff to make payments of public money. For example, if
an official directs other staff to take the necessary administrative steps to make a payment,
then that official requires valid drawing rights. Officials who perform the purely
administrative tasks necessary to facilitate the payment may not require drawing rights if
they are acting under the direction of another person and do not exercise any independent
judgment. A drawing right issued under section 27 (1) (a) must clearly identify that the
person to whom it is issued has the power to make payments of public money.
31.
Drawing rights must be issued to any officials who debit an amount against an
appropriation, or who have the authority to direct other staff to do so. Officials who make
ledger entries in their agencies’ FMIS to reflect a debit to an appropriation (i.e. when
money leaves the CRF), or who authorise someone else to make this entry, will therefore
require a valid drawing right under section 27 (1) (c) of the FMA Act.
32.
Drawing rights instruments can be used to issue drawing rights for all
appropriations that an agency is responsible for. Ideally, drawing rights instruments should
6
See Attachment B, Example 5, for further information.
Page 5 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
include details of the specific appropriation that the drawing right relates to, as well as any
relevant conditions or limits. All drawing rights instruments must clearly identify to whom
the drawing rights are issued. Drawing rights can be issued to officials using the instrument
template at Attachment C. The drawing rights instrument should not be incorporated into
the agency’s Chief Executive’s Instructions (CEIs), although the role of drawing rights and
the location and operation of the agency’s drawing rights should be included in the
agency’s CEIs.
33.
Agencies must ensure that their drawing rights instruments cover all relevant
appropriations, including Special Accounts and section 28 of the FMA Act. If applicable,
agencies must also ensure that their drawing rights instruments cover appropriations for
payments to Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies7.
34.
Where an amount of money is to be paid and there is no law compelling its
payment, a drawing right can be issued with any limits and conditions necessary to assist
the agency to manage the relevant appropriation. Any conditions or limits must be clearly
detailed in the drawing rights instrument and should be brought to the attention of those
officials who have been issued with drawing rights.
35.
Section 27 of the FMA Act permits drawing rights instruments to contain classes of
appropriations. For example, a drawing right can be issued in relation to “Appropriation
Act No. 1 in respect of departmental items”, without the drawing right having to be
reissued each time a new Appropriation Act is passed. When issuing drawing rights for an
annual appropriation, the drawing rights instrument should identify the appropriations
covered. For special appropriations, the specific Act should be referenced in the drawing
rights instrument along with details about whether a drawing right is issued to cover all
appropriation provisions within an Act, or only part of the appropriation provision within
the Act. When the special appropriation is a Special Account, the drawing rights instrument
should clearly specify the relevant Special Account.
36.
When issuing drawing rights to officials for the purposes of investing public money
under section 39 of the FMA Act, the drawing rights instrument should detail the
appropriation from which the investment of public money is made. For example, an
investment power that relates to a Special Account will require a valid drawing right
relating to that Special Account, rather than section 39 of the FMA Act.
37.
If necessary, drawing rights can be issued to officials in respect of all appropriations
for which the agency is responsible. However, agencies should bear in mind that drawing
rights are intended to provide controls over the expenditure of public money and agencies
should therefore ensure that they still have sufficient internal controls before doing so.
Drawing rights issued to officials of other agencies
38.
There may be circumstances where a Chief Executive decides to allow another
agency or agencies to draw upon an appropriation for which that Chief Executive is
responsible. This could be for reasons of administrative efficiency or government policy.
 Officials in the agency that is drawing upon that appropriation (‘the spending
agency’) will require valid drawing rights from the Chief Executive (or delegate) of
the agency responsible for that appropriation (‘the responsible agency’) before they
can make payments. This can be done through a delegation from the Chief
7
See Finance Circular 2008/09: Appropriations for Payments to CAC Act bodies for further information.
Page 6 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
Executive of the responsible agency of the power to issue drawing rights to the
Chief Executive (or other official) in the spending agency, or by issuing drawing
rights directly to officials of the spending agency.
 The responsible agency may also impose conditions and reporting requirements on
the exercise of those drawing rights.
39.
If a Chief Executive, or their delegate, issues drawing rights directly to officials of
another agency, they should ensure that the drawing rights are maintained and regularly
updated. Officials in the responsible agency should also document the agreement between
the Chief Executives governing the administration, payment and reporting of the
appropriations in accordance with the requirements of the financial framework.
Drawing rights issued to allocated officials
40.
The FMA Act defines an “outsider” as any person other than the Commonwealth,
an official or a Minister. If an outsider8 performs a financial task9, FMA Regulation 4
provides that the outsider becomes an allocated official of the FMA Act agency for which
they are undertaking those financial tasks, when they are performing them10. Allocated
officials are subject to all the requirements of the financial framework applying to officials,
including the FMA legislation, the policies of the Commonwealth and the relevant
agency’s Chief Executive’s Instructions.
41.
If a Chief Executive is considering entering into an arrangement where an outsider
will be performing a financial task, the risks associated with such an arrangement should be
considered. If it is necessary and appropriate for an outsider to be performing a financial
task, Chief Executives should then ensure they have appropriate control mechanisms,
drawing rights and reporting arrangements in place.
42.
If a Chief Executive issues a drawing right to an allocated official, any relevant
directions, conditions or limits must be clearly specified in the drawing rights instrument.
Agencies may wish to consider incorporating the requirement to report any change in the
corporate structure of an organisation to which the allocated official may belong, into the
arrangement with that allocated official, as any potential changes may impact on the
drawing right and may be difficult for the agency to monitor otherwise.
Section 12 of the FMA Act – outsider arrangements
43.
Section 12 of the FMA Act provides that an official or Minister must not enter into
an arrangement for the receipt, custody or payment of public money by an “outsider”,
unless the Finance Minister has first given a written authorisation, or the arrangement is
expressly authorised by an Act.
44.
An outsider who receives, holds, or makes a payment of public money, under an
authorised section 12 arrangement, is not deemed to be an allocated official. In this case,
the contractual agreement between the Commonwealth and the outsider, and section 12 of
the FMA Act, set out the requirements applying to the outsider.
8
Other than an outsider operating under an agreement or arrangement authorised under section 12 of the FMA Act.
FMA Regulation 3 defines a financial task as “a task or procedure relating to the commitment, spending,
management or control of public money,” excluding tasks performed under an agreement or arrangement authorised
under section 12 of the FMA Act.
10
In the case of outsiders operating under an agreement or arrangement authorised under section 12 of the FMA Act,
the arrangements are governed by the agreement, rather than FMA Regulation 4. See paragraphs 43-46.
9
Page 7 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
45.
Only Ministers or officials under the FMA Act can be issued with drawing rights.
Therefore, outsiders making a payment of public money under an authorised section 12
arrangement do not require drawing rights to make these payments.
46.
A drawing right is required by the official in the relevant agency who is responsible
for debiting an amount against an appropriation when a payment is made by an outsider
authorised under section 12. The agency will need to ensure that reporting arrangements
allow the official issued with the drawing right to debit the appropriation at relevant
times11.
Section 8 of the FMA Act – agreements with banks
47.
Section 8 of the FMA Act provides that the Finance Minister may, on behalf of the
Commonwealth, enter into an agreement with any bank for the receipt, custody, payment or
transmission of public money. This power has been delegated, with limits, to all Chief
Executives of FMA Act agencies.
48.
Bank employees making payments of public money, under an authorised section 8
agreement, are not required to have drawing rights. An example of a bank employee
making a payment of public money, under a section 8 agreement, is the debiting from an
agency’s bank account of fees and account keeping charges, payable to the bank.
49.
A drawing right is required by the person who will debit an appropriation to reflect
payments made by the bank. The agency will need to ensure that reporting arrangements
allow the relevant agency official to debit the appropriation at relevant times12. It will not
be necessary for a person to be issued with drawing rights to make a payment of public
money in this case, as the person making the payment of public money (the bank
employee) is not an official, and would not be in breach of section 26 of the FMA Act
when making a payment.
50.
Where an agency’s agreement with a bank extends beyond the provisions of
section 8 of the FMA Act, then any bank employees performing a financial task for that
agency may be deemed to be an allocated official of that agency under the FMA
Regulations. A bank employee who is deemed to be an allocated official will also require
valid drawing rights if they are making payments of public money.
Officers and employees of CAC Act bodies
51.
It is generally not appropriate to issue drawing rights to officers or employees of
CAC Act bodies, as circumstances may arise where there could be a potential conflict
between their duties under the CAC Act13 and the FMA Act requirements. However, there
may be some circumstances where it may be necessary to issue drawing rights, due to the
specific nature of a program or project. If an agency is considering issuing drawing rights
11
The timing for debiting an amount against an appropriation is a matter for the individual agency to determine,
subject to the requirements of section 48 of the FMA Act and the need to ensure that the Commonwealth has an
accurate picture of its appropriations at any point in time.
12
When the appropriation is debited, (i.e. when each payment is made) is a matter for each agency to determine.
However, officials should be mindful of the requirements of section 48 of the FMA Act, which requires agency
accounts and records to be kept as required by the Financial Management and Accountability Orders (Financial
Statements for reporting periods ending on or after 1 July 2008), as amended from time to time.
13
See Division 4 of the CAC Act.
Page 8 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
to CAC Act officers or employees, they should contact Finance at
finframework@finance.gov.au.
Maintaining and updating drawing rights
Establishing a drawing rights register
52.
All drawing rights issued by an agency should ideally be recorded in a central
drawing rights register or a single instrument. Any drawing rights issued to officials in
another agency, or issued by another agency, should also be recorded in the agency’s
central drawing rights register. Agencies should provide a copy of the relevant instrument
to officials who have been issued with drawing rights. The original signed instruments
should be kept in a central location.
53.
Drawing rights issued by the Finance Minister, a delegate or a sub-delegate, remain
valid until the drawing right is revoked. All drawing rights instruments should be reviewed
as necessary to ensure that all officials who make payments of public money, or who debit
appropriations, hold valid drawing rights. It is also advisable for agencies to review all
drawing rights issued if the power to issue drawing rights is amended.
Updating drawing rights
54.
It is essential that all drawing rights instruments be reviewed following Machinery
of Government changes, or changes to the structure of the agency, to determine if agencies
need to revoke and issue new drawing rights.
55.
It is preferable for agencies to revoke and reissue drawing rights, rather than amend
them. This procedure helps avoid uncertainty about the validity of a particular drawing
right.
Compliance and Accountability
56.
All instances of non-compliance with sections 26 or 27 of the FMA Act, or
FMA Regulation 19, must be reported in the agency’s annual Certificate of Compliance
(Certificate). Agencies must provide details of the circumstances of the breach, as well as
any mitigation strategies that have been, or will be, undertaken. Any breaches of drawing
rights issued by another agency must be reported in the spending agency’s Certificate14.
57.
Agencies should be aware of the criminal penalties provision in section 26 of the
FMA Act.
58.
Where drawing rights are issued to officials in other agencies, all transactions made
by the spending agency must be reported as required by the Financial Management and
Accountability Orders (Financial Statements for reporting periods ending on or after
1 July 2008), as amended from time to time15.
14
The issuing agency may also be non-compliant with section 27 (2) of the FMA Act if it has failed to issue valid
drawing rights. Where this occurs, all breaches reported by the spending agency under section 26 must also be
reported by the responsible agency under section 27. For further information on the Certificate process, see
Finance Circular 2009/06: Certificate of Compliance: FMA Act Agencies.
15
Contact accountingpolicy@finance.gov.au for further information relating to financial statements.
Page 9 of 10
Finance Circular 2009/07
Department of Finance and Deregulation
Contacts
59.
For more information, please contact the Financial Framework Policy Branch at
finframework@finance.gov.au.
Tom Ioannou
Assistant Secretary
Financial Framework Policy Branch
Financial Management Group
2 October 2009
Page 10 of 10
Finance Circular 2009/07
Department of Finance and Deregulation