Australian Government
Department of Finance and Administration
Finance Circular
No. 2006/07
To all Financial Management and Accountability Act 1997 agencies
Debits to Official Administered Receipts Accounts
Purpose
This Finance Circular provides guidance to Financial Management and Accountability Act
1997 (FMA Act) agencies on the change to the Financial Management and Accountability
(Finance Minister to Chief Executives) Delegation 2002 (the Delegation)1, regarding the
limited instances when an official administered receipts account may be debited2.
Target Audience
This Finance Circular is relevant to all officials of FMA Act agencies that oversee the
management or reconciliation of an official administered receipts account.
Key Points
1.
Schedule 4 of the Delegation details the mandatory banking arrangements (called the
core protocols) for FMA Act agencies. The core protocols, amongst other things, detail the
limited instances when an official administered receipts account may be debited.3
2.
The Delegation has recently been changed (see Attachment A) to allow receipts that
have been banked into an official administered receipts account through electronic means
(e.g. Bpay, merchant or direct credit facility) to be reversed or adjusted in accordance with
the relevant contract or facility agreement. For example, this may occur when an amount has
been credited twice, in error, by the merchant, and consequently needs to be reversed.
3.
Whenever transactions are credited to or debited from an official bank account the
agency must have adequate controls in place to ensure that each transaction is true and
correct. With the increased use of electronic receipting and payment processes it becomes
very important that agencies reconcile all transactions, especially where adjustment
transactions can be generated by external parties drawing on their accounts.
Discussion
4.
Electronic receipting mechanisms are generally governed by agreed banking industry
rules or practices. In some instances these rules permit for transactions to be reversed or
processing errors adjusted unilaterally (i.e. without prior consultation). Agencies that receipt
moneys via electronic mechanisms need to ensure that they understand the terms and
conditions of the contracts being entered into.
5.
While usually infrequent, adjustments and reversals may occur several days or months
after the receipt has been processed. With the delegation amendment now permitting these
types of transactions, agencies that use electronic receipting facilities will need to ensure that
1
The Delegation should be read together with any subsequent amendment delegation.
Schedule 5 of the Financial Management and Accountability (Finance Minister to Finance Chief Executive)
Delegation 2003 has also been amended.
3 References to crediting or debiting throughout this circular are made as an agency would see it reflected on its bank
statement.
2
they have sufficient controls and processes in place to reconcile all transactions in a timely
manner, including making the necessary adjustments to their records and to the
Appropriations and Cash Management (ACM) Module.
Background
6.
Where an agency receives administered revenue the core protocols require the
revenue to be deposited into an official administered receipts account. The aggregate balance
of the agency’s official administered receipts accounts is swept to the Official Public Account
(OPA) at the end of each business day.
7.
Under the financial framework, the debit transaction to the agency’s official
administered receipts account is considered a payment4 from the Consolidated Revenue Fund
(CRF) and, accordingly, needs to be supported by an appropriation.5 Agencies will see the
result of this transaction as a reduction in cash, and will need to make the necessary
appropriation adjustments in ACM to reflect this. If no other appropriation is available to
support this payment, agencies can use the appropriation provided by section 28 of the FMA
Act (see Attachment A) to make the repayment. Adequate records must be retained by
agencies to support the transactions.
Action Required
8.
Agencies need to review existing internal controls and processes for these electronic
receipting facilities to ensure that all transactions are true and correct, this includes having
due regard for the agencies’ Chief Executive’s Instructions and operational guidelines, if
applicable.
9.
Where adjusting entries need to be made in ACM, agencies should contact the OPA
Help Desk in Finance on 02 6215 3660 to assist with the necessary journal entries.
10.
If agencies wish to enter into receipting arrangements other than those listed in the
Delegation they should consult the Banking Team in Finance on 02 6215 3810 prior to
entering into such agreements.
Contacts
11.
If you have any queries, please contact the Banking Team in Financial Management
Group, at Banking@finance.gov.au or visit our website at www.finance.gov.au
Marc Mowbray-d’Arbela
Acting First Assistant Secretary
Financial and Budget Framework Division
13 October 2006
Attachment A
4
Agencies will need to ensure adequate drawing rights are issued to account for these types of transactions. For further
information on drawing rights refer Finance Circular 2004/07 available from the Finance website.
5
Section 83 of the Australian Constitution states: “No money shall be drawn from the Treasury of the Commonwealth
(CRF) except under an appropriation made by law.”
Financial Management and Accountability (Finance Minister to Chief Executives)
Delegation 2002 (as amended from time to time) - Schedule 4, Clause 5,
Subclause 46.
insert
(4)
(e)
receipts that have been banked in an administered receipts account through a
payments clearing arrangement (e.g. direct entry or RTGS payments), a
merchant facility (e.g. for EFTPOS or scheme-based card payments), or a
receipting facility (e.g. Bpay or AP Billpay) are reversed or adjusted in
accordance with standard banking industry or receipting facility practice (e.g.
as reflected in relevant terms and conditions documents).
Note: The agency must ensure that it receives sufficient information from the service provider regarding
adjustments or reversals to its receipts.
Financial Management and Accountability Act 1997, Section 28 - Appropriation for
repayments required or permitted by law
(1) This section applies if:
(a) an Act or other law requires or permits the repayment of an amount received by the
Commonwealth; and
(b) apart from this section there is no appropriation for the repayment.
Note: For example, this section would apply to a law that requires an application fee to be refunded to an
unsuccessful applicant. It would also apply to a contractual obligation to repay a loan.
(2) The CRF is appropriated for the repayment.
(3) If the amount is repaid to the Commonwealth was credited to a Special Account, then the
repayment must be debited from that Special Account.
6
Schedule 4, Clause 5, Subclause 4 of the Financial Management and Accountability (Finance Minister to Finance
Chief Executive) Delegation 2003 has been amended in the same way.